Judge: Frank M. Tavelman, Case: 19BBCV00788, Date: 2022-08-12 Tentative Ruling

Case Number: 19BBCV00788    Hearing Date: August 12, 2022    Dept: A

ALLEGATIONS:

The instant action arises from certain work that Scott and Kelly Douglas (“Plaintiffs”) contracted with defendants Greentech Construction, LLC (“Greentech”), Robert McGlew (“McGlew”), ADCO Roofing, Inc. (“ADCO”), RG Heating & Air Conditioning, Inc. (“RG”), Jose Angel Moreno-Vazquez (“Moreno-Vazquez” and together the “Construction Defendants”) to perform work at 11252 Delano Street, North Hollywood, CA (“Subject Property”).  On or around November of 2018, Construction Defendants, allegedly contracted with Plaintiffs to perform an energy efficiency project at the Subject Property, but allegedly engaged in a fraudulent scheme whereby they misrepresented their licensing status, failed to perform the work under contract, failed to obtain the necessary permits, and ultimately caused damage to both the Subject Property and Plaintiffs.  Additional defendants American Contractors Indemnity Company (“ACIC”), and State National Insurance Company, Inc. (“SNIC”, and together, “Surety Defendants”) were alleged to have been surety companies for the Construction Defendants.

Plaintiffs filed the Complaint on August 29, 2019, and the First Amended Complaint (“FAC”) on June 10, 2022, alleging 12 causes of action: (1) Breach of Contract, (2) Fraud – Intentional Misrepresentation, (3) Fraud – Negligent Misrepresentation, (4) Fraud – False Promise, (5) Fraud – Misrepresentation to Others, (6) Negligence, (7) Breach of Implied Covenant of Good Faith and Fair Dealing, (8) Recovery of Payments to Unlicensed Contractors, (9) Recovery on Contractors License Bond, (10) Recovery on Contractors License Bond; (11) Breach of Contract; and (12) Aiding and Abetting Unlicensed Contracting.

ACIC filed a Cross-Complaint (“ACXC”) against Jose A. Moreno, individually and d.b.a. Angel Electric on April 6, 2020, alleging four causes of action: (1) Breach of Contract; (2) Statutory Indemnity; (3) Declaratory Relief; and (4) Specific Performance.

ADCO filed a Cross-Complaint ("ADXC") against Plaintiffs, Greentech, and McGlew on March 15, 2022, alleging three causes of action: (1) Breach of Contract; (2) Breach of Contract – Third-Party Beneficiary; and (3) Common Count: Goods and Services Rendered.

PRESENTATION:

The Court received the Demurrer filed by ADCO on July 11, 2022; the opposition filed by Plaintiffs on July 27, 2022; and the reply filed by ADCO on August 5, 2022.

RELIEF REQUESTED:

ADCO demurs to the twelfth cause of action in the FAC.

ANALYSIS:

I.          LEGAL STANDARD

The grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters.  (CCP § 430.30(a); Blank v. Kirwan (1985) 39 Cal. 3d 311, 318.) A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) The only issue involved in a demurrer hearing is whether the complaint states a cause of action. (Ibid.)

A demurrer assumes the truth of all factual, material allegations properly pled in the challenged pleading. (Blank v. Kirwan, supra, 39 Cal. 3d at p. 318.) No matter how unlikely or improbable, the plaintiff’s allegations must be accepted as true for the purpose of ruling on the demurrer. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.  App. 3d 593, 604.) But this does not include contentions; deductions; conclusions of fact or law alleged in the complaint; facts impossible in law; or allegations contrary to facts of which a court may take judicial notice.  (Blank, supra, 39 Cal. 3d at p. 318.)

Pursuant to CCP §§ 430.10(e) and (f), the party against whom a complaint has been filed may demur to the pleading on the grounds that the pleading does not state facts sufficient to constitute a cause of action, or that the pleading is uncertain, ambiguous and/or unintelligible. It is an abuse of discretion to sustain a demurrer without leave to amend if there is a reasonable probability that the defect can be cured by amendment. (Schifando v. City of Los Angeles (2003) 31 Cal. 4th 1074, 1081, as modified (Dec. 23, 2003).)

