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Technica LLC ex rel. United States v. Carolina Casualty Insurance Co.

United States Court of Appeals, Ninth Circuit

April 29, 2014

TECHNICA LLC, for the use and benefit of: United States of America, Plaintiff-Appellant,
v.
CAROLINA CASUALTY INSURANCE COMPANY; CANDELARIA CORPORATION; OTAY GROUP, INC.; DOES 1 THROUGH 10, INCLUSIVE, Defendants-Appellees

Argued and Submitted, Pasadena, California October 11, 2013

Appeal from the United States District Court for the Southern District of California. D.C. No. 3:08-cv-01673-H-KSC. Marilyn L. Huff, District Judge, Presiding.

J. Scott Scheper (argued), Jack R. Leer; Seltzer Caplan McMahon Vitek, San Diego, California, for Plaintiff-Appellant Technica, LLC.

Robert J. Berens (argued), Adam D. Melton; Lewis Brisbois Bisgaard & Smith, LLP, Phoenix, Arizona, for Defendants-Appellees Carolina Casualty Insurance Company, Candelaria Corporation and Otay Group, Inc.

Before: Richard A. Paez and Andrew D. Hurwitz, Circuit Judges, and Ralph R. Erickson, Chief District Judge.[*]

OPINION

Page 1150

PAEZ, Circuit Judge

In this Miller Act case, Technica, Inc. (" Technica" ), a subcontractor on a federal construction project in California, appeals the grant of summary judgment to Candelaria Corporation (" Candelaria" ), the prime contractor, and its surety Carolina Casualty Insurance Company (" CCIC" ). See 40 U.S.C. § § 3131-3134. At issue is whether the district court erred in concluding that because Technica was not a licensed California contractor as required by California law, it is precluded from pursuing its Miller Act claim for payments due under the subcontract. Reviewing the grant of summary judgment de novo, we conclude that the absence of California licensure does not bar this suit, and therefore reverse. See McDonald v. Sun Oil Co., 548 F.3d 774, 778 (9th Cir. 2008).

I.

This dispute stems from work performed in California on the ICE El Centro SPC - Perimeter Fence Replacement/Internal Devising Fence Replacement federal project (" Project" ). Candelaria, the prime government contractor on the Project, provided a payment bond as required by the terms of the government contract and the Miller Act, and enlisted CCIC as its surety. In December 2007, Candelaria

Page 1151

entered into a subcontract with Otay Group, Inc. (" Otay" ) to perform a portion of the work required under the prime contract. Shortly thereafter, Otay contracted with Technica to act as a sub-subcontractor on the Project.

Between late 2007 and June 2008, Technica provided $893,697.77 worth of labor, material and services to the Project. Technica submitted invoices to Otay and Candelaria for this work, but received only partial payments totaling $287,861.81. In June 2008, Candelaria terminated Otay's subcontract. In September 2008, Technica filed a complaint in district court invoking its rights under the Miller Act to recover outstanding amounts owed on the subcontract against the payment bond.

Candelaria and CCIC filed a motion for summary judgment, arguing that California's contractor licensing statute, California Business and Professions Code § 7031(a),[1] provided a complete defense to Technica's Miller Act claim. Section 7031(a) precludes any contractor from maintaining an action for collection of compensation for services if the contractor was not a licensed contractor during the performance of the contract. Candelaria and CCIC asserted that because Technica did not hold a California contractor's license and did not fit within the " labor provider" exception to the licensing requirement it could not maintain its Miller Act claim.[2]See Contractors Labor Pool, Inc. v. Westway Contractors, Inc., 53 Cal.App.4th 152, 61 Cal.Rptr.2d 715 (Ct. App. 1997). The district court, finding there was no dispute that Technica lacked a ...


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