Opinion
NOT TO BE PUBLISHED
Super. Ct. No. 34-2009-00047448.
BLEASE, Acting P.J.
Business and Professions Code section 7031, subdivision (a) “bars all actions, however they are characterized, which effectively seek ‘compensation’ for illegal unlicensed contract work.” (Hydrotech Systems, Ltd. v. Oasis Waterpark (1991) 52 Cal.3d 988, 997 (Hydrotech).) In this appeal we decide whether subdivision (a) bars plaintiff Commercial Residential Construction, Inc., a corporation that was licensed by the Contractors State License Board (CSLB) under the name “Commercial Residential Construction, Inc., ” from pursuing an action to collect compensation for work performed under two contracts entered into under the abbreviated name “CRC, Inc.”
Further statutory references are to the Business and Professions Code.
The trial court sustained defendants Steadfast Sunrise LLC and Steadfast Sunrise I LLC’s (collectively referred to as Steadfast) demurrer to the second amended complaint without leave to amend as to the third cause of action for foreclosure of mechanic’s liens and with leave to amend as to the fourth cause of action for breach of contract. With respect to the cause of action for foreclosure on mechanic’s liens, it found that Commercial Residential Construction, Inc. could not state a cause of action “for itself, as it was not the contracting party or on behalf of CRC, Inc., which was unlicensed.” As for the breach of contract cause of action, the court found that although Commercial Residential Construction, Inc. attached “several pages from what appears to be a contract [to the second amended complaint], it is incomplete as to the parties and terms, ” and “[t]he terms of the oral agreement are uncertain, as is whether the written agreement could be amended by a later oral agreement.” We disagree with both findings.
As for the cause of action to foreclose on the liens, the trial court has confused the corporate owner to whom the contractor’s license was issued with the name under which the corporation conducted its contracting business. Commercial Residential Construction, Inc. was licensed as a corporate entity. The dba “CRC, Inc.” was not an entity that could be licensed, rather it was the business name under which the corporate licensee did business. Because CRC, Inc. was not a distinct legal entity, it was not among the categories of individuals or entities defined by the Contractors’ State License Law (CSLL), section 7000 et seq., to whom a contractor’s license could be issued. (§§ 7065, 7068, subd. (b), 7096.)
We shall conclude that Commercial Residential Construction, Inc. was a licensed contractor and as such was entitled to perform work under the name Commercial Residential Construction, Inc. We shall further conclude that Commercial Residential Construction Inc.’s failure to contract in the exact same name as set forth in its license is, at most, grounds for disciplinary action. (See §§ 7083, 7117.) It does not bar Commercial Residential Construction, Inc. from pursuing an action to recover for work performed under the contracts. We shall also conclude that Commercial Residential Construction, Inc. alleged facts sufficient to state a cause of action for breach of contract against Steadfast. Accordingly, we shall reverse the judgment of dismissal as to Steadfast.
FACTUAL AND PROCEDURAL BACKGROUND
Because this matter comes to us after the trial court sustained Steadfast’s demurrer, we must “‘assume the truth of all properly pleaded material allegations of the complaint in evaluating the validity’ of the decision below” (Lazar v. Superior Court (Rykoff-Sexton, Inc.) (1996) 12 Cal.4th 631, 635), considering the evidentiary facts contained in recitals in the exhibits attached to the complaint and any facts judicially noticed by the trial court (Williams v. Housing Authority of Los Angeles (2004) 121 Cal.App.4th 708, 719; Satten v. Webb (2002) 99 Cal.App.4th 365, 375).
The operative second amended complaint alleged that “Plaintiff [Commercial Residential Construction, Inc., dba CRC Inc.], holds all licenses required to perform the work under the [subject] contracts.” It further alleged that Commercial Residential Construction, Inc., using the fictitious business name “CRC, Inc., ” contracted with defendant Marlali Property Investment Company (Marlali) “to supply labor and materials to defendants to build” two restaurants at Sunrise Mall, that Commercial Residential Construction, Inc. supplied all materials and performed all services required under the contracts, and that Marlali failed to pay it. For that reason, Commercial Residential Construction, Inc. recorded two mechanic’s liens against Steadfast and Marlali as the owners or reputed owners of the property. The lien documents identified the claimant as “CRC, Inc.”
There is no dispute that Commercial Residential Construction, Inc. is licensed by the CSLB. The trial court granted Steadfast’s request that it take judicial notice of records certifying Commercial Residential Construction, Inc. is “licensed under the provisions of law administered by [the CSLB].”
