Judge Theresa M. Traber, Case Number: 22STCV03916, Date: 2024-03-05 Tentative Ruling

Judge: Theresa M. Traber, Case: 22STCV03916, Date: 2024-03-05 Tentative Ruling

Case Number: 22STCV03916 Hearing Date: March 5, 2024 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: March 5, 2024 TRIAL DATE: NOT SET

CASE: Daniel Wang, et al., v. 360 Capital Ventures Inc., et al.

CASE NO.: 22STCV03916

MOTION FOR SUMMARY JUDGMENT AND SUMMARY ADJUDICATION

MOVING PARTY: Plaintiffs and Cross-Defendants Daniel Wang and Grace Lee; Cross-Defendant Rosalind Wang

RESPONDING PARTY(S): Defendants and Cross-Complainants 360 Capital Ventures Inc. and Sachin Patel, and Defendant Miguel Soltero

CASE HISTORY:

· 01/31/22: Complaint filed.

· 03/21/23: Cross-Complaint filed by 360 Capital Ventures and Sachin Patel as to Plaintiffs and as to Cross-Defendant Rosalind Wang

· 04/13/23: First Amended Complaint filed.

· 07/27/23: First Amended Cross-Complaint filed.

· 11/06/23: Cross-Complaint filed by 360 Capital Ventures, Sachin Patel, and Bayside Builders inc. as to Hudson Insurance Co.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is a breach of contract action for a construction contract. Plaintiffs allege that Defendants overcharged Plaintiffs relative to the portion of the work completed, and that the work was extremely late, incomplete, and substandard,

Plaintiffs/Cross-Defendants Daniel Wang and Grace Lee move for summary adjudication on the first cause of action in the First Amended Complaint as to Defendant 360 Capital Ventures Inc., and for summary adjudication on the first cause of action in the First Amended Cross-Complaint against these Cross-Defendants.

Cross-Defendant Rosalind Wang simultaneously moves for summary judgment on the First Amended Cross-Complaint as against her.

TENTATIVE RULING:

Plaintiffs’ Motion for Summary Adjudication is GRANTED.

Cross-Defendant Rosalind Wang’s Motion for Summary Judgment is DENIED AS MOOT.

DISCUSSION:

Motion for Summary Adjudication by Plaintiffs/Cross-Defendants Daniel Wang and Grace Lee

Legal Standard

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party can show evidentiary support for a pleading or claim and, if not, to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure Section 437c(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, 381-82.)

As to each claim as framed by the complaint, the plaintiff moving for summary judgment must satisfy the initial burden of proof by presenting proving each element of a cause of action. (Code Civ Proc. § 437c(p)(1).) 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 plaintiff has met that burden, the burden shifts to the defendant to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. (Code Civ. Proc. § 437c(p)(1).) 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.)

As to each claim as framed by the cross-complaint, the cross-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. (Code Civ Proc. § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) As stated above, 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, supra, 39 Cal.4th at 389.) The lack of opposition by a cross-complainant is not grounds to grant a motion for summary judgment if a cross-defendant cannot meet their initial burden of proof. (See Thatcher v. Lucy Stores, Inc. (2000) 79 Cal.App.4th 1081, 1087.)

Once the cross-defendant has met that burden, the burden shifts to the cross-complainant 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, supra, 68 Cal.App.4th at 166.)

Defendants’ Deficient Separate Statement

Plaintiffs object to Defendants’ Responses to Separate Statement as improper because large portions of the Separate Statement either do not provide precise citations to evidence or cite no evidence at all. In a separate statement, “[c]itation to the evidence in support of the position that a fact is controverted must include reference to the exhibit, title, page, and line numbers.” (Cal. Rule of Court 3.1350(f)(3).) “The separate statement serves two important functions in a summary judgment proceeding: It notifies the parties which material facts are at issue, and it provides a convenient and expeditious vehicle permitting the trial court to home in on the truly disputed facts.” (Collins v. Hertz Corp. (2006) 144 Cal.App.4th 64, 74.) To the extent that the disputed material facts identified in Defendants’ Response are not supported by citations to evidence with sufficient specificity to permit ready identification of the relevant materials, the Court will not consider those portions of the Separate Statement.

