Opinion
H049842
07-20-2023
CONSTRUCTION MANAGEMENT CORPORATION, INC., Plaintiff and Appellant, v. ALLIED MEDICAL MANAGEMENT PARTNERS, LLC, et al., Defendants and Respondents.
NOT TO BE PUBLISHED
(Santa Clara County Super. Ct. No. 18CV329849)
Danner, J.
Appellant Construction Management Corporation, Inc. (CMCI) contracted with respondents Allied Medical Management Partners, LLC (Allied) and Evergreen Surgery Center, LLC (Evergreen) to perform construction work at a medical office building in San Jose (projects). After CMCI finished its work on the projects, Allied and Evergreen withheld retention payments that CMCI claimed were due for completed work.
"Retention proceeds or retention payments are 'payments relating to work already done but which are not presently paid, which instead are withheld until completion of 100 percent of the [contractor's] work.' [Citation.] Typically, an owner withholds retention proceeds/payments only where the construction contract calls for installment payments. [Citation.] The withholding of retention payments provides the contractor with incentive to complete the work, while reducing the owner's risk of the contractor's nonperformance." (McAndrew v. Hazegh (2005) 128 Cal.App.4th 1563, 1566-1567.)
CMCI sued Allied and Evergreen, alleging breach of contract and other causes of action. Allied and Evergreen moved for summary judgment based on evidence that CMCI was unlicensed for 49 days during its work on the projects and therefore its causes of action were barred by Business and Professions Code section 7031, subdivision (a)(hereafter section 7031(a)). The trial court agreed, granted summary judgment, and entered judgment in favor of Allied and Evergreen.
Unspecified statutory references are to the Business and Professions Code.
On appeal, CMCI contends that the trial court erred in concluding that there were no triable issues of fact or law regarding the status of CMCI's contractor's license, by failing to hold an evidentiary hearing, and in denying CMCI's request for judicial notice of the Contractors' State License Board (Board)'s file regarding CMCI's license. In addition, based on newly obtained documents presented to this court with a motion for judicial notice, CMCI contends that "its apparent non-licensure" while working for Allied and Evergreen was caused by an "error of the [Board]," which the Board has now "admitted" and "corrected," further demonstrating that CMCI had substantially complied with all licensing requirements during the relevant period.
For the reasons explained below, we reverse the judgment and remand the matter to the trial court with directions to vacate the order granting summary judgment and to conduct further proceedings consistent with this opinion.
I. FACTS AND PROCEDURAL BACKGROUND
A. Background to Summary Judgment Motion
1. Contract, Complaint, Depositions, and Declarations
On or about December 12, 2014, CMCI and Evergreen entered into a written agreement for CMCI to perform construction work at a building in San Jose for the price of $949,465 (Evergreen project). CMCI's representative, Bruce Russo (Russo), signed the agreement, and CMCI completed its work on the Evergreen project between December 12, 2014, and February 2017.
On or about August 4, 2015, CMCI and Allied entered into a written agreement for CMCI to perform construction work at the same San Jose building for the price of $1,302,319 (Allied project). Russo signed the agreement for CMCI, and CMCI completed its work on the Allied project between August 4, 2015, and February 2017.
About 16 months after CMCI's work on the projects ended, CMCI filed the instant action against Allied and Evergreen in June 2018. In its complaint, CMCI alleged four causes of action against Allied (designated as first through fourth) and four causes of action against Evergreen (designated as fifth through eighth). The causes of action against Allied and Evergreen included (1) breach of contract (first &fifth), (2) quantum meruit (second &sixth), (3) open book account (third &seventh), and (4) prompt payment penalties for due retention (Civ. Code, § 8818) (fourth &eighth). Additionally, the complaint alleged that CMCI was "engaged in the business of general contracting" and "was at all relevant times licensed by the California State Contractors' License Board to perform the acts alleged" in the complaint. The complaint prayed for $180,042.43 in damages on the causes of action against Allied and $121,062.63 in damages on the causes of action against Evergreen.
