Judge: Ronald F. Frank, Case: 22TRCV00896, Date: 2024-08-14 Tentative Ruling
Case Number: 22TRCV00896 Hearing Date: August 14, 2024 Dept: 8
Tentative
Ruling¿
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HEARING DATE: August 14, 2024
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CASE NUMBER: 22TRCV00896
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CASE NAME: Sajid Ali; Suneetha Ali v. Ashok Sreepathi, et al.
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MOVING PARTY: Plaintiffs, Sajid
Ali and Suneetha Ali
RESPONDING PARTY: Defendants, Ashok Sreepathi and Suresh Sripathi
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TRIAL DATE: September
30, 2024
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MOTION:¿ (1) Plaintiffs’ Motion for Summary Adjudication as to the 4th
cause of action under B&P Code section 7031.
Tentative Rulings: (1) The Court’s Tentative Ruling is to GRANT, but the Court
seeks oral argument on several points. Is
it a material fact as to whether Defendants were joint venturers or not, if the
undisputed evidence shows they performed work on the subject property that
required a contractor’s license but neither were licensed after Suresh’s license
was suspended in 2019? If there a triable issue as to the amount of
money paid to Suresh between 2017 and 2019, while Suresh was licensed? If there is a triable issue as to whether the
individuals who defendants paid for work on the subject property were or were
not employees of Defendants, does that affect whether they were required to be
licensed themselves? If a contactor’s license
was revoked during the course of a construction project, does the disgorgement rule
of Section 7031 still apply to payments made before the suspension/revocation of
her or his license?
I. BACKGROUND¿¿
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A. Factual¿¿
On
October 7, 2022, Plaintiffs, Sajid Ali and Suneetha Ali (collectively,
“Plaintiffs”) filed a complaint against Defendants, Ashok Sreepathi, Suresh
Sripathi, and DOES 1 through 10. The complaint alleges causes of action for:
(1) Breach of Contract; (2) Intentional Misrepresentation; (3) Breach of
Fiduciary duty; and (4) Disgorgement of all Sums paid to unlicensed
contractors.
Now,
Plaintiffs seek summary adjudication as to their Fourth Cause of Action for
Disgorgement of all Sums Paid to Unlicensed Contractors.
B.
Procedural
On May 28, 2024, Plaintiffs filed a Motion for Summary
Adjudication. On July 29, 2024, Defendant, Suresh Sripathi filed an opposition
brief. That same day, Defendant, Ashok Sreepathi filed an opposition brief. On
August 9, 2024, Plaintiffs filed a reply brief.
II. REQUEST FOR JUDICIAL
NOTICE
Filed concurrently with the moving papers, Plaintiffs
also filed a request for judicial notice, seeking this Court judicially notice
the following:
1.
RJN EXHIBIT 1: Deed to real property
recorded on October 23, 2014 in the office of the Los Angeles County Recorder
as Instrument No. 20141122733 describing Lots 55 and 56 of Tract No. 9384, in
the City of Los Angeles, County of Los Angeles, State of California, as per Map
recorded in Book 149 Page 45 to 47 of Maps, in the office of the County
Recorder of Los Angeles County. Identified as Los Angeles County Assessor’s
Parcel Nos: 4113-013-020 and 4113-013-021.
2.
RJN EXHIBIT 2: Official Certified Record
from California Contractor’s License Board dated July 3, 2023 - No Record of
Licensing for Ashok Sreepathi.
3.
RJN EXHIBIT 3: Official Certified Record
from California Contractor’s License Board dated July 3, 2023 - No Record of
Licensing for Suresh Sripathi after November 30, 2019 (suspended March 27,
2019).
4.
RJN EXHIBIT 4: Judgment entered December
12, 2018 in the matter of Lifetime Investments, LLC. v. Suresh Sripathi and
Ashok Sreepathi, LASC Case No. PC057929.
5.
RJN EXHIBIT 5: Non-Dischargeable Judgment
entered August 20, 2004 in the matter of In re: Ashok Sreepathi, Debtor, United
States Bankruptcy Court Case No. SV-0089994-AG/Adv. Case Nos. SV 01-01263 &
SV 01-01264
Subsequently, on August 9,
2024, Plaintiffs filed a notice of Errata contending their original filing
contained the following errors: (1) Plaintiffs’ Request for
Judicial Notice inadvertently referenced Plaintiff’s First Cause of Action in
the Complaint. The Request for Judicial Notice is in Support of Plaintiff’s
Motion for Summary Adjudication of Issues as to their Fourth Cause of Action;
and (2) Plaintiffs’ Evidence in Support of Motion for Summary Adjudication of
Issues at Page 85 of 251 (Check No. 2404 payable to “Cornerstone Special
Inspect”) was inadvertently included in the filing and should be ignored.
Keeping the above in mind, this Court GRANTS the request and takes judicial
notice of the above, including the notice of errata.