The second amended complaint also alleged or documents attached thereto reflected that the subject contracts were entered into by Jason Rapelye on behalf of “CRC, Inc.” Rapelye is one of the corporate officers listed in Commercial Residential Construction, Inc.’s license. Commercial Residential Construction, Inc.’s contractor’s license number appeared on both contracts. Steadfast invoiced “Commercial General Contractors” for construction work performed by Steadfast and a $5,000 construction deposit and sent the invoices to Commercial Residential Construction, Inc.’s address in Citrus Heights. The invoices were paid with checks listing the payor as “Commercial Residential Construction, Inc.” At Steadfast’s request, Commercial Residential Construction, Inc. named Steadfast as an additional insured on its liability insurance policy, and the certificate of insurance supplied to Steadfast listed the insured as: “CRC, Inc. [¶] Commercial Residential Const.” Commercial Residential Construction, Inc. obtained building permits for the subject construction, which listed the applicant and contractor as “Commercial Residential Construction” and contained Commercial Residential Construction, Inc.’s license number, and provided copies of the permits to Steadfast. Commercial Residential Construction, Inc. recorded partial releases of both mechanic’s liens, which listed “Commercial Residential Construction, Inc.” as the claimant.
Copies of Commercial Residential Construction, Inc.’s fictitious business name statement, the construction contracts, the invoices from Steadfast, the checks to Steadfast, the certificate of insurance, the building permits, the mechanic’s liens, and the partial releases of mechanic’s liens were attached as exhibits to the operative second amended complaint.
Commercial Residential Construction, Inc. asserted causes for breach of contract (first cause of action), quantum meruit (second cause of action) foreclosure of mechanic’s liens (third cause of action), and breach of “mall contract” (fourth cause of action). The third cause of action, to foreclose the liens, was brought against Steadfast and Marlali. The fourth cause of action for breach of contract was brought against Steadfast.
A corporation transacting business under a fictitious name may maintain an action on its behalf only if it has filed a fictitious business name statement in accordance with the statute. (§§ 17902, 17918.) That Commercial Residential Construction, Inc. filed its fictitious business name statement for “CRC, Inc” after initiating this action is of no consequence because even if the action is filed before the certificate “the bar to suit disappears once the fictitious name certificate is filed.” (Kirby v. Coastal Sales Ass’n, Inc. (S.D.N.Y. 2000) 82 F.Supp.2d 193, 199 [construing § 17918]; Henning v. Clark (1920) 46 Cal.App. 551, 553 [construing predecessor to § 17918].) Section “17918 deals only with one’s capacity to resort to the courts, not one’s capacity to create an enforceable right.” (Kirby v. Coastal Sales Ass’n Inc., supra, 82 F.Supp.2d at p. 199.)
Steadfast demurred to the third cause of action to foreclose on the mechanic’s liens on the ground “plaintiff [Commercial Residential Construction, Inc.] is not the lien claimant, the lien claimant [CRC, Inc.] does not have a California Contractor’s License, and [Commercial Residential Construction, Inc.] is not registered with the [CSLB] to do business in the name of [CRC, Inc.].” Steadfast demurred to the fourth cause of action for breach of contract on the ground the second amended complaint “fails to specify whether the alleged contract is oral, written, or implied by conduct, fails to allege necessary consideration, fails to allege a contract between plaintiff and the demurring defendants, the breach is not assigned in the words of the contract, and the documents attached to the complaint contradict the allegations of the claim.”
Following oral argument, the trial court sustained the demurrer as to the third cause of action for foreclosure on the liens without leave to amend and the demurrer as to the fourth cause of action for breach of contract with leave to amend. Commercial Residential Construction, Inc. declined to amend its fourth cause of action, dismissed the second amended complaint without prejudice as to the non-Steadfast defendants, and moved the trial court to dismiss the second amended complaint as to Steadfast so that judgment could be entered. (Code Civ. Proc, § 581d [“All dismissals ordered by the court shall be... filed in the action and those orders when so filed shall constitute judgments and be effective for all purposes....”] The court granted the motion and dismissed the second amended complaint. Commercial Residential Construction, Inc. appeals from the judgment of dismissal.