In August 2018, represented jointly by a single counsel, Allied and Evergreen answered the complaint and alleged 12 affirmative defenses, including that CMCI "is not a licensed contractor under California Law and not entitled to recover money for work performed for [Allied and Evergreen]."
At a deposition on February 14, 2019 (February 2019 deposition), upon questioning by Allied and Evergreen's counsel, Russo testified as follows about CMCI's contractor's license:
"Q. All right. Now, isn't it true that Construction Management Corporation's license expired in June of 2016?
"A. Not that I'm aware of.
"Q. And that would be the first time you ever heard of it if that were true?
"A. Yeah. That would be true."
When Allied and Evergreen's counsel next asked if a license expiration date of June 30, 2016 "would not be true," Russo stated, "Not to my knowledge." Counsel then showed Russo a Board document that listed CMCI's license history and indicated that CMCI's license had expired on June 30, 2016. Russo responded to this document by saying, "I see it[,] but I don't believe it." After counsel again noted the June 2016 expiration date, as well as an August 18, 2016 renewal date listed in the license history, and further asserted that CMCI was an unlicensed contractor, Russo said he had "some idea" what that meant. When counsel asked Russo if he understood that he had done "construction work under an expired license" for a period of 49 days, Russo responded, "I don't believe it, but I see what it says here."
At a deposition on October 13, 2020 (October 2020 deposition), Luigi Delucchi, the CEO of Construction Loan Monitoring Group (CLM Group), testified that he had overseen the Evergreen project and Allied project for two banks that lent funds for the projects. At some point during CLM Group's oversight of those projects, Delucchi learned from his "process manager" that CMCI had become unlicensed as a general contractor. As a result, payment from the lenders to CMCI "was just frozen." Delucchi testified further that, during a meeting held "at the construction site" in San Jose, the licensure issue was discussed with Russo. Delucchi believed that Russo knew prior to the meeting that the lenders could not make further payments to CMCI because of the licensure issue. Delucchi testified that Russo never contacted anyone at CLM Group "about a resolution with regard to his license issue." Delucchi testified further that he "absolutely would never tell anybody to pay an unlicensed contractor. There's a lot of previous litigation since 2006 about paying unlicensed contractors." When asked next if he had told Allied and Evergreen "that," Delucchi answered "Yes."
In an August 2021 declaration, Evergreen's manager Hector Cervantes declared that "[n]ear the end of construction," Evergreen learned from CLM Group and Delucchi that CMCI was unlicensed. Delucchi advised that "the bank would not approve payment to an unlicensed contractor and that unlicensed contractors are not entitled to be paid for construction work performed." "Delucchi advised [Cervantes] not to pay CMCI because its contractor's license had expired. Based on the advice from Delucchi, and because [Cervantes] understood that unlicensed contractors are not entitled to be paid, Evergreen . . . withheld payment of retention to CMCI." Cervantes further declared that "[a]t no point were we informed CMCI had reinstated its license, and I was told that even if CMCI reinstated its license, the lapse of license during construction justified withholding payment."
Likewise, in August 2021, Allied's manager, Dr. Donald Siao, executed a declaration that provided information regarding Allied identical to that provided by Cervantes in his declaration about Evergreen.
2. Allied and Evergreen's Motion for Summary Judgment/Summary Adjudication and Request for Judicial Notice
In August 2021, Allied and Evergreen moved for summary judgment or, in the alternative, summary adjudication of the fourth and eighth causes of action for prompt payment penalties (motion). In support of their motion, Allied and Evergreen filed a declaration from their counsel with attached exhibits that included excerpts of Russo's February 2019 deposition and Delucchi's October 2020 deposition, Cervantes's August 2021 declaration, Dr. Siao's August 2021 declaration, and a separate statement of undisputed facts.
