Judge: Armen Tamzarian, Case: 23STCV01341, Date: 2023-10-02 Tentative Ruling

Case Number: 23STCV01341    Hearing Date: October 2, 2023    Dept: 52

Defendant CDMY Investment, LLC’s Motion for Judgment on the Pleadings

Defendant CDMY Investment, LLC (CDMY) moves for judgment on the pleadings on the complaint by plaintiff U&G Construction Group, Inc.

Requests for Judicial Notice

CDMY requests judicial notice of six exhibits.  (RJN, Gleason Decl. Exs. A-F.)  The first five are real property instruments recorded by the Los Angeles County Recorder’s Office.  (Id., Exs. A-E.)  These instruments and their legal effects are subject to judicial notice under Evidence Code section 452, subdivisions (c) and (h).  (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924, fn. 1; Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 194.)

The sixth exhibit is a copy of the Contractor’s License Detail for license No. 1104933, U & G Construction Inc, from the website of the California Department of Consumer Affairs, Contractors State License Board.  (RJN, Gleason Decl., Ex. F.)  This exhibit and its legal effects are also subject to judicial notice under Evidence Code section 452, subdivisions (c) and (h).

Legal Standard for Judgment on the Pleadings

“A motion for judgment on the pleadings is equivalent to a demurrer … .  All material facts which were properly pleaded are deemed true, but not contentions, deductions, or conclusions of fact or law.”  (Mack v. State Bar of California (2001) 92 Cal.App.4th 957, 961.)  “In addition to the facts pleaded, [a court] may consider matters which may be judicially noticed, including a party’s admissions or concessions that can not reasonably be controverted.”  (Ibid.)  Courts need not accept the truth of allegations that are contradicted by exhibits attached to the complaint (Brakke v. Economic Concepts, Inc. (2013) 213 Cal.App.4th 761, 767) or by facts subject to judicial notice (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1474).

1st Cause of Action: Foreclosure of Mechanic’s Lien

            Plaintiff does not allege sufficient facts for this cause of action.  Facts subject to judicial notice establish CDMY foreclosed on a senior lien it held on the property and thereby extinguished plaintiff’s junior mechanic’s lien.  “[T]he general rule is that foreclosure of a senior encumbrance terminates subordinate liens.”  (Miscione v. Barton Development Co. (1997) 52 Cal.App.4th 1320, 1326.)  “ ‘Title conveyed by a trustee’s deed [i.e., in a foreclosure sale] relates back in time to the date on which the deed of trust was executed.  The trustee’s deed therefore passes the title held by the trustor as of that earlier time plus any after-acquired title, rather than the title that the trustor held on the date of the foreclosure sale.  Liens that attached to the property after execution of the foreclosed deed of trust are therefore eliminated or “sold out,” and the purchaser at the trustee sale takes title to the property free of those junior liens.’ ”  (Decon Group, Inc. v. Prudential Mortgage Capital Co., LLC (2014) 227 Cal.App.4th 665, 670–671 (Decon Group), alterations omitted.)

The complaint alleges, “From approximately July 2022 to October 2022, Plaintiff provided construction services and improvements at the” subject property.  (Comp., ¶ 2.)  “Plaintiff has not been paid the agreed compensation for the improvements, work and materials provided to improve the Property.”  (¶ 14.)  Plaintiff further alleges, “On October 25, 2022, Plaintiff served notice of its Mechanic’s Lien with a proof of service affidavit to Defendants Real Prosperity and LA Investment, the owners or reputed owners of the property on that date.”  (¶ 15.)  Plaintiff recorded the lien the same day.  (¶ 16.)

Facts subject to judicial notice establish CDMY held a senior lien.  On November 14, 2019, the Los Angeles County Recorder’s Office recorded a deed of trust secured by the property naming CDMY Investment, LLC as lender and beneficiary.  (RJN, Gleason Decl., Ex. B.)  This lien arose nearly three years before plaintiff’s mechanic’s lien. 

