Crane Development v. Ketcham Forst Products

Filed 5/9/06 Crane Development v. Ketcham Forst Products CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of San Diego County, Jay M. Bloom, Judge. Affirmed.

Crane Development Corporation (Crane) appeals from a summary judgment in favor of Ketcham Forest Products, Inc., Gerald D. Iverson, Sam Howard, Al Willett and Sterling Wolfe (collectively Ketcham) on Crane's complaint for fraud, conspiracy to commit fraud, and violations of the Federal Racketeer Influenced and Corrupt Practices Act (18 U.S.C. § 1961 et seq., or the RICO statute). Crane alleged Ketcham, which supplied lumber for a project on which Crane was the general contractor, made false assertions about the value of its lumber and engaged in corrupt practices in connection with the submission of a lien waiver and release prescribed by the Legislature in Civil Code section 3262, subdivision (d)(1). On Ketcham's motion, the court granted summary judgment in part on grounds the lien waiver did not contain misrepresentations, and Crane had not shown a triable issue as to whether it suffered damages as a result of Ketcham's acts. Crane contends: (1) Ketcham's lien waiver and release was fraudulent as a matter of law on the theory that amounts stated in the release must be limited to the sum Ketcham can claim for a mechanics lien under Civil Code section 3123, subdivision (a); (2) it otherwise presented sufficient evidence to overcome summary judgment on its fraud, conspiracy and RICO claims; and (3) the trial court erred by denying its new trial motion. We affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Crane was the general contractor for the construction of two hotels located at the intersection of Scripps Poway Parkway and Interstate 15 in San Diego County (Springfield and Residence Inn, or collectively, the projects). In connection with the projects, Crane entered into a subcontract with BCH & Sons, Inc. (BCH) in which BCH agreed to supply all labor and materials for the rough carpentry or framing for the guaranteed fixed price of $1,912,000. Ketcham sold the lumber for the projects to BCH at an invoiced price of $564,098.35.

In April 2002, Crane and BCH entered into a supplemental contract including a " Schedule of Values" containing line items for BCH's draw upon the delivery of lumber for the projects of $333,350 and $452,000 (a total of $785,350). Exhibit " A" to the supplemental contract provides in part: " SUBCONTRACTOR and CONTRACTOR agree that monthly payment requests will be made based on the following schedule of values. All payment requests are to be received by CONTRACTOR no later than the 25th day of each month for inclusion in the monthly application. All lien releases from SUPPLIERS and SUBCONTRACTORS are due with that request." That same month, Ketcham prepared^[1] and BCH submitted to Crane a " conditional waiver and release upon progress payment" (the conditional waiver), which stated that Ketcham would release its mechanic's lien, stop notice or bond rights upon joint payment to Ketcham and BCH in the total amount of $785,350 on account of labor, equipment and material furnished to BCH through April 30, 2002.^[2]

In May 2002, the owner of the projects submitted a pay application to the builders fund control for the project asking that payment of $452,000 and $333,350 be jointly made to Ketcham and BCH for the lumber. Ray Fletcher, Crane's vice president and project manager for the projects, approved the applications.^[3] Approximately two weeks later, the fund control issued two checks in those amounts jointly payable to BCH and Ketcham. BCH endorsed the checks and sent them to Ketcham, which deposited them in its account. Ketcham then made two wire payments to BCH of $93,000 and $113,519.

BCH was unable to complete the work on the projects. In November 2002, Crane terminated its subcontract with BCH as a result of BCH's default and BCH left the projects.

Crane sued Ketcham, its officers Gerald Iverson and Sam Howard, its accountant Al Willett, and Sterling Wolfe for fraud, conspiracy to commit fraud and corrupt practices under the RICO statute.^[4] Crane alleged that by stating in its conditional waiver it would release its mechanics lien claim on payment to it and BCH in the amount of $785,350, Ketcham falsely represented that " (a) it was entitled to assert a mechanic's lien in that amount; (b) that the purchase price of the materials delivered to the job site was $785,350.00; [] (c) that the reasonable value of the material delivered to the job site was $785,350.00 and (d) that if such payment was not made, Ketcham would be entitled to file a mechanic's lien against the Projects for $785,350.00." According to Crane's complaint, Ketcham defrauded it by supplying lumber to BCH for an invoiced price of $564,068.35, but claiming to Crane that its sales price or reasonable value of its materials and the amount of its potential lien was $221,281.65 more than that amount, thus inducing Crane to pay that additional money to Ketcham. Crane further alleged that as a result of Ketcham's fraudulent scheme, Crane was led to believe at the start of construction that BCH was a solvent company capable of performing its obligations under their subcontract when in fact it was not, and that if Crane had known about BCH's insolvency it would have engaged another framing subcontractor for the projects and avoided in excess of $277,000 in damages incurred to purchase additional materials and complete the framing. In its RICO cause of action, Crane alleged Ketcham and its employees and agents engaged in corrupt practices and a pattern of racketeering by practicing their fraudulent scheme on numerous other subcontractors in Southern California to induce them to buy lumber from Ketcham and in turn receive cash advances for working capital.

