Ciaciuch v. Chapman



















Filed 1/8/13
Ciaciuch v. Chapman CA2/5

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OFFICIAL REPORTS

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California Rules of Court, rule
8.1115(a), prohibits courts and parties from citing or relying on opinions not
certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115>.





IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



SECOND APPELLATE DISTRICT



DIVISION FIVE






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JAMES CIACIUCH et al., Plaintiffs and Appellants, v. DAVID LEE CHAPMAN, Defendant and Respondent.

B235238 (Los Angeles County Super. Ct. No. PC042373)

APPEAL
from a judgment of the Superior Court of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Los Angeles
County, Barbara M. Scheper, Judge. Affirmed.

David
H. Pierce & Associates, David H. Pierce and Dennis D. Resh for Plaintiffs
and Appellants.

Vanderford
& Ruiz, Mario M. Menanno, Sean F. Daley and Roger R. Steinbeck for
Defendant and Respondent.



__________________________________



In this construction defects action,
plaintiffs and appellants James W. Ciaciuch, and Friendswood Builders, Inc.,
appeal from a judgment following the granting of a motion for href="http://www.mcmillanlaw.com/">summary judgment in favor of defendant
and respondent David Lee Chapman, individually and doing business as Chapman
Design and Development (collectively Chapman Design). Appellants contend triable issues of fact
exist that preclude the grant of summary judgment. We affirm the judgment.



FACTS AND PROCEDURAL BACKGROUND



First
Amended Complaint



Appellants
filed a complaint against Chapman Design for href="http://www.fearnotlaw.com/">breach of contract, negligence, indemnity,
declaratory relief, and contribution. The complaint alleged as follows. Ciaciuch owns Friendswood Builders, a Washington
corporation. In November 2004 through
February 2005, respondent entered into a contract with Friendswood Builders to
perform construction services on a residence in Santa Clarita (the
project). On January 20, 2006, the homeowners sued appellants and respondent for damages,
alleging, inter alia, that the construction work was defective (the homeowners’
action). On October 9, 2007, judgment was entered against appellants.

In
the first cause of action, appellants alleged respondent breached its contract
by failing to complete the job in a workmanlike manner. In the second cause of action, appellants
alleged respondent’s work on the project was negligent. In the third, fourth, and fifth causes of
action for implied contractual, equitable, and total indemnity, appellants
alleged the damages in the homeowners’ action were caused by acts and omissions
of respondent. In the sixth cause of
action, appellants requested a determination of the parties’ respective rights
and obligations. In the seventh cause of
action, appellants sought contribution for the judgment in the homeowners’
action, which appellants paid, that had been entered against appellants and
respondent jointly and severally.

Chapman Design’s Summary Judgment Motion



Chapman Design moved for summary
judgment on various grounds, including that appellants are barred from recovery
on any cause of action because Friendswood Builders was not a licensed
contractor in California, as required by Business and Professions Code section 7031,
subdivision (a).href="#_ftn1"
name="_ftnref1" title="">^[1]

Chapman
Design entered into a framing subcontract with Friendswood Builders for the
project. Friendswood Builders failed to
make all payments for Chapman Design’s work.

The
homeowners’ action alleged breach of contract and fraud by appellants. Appellants misrepresented that Friendswood
Builders was properly licensed.
Friendswood Builders overbilled, performed unnecessary work, and
misrepresented what was billed for.
There were many deficiencies in the construction, and much of the work
needed to be redone. The causes of
action alleged against Chapman Design were for negligence and breach of
warranty.

When
the homeowners filed their lawsuit, Ciaciuch assured the subcontractors that
Friendswood Builders would resolve the matter, but appellants failed to defend
the action and default judgments were entered.
Judgment that was given to the homeowners against appellant, respondent,
and others included the cost to remediate and complete. Appellants brought this lawsuit against
Chapman Design and other subcontractors to recover for satisfaction of the
judgment.



Appellants’ Opposition to Chapman Design’s Summary
Judgment Motion



Appellants contended section 7031
did not bar their causes of action except perhaps for the breach of contract
cause of action, because the claims did not seek compensation for unlicensed
work. Appellants contended the bar does
not extend to their claims for equitable indemnification, contribution, and
negligence.



