MONTEREY/SANTA CRUZ COUNTY BUILDING AND CONSTRUCTION TRADES COUNCIL v. CYPRESS MARINA HEIGHTS LP











Filed 1/10/11; pub. order 1/24/11 (see end of opn.)









IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

MONTEREY/SANTA CRUZ COUNTY BUILDING AND CONSTRUCTION TRADES COUNCIL et al., Plaintiffs and Respondents, v. CYPRESS MARINA HEIGHTS LP, Defendant and Appellant.

H034143 (Monterey County Super. Ct. No. M81343)

STORY CONTINUE FROM PART I….


C. The Implementation Agreement
The next question is whether the Implementation Agreement contained provisions which enforced MRDA’s obligation to require CMH to pay the prevailing wage.
The Implementation Agreement mandated that any transfer of property acquired from FORA by MRDA[1] must be done in compliance with the Master Resolution and must incorporate specific deed covenants. The required deed covenants included: “The Owner, for itself and for its heirs, assigns, and successors in interest, covenants and agrees that: [¶] . . . Any development of the property will be and is subject to the provisions of the Reuse Plan, the policies and programs of the Fort Ord Reuse Authority, including the Authority’s Master Resolution . . . .” “This Deed Restriction and Covenants . . . is hereby deemed and agreed to be a covenant running with the land binding all of the Owner’s assigns or successors in interest.”
“Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. (Id., § 1639.) The ‘clear and explicit’ meaning of these provisions, interpreted in their ‘ordinary and popular sense,’ unless ‘used by the parties in a technical sense or a special meaning is given to them by usage’ (id., § 1644), controls judicial interpretation. (Id., § 1638.) Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning.” (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 821-822.)
CMH contends that there are disputed factual issues about whether the deed covenants required by the Implementation Agreement were intended to make the Master Resolution’s prevailing wage requirement a covenant running with the land. CMH relies on extrinsic evidence that it proffered. CMH produced a declaration from the attorney for the City and MRDA who recounted his understanding during the negotiation of the Implementation Agreement that the City and MRDA were not obligated to require CMH to pay the prevailing wage. CMH also produced various 2006 documents written by FORA’s attorney and its executive officer and excerpts from 2006 FORA “minutes” and “Board Reports” in which there were statements that FORA lacked the power to itself require that downstream developers pay the prevailing wage and instead had to rely on the local jurisdictions to do so.
“The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.” (Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37.) Thus, the question is whether the language of the Implementation Agreement is reasonably susceptible to the meaning that CMH’s extrinsic evidence was offered to prove.
CMH offered this extrinsic evidence to prove that the deed covenants that the Implementation Agreement required MRDA to include in its deeds to CMH were not intended to obligate CMH to pay the prevailing wage. The language of the deed covenants stated that MRDA, for itself and its successors-in-interest, “covenants and agrees that: [¶] . . . Any development of the property will be and is subject to the provisions of the . . . Master Resolution . . . .” Rather than supporting an alternative meaning to which this language is reasonably susceptible, CMH’s extrinsic evidence would instead negate this provision of the Implementation Agreement. Although CMH claims that this provision of the Implementation Agreement was concerned with “land use restrictions, not labor policies,” CMH identifies no “land use restrictions” of any kind in the Master Resolution to which this provision might be referring other than the prevailing wage and local preference requirements in the Master Resolution. Since this provision is not reasonably susceptible to an interpretation that attributes no meaning to its reference to the Master Resolution, CMH’s extrinsic evidence was irrelevant and inadmissible.
The Implementation Agreement required MRDA to include in its deeds to CMH covenants requiring CMH to pay the prevailing wage.