II.        MEET AND CONFER

CCP § 430.41(a) requires that the demurring party meet and confer with the party who filed the pleading that is subject to the demurrer at least 5 days before the date the responsive pleading is due to determine if the parties can resolve the objections to be raised in the demurrer. The demurring party must file and serve a declaration detailing their meet and confer efforts. Failure to meet and confer is not grounds to overrule or sustain a demurrer, or grant or deny a motion to strike. (CCP §§ 430.41(a)(4); CCP 435.5(a)(4).)

The Court finds that meet and confer requirements have been satisfied to code. (Decl. Ayotte, ¶ 2.)

III.       MERITS

A.    Twelfth Cause of Action (Aiding and Abetting Unlicensed Contracting)

ADCO argues that the twelfth cause of action is based on Bus. & Prof. §§7114 and 7118, neither of which provide for a private right of action. ADCO also argues that, even if such a claim existed, the FAC fails to allege any factual allegations supporting ADCO’s knowledge of Greentech’s unlicensed status. Finally, ADCO argues that the prayer for attorneys’ fees and treble damages pursuant to CCP §1029.8 is improper, as it is undisputed that ADCO had a valid contractor’s license when it performed services for Plaintiffs.

In opposition, Plaintiffs argue that the aiding and abetting unlicensed contracting cause of action is based on an intentional tort and is not solely based on statutory authorization, citing to Long Beach Memorial Medical Center v. Kaiser Foundation Health Plan, Inc. (2021) 71 Cal.App.5th 323, 336-337. Plaintiffs also cite to Swickheimer v. King (1971) 22 Cal.App.3d 220, 226 to support the contention that, where a disciplinary statute fails to provide for strict liability, it may be used as a basis for a private right of action even absent an express provision allowing for a private right of action; and to Coleman v. Silverberg Plumbing Co. (1968) 263 Cal.App.2d 74, 85 (mistakenly cited as 268 Cal.App.2d 74) to support the contention that Bus. & Prof. §7118 may support a private right of action where a causal nexus between lack of licensure and damages may be demonstrated.

In reply, ADCO argues that the FAC does not allege that ADVCO acted fraudulently or performed unlicensed contracting and disputes the holdings of Plaintiffs’ case law.

To begin, Bus. & Prof. §7114 provides:

(a) Aiding or abetting an unlicensed person to evade the provisions of this chapter or combining or conspiring with an unlicensed person, or allowing one’s license to be used by an unlicensed person, or acting as agent or partner or associate, or otherwise, of an unlicensed person with the intent to evade the provisions of this chapter constitutes a cause for disciplinary action.

(b) A licensee who is found by the registrar to have violated subdivision (a) shall, in accordance with the provisions of this article, be subject to the registrar’s authority to order payment of a specified sum to an injured party, including, but not limited to, payment for any injury resulting from the acts of the unlicensed person.

Bus. & Prof. §7118 provides: “Entering into a contract with a contractor while such contractor is not licensed as provided in this chapter constitutes a cause for disciplinary action.”

Neither statute provides for a private right of action. Further, Plaintiffs’ case law does not provide for the existence of an aiding and abetting unlicensed contracting private right of action, either as an independent tort, or pursuant to statute. Long Beach provides some brief instruction on when a court may recognize a new tort, but the case is inapplicable in several ways: first, it provides no authority for this trial court to recognize a new tort; second, it analyzes a distinguishable fact pattern involving recognizing a legal duty by health plans to reimburse medical providers; and third, it expressly discusses the difficulty of recognizing a new tort and affirmed the trial court’s dismissal of the proposed new tort. (Long Beach, supra, 71 Cal.App.5th at 337-41.) Swickheimer and Coleman need not be discussed because they simply do not stand for the contention presented by Plaintiffs. Plaintiffs thus do not cite to any legal authority that would allow for a private aiding and abetting unlicensed contracting cause of action.

IV.       CONCLUSION

The Court sustains the demurrer without leave to amend. The Court does not believe Plaintiffs may cure the defects concerning the twelfth cause of action.

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TENTATIVE RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

Defendant/Cross-Complainant ADCO Roofing, Inc.’s Demurrer came on regularly for hearing on August 12, 2022, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

THE DEMURRER IS SUSTAINED WITHOUT LEAVE TO AMEND.

IT IS SO ORDERED.

DATE:  August 12, 2022                               _______________________________

                                                                        F.M. TAVELMAN, Judge

                                                                        Superior Court of California

County of Los Angeles