Judge: Richard S. Whitney, Case: 37-2021-00030875-CU-BC-CTL, Date: 2023-09-01 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - August 30, 2023

09/01/2023  10:30:00 AM  C-68 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Richard S. Whitney

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Civil - Unlimited  Breach of Contract/Warranty Motion Hearing (Civil) 37-2021-00030875-CU-BC-CTL ICON IDENTITY SOLUTIONS INC VS MISSION VALLEY SHOPPINGTOWN LLC CAUSAL DOCUMENT/DATE FILED:

TENTATIVE RULING: DEFENDANT SANTA MISSION, INC.'S MOTION TO EXPUNGE OR, IN THE ALTERNATIVE, TO REDUCE MECHANIC'S LIEN OF PLAINTIFF ICON IDENTITY SOLUTIONS, INC.

is GRANTED.

Defendant, Cross-Complainant and Cross-Defendant Santa Mission, Inc. ('Defendant') seeks to expunge the mechanic's lien filed by Plaintiff Icon Identity Services, Inc. ('Plaintiff') in this Lambert motion.

In Lambert v. Superior Court (1991) 228 Cal.App.3d 383, 279 Cal.Rptr. 32 (Lambert), the Court of Appeal pointed out that where a claimant has already filed suit to enforce a mechanic's lien or stop notice, the procedures identified in Connolly may no longer be available to the property owner. In such case, the owner may instead file a motion in the enforcement action to have the matter examined by the trial court. On such motion, the claimant bears the burden of establishing the 'probable validity' of the claim underlying the lien or stop notice. (Id. at p. 387, 279 Cal.Rptr. 32.) If the claimant fails to meet that burden, the lien and stop notice may be released in whole or in part. We refer to this procedure as a 'Lambert motion.' (Cal Sierra Construction, Inc. v. Comerica Bank (2012) 206 Cal.App.4th 841, 845.) 'In such motion, the question presented is not the ultimate merit of the contractor's claim but whether the contractor should be entitled to retain the security of the mechanic's lien or stop notice pending resolution of the matter.' (Id. at 85.) Defendant challenges the lien based on the assertion that Plaintiff's purported Responsible Managing Employee ('RME'), Mr. Rymarcsuk, was not a bona fide RME under Business and Professions Code section 7068. 'If the RME was a sham, the contractor is barred from recovery because he or she is, in effect, acting outside the license, just like a specialty contractor who labors at a task for which he or she has no expertise nor license.' (Buzgheia v. Leasco Sierra Grove (1997) 60 Cal.App.4th 374, 386.) 'The burden to prove licensure rests with the party asserting a contractor is licensed.' (Oceguera v. Cohen (2009) 172 Cal.App.4th 783, 790 citing Bus. & Prof. Code, § 7031(d).) ''[A] responsible managing employee' means an individual who is a bona fide employee of the applicant and is actively engaged in the classification of work for which that responsible managing employee is the qualifying person on behalf of the applicant.' (Bus. & Prof. Code, § 7068(c)(1).) ''Bona fide employee of the applicant' means an employee who is permanently employed by the applicant.' (Bus. & Prof. Code, § 7068(c)(2)(A).) ''Actively engaged' means working 32 hours per week, or 80 percent of the total hours Calendar No.: Event ID:  TENTATIVE RULINGS

2959688  47 CASE NUMBER: CASE TITLE:  ICON IDENTITY SOLUTIONS INC VS MISSION VALLEY SHOPPINGTOWN  37-2021-00030875-CU-BC-CTL per week that the applicant's business is in operation, whichever is less.' (Bus. & Prof. Code, § 7068(c)(2)(B).) The RME 'shall be responsible for exercising supervision and control of their employer's or principal's construction operations to secure compliance with this chapter and the rules and regulations of the board.' (Bus. & Prof. Code, § 7068.1(a).) ''Supervision or control' means direct supervision or control or monitoring and being available to assist others to whom direct supervision and control has been delegated.' (Bus. & Prof. Code, § 7068.1(c)(3).) ''Direct supervision or control' means any of the following: (A) Supervising construction. (B) Managing construction activities by making technical and administrative decisions. (C) Checking jobs for proper workmanship. (D) Supervision on construction sites.' (Bus. & Prof. Code, § 7068.1(c)(4).) 'A variety of activities can constitute direct supervision and control, including one or any combination of the following activities: supervising construction, managing construction activities by making technical and administrative decisions, checking jobs for proper workmanship, or direct supervision on construction job sites.' (Jeff Tracy, Inc. v. City of Pico Rivera (2015) 240 Cal.App.4th 510, 519 [Citation and quotes omitted].) Plaintiff has purportedly provided evidence (see below discussion that cited evidence was not be submitted to the Court) that Mr. Rymarcsuk was paid by Enhanced Site Solutions, LLC, which was a 100% wholly owned subsidiary of Plaintiff. Plaintiff has purportedly provided evidence that the structure was for accounting purposes and branding. However, Plaintiff does not provide any authority that interprets Business and Professions Code section 7068 et seq. to support that tax treatment law is applicable. Nothing in Business and Professions Code section 7068 states that there is an exception to the requirement that the RME be 'an individual who is a bona fide employee of the applicant and is actively engaged in the classification of work for which that responsible managing employee is the qualifying person on behalf of the applicant.' (Bus. & Prof. Code, § 7068(c)(1) [Emphasis added].) In the absence of any authority that states there is an exception to Business and Professions Code section 7068(c)(1) for fully owned subsidiaries, the Court declines to read into the statute an exception that does not explicitly exist. Plaintiff has the burden on this motion to demonstrate the RME was a bona fide employee of the applicant. Plaintiff has failed to do so.

