Mp Nexlevel of California, Inc v. Cvin, LLC

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 10, 2018
• Docket: 17-15289
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION JUL 10 2018 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

MP NEXLEVEL OF CALIFORNIA, INC, No. 17-15289

Plaintiff - Appellant, D.C.No.1:140-CV-00288LJO-EPG

v. MEMORANDUM* CVIN, LLC dba VAST NETWORKS,

Defendant - Appellee.

Appeal from the United States District Court for the Eastern District of California Lawrence O’Neill, District Judge, Presiding

Argued and Submitted March 12, 2018 San Francisco, California

Before: MCKEOWN and BEA, Circuit Judges, and BENITEZ, Senior District Judge.**

This appeal arises from a dispute over the scope of a California specialty

contractor’s license. MP Nexlevel of California, Inc. (“Nexlevel”) is a Minnesota

company licensed in California to install low-voltage communications systems like

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Circuit Rule 36-3. ** The Honorable Roger T. Benitez, Senior United States District Judge for the Southern District of California, sitting by designation. telephone and cable lines. CVIN LLC (“CVIN”) received a grant to design and

construct a fiberoptic internet network throughout the Central Valley of California.

Nexlevel contracted to excavate, trench, drill, and construct underground conduit

to carry the fiberoptic cables (“Phase One”). Nexlevel was not contracted to

actually insert and connect the fiberoptic cables to complete the installation of the

fiberoptic systems themselves (“Phase Two”). Nexlevel completed the contracted

Phase One work. CVIN did not pay Nexlevel for that work.

Nexlevel initiated the instant action against CVIN, claiming, among other

things, breach of contract. CVIN claimed, in turn, that Nexlevel was not entitled to

payment because Nexlevel was not licensed to perform the Phase One work.

The district court agreed with CVIN. The district court found that the Phase

One work was neither within the scope of Nexlevel’s license to install low-voltage

communications systems, nor was it incidental or supplemental to the installation

of such systems. The district court granted summary judgment in favor of CVIN.

We have jurisdiction under 28 U.S.C. § 1291, and we reverse.

Summary judgment rulings are reviewed de novo. Branch Banking & Tr.

Co. v. D.M.S.I., LLC, 871 F.3d 751, 759 (9th Cir. 2017). We also review de novo

the district court’s interpretation of state law. Paulson v. City of San Diego, 294

F.3d 1124, 1128 (9th Cir. 2002). “When interpreting state law, we are bound to

2 follow the decisions of the state’s highest court.” Id. However, “[w]hen the state

supreme court has not spoken on an issue, we must determine what result the court

would reach based on state appellate court opinions, statutes and treatises.”

Hewitt v. Joyner, 940 F.2d 1561, 1565 (9th Cir. 1991).

In California, a contractor who performs unlicensed work is not entitled to

recover payment for that work. Cal. Bus. & Prof. Code § 7031(a). However, a

specialty contractor may perform and recover payment for work that “is ‘incidental

and supplemental’ to the work for which a specialty contractor is licensed if that

work is essential to accomplish the work in which the contractor is classified.”

Cal. Code Regs. Tit. 16, § 831.

Here, Nexlevel was licensed under a C-7 Low Voltage Systems Contractor

specialty license (“C-7 License”). A C-7 licensed contractor “installs, services and

maintains all types of communication and low voltage systems which are energy

limited and do not exceed 91 volts.” Cal. Code Regs. Tit. 16, § 832.07.

The parties agree that fiberoptics systems qualify as “low voltage systems”

under a C-7 License. There is no clearly controlling California Supreme Court law

on whether the construction and installation of conduit for fiberoptic systems falls

within the scope of a C-7 License. Nonetheless, we find that Nexlevel’s work here

3 was “incidental and supplemental” to the installation of these fiberoptic systems.

California state courts, looking to the Contractors State License Board’s

decisions, have construed ‘incidental’ and ‘supplemental’ to mean “necessary to

the main purpose” of the work. Currie v. Stolowitz, 169 Cal. App. 2d 810, 814 (Ct.

App. 1959); see also Kelly v. Hill, 104 Cal. App. 2d 61, 65 (Ct. App. 1951)

(“‘[i]ncidental obviously means depending upon or appertaining to something else

as primary; something necessary, appertaining to, or depending upon another

which is termed the principal, something incidental to the main purpose”).

Communications systems inherently and necessarily require some

connection to other points of contact. Otherwise, there is no “communication” or

“system.” To facilitate that connection, some infrastructure is also necessary.

Nexlevel was licensed to install these communications systems. Even though

Nexlevel did not actually connect the fiberoptics cables, Nexlevel’s Phase One

work provided the necessary infrastructure to support the communications system.

Accordingly, to the extent the district court found that Nexlevel’s Phase One

work was not “incidental and supplemental” to the installation of the fiberoptic

systems here, we REVERSE and REMAND to the district court.