Judge: Salvatore Sirna, Case: 23PSCV00279, Date: 2024-10-10 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, counsel are advised to check this website periodically to determine whether any changes or updates have been made to the tentative ruling. Counsel may submit on a tentative ruling by calling the clerk in Department G at (909) 802-1104 prior to 8:30 a.m. the morning of the hearing.

Case Number: 23PSCV00279    Hearing Date: October 10, 2024    Dept: G

Defendants Blooming Box, LLC; Li Peng; and Ding Yue’s Motion for Judgment on the Pleadings

Respondent: Plaintiff W.H. Contractors, Inc.

Cross-Complainant Blooming Box, LLC’s Motion for Summary Judgment

Respondent: Cross-Defendant W.H. Contractors, Inc.

TENTATIVE RULING

Defendants Blooming Box, LLC; Li Peng; and Ding Yue’s Motion for Judgment on the Pleadings is DENIED.

Cross-Complainant Blooming Box, LLC’s Motion for Summary Judgment is DENIED.

BACKGROUND

This is a breach of contract action arising from a construction services agreement. In June 2021, Plaintiff W.H. Contractors, Inc. (W.H. Contractors) entered into a written or oral agreement with Defendant Blooming Box, LLC (Blooming Box) in which W.H. Contractors agreed to construct improvements on property in the City of Industry. Subsequently, Defendants Blooming Box, Li Peng, and Ding Yue allegedly failed to pay W.H. Contractors for services rendered.

On January 30, 2023, W.H. Contractors filed a complaint against Blooming Box, Peng, Yue, and Does 1-50, alleging the following causes of action: (1) breach of contract, (2) breach of prompt payment, (3) common counts, (4) quantum meruit, (5) money had and received, (6) declaratory relief, and (7) foreclosure of mechanic’s lien.

On December 8, 2023, Blooming Box filed a cross-complaint against W.H. Contractors, Siming Wang, Hongbo Yang, and Roes 1-75, alleging the following causes of action: (1) statutory disgorgement, (2) breach of contract, (3) negligence, (4) negligent misrepresentation, (5) intentional misrepresentation, and (6) breach of express warranty.

On January 24, 2024, W.H. Contractors filed a cross-complaint against Dongyi, Inc. (Dongyi); Land Vision, Inc. (Land Vision); Aital Custom Glass & Mirror, Inc. (Aital Glass); and Zoes 1-100, alleging the following causes of action: (1) implied equitable indemnity, (2) implied indemnity, (3) contribution and equitable apportionment, and (4) declaratory relief.

On April 8, 2024, Blooming Box dismissed its second, third, fourth, fifth, and sixth causes of action from its Cross-Complaint.

On April 8, 2024, Dongyi filed a cross-complaint against Moe Cross-Defendants, alleging causes of action for (1) indemnification, (2) apportionment of fault, and (3) declaratory relief.

On May 3, 2024, W.H. Contractors dismissed its Cross-Complaint.

On May 7, 2024, Dongyi dismissed its Cross-Complaint.

On May 9, 2024, Blooming Box, Peng, and Yue (collectively, Blooming Box Defendants) filed the present motion for judgment on the pleadings. Prior to filing on March 22, 2024, the Blooming Box Defendants’ counsel met and conferred telephonically with W.H. Contractors’ counsel. (Baik Decl., ¶ 2.)

On May 13, 2024, Blooming Box filed the present motion for summary judgment. On August 29, 2024, the court continued the hearing on the present motions in order for parties to provide further briefing.

A hearing on the present motions is set for October 10, 2024, along with a trial setting conference.

REQUEST FOR JUDICIAL NOTICE

The Blooming Box Defendants request the court take judicial notice of W.H. Contractors’ discovery responses pursuant to Evidence Code section 452, subdivision (h). Because “a court may take judicial notice of the pleading party’s discovery responses (or those of the party’s authorized agent) to the extent ‘they contain statements of the [party] or his agent which are inconsistent with the allegations of the pleading before the court,’” this request for judicial notice is GRANTED. (Bounds v. Superior Court (2014) 229 Cal.App.4th 468, 477, quoting Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 605.)

MOTION FOR JUDGMENT ON THE PLEADINGS

The Blooming Box Defendants move for judgment on the pleadings on the grounds that W.H. Contractors’ entire action is barred by Business and Professions Code section 7031. For the following reasons, the court DENIES their motion.

Legal Standard

Motion for Judgment on the Pleadings

A defendant may move for judgment on the pleadings when the “complaint does not state facts sufficient to constitute a cause of action against that defendant.” (Code Civ. Proc., § 438, subd. (c)(1)(B)(ii).) “A motion for judgment on the pleadings is akin to a general demurrer; it tests the sufficiency of the complaint to state a cause of action. [Citation.] The court must assume the truth of all factual allegations in the complaint, along with matters subject to judicial notice.” (Wise v. Pacific Gas & Electric Co. (2005) 132 Cal.App.4th 725, 738.)

Business and Professions Code § 7031

Business and Professions Code section 7031, subdivision (a), states as follows:

“Except as provided in subdivision (e), no person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action, or recover in law or equity in any action, in any court of this state for the collection of compensation for the performance of any act or contract where a license is required by this chapter without alleging that they were a duly licensed contractor at all times during the performance of that act or contract regardless of the merits of the cause of action brought by the person, except that this prohibition shall not apply to contractors who are each individually licensed under this chapter but who fail to comply with Section 7029.” (Bus. & Prof. Code, § 7031, subd. (a).)

Pursuant to Business and Professions Code section 7031, subdivision (e), licensing requirements have been substantially complied with “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.” But this does not apply when “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.” (Bus. & Prof. Code, § 7031, subd. (e).)

