Mp Nexlevel of California, Inc v. Cvin, LLC ( 2018 )

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NOT FOR PUBLICATION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
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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
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was “incidental and supplemental” to the installation of these fiberoptic systems.
Cal. Code Regs. Tit. 16, § 831.
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.
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