Further,
Defendant Suresh Sripathi also filed a request for judicial notice of the
following:
1. Exhibit
A. Description Articles incorporation of TCGE, Inc. filed on 01/22/1997
2. Exhibit
B. Grant Deed recorded on October 11, 2018.
3. Exhibit
C. Answer of Defendant Suresh Sripathi to Complaint filed on November 17, 2022
; and
4. Exhibit
D. Complaint of Plaintiffs filed on October 7, 2022.
The Court also grants this request
and takes judicial notice of the above.
Lastly,
Defendant Ashok Sreepathi filed a request for judicial notice seeking this
Court judicially notice the same as Defendant, Suresh Sripathi. This Court also
GRANTS this request.
III. EVIDENTIARY OBJECTIONS
Suresh Sripathi’s objections
to Declaration of Sandeep Kommareddy
Overrule: 1-7
Sustain: none.
Suresh Sripathi’s objections
to Declaration of Joseph R. Brown
Overrule: 3, 5-7
Sustain: 1, 2, 4, 8-10
Suresh Sripathi’s objections
to Declaration of Sanjid Ali
Overrule: 1-10, 14-33
Sustain: 11, 12-13
Ashok Sreepathi’s objections
to Declaration of Joseph R. Brown
Overrule: 3, 5-7
Sustain: 1, 2, 4, 8-10
Ashok Sreepathi’s objections
to Declaration of Sandeep Kommareddy
Overrule: 1-7
Sustain: none.
Ashok Sreepathi’s objections
to Declaration of Sanjid Ali
Overrule: 1-10, 14-33
Sustain: 11, 12-13
Plaintiffs’ objections to
Declaration of Suresh Sripathi
Overrule: 1-7
Sustain: none.
Plaintiffs’ objections to
Declaration of Ashok Sreepathi
Overrule: 1-32.
Sustain: none.
IV. ANALYSIS¿
A.
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
Richfield Co. (2001) 25 Cal.4th 826, 843.) CCP Section 437(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. Manor 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,
citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367,
381-382.)¿
As to each claim as framed by the
complaint, the defendant moving for summary judgment must satisfy the initial
burden of proof by presenting facts to negate an essential element, or to
establish a defense. (CCP § 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 defendant has met that burden,
the burden shifts to the plaintiff to show that a triable issue of one or more
material facts exists as to that cause of action or a defense thereto.¿¿¿
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.)
B.
Discussion
Plaintiffs have brought this motion
seeking a Court order granting summary
adjudication in their favor and against Defendants for its fourth cause of
action for violation of Business & Professions Code section 7031. Business and Professions Code § 7031(b)
“allows any person who utilizes the services of an unlicensed contractor to
bring an action for disgorgement of all compensation paid for the performance
of any act or contract, regardless whether there was any fault in the
contractor’s work…” (Eisenberg Village of Los Angeles Jewish Home for
the Aging v. Suffolk Construction Company, Inc. (2020) 53 Cal.App.5th 1201,
1203.) The Court in Eisenberg held that the one-year statute of
limitations applied to claims for disgorgement under §¿7301(b), and that a
7301(b) claim accrued upon the completion or cessation of performance of the
contract at issue. (Ibid.)
Plaintiffs assert that in 2014,
they contemplated a joint venture with Defendant Ashok and Sreepathi to: (1)
to develop real property located at 7126 and 7130 West 85th Street, in the
Westchester area of Los Angeles, California (“Subject Property”); and (2) to
construct four (4) detached single family homes on the Subject Property.
(Complaint, ¶ 9.) On January 7, 2017, Plaintiffs note that they separately
entered into a written contract with Defendant Suresh and Ashok for the
construction of one of the four single family residences on the Subject
Property, which was intended as Plaintiff’s personal residence. (Complaint, ¶
12.) Plaintiffs clarify that the Sreepathis are married and that Sukshma is
sisters with Suneetha. (Complaint, ¶10.) Plaintiffs contend that the contract
price for the construction of Plaintiff’s home by Defendants was $425,000.
(Complaint, ¶ 12, Exhibit A “Construction Contract”.) However, Plaintiffs
allege that as of the date of the filing of their complaint, the construction
of Plaintiffs’ home and the development of the subject property remains
incomplete. (Complaint, ¶ 13.) Plaintiffs note that Defendants have refused to
complete Plaintiffs’ home or the development of the subject property unless
Plaintiffs give them more money. (Complaint, ¶ 13.) Further, Plaintiffs assert
that they recently discovered that Defendants are not licensed contractors, and
recently discovered facts which lead them to believe that Defendants have
diverted funds provided to them by Plaintiffs for development/construction of
the subject property and Plaintiffs’ home, and used Plaintiffs’ money to fund
other projects in which Defendants have financial interest. (Complaint, ¶ 14.)
