Facts

On April 5, 2012, Cell-Crete Corporation duly provided Orange County Public Works and other interested parties with a written Preliminary Notice with regard to the Project in accordance with the requirements of California Civil Code section 3098. Well before it commenced any work, Cell-Crete was notified by Vadnais Corp. that the scope of work and material selection Cell-Crete was to provide on the Project would be revised, necessitating a subsequent subcontract agreement. In order to facilitate this change, Vadnais asked Cell-Crete to execute a release with respect to the first subcontract pursuant to which no work had been or would be performed. Cell-Crete did not perform any work on the Project pursuant to this initial subcontract agreement, and it was not paid any amount in exchange for this release, as no money was due.

On Aug. 8, 2012, Cell-Crete entered into a second subcontract agreement (the operative "Subcontract") with Vadnais to perform the revised scope of work. Cell-Crete performed its work on the Project pursuant to this Subcontract. The agreed price and reasonable value of the labor and materials Cell-Crete furnished to the Project pursuant to its Subcontract with Vadnais and several Vadnais purchase orders (and for the benefit of Vadnais, Los Angeles Engineering Inc. and OCPW) was the sum of $140,013.

It is undisputed that Cell-Crete fully performed all duties and obligations imposed upon it by the terms of the Subcontract and the purchase orders.

PLAINTIFF'S CONTENTIONS:
In late 2013/early 2014, well after this action was filed, Vadnais made a partial payment of $20,000 to Cell-Crete, and the balance remains due and owing. There has never been any assertion or claim of any kind by anyone that Cell-Crete's work was inferior, deficient, or untimely in any manner.

On Feb. 1, 2013, and within the time prescribed by Civil Code section 8508, Cell-Crete served a Stop Payment Notice pursuant to Civil Code sections 8520, 8530, and 9350. On Feb. 11, 2013, OCPW issued a written notice to Los Angeles Engineering advising of Cell-Crete's Stop Payment Notice and indicating that OCPW would be withholding amounts from Los Angeles Engineering sufficient to satisfy Cell-Crete's claim. A Notice of Completion for the Project was recorded on March 8, 2013. Despite Cell-Crete's several and repeated demands for further payment, neither Vadnais, Los Angeles Engineering, nor Safeco Insurance, have paid any further amounts to Cell-Crete toward the outstanding balance due.

Cell-Crete contended it was entitled to recover from all three defendants by virtue of the subcontract agreement, common counts allegations, Stop Payment Notice, and/or claim on the payment bond. Vadnais does not dispute the amount it owes to Cell-Crete.

DEFENDANT'S CONTENTIONS:
Defendant argued that plaintiff had executed a statutory unconditional final release of all bond claims after the date of both preliminary notices and the preliminary notices did not distinguish that there were multiple subcontract agreements.

Result

The court ruled that Safeco must pay Cell-Crete the unpaid balance of $90,813 under the bond, plus costs to be decided by motion. The court ordered an award of attorney fees in the amount of $82,725.

Other Information

According to plaintiff, the court found despite the unconditional final releases being executed after the preliminary notices, which since there was not a payment issued in exchange for the statutory unconditional final release that plaintiff could recover on the bond but did discount recovery to plaintiff by $40,000 in payments made after the statutory unconditional releases. The $40,000 in payments that the court discounted was $40,000 in payments by the general contractor to the subcontractor Vadnais that had sub-subcontracted work to Cell-Crete that did not in turn make payments to Vadnais. FILING DATE: May 24, 2013.