Judge: Melvin D. Sandvig, Case: 22CHCV00731, Date: 2023-08-07 Tentative Ruling

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Case Number: 22CHCV00731    Hearing Date: December 1, 2023    Dept: F47

Dept. F47

Date: 12/1/23                                                            TRIAL DATE: 10/14/24

Case #22CHCV00731

 

SUMMARY ADJUDICATION

 

Motion filed on 8/11/23.

 

MOVING PARTY: Plaintiff Hamid Siddiqi

RESPONDING PARTY: Defendants Nick Kazemi dba K Construction and Business Alliance Insurance Company

NOTICE: ok

 

RELIEF REQUESTED: An order granting summary adjudication in favor of Plaintiff Hamid Siddiqi and against Defendant Nick Kazemi dba K Construction with regard to Plaintiff’s 2nd cause of action for disgorgement.

 

RULING: The motion is granted. 

 

SUMMARY OF FACTS & PROCEDURAL HISTORY

 

This action arises out of Plaintiff Hamid Siddiqi’s (Plaintiff) claim that Defendant Nick Kazemi dba K Construction (Kazemi) breached a home improvement contract.  Plaintiff contends that Kazemi agreed to perform construction work relating to an existing retaining wall and to construct a swimming pool at Plaintiff’s residence for a total contract price of $200,000.00.  Plaintiff contends that he paid Kazemi $195,000.00; however, Kazemi demanded an additional $30,000.00 to $40,000.00 to complete the job.  Plaintiff contends that when he refused to pay the additional sum, Kazemi abandoned the project.  Defendant Business Alliance Insurance Company (BAIC) issued a $15,000 contractor’s bond to Kazemi.  Plaintiff is suing BAIC to require it to pay the bond amount to Plaintiff.   

 

On 9/6/22, Plaintiff filed this action alleging causes of action for: (1) breach of written contract, (2) disgorgement, (3) fraud and deceit; (4) negligence; (5) declaratory relief; (6) discipline against contractor’s license and (7) recovery against contractor’s bond.   Kazemi timely responded to the complaint.

 

On 8/7/23, the Court granted Plaintiff’s motion to deem admitted Requests for Admissions Plaintiff served on Kazemi.  (Soffer Decl., Ex.D).  Based on the admissions, on 8/11/23, Plaintiff filed and served the instant motion seeking an order granting summary adjudication in favor of Plaintiff and against Kazemi with regard to Plaintiff’s 2nd cause of action for disgorgement. 

 

On 11/16/23, the Court denied Kazemi’s ex parte application for an order continuing the hearing on the instant motion for the reasons set forth in the opposition to the application.  (See 11/16/23 Minute Order).  On 11/17/23, Kazemi filed an opposition to the instant motion and on 11/22/23, Plaintiff filed a reply to the opposition. 

 

ANALYSIS

 

Kazemi’s “Objections to Plaintiff’s Separate Statement of Undisputed Material Facts” (numbers 1-9) are overruled.  First, the objections do not follow the format required by CRC 3.1354(b).  As such, it is not entirely clear what Kazemi is objecting to – i.e., the fact itself or the evidence in support of the fact and if so, all of the evidence or only part.  Second, objections 1-6 are based, in part, on the argument that “all requests for admissions that were deemed admitted as a result of the mistake, excuse, and neglect of Defendants’ prior counsel.”  The Court has already rejected Kazemi’s request to continue the hearing on this motion to allow Kazemi time to seek relief from the admissions.  Additionally, Kazemi did not/has not submitted a proposed motion to support the request for such relief.  Third, no authority is cited for objections 7-9.    

 

Plaintiff’s objections to the Jones declaration (numbers 1-6) and Kazemi declaration (numbers 7-30) are sustained.

 

“[A] deemed admitted order establishes, by judicial fiat, that a nonresponding party has responded to the requests by admitting the truth of all matters contained therein.”  Wilcox (1999) 21 C4th 973, 979.  “A party is bound by admissions made in the course of discovery and, on motion for summary judgment, no further evidence of the matters so deemed admitted is required.”  Hejmadi (1998) 202 CA3d 525, 553; See also Murillo (2006) 143 CA4th 730, 736.  In ruling on a motion for summary judgment/adjudication, the court may disregard declarations submitted in support of an opposition which controvert a prior admission by that party.  See D’Amico (1974) 11 C3d 1, 21 (disapproved on other grounds in Woodland Hills Residents Association, Inc. (1979) 23 C3d 917, 929); Prilliman (1997) 53 CA4th 935, 961; Jogani (2006) 141 CA4th 158, 177; Cohen (2019) 35 CA5th 13, 18.      

