Opinion
E039771
4-24-2007
STEVEN BOUBON, Plaintiff, Cross-defendant and Respondent, v. 02 WIRELESS, INC., Defendant, Cross-complainant and Appellant.
Best Best & Krieger, D. Brian Reider, Douglas S. Phillips and Kira L. Klatchko for Defendant, Cross-complainant and Appellant. Reid & Hellyer and Thomas L. Miller for Plaintiff, Cross-defendant and Respondent.
NOT TO BE PUBLISHED
Defendant, 02 Wireless, Inc., dba Baran Telecom (hereafter 02 Wireless) appeals from the summary judgment entered against it and in favor of plaintiff, Steven Boubon (hereafter Boubon), on Boubons complaint against 02 Wireless seeking, among other things, declaratory and injunctive relief, and damages for breach of contract. Boubon and 02 Wireless had entered into a contract pursuant to which he would pay $989,476 to 02 Wireless to construct a building for Boubon to use as a showroom, warehouse, and office for his carpet business. In connection with that contract, 02 Wireless agreed to advance the construction costs. As security for repayment, Boubon executed a deed of trust in favor of 02 Wireless on the property where the building was to be constructed.
After construction was complete and Boubon had accepted the building, 02 Wireless demanded payment. Boubon refused, apparently because he believed that the cost overruns had been excessive and that some work had not properly been performed. 02 Wireless initiated non-judicial foreclosure proceedings on the deed of trust. To prevent the foreclosure, Boubon filed the action that is the subject of this appeal. In his complaint, Boubon alleged among other things that 02 Wireless was not entitled to any money because it did not have the proper contractors license at the time it constructed the building. The trial court agreed and entered summary judgment in favor of plaintiff.
It this appeal, 02 Wireless contends that triable issues of material fact exist regarding (1) the license 02 Wireless was required to have in order to construct the building; (2) whether the contract was a hybrid that included a construction loan and an agreement to construct the building such that 02 Wireless could recover on the loan provision, even if precluded from recovering on the construction provision; and (3) whether 02 Wireless needed a license at all. We conclude that its contentions all lack merit and therefore we will affirm the judgment.
DISCUSSION
1.
STANDARD OF REVIEW
Because this is an appeal from a summary judgment, we independently review the record to determine whether triable issues of material fact exist that would preclude granting such a motion. (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142.) We conduct our review according to the same procedure followed in the trial court. Therefore, we first identify the issues framed by the pleadings. Next, "`"we determine whether the moving partys showing has established facts which negate the opponents claims and justify a judgment in movants favor; when a summary judgment prima facie justifies a judgment, the third and final step is to determine whether the opposition demonstrates the existence of a triable, material factual issue. [Citations.]" [Citation.]" (Dawson v. Toledano (2003) 109 Cal.App.4th 387, 392.)
2.
ANALYSIS
Boubons complaint raises only one issue — whether 02 Wireless had the correct contractors license to perform its contractual obligations. Boubon alleged in his complaint that on July 21, 2003, he entered into a contract, entitled "Master Services Agreement" (the MSA), with 02 Wireless. The MSA, which identifies Boubon as "Owner" and 02 Wireless as "Contractor," states, among other things, that, "Contractor shall provide construction services for a new commercial building . . . . As the General Contractor, Contractors services shall include the management of the construction process including selection (with the approval of Owner) and administration of subcontracts and supervision of subcontractors."
Boubon attached a copy of the MSA to the complaint and incorporated it by reference into that pleading.
In its summary judgment motion, Boubon asserted that a general contractor must have what commonly is referred to as a Class B general contractors license and that 02 Wireless did not have such a license; it had a Class A general engineering contractors license.
In its opposition, 02 Wireless did not dispute the above noted facts and thus admitted that it had entered into the MSA with Boubon, that the MSA included the above quoted provision, and that 02 Wireless had a Class A general engineering license. 02 Wireless argued, however, that other provisions in the MSA prevailed over the provision relied on by Boubon. The validity of that claim does not depend on the resolution of disputed facts but rather on the legal significance of the undisputed facts. Because the facts are undisputed, the issues raised in this appeal are ones of law. (Evans v. Unemployment Ins. Appeals Bd. (1985) 39 Cal.3d 398, 407.)
The pertinent legal principles are also undisputed and are set out in the Contractors State License Law (CSLL; Bus. & Prof. Code, § 7000 et seq.), which, as the Supreme Court recently confirmed, "imposes strict and harsh penalties for a contractors 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 `at all times during the performance of that act or contract. (§ 7031, subd. (a) . . . .)" (MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 418, emphasis omitted.)
All further statutory references are to the Business and Professions Code unless indicated otherwise.
02 Wireless requests that we take judicial notice of the superseded appellate court decision, MW Erectors, Inc. v. Niederhauser Ornamental and Metal Works Company, Inc. (2004) 115 Cal.App.4th 512, solely to show that the Supreme Court purportedly affirmed the Court of Appeals conclusion that the issue of licensing is a question of fact. The request for judicial notice is denied. In denying that request we note that if a superseded appellate case is the only authority that supports an argument, it is likely that argument is wrong.
At the time it performed its contract with Boubon, 02 Wireless had a Class A general engineering license. Under that license, 02 Wireless was permitted to operate only within the areas set out in section 7056. (See Cal. Code Regs., tit. 16, § 834, subd. (a) ["A licensee classified as a general engineering contractor shall operate only within those areas defined in Section 7056 of the Code."].) Section 7056, as pertinent here, states, "A general engineering contractor is a contractor whose principal contracting business is in connection with fixed works requiring specialized engineering knowledge and skill . . . ."
