Judge: Michael Shultz, Case: 22STCV21326, Date: 2025-03-04 Tentative Ruling
Case Number: 22STCV21326 Hearing Date: March 4, 2025 Dept: 40
22STCV21326 Faramarz Nazmifar v. Behzad
Ben Toubian, et al.
Tuesday,
March 4, 2025
[TENTATIVE] ORDER
I.
BACKGROUND
The
first amended complaint (“FAC”) alleges that Plaintiff, individually and
derivatively on behalf of Brentanita, Inc. (“Brentanita”) contracted with
Defendant, Behzad Ben Toubian (“Toubian”) an unlicensed contractor, to hire
properly qualified contractors to perform construction work on two parcels of
real property (the “Homewood” and “Anita” property). Plaintiff alleges that he and Toubian are
officers and directors of Brentanita. Plaintiff alleges that Toubian
misappropriated assets of Brentanita by withdrawing corporate funds for
construction expenses that did not occur.
Plaintiff
invested funds for the purchase of the real property and became a guarantor on
a loan to purchase Homewood. (FAC ¶ 2, 27, 30, .).
Plaintiff
alleges individual and derivative claims for breach of contract, breach of
fiduciary duty, negligence, fraud and concealment, conversion, and other statutory and tort
claims. The 11th cause of action asserts a claim for recovery of
payments to an unlicensed contractor pursuant to Bus & Professions Code §
7031.
II.
ARGUMENTS
Plaintiff
argues he is entitled to adjudication of the 11th cause of action in
his favor because Defendant Toubian developed two parcels of real property for
sale for his investment partners although he was an unlicensed contractor.
Defendant did the contracting work himself without a licensed contractor.
Plaintiff argues he is entitled to an order for Toubian to disgorge all
compensation received for services.
In
opposition, Toubian does not dispute the policy reasons behind license
requirements but argues the corporations were the owner-builders while Toubian
acted as a construction manager, which is exempt from licensing requirements.
Toubian did not receive compensation from Plaintiff.
In
reply, Plaintiff argues that Toubian admits he and/or the corporation hired
unlicensed contractors. Owner-builders must contract with licensed trades
people. Toubian fails to proffer evidence to dispute the material facts.
III.
LEGAL STANDARDS
Summary
judgment is proper “if all the papers submitted 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.” (Code Civ. Proc., § 437c subd (c).)
The court strictly construes the moving party's
supporting evidence while the opposing party’s evidence is liberally construed.
Doubts as to the propriety of the motion should be resolved against granting
the motion. (D’Amico
v. Board of Medical Examiners
(1974) 11 Cal.3d 1, 20.)
The court does not evaluate the credibility of testimony. (Binder
v. Aetna Life Ins. Co. (1999)
75 Cal. App. 4th 832, 840.) The court applies the three-step analysis to
motions for summary judgment or adjudication: (1) identify the issues framed by
the pleading, (2) determine whether the moving party established facts which
negate the opponents’ claim, (3) if a defendant meets its threshold burden of
persuasion and the burden shifts, determine whether the opposing party has
controverted those facts with admissible evidence. (Torres
v. Reardon (1992) 3 Cal.App.4th
831, 836.)
A party can move for summary adjudication
as to one or more causes of action within an action or one or more claims for
damages if the party contends that there is no affirmative defense to any cause
of action. A motion for summary adjudication shall be granted only if it
completely disposes of a cause of action, an affirmative defense, a claim for
damages, or an issue of duty. (Code Civ. Proc., § 437c(f)(1).) In ruling on the motion, the court considers
the material issues defined by the allegations of the complaint. (Lewinter
v. Genmar Industries, Inc. (1994) 26 Cal.App.4th 1214, 1223.)
IV.
DISCUSSION
A.
Allegations
of the FAC
The 11th cause of action
alleges that Toubian did not have any contractor’s license during the time he
was performing services and supervising construction in connection with the
Homewood and Anita property. (FAC ¶ 164.) Plaintiff agreed to have Toubian
perform builder services and supervise construction. (FAC ¶ 165). Defendant was
required to have a valid contractor’s license to perform these services.
Plaintiff alleges he is entitled to recover and to disgorge compensation paid
to Toubian for services for which he was unlicensed. (FAC 169.)
The intent behind California Business
& Professions Code § 7031 is to deter unlicensed persons from engaging in the contracting business without a
license. (Kim
v. TWA Construction, Inc. (2022) 78
Cal.App.5th 808, 824.) The
statute prohibits such unlicensed contractors from bringing or maintaining an
action to collect compensation performed without a license. (Bus. & Prof. Code, § 7031 subd (a).) The statute also permits an action by a
person using such services to recover all compensation paid to the unlicensed
contractor for the performance of any act or contract." (Bus. & Prof. Code, § 7031 subd (b).) Disgorgement is permitted even
when the project owner knows that the contractor is unlicensed. (San
Francisco CDC LLC v. Webcor Construction L.P. (2021) 62 Cal.App.5th 266, 277.)
