McKinley Home Foundation v. West Hills Construction CA2/2

Filed 12/22/20 McKinley Home Foundation v. West Hills Construction CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
MCKINLEY HOME B292720
FOUNDATION et al.,
(Los Angeles County
Plaintiffs and Appellants, Super. Ct. No. KC069072)
v.
WEST HILLS CONSTRUCTION,
INC.,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of
Los Angeles County. Daniel Thomas Oki, Judge. Reversed.
Kassouni Law and Timothy V. Kassouni for Plaintiffs and
Appellants.
Ropers Jajeski, Terry Anastassiou, Tim M. Agajanian, and
German A. Marcucci for Defendant and Respondent.
_________________________
Plaintiffs and appellants McKinley Home Foundation
(Foundation) and McKinley Children’s Center, Inc. (Children’s
Center) (collectively appellants) sued West Hills Construction,
Inc. (respondent) for, inter alia, breach of warranty after the
failure of a solar power system that respondent installed. The
trial court granted summary judgment for respondent, concluding
that the warranty was unambiguous and did not apply because
the solar power system and its failed components were supplied
by a third party. We reverse summary judgment because the
warranty was ambiguous, and there are triable issues as to what
the warranty covers.
FACTS
The Pleadings
Appellants sued respondent and eventually filed an
amended complaint. They both alleged causes of action for
breach of warranty and breach of contract, and Children’s Center
alleged a cause of action for breach of contract on a third-party
beneficiary theory.
The amended complaint averred:
Foundation contracted with respondent to install a solar
power system at the Children’s Center campus. “The solar
energy system was largely manufactured and supplied by
GreenVolts, Inc. [(Greenvolts)]. [Greenvolts] has since filed [for]
bankruptcy and has been liquidated. [Respondent] supplied any
additional components necessary for installation that were not
supplied by [Greenvolts], including the wiring, its associated
conduit, and the racking system needed to hold the solar panels.”
Respondent warranted that the solar energy system would be
free from defects and would experience less than a 15 percent
reduction in power output for a period of 10 years. The
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installation was completed in May 2012. “Over 20 of the [solar]
panels completely failed by April 2015 and many more of them
were operating at half power. Additionally, investigators found
burn marks on a number of the inverters. The panels and
inverters experienced internal stresses, thermal cycling, and
possible surges that contributed to an imbalance in the solar
system when the panels failed. This imbalance caused the entire
system to fail.” As a consequence, appellants suffered various
types of damage.
The parties’ contract was attached to the amended
complaint as an exhibit. It provided certain milestones, two of
which stated “GV Equipment dropped on-site (Joint Checks to
[respondent] & [Greenvolts])” and “Greenvolts Equipment
Installation Completed.” A description of the project, the
materials to be used and the equipment to be installed was set
forth in a portion of the contract entitled Scope of Services for
Renewable Energy Power System (Scope of Services).
The Scope of Services listed the job site and identified the
“System Size” as “419.879 kw CEC-AC PV System, with Turn-
Key installation at customer’s site.” (Emphasis omitted.) It
listed “Major System Components” and identified Greenvolts as
the “Module Manufacturer” and the “Inverter Manufacturer.”
(Emphasis omitted.) The standard components were “[r]acking
and mounting components,” and “over-current protection . . . ,
Roofing sealant or flashing as needed.” Appellants initialed the
portion of the Scope of Services indicating that it was separately
purchasing the “Greenvolts Monitoring Package with Revenue
Grade Monitoring and Weather package.”
Next, the Scope of Services identified the standard labor as,
inter alia: system design; securing of permit; “[i]nstall specified
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system in good workmanlike manner;” and “[c]omplete and
submit utility interconnection documents sufficient for
[Children’s Center] to export energy to Southern California
Edison[.]”
The warranty stated that “all components of the [solar]
power system that [respondent] provides to [appellants], other
than the meter, will be free from defects in the components and
workmanship and a reduction in power output by more than
fifteen (15) percent for a period of ten (10) years from the date of
installation; the meter will be free from defects in the components
and workmanship for a period of one (1) year from the date of
installation. The warranty is limited to the following components
of the power system: photovoltaic (PV) panels, inverters, solar
collectors, tracking mechanisms, heat exchangers, pumps, heat-
driven cooling systems associated with the system, and the
meter. This warrants at the time of commissioning, [Greenvolts]
will specify the expected power output for the Equipment and
shall be the Site Expected Power. Greenvolts warrants that if,
within twenty (20) years from the original date of commissioning,
the Site Actual Energy is less than the Site Guaranteed Energy
(as defined by the full warranty provisions), Greenvolts will
restore the Equipment through a method at the discretion of
Greenvolts[] to a state capable of generating the Site Guaranteed
Energy. Please see Greenvolts[’s] System Warranty[.]” In the
exclusions paragraph, the warranty stated: “The following
exclusions apply to the . . . warranty: (1) Work performed by and
materials provided by any person or entity other than
[respondent] are not warranted[.]” Next, it stated, inter alia, “If
any of the components covered by [respondent’s] warranty
. . . fails at any time during the warranty period, [respondent]
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will, upon prompt written notice . . . make all repairs
. . . necessary[.]”