 

The facts in this case which are deemed admitted based on this Court’s 8/7/23 order (Deemed Admissions Order (DAO) granting Plaintiff’s motion to deem matters admitted as to Kazemi establish that Kazemi is liable for disgorgement.  The admissions establish the following:

 

Kazemi, as contractor dba K Construction, Plaintiff, as owner, entered into an agreement (the Agreement) in September 2021 for the construction of a swimming pool and other, and related, improvements, including a retaining wall and piles, at Plaintiff’s residence located at 17764 Sidwell Street, Granada Hills, California (the Project).  (Siddiqi Decl. ¶2; Soffer Decl. ¶¶ 4, 5, Exs.C, D (RFA Nos. 77, 78; DAO)).  As such, the Agreement was for a “home improvement” project.  (Soffer Decl. ¶¶ 4, 5, Exs.C, D (RFA No. 79; DAO)).  Pursuant to the Agreement, Kazemi agreed to furnish all labor, material, and equipment concerning the Project.  Id. (RFA No. 78; DAO).

 

The admissions also establish that work on the Project was performed between the fall of 2021 and late spring of 2022.  Id. (RFA Nos. 100, 101; DAO).  At least one employee of Kazemi/K Construction performed work on the Project and least one Kazemi/K Construction employee performed work on the Project whenever any work was performed on the Project by any subcontractor of K Construction.  Id. (RFA Nos. 86, 87; DAO).  As such, the admitted facts show an employee of Kazemi/K Construction was always present and working whenever any work was being performed on the Project.  No work was performed on the Project in connection with any agreement between Kazemi and Plaintiff after 5/20/22.  Id. (RFA No. 101; DAO).  As of 7/18/22, the work on the Project had not been completed.  Id. (RFA No. 102; DAO).  As of 5/20/22, Plaintiff had made nine payments to Kazemi, totaling $195,000, in connection with the work that was performed and was to be performed on the Project.  Id. (RFA No. 103; DAO); (Siddiqi Decl. ¶3, Exs.A, B).

 

The admissions further establish that a license issued by the California Contractor State License Board (CSLB) was required in order to perform all aspects of the work that was performed on the Project pursuant to the Agreement.  (Soffer Decl. ¶¶4, 5, Exs.C, D (RFA No. 94; DAO)).  At all times when work was performed on the Project in connection with the Agreement by K Construction, any of its subcontractors, or anyone else, neither Kazemi, nor any of Kazemi’s employees, nor any of Kazemi’s subcontractors, was licensed by CSLB to engage in swimming pool construction.  Id. (RFA Nos. 88-92; DAO).  Additionally, at all times when work was performed on the Project in connection with the Agreement by anyone, no one who supervised such work was licensed by CSLB to engage in swimming pool construction.  Id. (RFA No. 93; DAO).

 

As noted above, at least one employee of Kazemi/K Construction performed work on the Project and least one Kazemi/K Construction employee performed work on the Project whenever any work was performed on the Project by any subcontractor of K Construction.  Id. (RFA Nos. 86, 87; DAO).  The admissions establish that at all times when any work was performed on the Project by K Construction, any of K Construction’s employees, or anyone else, K Construction (i.e., Kazemi) was required by law to have workers’ compensation insurance coverage.  Id. (RFA No. 95, 96, 98; DAO).  The admissions further establish that K Construction did not have any workers’ compensation insurance coverage at any time when work was performed pursuant to the Agreement on the Project by any of K Construction’s employees or anyone else.  Id. (RFA No. 97, 99; DAO).  Finally, the admissions establish that after Kazemi was served with the complaint in September of 2022, and thereby learned that Plaintiff was seeking to hold him liable on the Disgorgement Claim under Business &Professions Code sections 7031(b) and 7125.2 on the grounds that Kazemi is deemed to be unlicensed because of his failure to have workers’ compensation insurance coverage for his employees, Kazemi continued to operate without the required workers’ compensation insurance coverage for his employees.  (Soffer Decl. ¶¶4, 5, Exs.C, D (RFA Nos. 110-113; DAO).

 

Business & Professions Code 7031(b) provides:

 

“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.”

 

Business & Professions Code 7031(e) provides:

 

“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.”

 

Since the work offered to be performed or which was actually performed by Kazemi and his employees constitutes a form of constructing a structure and because the Agreement price was more than $500, a contractor’s license was required for the performance of such work.  (See Soffer Decl. ¶¶4-5, Exs.C, D (RFA Nos. 77, 79, 104; DAO); Business & Professions Code 7026, 7026.1(a)(2), 7048, 7117.6.

 

As noted above, the facts deemed admitted by this Court establish that a California Contractor State License Board (CSLB) license was required to perform the work on the Project and did not possess such a license.  (Soffer Decl. ¶¶4-5, Ex.C, D (RFA Nos. 86-94; DAO).