Ketcham moved for summary judgment or alternatively summary adjudication of issues. It argued Crane could not raise triable issues of material fact to support its causes of action because (1) it was undisputed that none of the individual defendants had made any representations about BCH's solvency or ability to perform its obligations; (2) the conditional waiver did not contain representations about the purchase price, sales price, or reasonable value of the materials provided by Ketcham; (3) the fair market value of the lumber under the BCH/Crane subcontract was $785,350, which was the agreed-upon lumber price for the projects; (4) Crane's losses were caused by BCH's failure to perform, not by Ketcham; (5) even assuming Crane paid more than the actual price of the lumber, that payment did not affect Crane's obligation to pay the approximately $1.9 million dollar fixed contract price; and (6) Crane could not show Ketcham's conduct was the direct cause of any injury for purposes of RICO since its damages were caused by BCH's default. In opposition, Crane argued in part that Ketcham's mechanics lien rights were limited to the amount it charged BCH for the lumber under Civil Code section 3123, subdivision (a),^[5] and Ketcham committed fraud by including in its conditional waiver more than $206,000 in excess of that cost and " kicking back" those monies to BCH.

Following arguments on the matter, the court granted Ketcham's motion. In part, the court found it undisputed that $785,350 was the amount to be paid for the lumber called for in Crane's subcontract with BCH and that Ketcham only received the funds it was owed. It ruled the conditional waiver did not contain any representation as to the lumber's cost or its reasonable value; it merely provided that upon payment, it was effective to release any mechanics lien Ketcham had on the job, whatever the amount. Further, the court concluded Civil Code section 3123 did not apply to the conditional waiver because it was not a direct lien. It entered judgment in Ketcham's favor.

After unsuccessfully moving for a new trial, Crane filed the present appeal.

DISCUSSION

I. Summary Judgment

A. Standard of Review

A defendant meets his or her burden upon a motion for summary judgment or summary adjudication if that party has proved " one or more elements of the cause of action . . . cannot be established. . . ." (Code Civ. Proc., § 437c, subd. (p)(2).) The defendant need not conclusively negate an element of the plaintiff's cause of action, but must only show that one or more of its elements cannot be established. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853 (Aguilar).) To shift the burden to the nonmoving party, the evidence produced by the moving party must " persuade the court that there is no material fact for a reasonable trier of fact to find. . . ." (Id. at p. 850, fn. 11, emphasis omitted.) The 'moving party also bears a burden of production " to make a prima facie showing of the nonexistence of any triable issue of material fact." (Id. at p. 850.) " A prima facie showing is one that is sufficient to support the position of the party in question." (Id. at p. 851.)

" Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists. . . ." (Code Civ. Proc.,

§ 437c, subd. (p)(2).) In opposing the motion, the plaintiff may not simply rely upon allegations or denials of the pleadings; the plaintiff must set forth specific facts showing that a triable issue of material fact exists. (Ibid.) " There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Aguilar, supra, 25 Cal.4th at p. 850.)

We review the trial court's decision de novo, considering all of the evidence offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports. (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476-477.) In resolving the motion we construe Ketcham's evidence strictly and Crane's evidence liberally, and resolve any doubts as to the propriety of granting the motion in Crane's favor as the opponent. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768; Baroco West, Inc. v. Scottsdale Ins. Co. (2003) 110 Cal.App.4th 96, 99.)

B. Fraud Cause of Action

Crane contends it presented evidence sufficient to raise a triable issue of fact on its fraud cause of action. It devotes a substantial portion of its brief seeking to establish that as a matter of law and statutory interpretation, Ketcham made a false representation in connection with the conditional waiver on the theory that the amount stated within it must be limited to the amount Ketcham would be legitimately entitled to claim in a mechanics lien, i.e., the actual $578,831 cost of its lumber. As we explain, we need not reach that issue, for we conclude Ketcham met its threshold burden to demonstrate Crane could not establish the justifiable reliance or causation elements of its fraud cause of action, and Crane did not meet its responding burden to raise triable issues of material fact on those elements.