In opposition to Boubons summary judgment motion 02 Wireless attempted to present evidence to show that a contractor with a Class A general engineering license could have built the building in question. The trial court sustained Boubons various objections to the admissibility of the evidence 02 Wireless offered to support its claim, a ruling 02 Wireless contests in this appeal. That showing begs the issue. Whether construction of the building required engineering knowledge and therefore the building could have been constructed by a person with a Class A general engineering license would have been relevant if 02 Wireless had acted as the general engineering contractor on the project. It did not. According to the express terms of the MSA, quoted above, 02 Wireless performed the duties of a general contractor and therefore was required to have a Class B general contractors license.
The challenged evidence consisted of the declarations of two different and presumably qualified people, who each expressed the opinion that construction of the building required specialized engineering knowledge.
Section 7057 defines a "general building contractor" as "a contractor whose principal contracting business is in connection with any structure built, being built, or to be built, for the support, shelter, and enclosure of persons, animals, chattels, or movable property of any kind, requiring in its construction the use of at least two unrelated building trades or crafts, or to do or superintend the whole or any part thereof." (§ 7057, subd. (a).)
According to the express terms of the MSA quoted above, 02 Wireless acted as the general contractor in constructing the building for Boubon. Therefore, it was required to have a Class B general contractors license. 02 Wireless did not have such a license; it had a Class A general engineering contractors license.
02 Wireless also claims that under the MSA it was not just the general contractor, but it was also the construction lender and should be entitled to recover the funds loaned on the project by foreclosing on its deed of trust. That argument is not supported by the evidence. According to the pricing provision contained in the MSA, which is the evidence 02 Wireless cites to support its claim, 02 Wireless agreed "to provide limited financing of the construction costs" and Boubon agreed to pay interest of 5 percent per annum. In other words, 02 Wireless agreed to advance the costs of construction, the repayment of which was secured by a deed of trust on Boubons property.
Section 7.2 of the MSA addresses the construction loan and requires Boubon to obtain the necessary financial arrangements and to provide 02 Wireless with evidence that he had made the required arrangements.
Because it secures payment for performance, the deed of trust Boubon gave to 02 Wireless is unenforceable. Section 7031, subdivision (c) expressly states that "A security interest taken to secure any payment for the performance of any act or contract for which a license is required by this chapter is unenforceable if the person performing the act or contract was not a duly licensed contractor at all times during the performance of the act or contract." (§ 7031, subd. (c).)
02 Wireless also contends that there was a triable issue of material fact regarding whether it was entitled to recover payment for the work it performed on the building for which it was properly licensed. In asserting this claim, 02 Wireless does not cite any evidence to show that it actually performed any work on the building that it was properly licensed to perform. Nor did it cite such evidence in the trial court in its opposition to Boubons summary judgment motion. Instead, 02 Wireless cited the statutory examples of work permitted to be performed by a contractor that holds a Class A license. Because it did not present evidence in the trial court to show that it performed work under the contract that it was duly licensed to perform, we need not decide the issue of whether it may recover payment for that work.
Finally, 02 Wireless contends that a triable issue of material fact exists regarding whether a contractors license was required at all. 02 Wireless cites Denver D. Darling, Inc. v. Controlled Environments Construction, Inc. (2001) 89 Cal.App.4th 1221 for the purported view that the CSLL is concerned with protecting consumers with small construction projects rather than large projects that involve multiple trades and large sums of money. Therefore, 02 Wireless contends a triable issue of material fact exists as to whether the project in this case was even subject to the licensing requirements of the CSLL.
Contrary to the assertion of 02 Wireless, the court in Denver D. Darling, Inc. v. Controlled Environments Construction, Inc., supra, did not hold or otherwise suggest that large construction projects involving multiple subcontractors and trades are exempt from the licensing requirements of the CSLL. The case concerns the interplay between a rule promulgated by the Contractors State License Board and section 7057, which, as previously noted, sets out the definition of a general contractor. In that context, and in passing, i.e., as obiter dictum, the court stated, "Aside from the issue of which version of section 7057 applies, we note that the main objective of the legislation appears always to have been protection of consumers with regard to smaller construction projects and not larger ones that involve multiple trades or crafts. (See Home Depot U.S.A., Inc. v. Contractors State License Bd. [(1996)] 41 Cal.App.4th [1592,] 1605.) This subcontract, which involved multiple sub-subcontractors and total payment to [plaintiff] of about $1 million, is not the type of project with which the legislation is concerned." (Denver D. Darling, Inc. v. Controlled Environments Construction, Inc., supra, 89 Cal.App.4th at p. 1234.) The legislation the court referred to is section 7057, not the CSLL, as 02 Wireless states.
In quoting the sentence following the Home Depot citation, 02 Wireless has inserted "[CSLL]" after the word "legislation." That insertion clearly is wrong. Both Denver D. Darling, Inc. v. Controlled Environments Construction, Inc. and Home Depot U.S.A., Inc. v. Contractors State License Bd., cited therein, involve section 7057 and California Code of Regulations, title 16, section 834, subdivision (b).
In short and simply put, we conclude here, as the trial court did, that because it was not licensed as a general building contractor, 02 Wireless may not recover either in law or in equity for the work it performed in that capacity under the MSA with Boubon. Accordingly, the trial court properly granted Boubons motion for summary judgment and properly entered summary judgment in his favor in this case.
DISPOSITION
The judgment is affirmed. Boubon to recover costs on appeal.
We concur:
HOLLENHORST, Acting P.J.
MILLER, J.