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(A
version of this article appears in the California Construction
Law Reporter, published by the West Group.)
By James Acret
Contractor Arya alleged in its second amended complaint
that it negotiated with the singer and actress Cher an oral
agreement to design and build a residence in Malibu for
$4,217,529, and that Cher did not sign a written contract,
although she promised to do so. Arya alleged that
Cher and Bussell, a contractor from Florida, conspired to
remove Arya from the job and substitute Bussell, and that
Cher never intended to honor the terms of the contract.
Cher terminated her agreement leaving $415,169.41 unpaid.
Cher and Bussell then induced Arya's subcontractors to breach
their contracts with Arya and work directly with Cher, misappropriated
designs and drawings prepared by Arya, transferred building
permits into Cher's name and spread rumors that Arya and
its principals were thieves who abandoned the job and performed
substandard work. Arya Group, Inc. v. Cher,
___ Cal.App.4th ___, ___ Cal.Rptr.2d ___, 2000 Daily Journal
D.A.R. 505 (2000)
The trial court sustained Cher's demurrer to the second
amended complaint without a leave to amend. REVERSED.
California Business and Professions Code §7164 requires
that contracts for construction of a single family dwelling
to be retained by the owner shall be in writing signed by
both parties. Legislative history shows that the purpose
of §7164 is to protect consumers just as they are protected
by Business and Professions Code §7159 for the construction
of "home improvement" work. In Asdourian
v. Araj (1985) 38 Cal.3d 276, the Supreme Court held
that in compelling cases illegal contracts will be enforced
in order to avoid unjust enrichment to the defendant and
a disproportionately harsh penalty upon the plaintiff.
The facts alleged in the second amended complaint persuade
the court that Arya might be entitled to some relief.
It is alleged that Cher is a highly sophisticated homeowner
with previous involvement in residential construction projects
and that her legal representatives assisted her in negotiating
the agreement with Arya. Arya stated a cause of action
that should not have been dismissed.
(In an unpublished portion of its opinion, the Court of
Appeal affirmed the trial court's decision to sustain the
demurrer to the sixth cause of action: intentional interference
with subcontractor economic relationships. Since Cher
had terminated Arya's services there was no longer any reasonable
prospect of a continuing profitable relationship between
Arya and the subcontractors. Youst v. Longo
(1987) 43 Cal.3d 64.)
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To learn more about Thelen Reid's Construction and Government Contracts Department, click here. For more information about books and other legal materials written by James Acret, click here and enter "Acret" in the Search Products Field. To learn more about topics covered in this article, contact Paul Berning at (415) 369-7229 or at pwberning@thelen.com.
©2000
Thelen Reid Brown Raysman & Steiner LLP
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