" The elements of fraud are: (1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage." (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 990.) With respect to the essential element of justifiable or reasonable reliance, " whether a party's reliance was justified may be decided as a matter of law if reasonable minds can come to only one conclusion based on the facts." (Guido v. Koopman (1991) 1 Cal.App.4th 837, 843; see also Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239.) As for the resulting damage element, to recover for fraud, the plaintiff must prove

" 'detriment proximately caused' by the defendant's tortious conduct. [Citation.] Deception without resulting loss is not actionable fraud. [Citation.] 'Whatever form it takes, the injury or damage must not only be distinctly alleged but its causal connection with the reliance on the representation must be shown.' " (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1818; Alliance Mortgage Co., at pp. 1239-1240; Civ. Code, §§ 1709, 3333; 5 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 687,

p. 147; BAJI No. 12.57.) " Damage to be subject to a proper award must be such as follows the act complained of as a legal certainty." (Agnes v. Parks (1959) 172 Cal.App.2d 756, 768.)

In support of its motion, Ketcham submitted a copy of the fixed price Crane/BCH contract and the accompanying Schedule of Values reflecting the $785,350 progress payment owed for delivery of lumber to the projects. Ketcham further showed that in verified discovery responses, Crane admitted that " prior to May 2002, Crane knew, or should have known, that the figures in the Schedule of Values included BCH's anticipated direct project costs (including labor and materials), administrative costs, and margin of profit, if any." Crane's principal, Philip Crane, admitted in his deposition that it would have been fair for BCH to add mark up to the lumber it purchased from Ketcham in its pay application to Crane. There is no dispute that the Schedule of Values was encompassed in and is part of the BCH/Crane subcontract.

" We independently interpret a written contract when no extrinsic evidence and related credibility questions were presented below. [Citation.] 'The interpretation of a written instrument . . . is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect.' [Citation.] 'The possibility that conflicting inferences can be drawn from uncontroverted evidence does not relieve the appellate court of its duty independently to interpret the instrument . . . .' " (Culligan v. State Comp. Ins. Fund (2000) 81 Cal.App.4th 429, 434; see Buss v. Superior Court (1997) 16 Cal.4th 35, 60.) A schedule of values acts as a construction budget in the context of a guaranteed maximum cost contract. (4, pt. 1 Miller & Starr, Cal. Real Estate Forms (2006) § 4.101.) Crane's vice president Ray Fletcher explained in his opposing declaration: " A 'schedule of values' was prepared on the Springhill and Residence Inn projects in conformance with standard practice in the industry. The purpose of the schedule of values is to disperse progress payments in direct proportion to the amount of work which has been completed. In this way, the parties are treated equitably in that: a.) the owner is not required to pay more than the value of work performed and has some assurance that work will be completed in a satisfactory manner before all funds are distributed and it has lost all economic leverage; b.) the subcontractor is not required to wait an unreasonable length of time to get paid for work it has satisfactorily completed and still maintains an economic incentive to complete a job without delay."

On these undisputed facts, Ketcham demonstrated Crane was contractually obligated to make a progress payment to BCH in the amount of $785,350 upon delivery of the lumber for the projects, as long as Ketcham provided an accompanying release of its mechanics' lien. The contractual language did not place limits, specify or otherwise address the amounts stated in the BCH/Ketcham conditional waiver, and thus, as a matter of law, Crane could not have justifiably relied to its detriment on any representation in the conditional waiver as to Ketcham's lien amount in making its progress payment. This is particularly true when Crane concedes in its reply brief that the amount listed in the conditional waiver " represents only the amount of the progress payment for which the claimant is willing to release its lien rights." (Emphasis added.) If, in keeping with this concession, the conditional waiver represented that $785,350 was the amount of the progress payment payable jointly to Ketcham and BCH, it was entirely consistent with Crane's obligation under the subcontract to make a progress payment in that amount upon Ketcham's delivery of the lumber.