Plaintiffs
argue that according to Business & Professions Code § 7026, a contractor is
“‘any person, who undertakes to ... construct, alter, repair, add to, subtract
from, improve, move, wreck or demolish any building ... structure, project,
development or improvement, or to do any part thereof, ... whether or not the
performance of [such] work ... involves the addition to or fabrication into any
[such] structure, project, development or improvement ... of any material or
article of merchandise.’” Here, the Construction Contract signed by the
parties on January 7, 2017 indicates that the Defendants indicated a
willingness to build Plaintiff a single-family residence as part of a four
building structure. (Plaintiffs’ Exhibit B.) As such, the work the parties have
agreed upon indicate that Defendants were acting as contractors. Plaintiffs
contend that Ashok and Suresh formed a single business enterprise, as a joint
venture to perform work on the subject property. Further, in order to qualify
for licensing as a joint venture, Plaintiffs argue that both Ashok and Suresh
would have been required to hold “a current, active license in good standing”
pursuant to Business & Professions Code section 7029. Plaintiffs have provided evidence that at the
time, Suresh and Ashok entered into the construction contract, only Suresh was
licensed as a contractor (Plaintiffs’ SUMF No. 32.) Plaintiff argues that Suresh’s license was
ultimately suspended in 2019 as a consequence of Ashok’s and Suresh’s allegedly
fraudulent conduct on a separate construction project, and that the State Board
has not reinstated Suresh’s license. (Plaintiffs’ SUMF Nos. 17-19.)
In both of
the Defendants’ oppositions, they argue that Ashok was acting as a “Developer”
as a member of the Joint Venture as is confirmed by the Joint Venture
Agreement. (Plaintiffs’ Exhibit A.) However,
this Joint Venture agreement was dated from 2014, while the Contractor
Agreement from 2017 appears to be a completely different document that is not
integrated into the Joint Venture Agreement. The Court does note, however, that
the Contractor Agreement introduces the Defendants by stating: “Suresh Sripathi and Ashok Sreepathi, developer
(collectively the “Contractor”)…” (Plaintiffs’ Exhibit B, ¶ 1.) But
it is not clear how a developer role affects this motion, i.e., if Ashok was a
developer and also was a contactor, is not this motion still well taken? The
rest of the Contractor Agreement references the Defendants as “Contractors” and
explains their work in the context of them being contractors. Plaintiffs attach
Exhibit E, showing that Ashok’s license was revoked for a violation of Business
and Professions Code section 7110 and 7116. However, Plaintiffs’ Exhibit F showing a list
of lawsuits involving Ashok’s company does not per se, on its own, indicate any
violation in the case at bar.
Based on the above, the Court finds that Plaintiffs’ evidence
tends to show that they have carried their initial burden in showing that the Defendants
held themselves out as contractors for the purpose of doing business on the
subject property, and that they did so after January of 2017 without a license.
Next, Plaintiffs contend that Suresh’s failure to maintain worker’s compensation
insurance resulted in the automatic suspension of his license in January of
2017. Pursuant to Business and Professions Code section 7125.2, a contractor is
to maintain workers’ compensation insurance for his employees. For evidence,
Plaintiffs have attached an invoice from the Defendants (Plaintiffs’ Exhibit
C), which shows that evidences work done by numerous other persons who
Plaintiffs claim are Defendants’ employees and Exhibit D, payment of checks
from Defendants to individuals. As noted by Plaintiffs, Labor Code section 3351
defines an employee as every person in the service of an employer under any
appointment or contract of hire or apprenticeship, express or implied, oral or
written, whether lawfully or unlawfully employed. Plaintiffs’ evidence shows
the invoice of Defendants paying individuals as well as checks made out by
Defendants to some of those individuals. This evidence appears to show that Defendants
employed individuals to work on the subject property.
In opposition, Suresh argues that
she did not have employees and was therefore exempt from the requirement to
have workers compensation insurance. From 2017 through March 1, 2019, Suresh
contends that he did not have any employees, and that all persons working at
the subject property were hired solely by Ashok and were not Defendants’ employees.
The Court seeks argument from
Defendants as to whether this matters, i.e., whether it is a material fact
requiring a trial as to whether the individuals paid for the work on the
property were or were not employees of Defendants, if Defendants were working
on the subject property and performing work themselves that required a
contractor’s license?
Having reviewed the evidence presented by
Plaintiffs, including the invoices and receipts filed demonstrating the type of
work performed and the amounts charged, and the checks made out to individuals
by Defendants, the Court finds that Plaintiffs have met their burden of
producing sufficient evidence to show that that the work performed by Defendants
constituted that of a “contractor” and required a contractor’s license for
purposes of California Business & Professions Code § 7031.
IV. CONCLUSION
Based on the foregoing, and depending
on Defendants’ answers to the questions raised by the Court, this Court tentatively
finds that Plaintiffs have demonstrated that no triable issue of fact exists as
to their fourth cause of action, and summary adjudication is GRANTED.
Plaintiffs are ordered to provide
notice.