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In the underlying action, a subcontractor filed suit against

In the underlying action, a subcontractor filed suit against appellant general contractor to collect its fee for labor and materials furnished to residential properties under contracts with the general contractor. The general contractor filed a cross-complaint against respondent bank, which was dismissed by judgment of the Superior Court of Los Angeles County (California). The general contractor appealed.

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Overview

While defending a complaint from a sub-contractor for non-payment, the general contractor cross-complained against the bank, which financed the construction loan. The trial court dismissed the amended complaint on the basis that there was no cause of action on the facts alleged. The general contractor appealed. The court affirmed, holding that the bank had not breached its duty to the general contractor by failing to pay the sub-contractor because the general contractor was not a party to the contract. The cross-complaint was fatally defective because it not only failed to demonstrate that the general contractor was a party to the contract, but also failed to allege that the general contractor had performed under the alleged contract, which was required by Cal. Civ. Proc. Code § 457. The loan agreement prohibited assignment of the loan proceeds, and there was no evidence that the bank ever agreed to an assignment. The general contractor was unable to prove it was an intended beneficiary of the contract. The general contractor did not have an equitable lien on the loan proceeds because reliance or direct provision of labor or materials was not alleged.

Outcome

The court affirmed the order of the trial court, which had dismissed the second amended cross-complaint without leave to amend.

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