Further, there is no dispute Crane paid Ketcham and BCH by joint check, which is an established custom and practice in the construction industry. (Post Bros. Constr. Co. v. Yoder (1977) 20 Cal.3d 1, 5.) " When a subcontractor and his materialman are joint payees, and no agreement exists with the owner or general contractor as to allocation of proceeds, the materialman by endorsing the check will be deemed to have received the money due him. [Citations.] Inclusion of the materialman as payee makes clear that the maker of the check intends to discharge obligations owed the materialman." (Ibid.) Miller and Starr further explains: " [B]y issuing the joint check, the maker intends to have the funds applied first to the person who is not in privity of contract with the maker. . . . [¶] . . . [A] general contractor who issues a joint check to a subcontractor and material supplier intends that the proceeds from the check be applied first to any sums due the material supplier on the particular project and that the subcontractor is to receive only the surplus funds. If an owner's check is made payable to the subcontractor and material supplier, the subcontractor is only entitled to the surplus after the obligation due the material supplier has been paid." (10 Miller & Starr, Cal. Real Estate (2001) § 27:54, p. 142.) Under the joint check rules, Crane was on notice that surplus funds over and above monies owed to Ketcham, if any, would be paid to BCH.

Turning to Crane's burden, we assess whether Crane presented evidence that would allow a trier of fact to conclude it is more likely than not that it justifiably relied upon any asserted representation contained in the conditional waiver in making payment to BCH. (E.g., Aguilar, supra, 25 Cal.4th at pp. 852, 862.) In its reply brief, Crane does not respond to Ketcham's arguments pertaining to the element of justifiable reliance. However, it argues the trial court ignored evidence that the conditional waiver was understood by Crane and the construction industry generally as being a representation that the supplier had potential lien rights in the amount stated in the document. It points to Ray Fletcher's declaration in which Fletcher stated, based on his experience and the document's language, he understood the conditional waiver to mean Ketcham had mechanic's lien rights in the amount of $785,350, which was the sum due it under its contract with BCH, and that Crane relied upon that representation in authorizing the $785,350 payment for the lumber. Fletcher averred: " Had [Crane] been aware of the true facts regarding the value of the lumber delivered by Ketcham or that it planned to kick back over $206,000 to BCH, the payment of $785,350 would most definitely not have issued as it did. [Crane] would not at that time have approved or authorized the payment of this amount of money to BCH because BCH had not yet earned such a distribution and had no basis to make a claim for a progress payment of any amount."

Exercising our obligation to determine what evidence or inference could show or imply to a reasonable trier of fact (Aguilar, supra, 25 Cal.4th at p. 856), we do not agree Crane's opposing evidence would permit a trier of fact to draw inferences contradicting Ketcham's showing. Ketcham's evidence, namely, the Crane/BCH subcontract, did in fact provide the basis for BCH make a claim for a $785,350 distribution upon delivery of Ketcham's lumber and lien release, and Crane knew its payment by joint check entitled BCH to retain any surplus proceeds after Ketcham was paid. We read no conditions to payment in the Crane/BCH subcontract or the incorporated Schedule of Values regarding the amount specified in Ketcham's lien release. On this record, Crane did not meet its burden to establish a triable issue of material fact as to the reliance element of its fraud cause of action.

Nor did Crane raise a material fact question as to whether Ketcham's asserted misrepresentation proximately caused its alleged damages. " Proximate cause involves two elements. [Citation.] One is cause in fact. An act is a cause in fact if it is a necessary antecedent of an event. [Citation.] . . . [¶] To simply say, however, that the defendant's conduct was a necessary antecedent of the injury does not resolve the question of whether the defendant should be liable. . . . '[T]he consequences of an act go forward to eternity, and the causes of an event go back to the dawn of human events, and beyond. But any attempt to impose responsibility upon such a basis would result in infinite liability for all wrongful acts, and would " set society on edge and fill the courts with endless litigation." ' [Citation.] Therefore, the law must impose limitations on liability other than simple causality. These additional limitations are related not only to the degree of connection between the conduct and the injury, but also with public policy. [Citation.] As Justice Traynor observed, proximate cause 'is ordinarily concerned, not with the fact of causation, but with the various considerations of policy that limit an actor's responsibility for the consequences of his conduct.' " (PPG Industries, Inc. v. Transamerica Ins. Co. (1999) 20 Cal.4th 310, 315-316.) Proximate cause is " 'a policy-based legal filter on " but for" causation' " that courts apply " ' " to those more or less undefined considerations which limit liability even where the fact of causation is clearly established." ' " (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 464.)