On April 8, 2022, the Recorder’s Office recorded a notice of default and election to sell under the deed of trust.  (RJN, Gleason Decl., Ex. C.)  On September 28, 2022, the Recorder’s Office recorded a notice of trustee’s sale scheduled for October 27.  (Id., Ex. D.)  Finally, on December 13, 2022, the Recorder’s Office recorded a trustee’s deed upon sale under which CDMY Investment, LLC acquired title to the subject property.  (Id., Ex. E.)  That transfer of the property extinguished plaintiff’s junior lien.    

The facts in Decon Group are analogous.  There, the Court of Appeal held, “When [defendant] foreclosed and purchased the Property at the foreclosure sale,” the plaintiff’s mechanic’s “lien was eliminated, and [defendant] then owned the Property free of [plaintiff’s] lien.”  (Decon Group, supra, 227 Cal.App.4th at p. 672.)  CDMY similarly foreclosed on its senior lien.  That extinguished plaintiff’s junior lien.  Plaintiff cannot now foreclose on it.

2nd Cause of Action: Quantum Meruit

            Plaintiff does not allege sufficient facts for this cause of action.  “The requisite elements of quantum meruit are (1) the plaintiff acted pursuant to ‘an explicit or implicit request for the services’ by the defendant, and (2) the services conferred a benefit on the defendant.”  (Port Medical Wellness, Inc. v. Connecticut General Life Insurance Company (2018) 24 Cal.App.5th 153, 180.)

            The complaint does not allege defendant CDMY Investment, LLC requested plaintiff’s services.  It alleges the other two defendants, “Real Prosperity Investment, LLC and LA Investment Advisory, LLC (hereinafter ‘Owners’) were at all times relevant the owners or reputed owners of the Property, and engaged Plaintiff for the work which is the subject of this action and promised to pay for such work.”  (Comp., ¶ 9.)  It further alleges, “Defendant Owners requested that Plaintiff construct improvements and repairs to the Property.  Plaintiff performed and completed the improvements in reliance on the Owners’ promises to pay for such work.”  (¶ 21.)

The complaint’s term “Owners” does not include CDMY.  The complaint alleges, “Defendant CDMY Investment, LLC is a California limited liability company who claims rights to the Property under a foreclosure.”  (Comp., ¶ 10.)  The mechanic’s lien itself also states, “Claimant furnished the labor or services or equipment or materials, at the request of Owners Real Prosperity Investment, LLC and LA Investment Advisory, LLC (employer, person, or entity to whom labor, materials, services, or equipment were furnished).”  (Comp., Ex. B, ¶ 3.)  The complaint therefore does not allege CDMY requested plaintiff’s services.  Moreover, the real property instruments subject to judicial notice show CDMY held a lien but did not own the property until December 2022—after plaintiff finished providing its services in October 2022.  (Comp., ¶ 2.)        

Business & Professions Code § 7031

            Plaintiff’s two causes of action against CDMY also fail for an independent reason.  Under the Contractors State License Law, a contractor may not maintain any action to recover compensation for the “performance of any act or contract” unless the contractor was duly licensed “at all times during the performance of that act or contract.”  (Bus. & Prof. Code, § 7031(a).)  A contractor “is ineligible to recover any compensation … if, at any time during performance of an agreement for contractor services, he or she was not duly licensed.”  (MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 425.)

            The complaint alleges, “Plaintiff U&G Construction Group, Inc. is and at all relevant times was a California corporation and a licensed contractor.”  (Comp., ¶ 1.)  Facts subject to judicial notice show otherwise.  A copy of the Contractor’s License Detail for license No. 1104933, for U & G Construction Inc, retrieved from the website of the Contractors State License Board, shows U & G Construction Inc’s license was issued on May 17, 2023.  (RJN, Gleason Decl., Ex. F.)  Plaintiff thus was not licensed as a contractor until over six months after it completed its construction services.  It cannot maintain an action to recover compensation for those services.

Disposition

            Defendant CDMY Investment, LLC’s motion for judgment on the pleadings is granted with 30 days’ leave to amend.