Trial Court’s Ruling on Chapman Design’s Motion for
Summary Judgment



The
trial court granted the motion for summary judgment in favor of respondent as
to all causes of action. The court found
there was no triable issue of material fact and all of the causes of action
were barred by section 7031. “The
undisputed facts demonstrate that . . . Friendswood Builders[,] the party that
contracted with the [homeowners], was never licensed in California. The fact that . . . Ciaciuch was licensed in California is of
no moment since he was not the contracting party. . . . [¶]
‘Regardless of the equities, section 7031 bars all actions, however
they are characterized, which effectively seek compensation for illegal
unlicensed contract work. . . . Thus, an
unlicensed contractor cannot recover either for the agreed contract price or
for the reasonable value of labor and materials. . . .’ [Citation.]
[¶] Plaintiffs rely on >Ranchwood Communities v. Jim Beat
Construction Co. (1996) 49 Cal.App.4th 1397 [(Ranchwood)] to support their claim that an unlicensed contractor
may sue and obtain equitable indemnity from negligent subcontractors. Ranchwood,
however, is distinguishable. There, the
contractor was also the developer of the project and thus strictly liable to
the homeowners for construction defects.
In Ranchwood, the allegedly
negligent subcontractors had been paid for their work on the project. Here, . . . Friendswood [Builders] was acting
solely in the capacity of a general contractor and had no other role. In addition, the undisputed facts demonstrate
that defendant[] [was] not paid. Thus,
unlike the developer in Ranchwood,
plaintiffs are not seeking disgorgement of payments by negligent subcontractors
for defective work for which plaintiffs were held strictly liable. Rather, plaintiffs here were found to have
committed fraud against the [homeowners] and ordered to pay damages to correct
the work negligently performed on the . . . project and to finish the
project. Regardless of the label
attached to plaintiffs’ claims, they are seeking compensation for work done
pursuant to an illegal contract which is clearly barred by statute.”

In
addition, as Friendswood Builders was found to have committed fraud against the
homeowners in the homeowners’ action, the contribution cause of action cannot
succeed based on Code of Civil Procedure, section 875, subdivision (d) [“There shall be no right of
contribution in favor of any tortfeasor who has intentionally injured the
injured person.”].



DISCUSSION



Friendswood
Builders contends section 7031 does not deprive it of standing to assert the
indemnity, contribution, and negligence causes of action.href="#_ftn2" name="_ftnref2" title="">^[2] We conclude the contention
has no merit: Friendswood Builders has
no standing to sue respondent on any of the causes of action in the href="http://www.fearnotlaw.com/">first amended complaint.^[3]



Standard
of Review of Orders Granting Summary Judgment



“A
trial court properly grants summary judgment where no triable issue of material
fact exists and the moving party is entitled to judgment as a href="http://www.mcmillanlaw.com/">matter of law. [Citation.]
We review the trial court’s decision de novo, considering all of the
evidence the parties offered in connection with the motion (except that which
the court properly excluded) and the uncontradicted inferences the evidence
reasonably supports. [Citation.] In the trial court, once a moving defendant
has ‘shown that one or more elements of the cause of action, even if not
separately pleaded, cannot be established,’ the burden shifts to the plaintiff
to show the existence of a triable issue; to meet that burden, the plaintiff
‘may not rely upon the mere allegations or denials of its pleadings . . . but,
instead, shall set forth the specific facts showing that a triable issue of
material fact exists as to that cause of action . . . .’ [Citations.]”
(Merrill v. Navegar, Inc.
(2001) 26 Cal.4th 465, 476-477.) “[W]e
‘“liberally construe the evidence in support of the party opposing summary
judgment and resolve doubts concerning the evidence in favor of that
party.”’ [Citations.]” (Hughes v. Pair (2009) 46 Cal.4th 1035, 1039.) “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.)



Section
7031



Section
7031 provides in pertinent part: “(a) 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 he or she was 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. [¶] (b)
Except 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.”

“To
protect the public, the Contractors’ State License Law (CSLL; . . . § 7000 et
seq.) imposes strict and harsh penalties for a contractor’s failure to maintain
proper licensure. Among other things,
the CSLL states a general rule that, regardless of the merits of the claim, a
contractor may not maintain any action, legal or equitable, to recover
compensation for ‘the performance of any act or contract’ unless he or she was
duly licensed . . . .” (>MW
Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 418, fn. omitted (>MW Erectors).)

“The
purpose of the licensing law is to protect the public from incompetence and
dishonesty in those who provide building and construction services. (Lewis & Queen v. N. M. Ball
Sons (1957) 48 Cal.2d 141, 149-150 [(Lewis
& Queen)].) The licensing
requirements provide minimal assurance that all persons offering such services
in California have the requisite skill and character, understand applicable
local laws and codes, and know the rudiments of administering a contracting
business. . . . [¶] Section 7031 advances this purpose by
withholding judicial aid from those who seek compensation for unlicensed
contract work. The obvious statutory
intent is to discourage persons who have failed to comply with the licensing
law from offering or providing their unlicensed services for pay. [¶]
Because of the strength and clarity of this policy, it is well settled
that section 7031 applies despite injustice to the unlicensed contractor. ‘Section 7031 represents a legislative
determination that the importance of deterring unlicensed persons from engaging
in the contracting business outweighs any
harshness between the parties, and that such deterrence can best be
realized by denying violators the right to maintain any action for compensation
in the courts of this state. [Citation.]
. . .’ (Lewis & Queen, supra,
48 Cal.2d at p. 151 . . . ; [citations].)”
(Hydrotech Systems, Ltd. v. Oasis
Waterpark (1991) 52 Cal.3d 988, 995 (Hydrotech);
accord, MW Erectors, supra, 36
Cal.4th at p. 423.)