In its summary judgment motion, Ketcham argued Crane's damages, if any, were proximately caused by BCH's financial collapse and contractual default rather than by statements or misrepresentations from Ketcham or its principals. It submitted deposition testimony from project manager Ray Fletcher that the work Crane had done to complete the projects was the result of BCH's failure to perform; that Ketcham did not fail to perform its obligations under the contract, and had BCH completed the project, Crane would not have filed its law suit against Ketcham. Ketcham also submitted deposition testimony from Philip Crane, who admitted that had BCH properly performed, Crane would not have suffered damages or filed its law suit. Ketcham's evidence was sufficient to establish it was but for BCH's insolvency and default that Crane incurred the additional costs in completing the project, that is, BCH's default was the " necessary antecedent," or cause in fact, of Crane's asserted damage. (PPG Industries, Inc. v. Transamerica Ins. Co., supra, 20 Cal.4th at p. 315.)

Crane does not challenge whether Ketcham met its threshold burden; rather, it contends it presented ample evidence of damages sustained as a result of Ketcham's payment of some $200,000 to BCH from Crane's $785,350 progress payment. Crane points to Fletcher's declaration setting out its cost overruns, and maintains " BCH's receipt of a then unearned $206,519.00 at the inception of the project, at a time when it was insolvent and perhaps fatally insolvent . . . removed the economic incentive of BCH to complete its contract because it had already received and utilized the money necessary to fund completion of its contract." It further argues " [h]ad BCH not received these funds, it most likely would have been unable to commence work on the job or would have defaulted early in the construction process." In support of this theory, Crane points to BCH's May 2002 balance sheet, as well as letters between BCH and Ketcham in March and April 2002, in which BCH reported its cash flow estimates, set out revenue schedules, and explained to Ketcham's accountant how it was proposing to pay arrearages to the IRS and State of California. It also points to Philip Crane's deposition testimony in which he stated his " belief" that Ketcham's principals gave BCH " temporary solvency" by paying it money, and that, had he known of BCH's insolvency, he would have hired a different subcontractor.^[6] Crane further refers to Philip Crane's testimony explaining that Crane did not know it was paying BCH any money from its $785,350 progress payment; that it would not have paid had it known BCH was receiving money; and if Crane had not paid the additional $206,000, it would have had more money to finish the project and its damages would have been reduced by that amount. It was in connection with this testimony that Philip Crane admitted Crane would not have suffered damages had BCH completed its work on the project.

Taking this evidence as true, we are nevertheless compelled to conclude that Crane has not established an issue for a reasonable trier of fact on the issue of proximate cause. Nothing in Crane's cited evidence supports a conclusion, or even a reasonable inference, that Ketcham's payment to BCH somehow contributed to BCH's ultimate default under the Crane/BCH subcontract, which was the necessary antecedent of Crane's asserted damage. The letters referenced between BCH and Ketcham merely show BCH was making strenuous efforts to collect receivables and satisfy its tax obligations, and reporting those efforts to Ketcham. If anything, Ketcham's payment would have had a positive impact on BCH's financial picture. Crane's evidence, as a matter of law, is too tenuous to establish a causal link between Ketcham's conduct and Crane's asserted damage.

C. Conspiracy

Crane's inability to meet its summary judgment burden of proof on its fraud cause of action necessarily defeats its cause of action for conspiracy. " 'A civil conspiracy however atrocious, does not per se give rise to a cause of action unless a civil wrong has been committed resulting in damage.' " (Doctors' Co. v. Superior Court (1989) 49 Cal.3d 39, 44; see also Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1062 [civil conspiracy does not give rise to a cause of action unless an independent civil wrong has been committed]; Everest Investors 8 v. Whitehall Real Estate Limited Partnership XI (2002) 100 Cal.App.4th 1102, 1106 [conspiracy must be activated by commission of an actual tort].) Indeed, " [c]onspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration." (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511.) Given our conclusions as to the substantive claims pressed by Crane in its cause of action for fraud, the cause of action for conspiracy has no merit as a matter of law. The court did not err in granting summary judgment on that cause of action.

D. RICO Cause of Action

Crane sought damages under its RICO cause of action on the theory that as a result of BCH's default, it was necessary for Crane to complete BCH's framing work, including by purchasing additional materials, and also pay laborers left unpaid by BCH. On appeal, Crane argues it provided " ample evidence" to sustain its RICO claim against summary judgment by showing " evidence of continuous activity by Ketcham and the individual defendants of submitting lien claim releases in excess of its lien rights, obtaining the excess monies from the owner or general contractor, and then kicking back the excess to its customers."