Concurrently with their motion, Allied and Evergreen requested that the trial court take judicial notice of CMCI contractor's license history as produced and certified by the Board on August 20, 2018 (August 2018 license history). The August 2018 license history covered the period September 1, 2014, to August 20, 2018. It indicated that CMCI was a "B General Building Contractor" and listed two personnel for CMCI, "Bruce Roberts Russo, RMO" (i.e., responsible managing officer) and "Marianne Patricia Russo, Officer." The August 2018 license history also provided the following information about CMCI's license in a section titled "History": "09/01/14 In Effect [¶] 06/30/16 Expired [¶] 08/18/16 Renewed [¶] 10/01/17 Suspended [section] 7125.2 (Workers' Compensation) [¶] 10/05/17 Suspended [Code of Civil Procedure section] 996.340 (Contractor's Bond) [¶] 10/23/17 Suspended [section] 7071.11 (Bond Payment of Claim #60432) [¶] 06/30/18 Expired Under Suspensions* [¶] 08/20/18 Expiration &[section] 7071.11 Suspension Still In Effect." (Italics added.) In a section titled "Additional Information," the August 2018 license history stated, "This license expired 06/30/18 and has not been in effect since that date." (As stated above, CMCI had completed its work on both projects in February 2017.)
See Jeff Tracy, Inc. v. City of Pico Rivera (2015) 240 Cal.App.4th 510, 518 ["In California, a corporation qualifies for a contractor's license '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.' "]; See also sections 7065, subdivision (c)(3), 7068, subdivision (b)(3).
At his February 2019 deposition, Russo testified that Marianne Russo was his wife.
In their motion, Allied and Evergreen asserted that summary judgment of the entire action was proper "because under California law a contractor must allege he or she 'was a duly licensed contractor at all times during the performance of that [construction] act or contract.' [Quoting § 7031(a). Plaintiff [CMCI] cannot meet that burden because it was unlicensed for 49 days during construction." Allied and Evergreen further argued that the exception for "substantial compliance with licensure requirements" under Business and Professions Code section 7031, subdivision (e) (hereafter section 7031(e)), did not apply in this case because "Bruce Russo, the person 'engaged in the business or acted in the capacity of a contractor' testified he knew nothing about the lack of licensure, so could not have acted reasonably or in good faith, and could not have promptly cured the expiration." Allied and Evergreen further asserted that, under Business and Professions Code section 7031(e), Russo could not properly delegate his license renewal responsibility to another person.
Business and Professions Code section 7031(a) provides that no person "engaged in the business or acting in the capacity of a contractor" can bring an action for compensation for work requiring a contractor's license if the person was not properly licensed at all times during the performance of the work. (§ 7031(a).)
Current Business and Professions Code section 7031(e) offers a "safe harbor" for a contractor by allowing a court to "determine that there has been substantial compliance with licensure requirements under this section if it is shown at an evidentiary hearing that the . . . contractor (1) had been duly licensed as a contractor in this state prior to the performance of the act or contract, (2) acted reasonably and in good faith to maintain proper licensure, and (3) acted promptly and in good faith to remedy the failure to comply with the licensure requirements upon learning of the failure." (§ 7031(e).)
Alternatively, Allied and Evergreen asserted that the trial court should grant summary adjudication of the fourth and eighth causes of action for prompt payment penalties. They argued that, under Civil Code section 8812, subdivision (c), "project owners may withhold without penalty up to 150% of any amount legitimately in dispute," and they had "withheld retention payment based on a good faith dispute over [CMCI]'s license and professional advice of a construction loan administrator" and thus CMCI was not entitled to prompt payment penalties for that withholding.
3. CMCI's Opposition to Summary Judgment/Summary Adjudication and Request for Judicial Notice
CMCI opposed Allied and Evergreen's motion. Along with its memorandum of points and authorities in opposition to the motion (opposition), CMCI filed a separate statement of undisputed facts, a declaration signed by Russo on January 18, 2022, which appended several exhibits (January 2022 declaration), and counsel's declaration with attached exhibits regarding counsel's attempts to schedule depositions of corporate representatives of Allied and Evergreen.