D. The Deed Covenants
The FORA/MRDA deeds expressly stated: (1) the Implementation Agreement contains the covenants; (2) these covenants “run with the land in perpetuity;” and (3) MRDA “covenants for itself, its successors, and assigns and every successor to the Property.” Nevertheless, CMH maintains that the deed covenants in the FORA/MRDA deeds do not meet the statutory requirements necessary to create prevailing wage covenants that run with the land.
“Certain covenants, contained in grants of estates in real property, are appurtenant to such estates, and pass with them, so as to bind the assigns of the covenantor and to vest in the assigns of the covenantee, in the same manner as if they had personally entered into them. Such covenants are said to run with the land.” (Civ. Code, § 1460.) “The only covenants which run with the land are those specified in this Title, and those which are incidental thereto.” (Civ. Code, § 1461.) “A covenant can run with the land under either section 1462 or section 1468 of the Civil Code.” (Scaringe v. J. C. C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536, 1543 (Scaringe), disapproved on another ground in Citizens for Convenant Compliance v. Anderson (1995) 12 Cal.4th 345, 366 (Citizens).)
Civil Code section 1462 provides: “Every covenant contained in a grant of an estate in real property, which is made for the direct benefit of the property, or some part of it then in existence, runs with the land.” (Civ. Code, § 1462.) “A covenant will run under Civil Code section 1462 if it is ‘contained in a grant’ conveying property and is made ‘for the direct benefit of the property.’ The California Supreme Court has narrowly applied section 1462, however, by holding that a covenant which burdens property does not run with the land [under section 1462].” (Scaringe, supra, 205 Cal.App.3d at p. 1543.)
“In contrast, Civil Code section 1468 permits enforcement of the burden as well as the benefit.” (Scaringe, supra, 205 Cal.App.3d at p. 1543.) “Each covenant, made by an owner of land with the owner of other land or made by a grantor of land with the grantee of land conveyed, or made by the grantee of land conveyed with the grantor thereof, to do or refrain from doing some act on his own land, which doing or refraining is expressed to be for the benefit of the land of the covenantee, runs with both the land owned by or granted to the covenantor and the land owned by or granted to the covenantee and shall . . . benefit or be binding upon each successive owner, during his ownership, of any portion of such land affected thereby . . . where all of the following requirements are met: [¶] (a) The land of the covenantor which is to be affected by such covenants, and the land of covenantee to be benefited, are particularly described in the instrument containing such covenants; [¶] (b) Such successive owners of the land are in such instrument expressed to be bound thereby for the benefit of the land owned by, granted by, or granted to the covenantee; [¶] (c) Each such act relates to the use, repair, maintenance or improvement of, or payment of taxes and assessments on, such land or some part thereof . . . ; [¶] (d) The instrument containing such covenants is recorded in the office of the recorder of each county in which such land or some part thereof is situated.” (Civ. Code, § 1468.)
The prevailing wage covenants facially complied with the requirements of Civil Code section 1468. The deed covenants were made by MRDA, the grantee of the land conveyed, with FORA, the grantor of the land. The deed covenants required MRDA to do an act (pay the prevailing wage) which would benefit all of the FORA land owned by FORA by ensuring that no parcel would be exempt from the prevailing wage requirement. Both the Marina Heights parcel burdened by the covenant and the FORA land benefitted by the covenant were “particularly described” in the deeds and in the Implementation Agreement, which were the instruments containing the covenants. (See Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1375-1376.) The Implementation Agreement and the deeds expressly stated that successive owners would be bound by the covenants. The “act” (the requirement that the prevailing wage be paid) “relates to the . . . improvement of” both the FORA land and the Marina Heights parcel. The deed covenants and the Implementation Agreement were all recorded.