Crane's argument does not identify any evidence it presented to establish the requisite causation of damages, which was a key element of Crane's RICO claim attacked by Ketcham in its summary judgment motion.^[7] Specifically, Ketcham argued Crane could not establish any damages it sustained were the direct result of Ketcham's asserted wrongdoing, and thus it could not meet the higher causation standard for a compensable RICO injury. In part, Ketcham cited Fletcher's deposition testimony that if BCH had completed the projects for the agreed-upon fixed price, Crane would not have sustained damages or filed suit. Crane did not dispute that fact; it only claimed it was irrelevant because BCH in fact materially defaulted its contract obligations.

Crane's RICO cause of action suffers from the same fatal defect as its fraud cause of action, under a more stringent causation standard. " [A] compensable RICO injury must do more than meet a 'but for' test of causation; it must also meet a test of proximate cause similar to that for recovery of antitrust damages under section 4 of the Clayton Act (15 U.S.C. § 15), which requires that the injury be the direct result of the wrong." (Gervase v. Superior Court (1995) 31 Cal.App.4th 1218, 1233, citing Holmes v. SIPC (1992) 503 U.S. 258.) In Gervase, the courtpointed out that the standard of proximate causation under RICO is not the same as the test for proximate cause under California negligence law: " [U]nder RICO, there is a requirement of some direct relationship between the injury asserted and the injurious conduct alleged, so that secondarily injured persons, those injured through some intervening cause, cannot recover regardless of foreseeability." (Gervase, 31 Cal.App.4th at p. 1234, fn. 9.)

As we have explained, the injurious conduct asserted by Crane was Ketcham's alleged misrepresentation in the conditional waiver that the sales price and reasonable value of the lumber delivered to the project, and thus the amount of Ketcham's mechanics lien, was $785,350. Crane's alleged injury was its payment of additional monies to pay laborers and complete the project after BCH defaulted in its contractual obligations. On appeal, Crane does not contend Ketcham failed to meet its threshold summary judgment burden on the causation element of its RICO claim, and as with its fraud cause of action, we conclude Ketcham met its burden through Fletcher's deposition testimony that Crane would not have sustained its alleged injuries and filed suit had BCH not defaulted in its contractual obligations.

In its opposing papers before the trial court, Crane did not respond to Ketcham's showing with evidence raising material questions of fact on the causation element. Indeed, Crane admitted through Fletcher's opposing summary judgment declaration that any overpayment it made was the " direct result" of BCH's default and financial instability. Fletcher averred: " BCH failed to adequately staff the Hotel Project and failed to perform as required by the SUBCONTRACT. After being given a Notice to Perform from [Crane], BCH informed [Crane] that they were no longer financially viable and were unable to continue the PROJECT thereby defaulting on its framing subcontract. As a direct result, [Crane] was forced to complete the framing by alternate means. [Crane's] cost to complete the work BCH had contracted to complete and correct the work that they had installed incorrectly, plus the amount [Crane] paid to BCH and its suppliers, including Ketcham[,] exceed the amount of the contract between [Crane] and BCH by over $287,000."

Crane has not made any showing on appeal that there are disputed issues of material fact for a jury on the question of whether its overpayment was the direct result of Ketcham's wrongdoing. Its appellate arguments, like its argument to the trial court, complain of Ketcham's asserted wrongful " course of conduct" in misrepresenting the amount of its lien claim and issuing kickbacks to framers. But absent evidence to support any conclusion or inference that Crane's additional expenses incurred in completing the project were the direct result of Ketcham's conduct as opposed to BCH's default, we must conclude the trial court properly granted summary judgment on Crane's RICO cause of action.

II. New Trial

A. Background

Following entry of judgment, Crane moved for a new trial on the apparent grounds the trial court's factual determinations in granting summary judgment were either unsupported by the evidence, contrary to the evidence, or contrary to law.^[8] Submitting a " revised" declaration from its vice president Ray Fletcher, Crane sought to show the lumber supplied by Ketcham up to April 30, 2002, was not the only shipment of lumber by Ketcham to BCH, and thus the " contract price" for the lumber necessary to complete the project was more than $785,350, contradicting the trial court's conclusion that Crane could not have been misled or damaged by making its progress payment when it did. Crane repeated its opposing summary judgment arguments that Ketcham's conditional waiver was limited to either the lesser of the reasonable value of the materials or price agreed upon by Ketcham and BCH, and that the waiver constituted an express representation about those amounts. It maintained summary judgment was prevented by a disputed issue of fact as to the customary trade usage of the lien release forms. Crane further argued there was no relevance to its discovery admission that the Schedule of Values included BCH's overhead and profit; that the schedule in fact did not set out overhead and profit as line items as industry practice would require; and that the true question was whether Ketcham was permitted to seek BCH's overhead and profit within Ketcham's lien release.

