Judge: Stephen I. Goorvitch, Case: 21STCV09737, Date: 2023-09-11 Tentative Ruling

Case Number: 21STCV09737    Hearing Date: September 11, 2023    Dept: 39

Ecro Custom Furniture, Inc. v. Eric Lavey, et al.

Case No. 21STCV09737

Motion for Summary Judgment

Motion for Leave to Amend

BACKGROUND

            Plaintiff Ecro Custom Furniture Inc. (“Ecro” or “Plaintiff”) filed this action against Defendants Eric Lavey and Jennifer Lavey (collectively, “Defendants”) asserting causes of action for breach of oral contract, common count for quantum meruit, common count for account stated, common count for book accounting, and fraud.  Defendants alleged hired Plaintiff to design and install custom cabinets and closets at their residence and refused to pay an outstanding balance of $78,700.  Defendants filed a cross-complaint asserting causes of action for breach of written contract, breach of implied warranty, defamation per se, and intentional infliction of emotional distress.  Defendants also assert a violation of Code of Civil Procedure section 1029.8 based upon allegations that Plaintiff was not licensed.  Now, Defendants move for summary judgment, which Plaintiff opposes.  Plaintiff filed a motion for leave to amend to add Gradilla Franco Construction, Inc. (“GFC”) as a plaintiff.  The Court grants Defendants’ motion for summary judgment.  The Court advances the hearing on Plaintiff’s motion for leave to amend, from October 25, 2023, and denies the motion. 

LEGAL STANDARD

“[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law . . . .  There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)  “[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.”  (Ibid.)

PROCEDURAL HISTORY

Plaintiff filed the initial complaint on March 11, 2021, and the operative complaint on July 20, 2021, against Defendants.  Defendants filed the operative cross-complaint on July 25, 2023, against Plaintiff, Ronay Ovando, Heydi Franco, and GFC.  Defendants filed a motion for summary judgment, which was heard on July 25, 2023, and the Court’s tentative order was to grant summary judgment.  However, Plaintiff’s counsel requested leave to amend to name GFC as a plaintiff, and the Court concluded that there may be a basis to do so, as Defendants’ cross-complaint asserted claims against GFC based upon GFC having been the contractor.  The Court continued the hearing on the motion for summary judgment, following which Defendants dismissed their cross-claims against GFC and its owner, Heydi Franco.  The Court ordered Plaintiff’s counsel to notice any motion for leave to amend for hearing on September 5, 2023, and to file the motion sufficiently in advance of that hearing date to afford statutory notice. 

DISCUSSION

            A.        Defendants’ Motion for Summary Judgment

            Defendants move for summary judgment, arguing that Plaintiff was not properly licensed.  An unlicensed contractor cannot recover for work performed.  (Bus. & Prof. Code, § 7031.) Defendants rely on evidence that Plaintiff’s owner and sole shareholder, Ronay Ovando, never had a contractor’s license.  (Declaration of Nicole V. Rosenberg, Exh. B, pp. 13, 28.)  Specifically, Ovando testified during his deposition that he has never applied for a contractor’s license.  (Id., Exh. B, p. 28:11-13.) 

Defendants also advance evidence that Plaintiff was the contractor on their job.  Defendants rely on evidence that their agreement was with Ecro, not GFC.  (Id., Exh. A(D).)  Defendants rely on email communications between Eric Lavey and Plaintiff’s owner, Ronay Ovando, discussing the project and potential pricing.  (Ibid.)  Defendants also rely on the written estimate, which was from “Ecro Custom Furniture, Inc.”  (Ibid.)  Ovando testified that Eric Lavey contacted him, and that he dealt directly with Eric Lavey.  (Id., Exh. B, pp. 38:19-39:6, 41:10-42:11.)  During his deposition, Ovando testified that he set the pricing: “The initial estimate was $117,000.  Then he asked me for a discount, and I gave him a $7,000 discount and I left it in $110,000.”  (Id., Exh. B, p. 42:19-22.)  This evidence is sufficient to demonstrate that Plaintiff was the contractor, and that it did not have the required contractor’s license.