Defendants’ Evidentiary Objections

Defendants raise several objections to Plaintiffs’ evidence in support of their motion. The Court rules on this evidence as follows:

Objection No. 1: OVERRULED. Does not lack foundation or authentication. Statement is not hearsay because it is not offered for the truth of its contents.

Objection No. 2: OVERRULED. Does not lack foundation or authentication. These documents are not hearsay under the business records exception. (Evid. Code § 1271.)

Objection No. 3: OVERRULED. Does not lack foundation or authentication. Statement is not hearsay because it is not offered for the truth of its contents.

Plaintiffs’ Evidentiary Objections

Plaintiffs raise numerous evidentiary objections to Defendants’ evidence in support of their opposition. The Court rules on these objections as follows:

1. Declaration of Sachin Patel

Objection No. 1: OVERRULED. Objection goes to weight, not admissibility.

Objection Nos. 2-3: OVERRULED. Not an improper legal conclusion, does not lack foundation.

Objection No. 4: SUSTAINED as improper legal conclusion with respect “360 Capital is not a contractor.” SUSTAINED as irrelevant as to lines 14-17.

Objection No. 5: OVERRULED. Not improper opinion evidence.

Objection No. 6: OVERRULED. Does not lack foundation nor personal knowledge. Not hearsay.

Objection No. 7: SUSTAINED as an improper legal conclusion as to the agreement between the parties.

Objection No. 8: SUSTAINED as to improper legal conclusion and secondary evidence rule, and as to the missing email chain.

Objection Nos. 9-10: OVERRULED. Not an improper legal conclusion. Does not lack foundation or personal knowledge.

Objection No. 11: SUSTAINED as irrelevant.

Objection No. 12: SUSTAINED as improper legal conclusion and secondary evidence rule.

Objection No. 13: OVERRULED. Does not lack foundation nor personal knowledge.

Objection No. 14: OVERRULED. Not an improper legal conclusion, does not lack foundation. Secondary evidence rule not applicable to this testimony.

Objection Nos. 15-16: OVERRULED. Not an improper legal conclusion. Does not lack foundation.

Objection No. 17: OVERRULED. Does not lack foundation. Secondary evidence rule not applicable to this testimony.

Objection No. 18: OVERRULED. Not an improper legal conclusion. Statement is admissible to show how 360 Capital held itself out, even if inadmissible to prove which entity was the contractor.

Objection No. 19: SUSTAINED under the secondary evidence rule. The evidence speaks for itself.

Objection No. 20: SUSTAINED as improper opinion evidence, and under the secondary evidence rule. The documents speak for themselves.

2. Declaration of Miguel Soltero

Objection No. 21: OVERRULED. Objection goes to weight, not admissibility.

Objection Nos. 22-23: OVERRULED. Not an improper legal conclusion, does not lack foundation.

Objection No. 24: SUSTAINED as improper legal conclusion with respect “360 Capital is not a contractor.” SUSTAINED as irrelevant as to lines 18-27.

Objection No. 25: OVERRULED. Not improper opinion evidence.

Objection No. 26: OVERRULED. Does not lack foundation nor personal knowledge. Not hearsay.

Objection No. 27: SUSTAINED as an improper legal conclusion as to the agreement between the parties.

Objection No. 28: SUSTAINED as to improper legal conclusion and secondary evidence rule.

Objection Nos. 29-30: OVERRULED. Not an improper legal conclusion. Does not lack foundation or personal knowledge.

Objection No. 31: SUSTAINED as irrelevant.

Objection Nos. 32-33: OVERRULED. Does not lack foundation nor personal knowledge.

Objection Nos. 34-35: OVERRULED. Not an improper legal conclusion. Does not lack foundation.

Objection No. 36: OVERRULED. Not an improper legal conclusion, does not lack foundation nor personal knowledge.

Objection No. 37: OVERRULED. Does not lack foundation. Secondary evidence rule not applicable to this testimony.

Objection No. 38: SUSTAINED as improper opinion evidence, and under the secondary evidence rule. The documents speak for themselves.