DISCUSSION
I
Standard of Review
When reviewing the sufficiency of a complaint where the trial court sustained a demurrer without leave to amend, we review the complaint de novo to determine whether a cause of action is stated giving “‘the complaint a reasonable interpretation, reading it as a whole and its parts in their context.’” (Williams v. Housing Authority of Los Angeles, supra, 121 Cal.App.4th at p. 719.) “Reversible error exists if facts were alleged showing entitlement to relief under any possible legal theory.” (Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 321-322.) If the complaint does not state a cause of action, but there is a reasonable possibility the defect can be cured by amendment, leave to amend must be granted. (Ibid.)
In addressing questions of statutory interpretation and application, we apply a de novo review. (Burden v. Snowden (1992) 2 Cal.4th 556, 562.) “Our primary duty when interpreting a statute is to ‘“determine and effectuate”’ the Legislature’s intent. [Citation.] To that end, our first task is to examine the words of the statute, giving them a commonsense meaning. [Citation.] If the language is clear and unambiguous, the inquiry ends. [Citation.] However, a statute’s language must be construed in context, and provisions relating to the same subject matter must be harmonized to the extent possible.” (Van Horn v. Watson (2008) 45 Cal.4th 322, 326, fn. omitted.)
II
The Trial Court Erred In Sustaining The Demurrer As To The Third Cause Of Action
In challenging the trial court’s sustaining of the demurrer as to the third cause of action for foreclosure of the mechanic’s liens, Commercial Residential Construction, Inc. contends “Steadfast misled the Superior Court into ruling that a fictitious, abbreviated business name used by a licensed contractor was a separate unlicensed entity.” While Commercial Residential Construction, Inc. concedes “that at the time it entered the contracts and recorded its mechanic’s lien[s], it had not updated its records with the [CSLB]... so as to use ‘CRC, Inc.’ as a business name, ” it asserts that “the allegations set forth in the [second amended complaint and the exhibits thereto] showed ‘CRC, Inc.’ (plainly an abbreviation for ‘Commercial Residential Construction, Inc.’) was [Commercial Residential Construction Inc.’s] fictitious business name, not a separate entity.” We agree.
A. The Statutory Licensing Scheme
The CSLL, section 7000 et seq., requires contractors to be licensed unless they are exempt from licensure. (§§ 7026, 7031 & 7040 et seq.) “The purpose of the licensing law is to protect the public from incompetence and dishonesty in those who provide building and construction services. [Citation.] 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.” (Hydrotech, supra, 52 Cal.3d at p. 995.)
“Section 7031, subdivision (a) is the primary enforcement mechanism for the CSLL.” (WSS Industrial Construction, Inc. v. Great West Contractors, Inc. (2008) 162 Cal.App.4th 581, 588.) It states: “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....” (§ 7031, subd. (a).)
The term “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, [or] improve... any building... or other structure, project, development or improvement, or to do any part thereof” and “includes subcontractor and specialty contractor.” (§ 7026.) “‘Person’ as used in this chapter includes an individual, a firm, partnership, corporation, limited liability company, association or other organization, or any combination thereof.” (§ 7025.)
B. Commercial Residential Construction, Inc. Is Not Barred As A Matter Of Law From Pursuing Its Action Against Steadfast For Foreclosure Of The Mechanic’s Liens
The CSLB licenses “individual owners, copartnerships, and corporations.” (§ 7065.) There is no dispute that Commercial Residential Construction, Inc., a corporation, is licensed by the CSLB. According to the second amended complaint, Commercial Residential Construction, Inc. entered into the contracts at issue herein using the fictitious business name “CRC, Inc.” “Use of a fictitious business name does not create a separate legal entity” distinct from the person operating the business. (Pinkerton’s Inc. v. Superior Court (1996) 49 Cal.App.4th 1342, 1348.) “‘The business name is a fiction, and so too is any implication that the business is a legal entity separate from its owner.’” (Ibid.) Thus, CRC, Inc. is legally indistinguishable from Commercial Residential Construction, Inc. (Ibid.) While Commercial Residential Construction, Inc. entered into the contracts as CRC, Inc., Commercial Residential Construction, Inc. was the contracting party, and as such, is entitled to pursue an action to collect for the work done pursuant to the contracts. That the liens listed “CRC, Inc.” as the claimant is of no consequence because, as just discussed, CRC, Inc. and Commercial Residential Construction, Inc. are one in the same. (Ibid.)