CMH argues that the prevailing wage covenant failed to satisfy Civil Code section 1468 because the Implementation Agreement was entered into before FORA acquired the property. As support for this proposition, CMH relies solely on McCaffrey v. Preston (1984) 154 Cal.App.3d 422 (McCaffrey). In McCaffrey, the issue was whether the grantor had intended for a deed covenant to run with the land or, instead, for it to be personal. (McCaffrey, at pp. 435-436.) The deed covenants in question had been included in deeds executed in 1960 and 1961. Until the late 1960s, a prior version of Civil Code section 1468 did not permit covenants running with the land to be entered into by the grantor and grantee of land, as the current version of Civil Code section 1468 does, but limited such covenants to only those made between two land owners. (Taormina Theosophical Community, Inc. v. Silver (1983) 140 Cal.App.3d 964, 972, fn. 3; Citizens, supra, 12 Cal.4th at p. 354) It was in this context that the court in McCaffrey stated “the covenantor and covenantee must be owners of land at the time the covenant is made.” (McCaffrey, at p. 436.) Since Civil Code section 1468 no longer requires that the covenant be entered into between two land owners, McCaffrey provides no support for CMH’s contention. In any case, it is undisputed that FORA owned the FORA property at the time it entered into the covenants with MRDA, which occurred when the FORA/MRDA deeds were executed, not when the Implementation Agreement was executed. “Merely recording the restrictions does not create mutual servitudes. Rather, they ‘spring into existence’ only upon an actual conveyance.” (Citizens, at p. 365.) Here, the covenants came into existence only upon the execution of the deeds, at which point FORA owned the property.
CMH also complains that “the Implementation Agreement does not state that successive owners are bound by its terms for the benefit of the land.” Since CMH provides no support or explanation for this contention, it is unclear whether CMH is claiming that the covenants were invalid because they failed to state that they bound successive owners or because they failed to state that their terms were for the benefit of the land. In either case, CMH is incorrect. The deed covenants explicitly stated that they “will be deemed to run with the land in perpetuity,” which necessarily expresses an intent to bind successive owners. Exhibit F to the Implementation Agreement, which was incorporated into the deed covenants, sufficiently expressed that the covenants were intended to benefit all of the FORA land by applying a uniform set of rules to the development of each parcel.
CMH contends that the deed covenants did not create a valid prevailing wage covenant because the deeds themselves “make no reference to prevailing wages.” CMH cites no statutory or case authority to support its implied claim that a deed covenant may not validly incorporate restrictions described in another instrument. “[I]f the restrictions are recorded before the sale, the later purchaser is deemed to agree to them. The purchase of property knowing of the restrictions evinces the buyer’s intent to accept their burdens and benefits. Thus, the mutual servitudes are created at the time of the conveyance even if there is no additional reference to them in the deed.” (Citizens, supra, 12 Cal.4th at p. 363.) A written instrument, such as the Implementation Agreement, is sufficient to set forth the nature of the deed covenants so long as those to be bound have notice of those covenants. (Hudson Oil Co. v. Shortstop (1980) 111 Cal.App.3d 488, 495.) Since the Implementation Agreement was recorded, CMH could not, and does not, claim that it lacked notice of its contents. Similarly, while the Implementation Agreement incorporated by reference the requirements in the Master Resolution, which contained the prevailing wage requirement, CMH does not claim that it lacked notice of the contents of the Master Resolution.[2]
Finally, CMH contends that the language in the FORA/MRDA deeds did not actually bind successors-in-interest but instead bound only MRDA to the obligations that the City had originally assumed in the Implementation Agreement. The language in the deeds is not susceptible to such an interpretation. Besides explicitly stating that the covenants “will be deemed to run with the land in perpetuity,” the deeds also state that the grantee (MRDA) “covenants for itself, its successors, and assigns and every successor in interest to the Property, or any part thereof, that Grantee and such successors and assigns shall comply with all provisions of the Implementation Agreement as if the Grantee were the referenced Jurisdiction under the Implementation Agreement and specifically agrees to comply with the Deed Restrictions and Covenants set forth in Exhibit F of the Implementation Agreement . . . .” (Bold omitted and italics added.) This language indisputably binds MRDA’s successors in interest..[3]