Request for Judicial Notice

Plaintiffs request that the Court take judicial notice of (1) the October 16, 2020 Statement of Information for 360 Capital Ventures, Inc. filed with the California Secretary of State; (2) Certification of Records from the Contractors’ State License Board dated November 2, 2022, finding no records that neither Sachin Patel d/b/a 360 Capital Ventures Inc., nor (3) 360 Capital Ventures, Inc., was licensed as a California contractor between December 1, 2018 and November 2, 2022; (4) the Contractor’s license for RE3 Restoration, LLC; (5) RE3’s April 16, 2021 and September 16, 2022 Statements of Information filed with the Secretary of State; and (6) the First Amended Cross-Complaint in this action. Plaintiffs’ Requests Nos. 1-5 are GRANTED pursuant to Evidence Code section 452(c) (official acts). Request No. 6 is GRANTED pursuant to Evidence Code section 452(d) (court records).

First Cause of Action (FAC): Restitution

Plaintiffs move for summary adjudication of their first cause of action for restitution against Defendant 360 Capital Ventures, Inc. only.

A person or corporation may not act as a contractor if that person is not licensed in the manner provided by the Business & Professions Code. (Bus & Prof. Code §§ 7025, 7028.) A person likewise may not advertise for construction or work of improvement without holding a valid license. (Bus & Profs. Code § 7027.1.) An unlicensed contractor may not seek compensation for the performance of any act or contract where a license is required. (Bus. & Profs. Code § 7031(a).) Further, any person who uses the services of an unlicensed contractor is entitled to recover all compensation for the performance of any act or contract. (Bus. & Profs. Code § 7031(b).) For the purposes of these statutes, a “contractor” includes ““any person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building ... or other structure, project, development or improvement, or to do any part thereof,” as well as any “subcontractor and specialty contractor.” (Bus. & Profs. Code § 7026.) The term also includes “[a]ny person who advertises or puts out any sign or card or other device that would indicate to the public that he or she is a contractor . . . regardless of whether his or her operations as a builder are otherwise exempted.” (Bus & Profs. Code § 7027.) “[M]ere execution of a construction contract is an act ‘in the capacity of a contractor.’” (Panterra GP, Inc. v. Superior Court (2022) 74 Cal.App.5th 697, 720-21.) Put differently, “those who enter into construction contracts must be licensed, even when they themselves do not do the actual work under the contract.” (Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 941.)

Plaintiffs contend that Defendant 360 engaged in numerous acts which required a contractor’s license. Specifically, Plaintiffs state that Defendant offered to construct a single-family dwelling for Plaintiffs at the subject property for $1,145,000, (Separate Statement of Undisputed Material Facts Nos. 5, 16) and that the construction contract into which Plaintiffs entered identifies it as being a contract with Defendant 360, who is named as the contractor, and even provided a license number belonging to a third-party contractor owned by Defendant Soltero. (SSUMF Nos. 5, 6.) 360 Capital is not a licensed contractor, nor is its principal, Sachin Patel. (SSUMF Nos. 17-18.) Instead, the license number that was provided is held by RE3 Restoration, LLC, of which Patel is not a member or manager. (SSUMF Nos. 20-21.) Plaintiffs state that Defendant solicited invoices and proposals relating to the construction from various vendors and subcontractors, (SSUMF Nos. 28-50), provided updates on the status of construction as if it were providing the services (No. 48), submitted invoices for services under its name, (No. 52-54), and posted a sign advertising its services to the public on the property. (No. 51.) Plaintiffs also offer evidence that Sachin Patel, on behalf of Defendant 360, entered into agreements with Southern California Gas Company for installation of natural gas infrastructure on the property. (SSUMF Nos. 24-26.) Plaintiffs also received a preliminary notice from one of the material suppliers that lists Defendant 360 as the contractor. (No. 27.) Plaintiffs contend that they paid Defendant 360 a total of $912,443.89 pursuant to Defendant’s own invoices. (SSUMF Nos. 52-54.)

Any one example of Defendant’s conduct would be sufficient to state a prima facie case that Defendant 360 acted as a contractor without holding a contractor’s license and secured compensation for that conduct. This voluminous production is thus more than sufficient to demonstrate that Plaintiffs have met all elements of this claim. The burden therefore shifts to Defendant to establish a triable issue of fact.