As the moving party, Plaintiff’s burden is
to establish there is no defense to the cause of action. (Code Civ. Proc., §
437c subd. (p)(1).) Plaintiff meets that burden by proving each element of the
cause of action entitling the Plaintiff to judgment on that cause of action. (S.B.C.C.,
Inc. v. St. Paul Fire & Marine Ins. Co. (2010) 186 Cal.App.4th 383, 388.) ”If that threshold burden is established, the burden shifts to
Defendant to show a triable issue of one or more material facts as to that
defense. (Id.) That burden requires Plaintiff to provide
admissible evidence all elements including damage. " (Paramount
Petroleum Corp. v. Superior Court
(2014) 227 Cal.App.4th 226, 241 ["a plaintiff cannot obtain judgment on a breach of contract
cause of action in an amount of damages to be determined later."].)
To prevail on this claim, Plaintiff is
required to show (1) Plaintiff engaged/hired/or contracted with Defendant to
perform services; (2) a valid contractor’s license was required to perform
those services which Defendant did not have; (3) Plaintiff paid Defendant for
services performed. (Judicial Council Of California Civil Jury
Instruction 4560.)
B.
Undisputed
facts.
A)
The
Anita Project.
The parties entered into a contract
wherein Toubian would build a house for sale. (PF 3). Defendant disputes the
use of the term “contract” and argues that the parties entered into an
“investment agreement” to form a corporation to purchase property on which a
house would be built for sale. (DF 3.) This is a disputed fact. Plaintiff’s
characterization implies Plaintiff contracted with Toubian personally to build
a home. The agreement entered into by the parties was not a simple construction
contract as further discussed.
Defendant agreed to manage the Anita
construction project. (PF 5.) The parties’ agreement called for the formation
of Brentwood Flats, Inc. (“Brentwood”) which would purchase the Anita project.
Brentwood owned the real property. (PF 6, 8.) Defendant disputes the date when
the deed was transferred to Brentwood, however, this is not a material dispute.
What is material is that the corporation owned the Anita property. Defendant
would be paid 15 percent of the constructions costs as a “supervisory” charge.”
(PF 9.)
One of Toubian’s responsibilities was to
select and hire the contractors to construct the Anita project. (PF 12.) He
coordinated contractor schedules, negotiated prices with the contractors, wrote
checks to pay the contractors (PF 14-16.) Defendant does not have any
construction-related licenses. (PF 17.)
C.
The
Homewood project.
The partnership agreement for the Homewood
project contained a clause that Mr. Toubian was the builder and supervisor of
the project. (PF 37.) The parties formed Brentanita Inc. for the Homewood
project. (PF 38.) Plaintiff asserts that Defendant was to receive 7.5 percent
of the construction cost as compensation during project construction and an
additional 7.5 percent after the project completion and sale of the home. (PF
39.)
Plaintiff invested $1,000,000 into Brentanita,
Inc. for the Homewood project. (PF 41.)
D.
The
undisputed evidence establishes that Defendant acted as a “contractor” for
purposes of section 7026.
There is no dispute that the construction
of both projects was facilitated through Defendant who admits he was
responsible for construction coordination on behalf of Brentanita. (PF 39.) Plaintiff
argues that Defendant, as a “project builder” performed construction tasks that
required a contract license to build the homes. A “contractor” is synonymous
with a builder, who undertakes by himself or through others, to construct or
improve any building or other structure, project, development, or improvement.
(Bus. & Prof. Code, § 7026.)
Both the person who provides construction
services himself and one who does so “through others” qualifies as a
contractor. (Vallejo
Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 941 ["The California courts have also long held that those who enter
into construction contracts must be licensed, even when they themselves do not
do the actual work under the contract."].)
The undisputed facts referenced above show
Defendant served as a “project builder” and supervisor for both project and engaged others in the construction of the
homes. (PF 37.) There is no dispute that Plaintiff invested funds in Brentanita,
Inc. as part of the agreement to create a corporation to buy properties, on
which a residence would be constructed for resale. (PF 8, 36-38, 41.)
The statute permits recovery of “all
compensation paid to the unlicensed contractor for performance of any act or
contract." (Bus. & Prof. Code, § 7031 subd. (b).) By Plaintiff’s own admission,
Plaintiff is trying to recover his investment in Brentanita (PF 7.) The statute
requires proof of payment to the unlicensed contractor for the services
provided for which a license was required. The material facts proffered do not
include payments that Plaintiff made to Defendant for construction-related
services.
There is no dispute that Defendant would
be paid 15 percent of the construction costs for “supervisory charges” for the
Anita property and that Defendant would receive 7.5 percent of the construction
costs of Homewood “in a progressive manner as compensation during the project
construction … and an additional 7.5 percent upon sale.” (PF 9, 39.) These
facts do not establish that Plaintiff paid Defendant sums for the unlicensed
services that Defendant performed which is arguably subject to disgorgement
under section 7031.
The partnership agreement for the creation
of Brentanita and the purchase of the Homewood property required the partners
to make capital contributions. (Plaintiff’s Ex. 25.) Plaintiff invested $1
million. The amendment to that agreement obligated Plaintiff to make capital contributions of $1,016,000.
(Plaintiff’s Ex. 33.)
There is no evidence of what Plaintiff
actually paid Defendant for construction costs.
V.
CONCLUSION
Plaintiff did not meet his initial burden
of providing undisputed facts supporting each element of the claim. (Code Civ.
Proc., § 437c(p)(1). Accordingly, Plaintiff’s motion is DENIED.