Steadfast argues, as it did below, that the liens are unenforceable because “Commercial Residential Construction, Inc.... was never duly licensed as a contractor to do business as ‘CRC, Inc., ’ and ‘CRC, Inc.’ was never duly licensed as a contractor.” In support of its argument, Steadfast relies on sections 7059.1 and 7083. Section 7059.1, subdivision (b) provides that “[a] licensee shall not conduct business under more than one name for each license, ” while section 7083 requires that “all licensees... notify the registrar... within 90 days of any change to information recorded under this chapter, ” including “changes in business address, personnel, [and] business name....”
As a preliminary matter, we note that because CRC, Inc. is not a separate legal entity, it is not among the categories of “persons” defined by the CSLL to whom a contractor’s license may issue. (§§ 7065, 7068, subd. (b), 7096.) Moreover, we question whether Commercial Residential Construction, Inc. was conducting business under more than one name as contemplated by section 7059.1 where, as here, the contracts contained an abbreviated form of Commercial Residential Construction, Inc.’s name, as well as its business address, telephone number, license number, and the name of one of the officers listed in its license; other documents provided to Steadfast, including building permits and a certificate of insurance, contained its full business name; Steadfast sent invoices to “Commercial General Contractors” at Commercial Residential Construction, Inc.’s address; and those invoices were paid with checks listing Commercial Residential Construction as the payor. (See, e.g., Handyman Connection of Sacramento, Inc. v. Sands (2004) 123 Cal.App.4th 867, 887-888 [holding that use of the name “Handyman Connection” in a contract instead of “Handyman Connection of Sacramento, Inc.” the name in which the license was issued did not constitute a material violation of section 7117 (which prohibits acting as a contractor except in the name of the licensee shown on the license) where documents otherwise disclosed the contractor’s license number, phone number, and address].)
Assuming for argument’s sake that Commercial Residential Construction, Inc. did violate section 7059.1 by operating under the name CRC, Inc. or section 7083 by failing to timely update its business name, it does not follow that it is precluded from pursuing an action to collect for work done under the unregistered name. Section 7031, subdivision (a)’s prohibition applies to contractors who are not “duly licensed” at all times during the performance of the contract. Nothing in sections 7031, 7059.1, or 7083 suggests that a contractor that contracts under a name different from that listed in its license is not “duly licensed” and thus barred from pursuing an action to collect for work done under the contract. While the Legislature easily could have specified that a license is automatically suspended or otherwise invalidated where a contractor does business in a name other than that set forth in its license, it did not. While section 7059.1 is silent as to the consequences for conducting business under more than one name, section 7083, provides that “[f]ailure to notify the registrar of [a change in business name] within the 90 days is grounds for disciplinary action.” (Italics added.) Similarly, section 7117 provides that “[a]cting in the capacity of a contractor under any license issued hereunder except... in the name of the licensee as set forth upon the license... constitutes a cause for disciplinary action.” (Italics added.) Having considered the relevant code sections in context as we must (Van Horn v. Watson, supra, 45 Cal.4th at p. 326), we conclude that Commercial Residential Construction, Inc.’s failure to contract in the exact same name as set forth in his license is, at most, grounds for disciplinary action.
Section 7059.1 is part of Article 4, section 7055 et seq., which governs “classification” of contracting businesses. For purposes of this appeal, we assume, without deciding, that section 7059.1 applies generally to a contractor’s use of business names and is not limited to the use of business names as they relate to the contractor’s classification(s).
In other circumstances, the Legislature has done just that. (See, e.g., § 7068.2 [license suspended or classification removed upon failure to replace or notify CSLB of disassociation of qualifying individual within 90 days]; § 7071.17, subd. (b) [license automatically suspended upon failure to notify CSLB of unsatisfied judgment within 90 days]; § 7076 [specifying events resulting in cancellation of license]; § 7076.2, subd. (a) [license automatically suspended upon failure to maintain corporate good standing with California Secretary of State]; § 7085.6, subd. (a)(1) [license automatically suspended upon failure to comply with a CSLB arbitration award within 30 days after notice from CSLB]; § 7090.1, subd. (a)(1) [license automatically suspended upon failure to pay civil penalties or comply with corrective orders]; § 7125.2 [license automatically suspended upon failure to obtain and maintain worker’s compensation insurance].)
Asdourian v. Araj (1985) 38 Cal.3d 276, relied on by Steadfast, is distinguishable. There, the plaintiff Asdourian filed an application to license his business, Artko Remodeling and Construction, which he expected to incorporate. (Id. at p. 279-280.) In the application, Asdourian listed himself as the “responsible managing party.” (Id. at p. 279.) Thereafter, he contracted in his own name. (Id. at p. 280.) Section 7028.5 specifically requires that a person serving as a responsible managing party be licensed in his own name to contract individually. Because Asdourian was not licensed in his own name, the court concluded he “was not duly licensed.” (Id. at p. 285.) Here, unlike the plaintiff in Asdourian, Commercial Residential Construction, Inc. was licensed in its own name.