In opposing the motion, Ketcham requested the court strike the revised Fletcher declaration and its attached exhibits on grounds Crane had not shown it constituted newly discovered evidence under Code of Civil Procedure section 657(4). It argued Crane did not establish any of the enumerated grounds justifying a new trial.

The court denied Crane's motion, and in so doing, granted Ketcham's motion to strike the Fletcher declaration. It ruled: " Plaintiff is impermissibly seeking to introduce new evidence without showing (1) the evidence is newly discovered; (2) reasonable diligence has been exercised in its discovery and production; and (3) the evidence is material to the movant's case. (Sherman v. Kinetic Concepts, Inc.(1998) 67 Cal.App.4th 1152, 1161.) A party who fails to offer certain evidence because it was unaware of its relevance, cannot later, upon realizing its significance, claim it is newly discovered. A party's mistake of fact or law is not a ground for relief under CCP § 657."

B. Standard of Review

We review the denial of a motion for new trial for abuse of discretion, and independently review assignments of legal error to the extent they are presented. (Aguilar, supra, 25 Cal.4th at pp. 859-860; see also Plancarte v. Guardsmark, LLC (2004) 118 Cal.App.4th 640, 645-647.) " ' " The determination of a motion for a new trial rests so completely within the court's discretion that its action will not be disturbed unless a manifest and unmistakable abuse of discretion clearly appears." ' [Citations.]" " ' " [I]n determining whether there has been a proper exercise of discretion on such motion, each case must be judged from its own factual background." ' " (People v. Turner (1994) 8 Cal.4th 137, 212, overruled on other grounds in People v. Griffin (2004) 33 Cal.4th 536, 555, fn. 5.)

C. The Court Did Not Abuse its Discretion in Denying Crane's New Trial Motion

On appeal, Crane repeats the assertions made in its new trial motion, but now takes the position that in opposing summary judgment, it had no obligation to refute any claim that Ketcham supplied, and Crane paid for, all of the lumber necessary to complete the project because Ketcham never presented such evidence to the trial court in its motion. Crane also points out the trial court excluded the accompanying Fletcher declaration, but nevertheless relies on that declaration in making its arguments.

Crane's arguments are unavailing. First, Crane presents no argument or authority challenging the trial court's ruling excluding the revised Fletcher declaration, on which its underlying new trial arguments were based. It is the appellant's burden to demonstrate the requisite abuse of discretion. (E.g. Del Real v. City of Riverside (2002) 95 Cal.App.4th 761, 766; In re Marriage of King (2000) 80 Cal.App.4th 92, 118.) Crane has not carried that burden by showing, for example, any new facts are material or it acted diligently in locating such facts, and it has not shown (nor do we ascertain) error in the court's ruling under the standards for new trial based on newly discovered evidence. (Plancarte v. Guardsmark, LLC, supra,118 Cal.App.4th at p. 646.)

Further, Crane's argument that " there was no evidence before the trial court that the lumber delivered by Ketcham to the job on or before April 30, 2002, constituted all of the lumber necessary to complete the project" assumes the trial court based its ruling on such a proposition. We do not so read the trial court's order. The court ruled in part: " It is undisputed that $785,350 was paid and that this is the amount called for in the Subcontract to be paid for the lumber. . . . Of that amount, Ketcham paid $206,519 to BCH. . . . Ketcham received only the funds it was owed for the lumber. . . . [¶] . . . [¶] . . . Moreover, the Conditional Waiver was in the amount of $785,350. The Schedule of Values attached to the Subcontract lists a lumber price of $452,000 for Springhill and $333,350 for Residence Inn, for a total of $785,350. . . . Crane paid for the lumber it received at the price it agreed to pay."