Discussion

In this case, the Complaint alleges that “at all times relevant, [W.H. Contractors] was a duly licensed contractor with the California Contractors State Licensing Board to perform work as alleged herein.” (Complaint, ¶ 1.) The Blooming Box Defendants argue this allegation is contradicted by W.H. Contractors’ discovery responses where W.H. Contractors admitted that W.H. Contractors (1) obtained a contractor’s license on July 12, 2021, and (2) performed work on the City of Industry property before that date. (Motion, p. 6:9-19.) But a review of the actual discovery responses that the court has taken judicial notice of reveals no such contradiction.

In Blooming Box’s Request for Admission No. 3, Blooming Box stated as follows:

“Admit that, prior to July 11, 2021, CSLB had not issued a general contractor (Class B) license to YOU.” (RJN, Ex. 1, p. 3:18-19.)

In response to the request for admission, W.H. Contractors stated the following after a series of boilerplate objections:

“Without waiving these objections, Responding Party admits that the CSLB issued a new Class B general contractors license to Responding Party on July 12, 2021.” (RJN, Ex. 1, p. 3:24-25.)

Although W.H. Contractors uses the word “admits” in its response, its qualifying language demonstrates this is neither an admission nor a denial as it is nonresponsive. It does not address whether W.H. Contractors was licensed before July 11, 2021, and the fact that it obtained a license on July 12, 2021, does not exclude the possibility that W.H. Contractors had a previous license. Thus, W.H. Contractors’ nonresponsive discovery response is insufficient to contradict the Complaint’s allegation that W.H. Contractors was a licensed contractor at all times relevant.

Accordingly, the Blooming Box Defendants’ motion is DENIED.

MOTION FOR SUMMARY JUDGMENT

Blooming Box moves for summary judgment on Blooming Box’s first cause of action for statutory disgorgement pursuant to Business and Professions Code section 7031. For the following reasons, the court DENIES their motion.

Legal Standard

Motion for Summary Judgment

A motion for summary judgment or adjudication provides “courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).) It must be granted “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, quoting Code Civ. Proc., § 437c, subd. (c).) To establish a triable issue of material fact, the opposing party must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.) 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.)  “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, subd. (f)(1).)

Statutory Disgorgement Pursuant to Business and Professions Code § 7031

Business and Professions Code section 7031, subdivision (b) states “[e]xcept 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.” Subdivision (e) states as follows:

“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.” (Bus. & Prof. Code, § 7031, subd. (e).)

Discussion

In this case, Blooming Box’s Cross-Complaint alleges as follows: on June 7, 2021, W.H. Contractors entered into a construction contract with Blooming Box (Cross-Complaint, ¶ 4.); at the time, W.H. Contractors stated its contractor license was No. 1064256 (Cross-Complaint, ¶ 4.); however, Blooming Box alleges this license belonged to another entity and that W.H. Contractors did not acquire a license until July 12, 2021 (Complaint, ¶ 4.); and prior to acquiring the license, Blooming Box alleges W.H. Contractors completed work on the project without a contractor’s license. (Complaint, ¶ 5.)

In Blooming Box’s separate statement, Blooming Box establishes it is undisputed that W.H. Contractors obtained a contractor’s license on July 12, 2021. (Defendant Separate Statement (DSS), ¶ 2.) Blooming Box also establishes W.H. Contractors performed work on the City of Industry property prior to July 12, 2021. (DSS, ¶ 3.) But no fact in the separate statement establishes that W.H. Contractors lacked a contractor license prior to July 12, 2021. While the fact that W.H. Contractors obtained a contractor license on July 12, 2021, can lead to the inference that W.H. Contractors lacked a contractor license before that date, it does not foreclose the equally probable inference that W.H. Contractors was licensed beforehand and merely obtained a new license. Because the court must consider all inferences “in the light most favorable to the opposing party,” the possibility of the second inference prevents Blooming Box from establishing W.H. Contractors lacked a contractor license prior to July 12, 2021. (Aguilar, supra, 25 Cal.4th at p. 843)

Although W.H. Contractors provide their own evidence in opposition, the court need not consider or address any such evidence as Blooming Box has failed to carry their initial burden of establishing they are entitled to summary judgment as a matter of law. (Y.K.A. Industries, Inc. v. Redevelopment Agency of City of San Jose (2009) 174 Cal.App.4th 339, 367 [“The court’s assessment of whether the moving party has carried its burden—and therefore caused a shift—occurs before the court’s evaluation of the opposing party’s papers. [Citations.] Therefore, the burden on the motion does not initially shift as a result of what is, or is not, contained in the opposing papers.”].) And even in cases where the court exercises its discretion to grant a motion for summary judgment on grounds not raised in the moving papers, such grounds were supported by evidence included in the moving papers. (Pereda v. Atos Jiu Jitsu LLC (2022) 85 Cal.App.5th 759, 766 [“A trial court nevertheless has the discretion to consider other grounds for summary judgment if . . . the evidentiary basis for those grounds otherwise appears in the record presented with the moving papers.”]; see also Luebke v. Automobile Club of Southern California (2020) 59 Cal.App.5th 694, 706.)

Accordingly, because Blooming Box failed to establish it is undisputed that W.H. Contractors lacked a contractor license prior to July 12, 2021, the court DENIES their motion.

CONCLUSION

Based on the foregoing, the Blooming Box Defendants’ motion for judgment on the pleadings as to W.H. Contractors’ Complaint is DENIED.

Furthermore, Blooming Box’s motion for summary judgment on their Cross-Complaint is DENIED.