Section 7068 provides in part: “(a) The [CSLB] shall require an applicant to show the degree of knowledge and experience in the classification applied for, and the general knowledge of the building, safety, health, and lien laws of the state and of the administrative principles of the contracting business that the board deems necessary for the safety and protection of the public.
Opp v. St. Paul Fire and Marine Insurance (2007) 154 Cal.App.4th 71, also cited by Steadfast, is of no assistance. There, the court held that the plaintiff William Opp, a licensed building contractor, could not recover against a surety in an action on a payment bond pursuant to section 7031, subdivision (a) where “the contracting entity was [Mountain Connection, Inc. (MCI)], a separate entity and an unlicensed building contractor. (Id. at pp. 72-73, 75.) That the contract was signed by Opp as president of MCI was immaterial. (Id. at p. 76.) Here, unlike Opp, there is only one legal entity, Commercial Residential Construction, Inc., and it was licensed.
In sum, the trial court erred in concluding Commercial Residential Construction, Inc. was barred as a matter of law from pursuing its third cause of action for foreclosure of mechanic’s liens because “it was not the contracting party” and CRC, Inc. “was unlicensed.” As a licensed contractor and the contracting party, Commercial Residential Construction, Inc. is not barred under section 7031, subdivision (a) from pursuing its third cause of action.
III
The Trial Court Erred In Sustaining The Demurrer As To The Fourth Cause Of Action
Commercial Residential Construction, Inc. contends it adequately pleaded its breach of contract cause of action against Steadfast. We agree.
“‘The standard elements of a claim for breach of contract are “(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom. [Citation.]” [Citation.]’” (Abdelhamid v. Fire Ins. Exchange (2010) 182 Cal.App.4th 990, 999.)
Here, the operative second amended complaint alleged or documents attached thereto reflected that: On December 17 or 18, 2008, Steadfast provided Commercial Residential Construction, Inc. with its “General Rules & Regulations For Remodeling, ” which required, among other things, that Commercial Residential Construction, Inc. “submit a $5,000 deposit to [Steadfast] prior to commencement of any Tenant’s Work. Upon satisfactory completion of all Tenant’s Work, deposit shall be evaluated for return.” Thereafter, “[t]he parties agreed that if plaintiff performed construction work in the two restaurant spaces without causing damage prohibited in the mall rules..., that Steadfast would return the $5,000 deposit....” Commercial Residential Construction, Inc. paid the $5,000 deposit and “performed all requirements of the partly written and partly verbal contract with Steadfast....” Steadfast breached the contract by failing to return the $5,000.
Those allegations are sufficient to state a cause of action for breach of contract against Steadfast. Steadfast’s agreement to return the deposit if Commercial Residential Construction, Inc. “performed construction work... without causing damage prohibited in the mall rules” constituted an explanation, not an oral modification of, the “general rule” that “[u]pon satisfactory completion of all Tenant’s Work, deposit shall be evaluated for return.” Thus, contrary to Steadfast’s assertion, no consideration was required under Civil Code section 1698. Moreover, even assuming the “General Rules & Regulations For Remodeling” did not create a contract between Commercial Residential Construction, Inc. and Steadfast, as Steadfast contends, it was the starting point for a subsequent agreement concerning the payment and return of the construction deposit. Thus, that Commercial Residential Construction, Inc. was not a party to the “General Rules & Regulations For Remodeling, ” is of no consequence.
Civil Code section 1698, subdivision (c) provides that “[u]nless the contract otherwise expressly provides, a contract in writing may be modified by an oral agreement supported by new consideration.”
The trial court erred in sustaining the demurrer as to the fourth cause of action.
DISPOSITION
The judgment of dismissal is reversed as to Steadfast. Plaintiff shall recover its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1)-(2).).
We concur: NICHOLSON, J., MAURO, J.
“(b) An applicant shall qualify in regard to his or her experience and knowledge in one of the following ways:
“[¶]... [¶]
“(3) If a corporation, or any other combination or organization, it shall qualify by the appearance of a responsible managing officer or responsible managing employee who is qualified for the same license classification as the classification being applied for.” (Italics added.)