Judge: Donald F. Gaffney, Case: "Fineline Woodworking, Inc. v. Jeremy Harnish Designer Finishes, Inc.", Date: 2023-05-17 Tentative Ruling
TENTATIVE RULING:
Motion for Summary Adjudication.
Plaintiff Fineline Woodworking, Inc. dba Fineline Architectural Millwork, Inc. moves for summary adjudication on the eighth cause of action in the First Amended Complaint against Defendant Jeremy Harnish Designer Finishes, Inc. For the following reasons, the unopposed motion is DENIED.
A defendant moving for summary judgment satisfies his or her initial burden by showing that one or more elements of the cause of action cannot be established or that there is a complete defense to the cause of action. (Code Civ. Proc. (“CCP”), § 437c(p)(2).) A cause of action “cannot be established” if the undisputed facts presented by the defendant prove the contrary of the plaintiff’s allegations as a matter of law. (Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1597.) Once the moving party meets that burden, the burden shifts to the party opposing MSJ to show, by reference to specific facts, the existence of a triable issue as to that affirmative defense or cause of action. (Id.; Villacres v. ABM Industries, Inc. (2010) 189 Cal.App 4th 562, 575.) To meet this burden, the opposing party must present substantial and admissible evidence creating a triable issue. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 163.)
Plaintiff seeks summary adjudication on the eighth cause of action for disgorgement of compensation pursuant to Business & Professions Code § 7031(b) asserted in the First Amended Complaint.
“Business and Professions Code section 7000 et seq., the “Contractors License Law,” provides a comprehensive scheme which governs contractors doing business in California. The purpose of the licensing law is to protect the public from incompetence and dishonesty in those who provide building and construction services. The licensing requirements provide minimal assurance that all persons offering such services in California have the requisite skill and character, understand applicable local laws and codes, and know the rudiments of administering a contracting business.” (Design Built Systems v. Sorokine (2019) 32 Cal.App.5th 676, 690 [internal quotations and citations omitted].
Code Civ. Proc. § 7031 provides:
(b) Except as provided in subdivision (e), a person who utilizes the services of an unlicensed contractor may bring an action in any court of competent jurisdiction in this state to recover all compensation paid to the unlicensed contractor for performance of any act or contract.
…
(e) The judicial doctrine of substantial compliance shall not apply under this section where the person who engaged in the business or acted in the capacity of a contractor has never been a duly licensed contractor in this state. However, notwithstanding subdivision (b) of Section 143, the court may determine that there has been substantial compliance with licensure requirements under this section if it is shown at an evidentiary hearing that the person who engaged in the business or acted in the capacity of a contractor (1) had been duly licensed as a contractor in this state prior to the performance of the act or contract, (2) acted reasonably and in good faith to maintain proper licensure, and (3) acted promptly and in good faith to remedy the failure to comply with the licensure requirements upon learning of the failure.
“Our Supreme Court has stated that “ ‘ “Section 7031 represents a legislative determination that the importance of deterring unlicensed persons from engaging in the contracting business outweighs any harshness between the parties . . . . ” ’ ” (Design Built Systems v. Sorokine, supra, 32 Cal.App.5th at 690-691.)
“[T]he disgorgement provided in section 7031(b) is a penalty. It deprives the contractor of any compensation for labor and materials used in the construction while allowing the plaintiff to retain the benefits of that construction. And, because the plaintiff may bring a section 7031(b) disgorgement action regardless of any fault in the construction by the unlicensed contractor, it falls within the Supreme Court's definition of a penalty: “a recovery ‘without reference to the actual damage sustained.’” (Eisenberg Village of Los Angeles Jewish Home for the Aging v. Suffolk Construction Company, Inc. (2020) 535 Cal.App.5th 1201, 1212.)
To establish that it is entitled to disgorgement, Plaintiff must prove Defendant was an “unlicensed contractor” at the time the work was performed and that Defendant was not in “substantial compliance” with Business & Professions Code § 7031 at the relevant time.
Here, Plaintiff retained JHDF to apply a finish to custom cabinetry and doors on a residential project in Laguna Beach. (UMF 2-3.) JHDF presented to Plaintiff a business card bearing the name “Harnish Custom Coatings,” license number 830490. (UMF 4.) Under the “Entity,” the card reads: “INDIV.” Harnish Custom Coatings was issued its license in 2003 and the entity is listed as “Sole Ownership.” (UMF 5.) JHDF was incorporated in California in February 2008. (UMF 7.) “Harnish Custom Coatings” is not a registered trade name of JHDF in Orange County. (UMF 8.) JHDF has two registered trade names: “JH Wall Paints” and “J Harnish Paints.” (UMF 9.) Plaintiff and JHDF entered into an Independent Contractor Agreement in November 2019. (UMF 13.) Plaintiff paid JHDF $145,000 for services rendered on the project. (UMF 18.)
However, Plaintiff has not met its initial burden of establishing that JHDF was not a licensed contractor. Plaintiff’s separate statement does not affirmatively state that, or point to any evidence establishing that, JHDF was unlicensed. Instead, Plaintiff provides evidence that Harnish Custom Coatings is licensed, that JHDF was incorporated in California, and that Harnish Custom Coatings is not a registered trade name for JHDF. Plaintiff’s failure to point to any evidence in its separate statement that JHDF was not licensed is fatal to its motion. “This is the Golden Rule of Summary Adjudication: if it is not set forth in the separate statement, it does not exist.” (United Community Church v. Garcin (1991) 231 Cal.App.3d 327, 337 (superseded by statute on other grounds) (emphasis in original).)
Because Plaintiff has not met its initial burden of showing that JHDF was not licensed, the motion is denied.
Plaintiff to give notice.