In the January 2022 declaration, Russo declared that "CMCI's Contractor's license was set to expire on June 20 [sic], 2016." Prior to that date, CMCI submitted its license renewal application to the Board, and it "was postmarked prior to the expiration date." In support of his statements regarding CMCI's effort to renew its license, Russo cited to specified documents on file with the Board and appended a complete copy of the certified Board file to his declaration. Russo explained that about seven days after the Board deposited CMCI's check for the renewal fee, the Board issued a letter on July 19, 2016, notifying Russo that CMCI's license renewal application required a correction because Russo had failed to date his signature on the license renewal application. Russo declared that the Board's notification was sent to him "via regular U.S. Mail" and "[u]pon receipt of the request for corrections, [he] immediately signed the application, on August 19, 2016, and returned the application to the [Board]."
CMCI's two-year license was in fact due to expire on June 30, 2016, not June 20. The parties do not dispute that the actual expiration date was June 30, 2016.
The appended Board file was certified on February 25, 2019, and it contained documents bearing dates between February 1998 (when CMCI originally applied for a contractor's license) and August 2018.
The Board file attached to Russo's declaration includes both the license renewal application sent to the Board prior to the June 30, 2016 expiration date (original application) and the corrected/resubmitted license renewal application from August 2016 (corrected application). The application form itself includes the following information regarding renewal and expiration provided by the Board: "If an acceptable renewal is not received before the license expires, you will be charged a delinquent fee, even if the renewal was originally postmarked prior to the expiration date. Licenses renewed after the expiration date will have a break in licensing time." The original application (timely sent before June 30) was signed by both Russo and Marianne Russo, but only Marianne Russo's signature was dated ("6/27/16"). The corrected application includes a date of "8/19/16" for Russo's previously undated signature.
In his January 2022 declaration, Russo further declared, "I was unaware of any suspension of CMCI's license as I never received any notice of suspension following the resubmission of my application with the required correction, adding a date to my signature.... As my license application was timely submitted, I understood that there would be no break in licensing. The license application indicates that breaks in licensing occur when licenses are renewed after the expiration date, not when renewed before." Russo also noted that, by contrast to the situation in 2016, the Board had sent a notice of expiration following the expiration of CMCI's license in July 2018. Russo further declared that after CMCI left the Allied and Evergreen projects in February 2017, CMCI "ceased doing any contracting business" and all subsequent suspensions and the ultimate expiration of CMCI's license at the end of June 2018 resulted from CMCI no longer working as a contractor.
Regarding the meeting that Delucchi described in his October 2020 deposition, Russo declared, "I recall that such a meeting occurred, but my recollection of that meeting was that it was a discussion of the CMCI's license being closed after CMCI had ceased work on the project in February 2017" (italics added). Russo further declared that "CMCI received [six] separate payments from Evergreen after June 30, 2016." Russo also explained that "on September 7, 2017, a representative of [] Allied . . . stated in an e[-]mail that [Allied and Evergreen] were prepared to pay CMCI," a representative of Delucchi's team subsequently e-mailed Russo "regarding differences in [his] budget numbers versus CLM Group's budget numbers," "[n]o mention of [CMCI's] license status, or issues regarding license status are contained in that e[-]mail," and "[n]o recommendation that payments not be made came from Mr. Delucchi or his team in response to this e[-]mail."
In its separate statement of undisputed facts in opposition to the motion, CMCI stated that the June 30, 2016 license expiration date and the August 18, 2016 license renewal date were "[u]ndisputed." In addition, CMCI did not dispute that "Russo testified he had no knowledge of the lack of license."
Concurrently with its opposition, CMCI requested that the trial court take judicial notice of the certified Board file and a certified license history dated February 27, 2019 (February 2019 license history). The February 2019 license history listed the same June 30, 2016 license expiration date and August 18, 2016 license renewal date as that stated in the August 2018 license history (submitted to the court by Allied and Evergreen). CMCI's request for judicial notice cited Evidence Code sections 452, subdivision (c), and 453, and asserted that a "court may take judicial notice of something that cannot reasonably be controverted."