E. Waiver
CMH argues that summary adjudication was prohibited because there was a material factual dispute about whether FORA “waived” the prevailing wage requirement. The Implementation Agreement, which contained the covenant requiring CMH to pay the prevailing wage, provided: “No waiver of any right or obligation of either Party hereto shall be effective unless in writing, specifying such waiver, executed by the Party against whom such waiver is sought to be enforced.” CMH’s opposition to plaintiffs’ motion did not include any evidence that FORA had executed a writing “specifying” that FORA was waiving the prevailing wage requirement. CMH does not claim that any such writing exists. Instead, CMH relies on the Option Agreement, FORA’s failure to respond to an e‑mail from MRDA’s attorney, and an excerpt from a FORA “Board Report.” The Option Agreement was not executed by FORA; it was an agreement between MRDA and CMH. FORA’s failure to respond to an e-mail from MRDA’s attorney was not a writing executed by FORA. It is questionable whether an excerpt from a FORA “Board Report” qualifies as a writing executed by FORA, but, in any event, the excerpt did not “specify[]” that FORA was waiving the prevailing wage requirement. Since there was no evidence to support CMH’s “waiver” contention, summary adjudication was not precluded on this ground.

F. Standing
CMH challenges plaintiffs’ standing to seek enforcement of the prevailing wage requirement. However, CMH cites no statutory or case authority to support its claim. Its entire argument is devoted to distinguishing various cases in which courts concluded that parties did have standing.
Prevailing wage requirements are intended “to protect employees from substandard wages that might be paid if contractors could recruit labor from distant cheap-labor areas; [and] to permit union contractors to compete with nonunion contractors.” (Lusardi Construction Co. v. Aubry (1992) 1 Cal.4th 976, 987.) Plaintiffs include a union, an association of unions, an association of local contractors, and two local taxpayers. Local and union contractors had a beneficial interest in the enforcement of the prevailing wage requirement because it was intended to benefit them. “ ‘[A]n association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.’ ” (Brotherhood of Teamsters & Auto Truck Drivers v. Unemployment Ins. Appeals Bd. (1987) 190 Cal.App.3d 1515, 1522.)
“Any person interested under a written instrument . . . who desires a declaration of his or her rights or duties with respect to another . . . may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract. . . . The declaration may be had before there has been any breach of the obligation in respect to which said declaration is sought.” (Code Civ. Proc., § 1060.)
Here, the individual contractors represented by plaintiffs were “interested under a written instrument” in the enforcement of the prevailing wage covenant. There was an “actual controversy” about this issue because CMH insisted that the covenant did not apply to its Marina Heights project. A declaratory relief action was authorized even though CMH had yet to breach the covenant.[4] The interests that plaintiffs sought to protect were germane to the purposes of their associations, and the participation of individuals members was not necessary. Consequently, the unions and associations had standing to litigate this action on their members’ behalf.