“[S]ection
7031 bars all actions, however they are characterized, which effectively seek
‘compensation’ for illegal unlicensed contract work.” (Hydrotech,
supra, 52 Cal.3d at p. 997 [the
provisions and purposes of § 7031 cannot be circumvented by characterizing the
claim as a tort claim].)

“[C]ourts may not resort to
equitable considerations in defiance of section 7031.” (Lewis & Queen, supra, 48 Cal.2d at p. 152.) “Section 7031 represents a
legislative determination that the importance of deterring unlicensed persons
from engaging in the contracting business outweighs any harshness between the
parties, and that such deterrence can best be realized by denying violators the
right to maintain any action for compensation in the courts of the
state[.]” (Id. at p. 151.) The bar of
section 7031 applies even where the result would be unjust enrichment. (MW
Erectors, supra, 36 Cal.4th at p. 423.) “[T]he possibility of the defendant’s unjust
enrichment [does] not overcome the absolute prohibition against use of the
courts to recover for unlicensed contract work.” (Id.
at p. 424.)

“The statutory language demonstrates
the Legislature’s ‘intent to impose a stiff all-or-nothing penalty for
unlicensed work . . . .’ ([>MW Erectors, supra, 36 Cal.4th,] at
p. 426.) The statute’s harsh
results are justified by the importance of deterring violations of the
licensing requirements. . . .” (>White v. Cridlebaugh (2009) 178
Cal.App.4th 506, 519.)

Subcontractors
are in the class protected by the statute when a general contractor is required
to have a license. (Lewis & Queen, supra, 48 Cal.2d at p. 153.) The CSLL “was enacted for the safety and
protection of the public . . . and for the prevention of fraudulent acts by
contractors resulting in loss to subcontractors . . . .” (Fraenkel
v. Bank of America (1953) 40 Cal.2d 845, 848.)

Section 7031 bars a general
contractor who is liable to the homeowner for construction defects from suing
its subcontractors for indemnification and contribution. (Ranchwood, supra, 49 Cal.App.4th at
p. 1418.)



The Bar
of Section 7031 Applies to Friendswood Builders in this Action



We
conclude section 7031 bars Friendswood Builders, an unlicensed contractor, from
seeking recovery of the homeowner judgment from respondent, its subcontractor,
by asserting claims for indemnity and contribution based on negligence. Friendswood Builders’ claims are all founded
on its subcontractual relationship with respondent and are based on the
construction work it performed in violation of the state’s licensing laws. Recovery of some or all of the homeowners’
damages award would compensate the unlicensed contractor for performance of its
work on the project, a result that is forbidden by section 7031. This result promotes the legislative policy
that a “stiff all or nothing penalty” must be imposed for unlicensed work. (See MW
Erectors, supra, 36 Cal.4th at p. 426.)

Ranchwood, supra, does not
support appellants’ contention that section 7031, subdivision (a) allows an
unlicensed general contractor to recover damages from a subcontractor under
theories of equitable indemnity and negligence.
Each appellant in Ranchwood
was the developer of a housing development who also acted as his own general
contractor on the project. The
homeowners who purchased the housing units sued the appellants for damages for
construction defects. The appellants
cross-complained against subcontractors who had worked on the project for
indemnity, contract damages, and contribution, alleging negligence, breach of
contract, and breach of warranties. (>Ranchwood, supra, 49 Cal.App.4th at pp.
1404-1405.) The subcontractors moved for
summary judgment on the ground the appellants were not licensed general contractors. (Id.
at p. 1405.) The court held: (1)
suing in their capacity as the developers on the projects to recover
damages for which they were potentially strictly liable to the homeowners, the
appellants were not barred by section 7031 from seeking indemnification and
contribution from the subcontractor; but (2)
suing in their capacity as general contractors, section 7031 barred the
appellants from recovering damages or seeking indemnification and contribution
from the subcontractors for breach of contract and contract-related causes of
action. (Id. at pp. 1418-1421.) The
first holding of Ranchwood, which
Friendswood Builders relies on, has no application in this case, because
Friendswood Builders was not the developer of the project. As the general contractor on the project,
Friendswood Builders was not strictly liable to the homeowners for construction
defects, as the appellants in Ranchwood
were because they were the developers.
(See id. at p. 1414
[developers may be subject to strict liability].)

As summary judgment was proper on
the ground of lack of standing, we need not reach appellants’ other contentions
challenging the grant of summary judgment.



DISPOSITION



The judgment is affirmed. Costs on
appeal are awarded to respondent.





KRIEGLER,
J.





We concur:



TURNER,
P. J.





ARMSTRONG,
J.