Summary Judgment
Respondent moved for summary judgment. It claimed that
Greenvolts manufactured and supplied all the “system
constituents that [respondent] installed[, including] the solar
panels, the tilting panel racks, and the power inverters.”
Further, respondent pointed out that appellants confirmed in
discovery that the equipment that failed was the solar panels, the
inverters, and the actuators that move the panels to align with
the sun. Per respondent, the warranty excluded Greenvolts’s
work and equipment and respondent could not be liable for the
system failure.
In opposition, appellants argued that the warranty covered
Greenvolts’s equipment or was ambiguous as to its meaning.
Alternatively, they argued that if the warranty excluded
Greenvolts’s equipment, then it was illegal because it violated
Public Resources Code section 25782. Separately, appellants
argued that respondent breached the contract by failing to install
a working solar energy system. Finally, they accused respondent
of spoliation of evidence due to the destruction of e-mails between
respondent and Greenvolts.
The trial court granted the motion, ruling that the contract
was unambiguous, and that Greenvolts warranted its equipment,
not respondent. The trial court rejected the spoliation of evidence
accusation, accepting the evidence provided by respondent that
the e-mails had been automatically deleted before the lawsuit
was filed.
Judgment was entered for respondent.
This timely appeal followed.
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DISCUSSION
Appellants seek reversal on three grounds: there is a
triable issue as to whether respondent’s warranty excluded the
failed components; a 10-year warranty was implied by law into
the contract pursuant to Public Resources Code section 25782;
and respondent was guilty of spoliation of evidence. Because we
conclude that appellants are correct on the first issue, we
conclude that summary judgment was improper. We need not
reach the other issues.
I. Standard of Review.
Summary judgment is reviewed de novo. (Saelzler v.
Advanced Group (2001) 25 Cal.4th 763, 767.) Where, as here, the
summary judgment motion pertained to contract interpretation
and the parties did not offer extrinsic evidence to aid that
interpretation, the trial court was empowered to grant summary
judgment only if the contractual language is clear and
unambiguous. (Niederer v. Ferreira (1987) 189 Cal.App.3d 1485,
1499–1500.)
II. Summary Judgment was Improper.
The pivotal question is whether the language in the parties’
contract is ambiguous or unambiguous. We conclude that it is
ambiguous. Consequently, the trial court erred when it granted
summary judgment.
A. Relevant Principles.
“The language of a contract is to govern its interpretation,
if the language is clear and explicit, and does not involve an
absurdity.” (Civ. Code, § 1638.) But not every contract has a
clear meaning. A contract is ambiguous on its face if it is capable
of two reasonable interpretations. (Republic Bank v. Marine Nat.
Bank (1996) 45 Cal.App.4th 919, 924.)
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B. Analysis.
On its face, the contract can reasonably be interpreted in
two ways.
Read one way, the contract can be interpreted to mean that
Greenvolts provided the failed panels and inverters, and that
they were excluded from respondent’s warranty, because:
Greenvolts was identified as the manufacturer of the modules
and inverters; the contract specified that Greenvolts would
deliver the “equipment” and that appellants would pay
Greenvolts by separate check; the contract alerted appellants to
Greenvolts’s warranty; and components provided by third parties
were expressly excluded.
Alternatively, the contract can be interpreted to mean that
the parties understood that respondent provided the failed
components and therefore they were covered by the warranty.
The warranty stated that respondent “warrants that all
components of the [solar] power system that [respondent]
provides to [appellants] . . . will be free from defects in the
components and workmanship and a reduction in power output
by more than fifteen (15) percent for a period of ten (10) years
from the date of installation; the meter will be free from defects
in the components and workmanship for a period of one (1) year
from the date of installation.” The warranty was “limited to the
following components of the power system: photovoltaic (PV)
panels, inverters, solar collectors, tracking mechanisms, heat
exchangers, pumps, heat-driven cooling systems associated with
the system, and the meter.” The warranty also stated, “If any of
the components covered by [respondent’s] warranty . . . fails at
any time during the warranty period, [respondent] will, upon
prompt written notice . . . make all repairs . . . necessary[.]”
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In light of these conflicting reasonable interpretations, the
contract is facially ambiguous as a matter of law. On remand,
the onus will be on the parties and the trial court to resolve the
ambiguity.
DISPOSITION
The judgment is reversed. Appellants are entitled to their
costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
______________________, J.
ASHMANN-GERST
We concur:
________________________, P. J.
LUI
________________________, J.
HOFFSTADT
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