In opposition, Defendant first argues that Plaintiffs have not established the viability of their claims against Defendants Soltero and Patel under an alter ego theory. As Plaintiffs are not seeking to establish the liability of those Defendants on this motion, that argument is irrelevant. Defendant also argues that there are triable issues as to Plaintiffs’ separate claim for damages under Code of Civil Procedure section 1029.8. (FAC ¶ 21.) However, Plaintiffs expressly disclaim any damages under that section in their motion, which moots this argument. (Memo. of Ps & As p.9 fn. 2.)

As to the substantive contentions, Defendant first argues that RE3 Restoration was the general contractor, not 360 Capital, and that Plaintiffs were aware of this relationship. (See Defendant’s Responses to Separate Statement No. 5; Declaration of Miguel Soltero ISO Opp. Exhs. B-N.) None of the various text messages offered by Defendant make any mention of RE3, however. Nor is there any basis to infer from these messages that Plaintiffs were aware of RE3’s existence, let alone its status as the general contractor. Defendant also contends that it was listed on the contract because RE3 was using 360 for “administrative purposes,” a contention not supported by any evidence, and that Defendant Patel signed the contract as RE3’s agent. (See RSS No. 5, Declaration of Sachin Patel ISO Opp. ¶ 14.) The individual Defendants claim under penalty of perjury that RE3’s name was inadvertently missing from the contract. (RSS No.5.) Defendants Soltero and Patel also categorically deny that they ever represented that 360 Capital was a licensed contractor, and state that RE3 was always held out as the entity that would perform the contractor services. (RSS No. 5, see, e.g. Patel Decl. ¶ 12.) Defendant contends that it holds itself out as a “design/build” firm, as it did on the sign posted on Plaintiffs’ property, not as a contractor. (RSS No. 51.) Defendant also argues that, in sending out invoices and payment requests, it acted only as a construction manager, maintaining records, coordinating construction activities, and managing financials, none of which requires licensure as a matter of law. (The Fifth Day, LLC v. Bolotin (2009) 172 Cal.App.4th 939, 947-48.) Defendant does not address Plaintiffs’ evidence of agreements with third parties or utility companies for services on the property, and, although the Response to the Separate Statement claims that the corresponding Material Facts are disputed, none of the evidence cited pertains to those agreements.

Defendant also claims that Plaintiffs’ alleged damages are inconsistent. According to Defendant, the payments identified in the Separate Statement do not sum up to the amount claimed. (SSUMF Nos. 29-50.) However, the invoices identified in the Separate Statement are examples, and are not offered as a comprehensive list. (See Declaration of Daniel Wang ISO Mot. ¶ 19.) Moreover, to the extent that the total of the invoices exceeds the amount claimed by Plaintiffs as damages, Plaintiffs have categorically disclaimed any amount in excess of $912,443.89. (Memo. of Ps & As p.9 fn. 2.)

In reply to Defendant’s substantive arguments, Plaintiffs contend that Defendant’s position that Patel signed the contract on behalf of RE3 as a proxy is “incredible, self-serving, and unworthy of credence.” Whether or not Defendants Patel and Soltero are credible is a question of fact that may not be resolved on summary judgment, and Plaintiffs may not challenge the credibility of this evidence on this motion. As to Defendant’s contentions that it only performed administrative functions, Plaintiffs argue that The Fifth Day is distinguishable because the contract under which those obligations were performed clearly specified by its plain language that the construction manager would only perform administrative functions and “had no responsibility or authority to perform any construction work or to enter into any contract or subcontract for the performance of such work.” (The Fifth Day, LLC, supra, 172 Cal.App.4th at 948.) Here, in contrast, the contract contains no such terms, and, instead, these duties are being carried out in fulfilment of a contract for construction services, which constitutes unlicensed contractor work as a matter of law. (Vallejo Development Co., supra, 24 Cal.App.4th at 938-39.)

