Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

MOVING PARTY: Plaintiff/Cross-Defendant Expert Decking Inc. 

RESPONDING PARTY: Defendant/Cross-Complainant Malibu SEJ Properties, LLC 

 

BACKGROUND 

This action arises from a contract dispute regarding a construction project located at 3155 Pacific Coast Highway, Malibu, California (the “Property”).  Plaintiff/Cross-Defendant Expert Decking Inc. (“EDI”) entered into a written contract with Defendant/Cross-Complainant Malibu SEJ Properties, LLC (“Malibu”) for waterproofing work at the Property.  (Undisputed Material Fact “UMF” No. 1.)  EDI claims that Malibu failed to pay Plaintiff for work performed under the contract.  (UMF No. 8.)  EDI sued for (1) breach of contract, (2) open book account, (3) account stated, (4) quantum meruit, and (5) foreclosure of mechanic’s lien. 

Malibu cross-complained alleging that EDI did not have a contractor’s license at the time it performed the work on the Property, and pursuant to Bus. & Prof. Code § 7031(b), Malibu is entitled to disgorgement of all monies paid to EDI.  The cross-complaint alleges a single cause of action for disgorgement.    

This hearing is on EDI’s motion for summary judgment on the cross-complaint.  EDI argues that Malibu’s sole claim for disgorgement is subject to a one year statute of limitations, which began to run when EDI stopped work on the Property in September 2019 (UMF No. 5).  Malibu did not file its cross-complaint until May 27, 2021.     

REQUEST FOR JUDICIAL NOTICE 

Malibu seeks judicial notice of the complaint and cross-complaint filed in this action.  The Court grants its request for judicial notice pursuant to Cal. Evid. Code §§ 452(d) and 453. 

EVIDENTIARY OBJECTIONS  

The Court overrules Malibu’s objections to the Declaration of Victor Hadad.  As a vice president of EDI, Hadad has personal knowledge and foundation to attest to the facts stated in his declaration.  The Court sustains Malibu’s objections to the Declaration of Nelson Argueta and the exhibits thereto since it was improperly submitted in support of EDI’s reply brief.  

LEGAL STANDARD  

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial.  (Aguilar v. Atlantic Ritchfield Co. (2001) 25 Cal.4th 826, 843.)  Code Civ. Proc. §437c(c) “requires the trial judge to grant summary judgment if all the evidence submitted and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Minor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)  “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.”  (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67).   

As to each claim as framed by the complaint, the party moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate each essential element of the claim or establish a defense.  (Code Civ. Proc. §437c(p)(2); Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.)  Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”  (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)  

Once the moving party has met its burden, the burden shifts to the opposing party to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.  (Id.)  To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence.  (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.) 

DISCUSSION 

The Cross-Complaint alleges a single cause of action for disgorgement based on Bus. & Prof. Code § 7031(b).  The statute of limitations for such disgorgement claims is one year after the contractor completed its scope of work or ceased to work on the project, regardless of whether any licensing issue was known or discovered within the one year period.  (Eisenberg Village of the Los Angeles Jewish Home for the Aging v. Suffolk Construction Co., Inc. (2020) 53 Cal.App.5th 1201, 1203 (“We hold that the one year statute of limitations applies to claims for disgorgement under section 7031(b).  We also hold that … a section 7031(b) claim accrues upon the completion or cessation of the performance of the act or contract at issue.”)   

Further, the discovery rule does not apply to toll or extend the statute of limitations.  (Id.; see also San Francisco CDC, LLC v. Webcor Construction L.P. (2021) 62 Cal.App.5th 266, 280 (“We further agree that such claims accrue upon the completion or cessation of the act or contract at issue and are not subject to tolling under the delayed discovery rule.”).)  The discovery rule provides that a statute of limitations does not begin to run until “the plaintiff suspects or should suspect that her injury was caused by wrongdoing.” (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110.)  In declining to apply the discovery rule to a statutory disgorgement claim, the Eisenberg court explained that a section 7031(b) claim does not require that the plaintiff suffer any injury; the disgorgement mandated by section 7031(b) “is not designed to compensate the plaintiff for any harm, but instead is intended to punish the unlicensed contractor.”  (Eisenberg, 53 Cal.App.5th at 1213.) Thus, holding that the discovery rule does not apply to section 7031(b) claims “does not produce a harsh result for plaintiffs.” (Id.)  

Here, there is disputed issue as to when EDI completed work on the Property.  EDI claims it last performed work on the Property in September 2019.  (UMF No. 5; Hadad Decl. ¶7.)   Malibu, however, claims EDI continued working on the Project until June 2020, and EDI never completed its work as required under the parties’ agreement.  (Shokrian Decl. ¶¶7-8.)  Given this disputed issue, the Court cannot conclude that Malibu’s cross-complaint (filed on May 27, 2021) is time-barred.   

Further, the filing of EDI’s complaint tolls the statute of limitations as to any compulsory cross-complaint arising out of the same “contract, transaction, matter, happening or accident” upon which the complaint is brought.  (Trindale v. Superior Court (1973) 29 Cal.App.3d 857, 859.)  This same rule also applies to permissive cross-claims.  (Micro Devices Inc. v. TAT Capital Partners Ltd. (2016) 5 Cal.App.5th 69, 92.)  Thus, even assuming EDI completed work by September 2019, the filing of its complaint on September 2020 tolls the statute of limitations and renders Malibu’s cross-complaint timely.   

 

CONCLUSION 

For the foregoing reasons, the Court DENIES EDI’s motion for summary judgment.   

 

IT IS SO ORDERED. 

 

DATED: May 9, 2023 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court