The trial court's reference to " price" is not determinative, whether denoted a price or a progress payment, the key fact was that Crane and BCH had expressly agreed Crane was to make the $785,350 payment upon Ketcham's lumber delivery and submission of a lien release. Further, the trial court observed: " There [are] no allegation[s] or facts to suggest that the lumber was not provided or that there was any problem with the lumber." The trial court did not purport to find that Crane's payment was for all of the lumber necessary to complete the project. In any event, the fact Crane later was required to pay for additional lumber during the course of completing the projects was not shown to be " newly discovered evidence" within the meaning of section 657(4). Because this was the primary rationale for Crane's new trial motion, the trial court did not err in denying its motion for new trial.

DISPOSITION

The judgment is affirmed.

O'ROURKE, J.

WE CONCUR:

BENKE, Acting P. J.

HALLER, J.

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^[1] Ketcham's independent contractor lumber broker, Sterling Wolfe, prepared the conditional waiver and executed it on Ketcham's behalf as its agent.

^[2] It is undisputed the conditional waiver is in the form prescribed by Civil Code section 3262, subdivision (d)(1). In full, the conditional waiver provides: " Upon receipt by the undersigned of a check from Crane Development Corporation in the sum of $785,350.00 payable to Ketcham Forest Products & BCH & Sons, Inc. and when the check has been properly endorsed and has been paid by the bank upon which it is drawn, this document shall become effective to release any mechanic's lien, stop notice, or bond right the undersigned has on the job of Scripps Hotel Investors, L.P. located at Scripps Highland Drive, San Diego, CA 92131 to the following extent. This release covers a progress payment for labor, services, equipment or material furnished to BCH & Sons, Inc. through 4/30/02 only and does not cover any retention retained before or after the release date; extras furnished before the release date for which payment has not been received; extras or items furnished after the release date. Rights based upon work performed or items furnished under a written change order which has been fully executed by the parties prior to the release date are covered by this release unless specifically reserved by the claimant in this release. This release of any mechanic's lien, stop notice, or bond right shall not otherwise affect the contract rights, including rights between parties to the contract based upon a rescission, abandonment, or breach of the contract, or the right of the undersigned to recover compensation for furnished labor, services, equipment, or material covered by this release if that furnished labor, services, equipment, or material was not compensated by the progress payment. Before any recipient of this document relies on it, said party should verify evidence of payment to the undersigned."

^[3] Crane did not present evidence disputing the fact that Fletcher approved the pay applications; in its opposing separate statement, it disputed the assertion that the Crane/BCH subcontract contained an " agreed price" for lumber or any other separate component. As we explain more fully below, we interpret the Crane/BCH subcontract as requiring a progress payment to BCH in the amount of $785,350 upon lumber delivery in keeping with the incorporated Schedule of Values.

^[4] Crane also named certain BCH officers as individual defendants; the record indicates those parties were not served and, according to Ketcham, Crane dismissed them from the action.

^[5] Under that statute, the amount of a mechanics' lien " shall be for the reasonable value of the labor, services, equipment, or materials furnished or for the price agreed upon by the claimant and the person with whom he contracted, whichever is less." (Civ. Code, § 3123, subd. (a).)

^[6] Philip Crane testified: " If Ketcham had not given [BCH] the money to begin to perform their obligations under the contract, they – my belief is they would have been insolvent very quickly. The extortion gave them temporary solvency." Philip Crane was also asked what any of the Ketcham defendants had individually done to lead Ketcham to believe BCH was a solvent company. He ultimately admitted he did not know whether any of the individual defendants had given BCH personal funds. He also stated he would have hired another framing subcontractor had he known about BCH's insolvency, but he did not know who he would have hired, or whether it would have been the low bidder.

^[7] The elements of a civil RICO claim are: " '(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as " predicate acts" ) (5) causing injury to the plaintiff's " business or property." ' " (Living Designs, Inc. v. E.I. Dupont de Nemours and Co. (9th Cir. 2005) 431 F.3d 353, 361, see also Grimmett v. Brown (9th Cir. 1996) 75 F.3d 506, 510, citing 18 U.S.C. §§ 1964(c), 1962(c) & Sedima, S.P.R.L. v. Imrex Co. (1985) 473 U.S. 479, 496.) Crane misrepresents the record when it asserts in its reply brief that Ketcham's principal argument against imposition of RICO liability was the lack of any fraudulent conduct in the first instance.

^[8] While these grounds were summarily stated in Crane's motion, there were not meaningfully applied. Indeed, as noted below, Ketcham correctly pointed out to the trial court that Crane made no effort in its motion to explain how the standards of Code of Civil Procedure section 657 were satisfied.