Further, Defendant’s evidence that Plaintiffs knew that RE3 would be performing and did perform the construction work on the project does not rebut Plaintiffs’ showing that Defendant 360 acted in the capacity of a contractor, since contractor activities include construction work does “by or through others.” (Id., at p. 940, citing Business and Professions Code § 7026.) Nor does Defendants’ emphatic characterization of its work as merely administrative excuse its involvement its unlicensed involvement in the construction project. To paraphrase the holding in Vallejo, “even if [360] performed only administrative and oversight functions with respect to the actual [construction of Plaintiffs’ house], it nevertheless acted ‘in the capacity of’ a general engineering contractor by performing those functions in fulfillment of contractual obligations owed to the owners of the property on which the [house was built].” (Vallejo, supra, at p. 940; see also Judicial Council of California v. Jacobs Facilities, Inc. (2015) 239 Cal. App. 4th 882, 905 [securing insurance and bonding, soliciting and accepting payment, and executing contract amendments are activities in the capacity of a contractor].) Moreover, Plaintiffs correctly note that Defendant has made no effort to rebut Plaintiff’s evidence revealing repeated representations of its status as the “contractor” on the project in connection with its contracts with Southern California Gas. (SSUMF Nos. 24-26, Exh. 28-30.) For these reasons, Defendant has failed to establish a triable issue of fact on this cause of action, and Plaintiffs are entitled to summary adjudication as a matter of law.

Accordingly, Plaintiffs’ Motion for Summary Adjudication of the First Cause of Action in the First Amended Complaint is GRANTED.

First Cause of Action (FAXC): Reformation

Plaintiffs also move for summary adjudication of the first cause of action in the First Amended Cross-Complaint against them for reformation of the contract.

Civil Code section 3399 permits a party to apply for revision of a contract when that contract does not express the intention of the parties, whether that error is the result of fraud, mutual mistake, or a mistake of one party which the other knew or suspected, so long as the revision does not prejudice the rights of any third party. (Civ. Code § 3399.)

Plaintiffs contend that this cause of action fails because, first, reformation is an equitable remedy, not a free-standing cause of action. (Landis v. Superior Court (1965) 232 Cal.App.2d 548, 555.) Although Plaintiffs are correct, this argument does not by itself demonstrate that Cross-Complainants are not entitled to pursue this remedy. Indeed, Panterra GP, Inc., on which both parties rely, extensively considers a cause of action styled “reformation” notwithstanding its nature as an equitable remedy. (See Panterra, supra, 74 Cal.App.5th 713-14.)

Turning to more substantive contentions, Plaintiffs contend that reformation is unavailable to an unlicensed contractor because an unlicensed contractor may not pursue equitable relief under Business & Professions Code section 7031. As Plaintiffs have extensively argued, neither 360 Capital nor Sachin Patel, who are the only Cross-Complainants, were licensed contractors. (SSUMF Nos. 84-85.) Plaintiffs have thus offered evidence that the Cross-Complainants cannot prevail on this cause of action. The burden now shifts to the Defendant/Cross-Complainants to demonstrate a triable issue of fact in this respect.

In opposition, Defendants argue that Panterra holds that a claim for reformation to add a licensed contractor to a construction contract is not barred by section 7031. (Panterra, supra, 74 Cal.App.5th at 715.) However, Defendants misstate the holding of that case. The Panterra court rejected the argument that reformation was barred because the contract was allegedly made by an unlicensed person, where the gravamen of the claim was that the parties intended for the licensed entity to act as contractor. (Id. at 715.) However, the party seeking reformation in Panterra was the licensed contractor, and thus section 7031 did not apply. (Id. at 702.) Here, on the other hand, Defendants are not licensed entities, but the unlicensed entities, and section 7031 squarely applies. Defendants have thus failed to demonstrate a triable issue of fact as to this cause of action.

Accordingly, Plaintiffs’ Motion for Summary Adjudication of the First Cause of Action in the First Amended Cross-Complaint is GRANTED.

Motion for Summary Judgment

Cross-Defendant Rosalind Wang moved for summary judgment on the First Amended Cross-Complaint. However, Cross-Complainants requested dismissal of this Cross-Defendant as to all causes of action on February 28, 2024. (Request for Dismissal.) This Motion for Summary Judgment is therefore MOOT.

CONCLUSION:

Accordingly, Plaintiffs’ Motion for Summary Adjudication is GRANTED.

Cross-Defendant Rosalind Wang’s Motion for Summary Judgment is DENIED AS MOOT.

Moving Parties to give notice.

IT IS SO ORDERED.

Dated: March 5, 2024 ___________________________________

Theresa M. Traber

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.