            Plaintiff advances insufficient evidence to give rise to a triable issue.  Plaintiff’s counsel argues that his client worked under GFC’s supervision and license.  GFC’s owner, Heydi Franco, testified that that Ovando is a subcontractor of GFC.  (Id., Exh. C, p. 29.)  Plaintiff’s counsel also relies on a written resolution between Franco and Ovando stating that GFC “has agreed to participate in many of the projects that Ecro Custom Furniture, Inc. has invited her to join.”  (Id., Exh. A(B).)  The terms of the agreement were that Ecro would allocate ten percent of its stock to GFC, and GFC “will provide its contractors license to cover the projects that Ecro may accept for the next ten years.”  (Ibid.)  The agreement states that “GFC and Ecro will share in the proceeds and join in the projects that Ecro will accept.”  (Ibid.) 

            There are several problems with Plaintiff’s counsel’s argument.  First, Plaintiff has no standing to pursue this action.  If the party agrees to perform construction is a separate legal entity from the license holder, the party who agreed to perform construction cannot seek compensation for any work performed.  (Montgomery Sansome LP v. Rezai (2012) 204 Cal.App.4th 786, 795.)  “[I]f an individual or entity without a required license is engaged in the business or acting in the capacity of a contractor, a license held by a different individual or entity does not permit the unlicensed contractor to recover.”  (Ibid.)  The evidence is clear that Plaintiff, not GFC, agreed to perform the work in this case.   

            Second, Plaintiff’s agreement with GFC is void as a matter of public policy.  A licensed  contractor cannot “lend[s] his or her license to any other person or knowingly permit the use thereof by another,” per Business and Professions Code section 119(b).  Ovando required his own license because he was not an employee of GFC:

            Q:        Is Ronay Ovando a carpenter that works for GFC?

            A:        Yes.

            Q:        Is he an employee?

            A.        He is a subcontractor.

(Declaration of Nicole V. Rosenberg, Exh. C, p. 29:18-22.) 

            Finally, even if the agreement was lawful, it applies only to projects that Ecro “will agree to accept after July 20, 2018.”  (Id., Exh. B.)  Defendants’ evidence establishes Ecro accepted their project before this date.  (Id., Exh. A.)  Plaintiff advances no evidence to the contrary.  Rather, Plaintiff’s counsel misinterprets the agreement, representing that it applies to “all job projects, undertakings and contracts that ECRO undertook to perform after July 20, 2018.”  (Plaintiff’s Separate Statement, ¶ 2.)  In fact, it applies to all projects that Ecro “agree[d] to accept” after July 20, 2018, not all projects it worked after that date.

            The Court has considered Plaintiff’s remaining arguments and finds that none is persuasive.  Therefore, the Court grants Defendants’ motion for summary judgment. 

            B.        Motion for Leave to Amend

At the prior hearing, Plaintiff’s counsel requested an opportunity to file a motion for leave to amend to add GFC as a plaintiff.  The Court ordered Plaintiff’s counsel to do so sufficiently in advance of the hearing date of September 5, 2023, to afford statutory notice.  Plaintiff’s counsel filed the motion on August 23, 2023.  Regardless, the Court advances and denies that motion for two reasons.  Plaintiff’s counsel did not attach a copy of the proposed amended complaint, as required.  Regardless, the proposed amendment would violate the sham pleading doctrine.  Plaintiff’s complaint and first amended complaint, which were verified, made clear that Ecro was the contractor.  Plaintiff cannot amend the complaint to allege that GFC was the contractor. 

CONCLUSION AND ORDER

            Based upon the foregoing, the Court orders as follows:

            1.         The Court grants Defendants’ motion for summary judgment.

            2.         The Court advances the hearing on Plaintiff’s motion for leave to amend and denies that motion.

            3.         The only remaining pleading is the first amended cross-complaint by Jennifer and Eric Lavey against Ecro Custom Furniture, Inc. and Ronay Ovando. 

            4.         There is a demurrer to the first amended cross-complaint, which is set for hearing after the trial date.  Therefore, the Court advances and vacates the final status conference and trial dates. 

            5.         The Court shall hold a trial setting conference on November 6, 2023, at 8:30 a.m.

            6.         Defendants’ counsel shall provide notice and file proof of such with the Court.