Lundeen Coatings Corp. v. Department of Water and Power

232 Cal. App. 3d 816, 283 Cal. Rptr. 551, 91 Daily Journal DAR 9074, 91 Cal. Daily Op. Serv. 5785, 1991 Cal. App. LEXIS 851
CourtCalifornia Court of Appeal
DecidedJuly 23, 1991
DocketB051503
StatusPublished
Cited by23 cases

This text of 232 Cal. App. 3d 816 (Lundeen Coatings Corp. v. Department of Water and Power) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lundeen Coatings Corp. v. Department of Water and Power, 232 Cal. App. 3d 816, 283 Cal. Rptr. 551, 91 Daily Journal DAR 9074, 91 Cal. Daily Op. Serv. 5785, 1991 Cal. App. LEXIS 851 (Cal. Ct. App. 1991).

Opinion

Opinion

GRIGNON, J.

—In this appeal, we are asked to reverse an order dismissing (demurrer sustained without leave to amend) plaintiff subcontractor’s complaint against defendant department of water and power (DWP). Plaintiff contends that it is owed over $1 million for construction services rendered. Defendant maintains that plaintiff failed to sue on its unpaid contract claims within the two-year period prescribed by Government Code section 945.6, and that DWP is immune from the tort claims alleged. We affirm.

Facts

For purposes of this appeal, we assume that the facts as alleged in plaintiff’s third amended complaint for damages are true. They are as follows: On December 10, 1981, defendant General Electric Environment Sources, Inc. (GEESI) entered into a written agreement with the Intermountain Power Agency 1 (Owner) to act as the prime contractor for the construction of wet scrubbers for units 1 and 2 of the Intermountain Generating *823 Station, Intermountain Power Project in Delta, Utah (Prime Contract). Defendant DWP was the “agent and duly authorized representative of the [Ojwner in the administration” of the Prime Contract. DWP was the project manager for the Prime Contract, was responsible for the overall design, construction, and operation of the project, and acted as the agent and representative of the Owner of the project. Defendant Bechtel Corporation acted as the construction manager for the project, pursuant to a written agreement between Bechtel, the Owner, and DWP.

On November 5, 1984, GEESI entered into a written agreement with defendant Con/Chem Inc. (CCI), whereby CCI agreed to provide labor and materials necessary to install tank linings and to perform work related to the reaction tanks, the thickener feed mix tank, the filter feed tank, the limestone slurry tanks, and the distribution trough of the wet scrubbers of units 1 and 2 (Subcontract). GEESI agreed to pay to CCI $333,844 for materials and $523,632 for installation. GEESI knew that CCI would subcontract these contracted-for services because the Subcontract with GEESI provided that the work was to be performed by a contractor licensed to do business in the state of Utah, and CCI did not hold such a license.

Plaintiff Lundeen Coatings Corporation is a painting contractor licensed to do business in California and Utah. Pursuant to the Prime Contract and the Subcontract, on April 8, 1985, plaintiff entered into a written agreement with CCI to supply all of the labor and equipment necessary to install CCI’s lining materials into the tanks for the wet scrubbers of units 1 and 2. CCI agreed to pay plaintiff $598,000. Plaintiff was approved and accepted by GEESI as a subcontractor qualified to work on the project.

GEESI’s fabrication and welding of the tanks was defective, and caused plaintiff to incur delays in its scheduled work and extra work in the form of repairs. GEESI concealed these defects from CCI and plaintiff. However, Bechtel and DWP knew of the defects. Plaintiff performed all of the terms and conditions of its contract with CCI as to unit 1 between April 8, 1985, and October 21, 1985. Plaintiff’s work on unit 1 was accepted by all defendants on October 21, 1985.

Defendants DWP, Bechtel, GEESI, and others conspired to terminate CCI from the project after work was completed on unit 1, but before work was undertaken on unit 2. DWP’s role in this alleged “fraudulent interference with economic advantage” and “conspiracy to fraudulently induce a breach of contract” is not entirely clear. Apparently, DWP conspired to cause CCI to default in the performance of its obligations under the Subcontract. DWP *824 improperly represented that CCI had not performed its obligations under the Subcontract resulting in GEESI’s finding that CCI was in default. CCI was not permitted to perform the work on unit 2 and, as a consequence, plaintiff was not permitted to perform the unit 2 work and lost the benefit of its contract with CCI. GEESI performed the lining work on unit 2 itself.