 

Additionally, even if Kazemi had the required license, it was automatically suspended because of his failure as an employer to obtain the required workers’ compensation insurance coverage.  See Labor Code 3700; Business & Professions Code 7125(a), (b), 7125.2(a); Wright (2007) 149 CA4th 1116, 1122-1123.  As noted above, the matters deemed admitted establish that work on the Project was performed by at least one of Kazemi’s employees and that such employee (or perhaps at least one other employee) was always performing work on the Project even when Kazemi’s subcontractors were performing work.  (Soffer Decl. ¶¶4, 5, Exs.C, D (RFA Nos. 86, 87; DAO)).  As such, Kazemi was required to have workers’ compensation insurance.  Business & Professions Code 7125.

 

The admissions establish that Kazemi was required by law to have workers’ compensation insurance coverage in connection with the Project; Kazemi did not have the required workers’ compensation insurance coverage; and Kazemi failed to substantially comply with the licensure requirements under Business & Professions Code 7031 by acting promptly and in good faith to rectify the issue.  Id. (RFA Nos. 95-102, 110-113; DAO)).      

 

The opposition first requests a continuance of the motion under CCP 437c(h).  However, the Court already denied Kazemi’s request for a continuance under CCP 437c(h) made pursuant to an ex parte application.  (See Ex Parte Application filed 11/15/23; 11/16/23 Minute Order).  As such, the request improperly seeks reconsideration of the Court’s 11/16/23 order and is, again, denied. 

 

Kazemi then essentially concedes that the remainder of his opposition is based on his declaration which contradicts the prior admissions.  (See Opposition, p.11:4-7 whereat Kazemi argues that Plaintiff cannot meet his burden on this motion “given the significant issues and facts that have recently come to light about Defendants’ prior counsel’s mistake, inadvertence and negligence that has materially prejudiced the defendants and in light of the additional disputed material facts presented in Mr. Kazemi’s declaration.”).

 

Even if the Court could consider Kazemi’s evidence which improperly contradicts the facts which the Court previously deemed admitted, his substantial compliance argument would still fail.  First, Kazemi waived such defense by failing to plead it in his answer.  (See Reply Soffer Decl. ¶10, Ex.K); Carranza (1966) 240 CA2d 481, 488.  Additionally, Kazemi failed to present sufficient evidence to support a finding that he substantially complied with the licensure requirements/requirement to have workers’ compensation insurance. 

 

To support such a claim, Kazemi must show that: (1) he acted reasonably and good faith to maintain proper licensure, and (2) he acted promptly and in good faith to remedy his failure to comply with the licensure requirements upon learning of the failure.  Business & Professions Code 7031(e).  Here, Kazemi merely offers his own self-serving declaration, without any other supporting evidence, to state that he believed that the workers he hired were subcontractors and not his employees.  (Kazemi Decl. ¶16).  Further, Kazemi has failed to establish that retroactive attempts to comply with the insurance requirements constitute substantial compliance.  See Judicial Council of California (2015) 239 CA4th 882, 906.

 

The evidence shows that Plaintiff made nine payments to Kazemi totaling $195,000.00 for the work performed and the work that was to be performed.  (Siddiqi Decl. ¶3, Exs.A, B; Soffer Decl. ¶¶4-5, Exs.C, D (RFA No.104; DAO).  Therefore, the principal amount of Plaintiff’s disgorgement claim under Business & Professions Code 7031(b) is $195,000.00.

 

Civil Code 3287(a) provides:

 

“A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day, except when the debtor is prevented by law, or by the act of the creditor from paying the debt. This section is applicable to recovery of damages and interest from any debtor, including the state or any county, city, city and county, municipal corporation, public district, public agency, or any political subdivision of the state.”

 

See also Evanston Insurance Co. (9th Cir. 2009) 566 F3d 915, 921.  In California, the “vesting” requirement has been held to be satisfied at the time the amount of damages becomes certain or capable of being made certain, not the time liability to pay the damages is determined.  Id.  As such, California allows for the recovery of prejudgment interest where the amount of damages is certain.  Id.  The amount of Plaintiff’s damages, $195,000.00, was certain when Kazemi received the funds. 

 

Therefore, Plaintiff is entitled to recover interest at the annual 7% rate that accrued as of the date on which each of the nine checks cleared his bank account which totals $25,284.32.  See California Constitution, Article XV, §1; (Siddiqi Decl. ¶¶3, Exs.A, B; Soffer Decl. ¶¶7-8, Ex.E).  With principal and interest, the total amount of the disgorgement claim as of the date of the hearing on this motion (12/1/23) is $220,284.32 with interest continuing to accrue at the rate of $37.397256 per day until final judgment is entered on the remaining causes of action. 

 

While the judgment may seem harsh and unfair, equitable considerations may not be considered by the Court under Business & Professions Code 7031.  See MW Erectors, Inc. (2005) 36 C4th 412, 418; Judicial Council of California, supra at 895.

 

CONCLUSION

 

The motion is granted.