As to supervision and control, Defendant points to evidence that Mr. Rymarcsuk did not do numerous tasks and did not supervise in numerous ways. In response, Plaintiffs points to Mr. Rymarcsuk's deposition testimony that indicates he had various responsibilities, including director of estimating, chief estimator, and account manager. Mr. Rymarcsuk explained he managed the directors and project managers that ran the project. The Court finds that Plaintiff has sufficiently demonstrated, for purposes of this motion, that Mr. Rymarcsuk was not a sham RME as to supervision. However, as discussed above, Plaintiff still fails to support that Mr. Rymarcsuk was a bona fide employee of the applicant.

Furthermore, Plaintiff has the burden on this motion to support that its subcontractors were properly licensed 'at all times during the performance of' any act or contract for which Plaintiff is seeking compensation. (Kim v. TWA Construction, Inc. (2022) 78 Cal.App.5th 808, 826-828; Bus. & Prof. Code, § 7031(a); Cal Sierra Construction, supra, 206 Cal.App.4th at 845.) The same applies to the substantial compliance exception. (Bus. & Prof. Code, § 7031(d) and (e).) 'The substantial compliance exception to the forfeiture rule is 'extremely narrow' and applies 'only where a contractor was without a license owing to circumstances truly beyond his control.'' (Pacific Caisson & Shoring, Inc. v. Bernards Bros. Inc. (2015) 236 Cal.App.4th 1246, 1257 [Citation omitted].) Here, Plaintiff does not provide any evidence as to what amount of the claim is based on which subcontractor's work. Rather, Plaintiff merely states Defendant has failed to identify which invoices comprise the claim. However, it is Plaintiff's burden to prove the 'probable validity' of the claim underlying the lien. (Cal Sierra Construction, supra, 206 Cal.App.4th at 845.) The Court notes that while the opposition cites purported evidence, no such evidence was filed with the opposition. It appears the Court rejected the attempt to file a declaration because the document was not searchable, which is required. Plaintiff failed to cure the issue. In any event, even assuming the cited evidence supports that Bella Development Services, Inc. dba Bella Construction and Sark Custom Awnings were properly Calendar No.: Event ID:  TENTATIVE RULINGS

2959688  47 CASE NUMBER: CASE TITLE:  ICON IDENTITY SOLUTIONS INC VS MISSION VALLEY SHOPPINGTOWN  37-2021-00030875-CU-BC-CTL licensed during performance Plaintiff fails to provide evidence that CMC Mechanical, LLC, Retail Construction Group, Inc., and True Glass and Glazing, Inc. were properly licensed at all relevant times.

Plaintiff does not dispute that CMC Mechanical LLC was paid $240,345.88, Retail Construction Group, Inc. was paid $191,103.76, and True Glass and Glazing, Inc. was paid $127,050.00. These amounts combined eclipse the total of the mechanic lien, which is $327,789.61. Plaintiff does not provide any evidence to support that its claim is not based on work by CMC Mechanical, LLC, Retail Construction Group, Inc., and True Glass and Glazing, Inc. In short, Plaintiff fails to support that its claim has probable validity as to work being performed by licensed subcontractors.

As to substantial compliance, Plaintiff does not provide any evidence but complains that there has not been an evidentiary hearing as to substantial compliance. Plaintiff has the burden to show the probable validity of its claim, which in this case necessarily would require Plaintiff to present evidence of substantial compliance. Plaintiff has failed to do so. Plaintiff can blame only itself.

For the reasons discussed above, the motion is granted.

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