The general conditions of the Prime Contract set forth a procedure by which claims for payment and requests for change orders were to be presented to DWP. Plaintiff, as directed by defendants, presented a claim for extra work and requests for change orders to DWP through GEESI. GEESI submitted plaintiff’s claim to DWP at 111 North Hope Street in Los Angeles between February 15, 1985, and March 13, 1986. The claim, which consists of two volumes over two inches thick, sought $1,264,078 for extra work provided by plaintiff. 2 At no time did defendants intend to pay plaintiff for its claim. DWP “considered” the claim from approximately March 13, 1986, to approximately August 1988. DWP at no time notified plaintiff that its claim was defective, nor did DWP give to plaintiff or CCI its notice of denial or rejection. On July 1, 1987, CCI filed a chapter 11 petition in the United States Bankruptcy Court for the Central District of California.

DWP, as project manager, was required to withhold from final payments made to GEESI a sum sufficient to pay plaintiff’s claim. GEESI received final payment on the project in August 1988. DWP did not withhold the amount due plaintiff. GEESI did not pay plaintiff. Moreover, in return for the release of a claim in excess of $800,000 against GEESI by the Owner, GEESI released the Owner from liability for plaintiff’s claim for extra work.

Procedural Background

Plaintiff filed suit against GEESI, Bechtel, and DWP on June 16, 1989. Plaintiff filed a first amended complaint on June 23, 1989. DWP filed a general demurrer to the first amended complaint on December 1, 1989, on the ground that plaintiff had not filed a timely government claim against DWP, as required by Government Code section 911.2. DWP also demurred on the basis that Government Code section 818.8 prohibits the award of punitive damages against a public entity. By minute order dated January 12, 1991, DWP’s demurrer was sustained. Plaintiff was granted 10 days leave to amend. GEESI had also successfully demurred to the first amended complaint as to all causes of action except for plaintiff’s cause of action to recover on the performance bond.

*825 Plaintiff filed a second amended complaint on January 26, 1990. DWP again demurred to the second amended complaint. DWP argued that plaintiff’s complaint set forth contract theories against DWP, even though DWP was not the owner of the project, was not a party to any written construction agreements, and acted merely as the construction manager for the project. DWP maintained that as manager, it did not receive any benefit from plaintiff’s work but that, even if it had, no quantum meruit action may be brought against the government, as a matter of law. In addition, DWP asserted that once again plaintiff had not alleged compliance with the government claims statute, Government Code section 911.2. Finally, DWP contended that except in cases of urgent necessity, all contracts with the City of Los Angeles for more than $500 must be in writing, pursuant to section 385 of the City Charter. The demurrer was taken off calendar upon the granting of GEESI’s separate demurrer to the second amended complaint. 3

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Gibbs v. County of Humboldt
California Court of Appeal, 2026
Coyote Aviation Corp. v. City of Redlands
California Court of Appeal, 2025
YCS Investments v. County of Santa Clara CA6
California Court of Appeal, 2025
County of Santa Clara v. Superior Court
California Supreme Court, 2023
WMC Mortg. v. JPMorgan Chase Bank CA3
California Court of Appeal, 2016
Nasrawi v. Buck Consultants LLC
231 Cal. App. 4th 328 (California Court of Appeal, 2014)
Shneyder v. Sokolovsky CA2/2
California Court of Appeal, 2013
Maranatha Corrections, LLC v. Department of Corrections & Rehabilitation
70 Cal. Rptr. 3d 614 (California Court of Appeal, 2008)
Garcia v. City of Merced
637 F. Supp. 2d 731 (E.D. California, 2008)
CPI Advanced, Inc. v. Kong Byung Woo Comm. Ind., Co.
135 F. App'x 81 (Ninth Circuit, 2005)
Pasadena Live, LLC v. City of Pasadena
8 Cal. Rptr. 3d 233 (California Court of Appeal, 2004)
Honeywell, Inc. v. San Francisco Housing Authority
72 F. App'x 609 (Ninth Circuit, 2003)
Brown v. Compton Unified School District
80 Cal. Rptr. 2d 171 (California Court of Appeal, 1998)
First Street Plaza Partners v. City of Los Angeles
65 Cal. App. 4th 650 (California Court of Appeal, 1998)
Gates v. Superior Court
32 Cal. App. 4th 481 (California Court of Appeal, 1995)

Cite This Page — Counsel Stack

Bluebook (online)
232 Cal. App. 3d 816, 283 Cal. Rptr. 551, 91 Daily Journal DAR 9074, 91 Cal. Daily Op. Serv. 5785, 1991 Cal. App. LEXIS 851, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lundeen-coatings-corp-v-department-of-water-and-power-calctapp-1991.