G. Attorney’s Fees
CMH contests the trial court’s attorney’s fees award on two grounds. It claims that plaintiffs were not entitled to claim any attorney’s fees under Code of Civil Procedure section 1021.5 because they failed to satisfy the statutory requirements. CMH also claims that the trial court awarded an excessive amount of fees.
“Upon motion, a court may award attorneys’ fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.” (Code Civ. Proc., § 1021.5.) “The decision whether to award attorney fees pursuant to this statute lies within the discretion of the trial court and will not be disturbed on appeal absent a prejudicial abuse of discretion resulting in a manifest miscarriage of justice.” (Galante Vineyards v. Monterey Peninsula Water Management Dist. (1997) 60 Cal.App.4th 1109, 1125.)
CMH claims that there is no support for the trial court’s express finding that the litigation “resulted in the enforcement of an important right affecting the public interest.” The trial court explained its rationale for this finding. “The issue of attaching restrictions to the deeds granted by redevelopment agencies to developers is often raised in construction projects in this state” and “has ramifications that’s [sic] beyond the interests of the parties directly before the court.” “[I]n determining the ‘importance’ of the particular ‘vindicated’ right, courts should generally realistically assess the significance of that right in terms of its relationship to the achievement of fundamental legislative goals.” (Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 936.) Here, FORA’s goal was to ensure that the prevailing wage was paid on all development projects on FORA land so that local contractors would not be displaced by cheaper labor imported from elsewhere. Providing well-paying jobs for local contractors served FORA’s purpose, which was the revitalization of the local economy. This litigation vindicated FORA’s use of deed covenants to obligate downstream developers to honor the prevailing wage requirement. Prevailing wage requirements serve the public interest. (Plumbers & Steamfitters, Local 290 v. Duncan (2007) 157 Cal.App.4th 1083, 1097-1098.) The court did not abuse its discretion in finding that this litigation vindicated an important right affecting the public interest.
CMH also challenges the court’s finding that plaintiffs’ action conferred a significant benefit on a large class of persons. CMH claims that the only benefit was to “the unions’ interests.” “This element is met if the cost of the claimant’s legal victory transcends his personal interest—that is, when the burden of the litigation was disproportionate to the plaintiff’s individual stake in the matter.” (Roybal v. Governing Bd. of Salinas City Elementary School Dist. (2008) 159 Cal.App.4th 1143, 1151.) The court found that plaintiffs’ enforcement action was necessary because no public agency was willing to pursue this litigation. The trial court concluded that the financial burden of the fees far exceeded the financial value of the litigation to the plaintiffs because “[p]laintiffs’ pecuniary benefit will be indirect and uncertain.” These findings were supported by the evidence. The evidence also reflected that this action “benefitted a large class of persons” because the Marina Heights project and the Garrison project would provide work for 900 construction workers, many of whom would not be union members. Hundreds of construction workers is a “large class of persons,” and the fact that many of these workers would not be union members further demonstrated that this action conferred benefits which transcended plaintiffs’ stake in the matter.
Finally, CMH urges that it “was hit with an inequitable portion of the fees” which should have been borne by the other defendants in the action. CMH made this argument below, and the trial court limited the attorney’s fees award against CMH to 35 percent of the amount sought. The court found that “Plaintiffs’ time spent on this entire action was useful and necessary to its ultimate resolution.” This finding was supported by evidence that plaintiffs had incurred substantial fees for “common work . . . done on common issues” that was applicable to each of the defendants. On this basis, the court rejected CMH’s claim that it should not be responsible for any fees other than those attributable to plaintiffs’ summary judgment/summary adjudication motion against CMH. While some of the fees incurred by plaintiffs may not have been attributable to common issues, there is no indication in the record that the trial court’s award of 35 percent of the fees sought included any such fees. We can find no abuse of discretion in the amount of the trial court’s limited attorney’s fees award.

IV. Disposition
The judgment is affirmed.




_______________________________
Mihara, J.



WE CONCUR:






_____________________________
Bamattre-Manoukian, Acting P. J.






_____________________________
McAdams, J.

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

MONTEREY/SANTA CRUZ COUNTY BUILDING AND CONSTRUCTION TRADES COUNCIL et al., Plaintiffs and Respondents, v. CYPRESS MARINA HEIGHTS LP, Defendant and Appellant.

H034143 (Monterey County Super. Ct. No. M81343) ORDER GRANTING REQUESTS FOR PUBLICATION

BY THE COURT:
Pursuant to California Rules of Court, rule 8.1105(b), the requests for publication are hereby granted. It is ordered that the opinion in this matter, filed on January 10, 2011, shall be certified for publication.


Date: ____________________________
Mihara, J.


____________________________ Bamattre-Manoukian, Acting P. J.


____________________________
McAdams, J.




Trial Court: Monterey County Superior Court


Trial Judge: Honorable Robert A. O’Farrell


Attorney for Defendant and Appellant: Patrick Edward Breen
Francis N. Scollan
Allen, Matkins, Leck et al.


Attorney for Plaintiffs and Respondents: John Jacobs Davis, Jr.
Andrew J. Kahn
Paul L. More
Davis Cowell & Bowe, LLP










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