In its opposition, CMCI argued, inter alia, that "[w]hile the license history for CMCI shows that CMCI's license expired, and was expired for a period of 49 days during the course of the project, CMCI falls under the substantial compliance provision of [section] 7031 and CMCI is not therefore precluded from pursuing payment in this action." CMCI explained that summary judgment should be denied because Allied and Evergreen "cannot establish that[] there is no dispute that CMCI did not have a license, they cannot establish that there is no dispute as to whether or not their withholding of retention payments was based on a 'good faith' dispute, and [] the granting of a Motion for Summary Judgment or Summary Adjudication on the license issue deprives CMCI of its statutory right to an evidentiary hearing on these issues."
CMCI further contended that this was "a 'text book' [sic] case for a finding of substantial compliance" because, inter alia, CMCI "acted reasonably in timely submitting [its] license renewal application prior to the expiration of the license. Corrections were requested and immediately submitted to [the Board]. The gap was the result of the delay in delivery of the request for corrections paper work [sic] being delivered and the corrections arriving via U.S. Mail notwithstanding CMCI's good faith attempt to submit the renewal application on time and immediately respond to the [Board]'s request for a simple correction, adding a date to a signature. CMCI was never notified by the [Board] of the expiration and did not learn of it until the issue was raise[d] at deposition by [Allied's and Evergreen's] counsel." CMCI asserted that it had "maintained its general liability insurance, workers compensation insurance, and its license bond at all times during the project as it understood that its license was current and active at all times during the project." CMCI further argued that, under Business and Professions Code section 7031(e), summary judgment "is not the proper procedural vehicle for deciding whether or not CMCI was properly licensed or whether or not the doctrine of substantial compliance applies." CMCI asserted that it "is entitled to an evidentiary hearing on the issue [of substantial compliance], including trial." Additionally, CMCI argued that any affirmative defense under Business and Professions Code section 7031(a) was waived and "is barred by the [one] year statute of limitations[,] and the Motion for Summary Judgment based on that defense[] is barred."
Regarding the prompt payment penalties causes of action, CMCI opposed summary adjudication, asserting that "[t]here is very clearly a triable issue of fact and law as to whether or not there is a good faith dispute that relates directly to the payment of the retention."
In the alternative to its opposition to summary judgment and summary adjudication, CMCI requested that the trial court continue the hearing on the motion to allow time for CMCI to take depositions of "the Persons Most Qualified" at Allied and Evergreen "to address and explore factual issues relating to [their] knowledge of the licensing issue."
4. Allied and Evergreen's Reply to CMCI's Opposition
Allied and Evergreen replied to CMCI's opposition (reply). In addition, Allied and Evergreen filed another separate statement of undisputed facts and a declaration of counsel with attached exhibits. In their reply, Allied and Evergreen argued, inter alia, that CMCI had not acted reasonably to maintain its license and had not diligently sought an evidentiary hearing or ruling from the trial court-either before or during the instant litigation-on the issue of substantial compliance under Business and Professions Code section 7031(e). Furthermore, Allied and Evergreen urged the trial court to disregard Russo's declaration because it allegedly impeached his own deposition testimony. To that end, Allied and Evergreen argued: "Russo unambiguously testified he knew nothing about CMCI's license expiration.... But now, in opposition to a motion for summary judgment, he manufactured a story contradicting his testimony. Now, as the opposition reads, he took sole charge of diligently, promptly, and reasonably ensuring his license was reinstated." Additionally, Allied and Evergreen opposed any continuance for additional depositions.
In their separate statement of undisputed facts filed with the reply, Allied and Evergreen objected to statements made by Russo in his January 2022 declaration about the timely submission of CMCI's renewal application, the Board having deposited CMCI's renewal fee check, CMCI's resubmission of the renewal application with the required date correction, and the Board having sent an expiration notice to CMCI in 2018 about the June 2018 license expiration. As to all these statements, Allied and Evergreen asserted that the "statements lack foundation and/or are not based on personal knowledge" (citing Evid. Code §§ 702, subd. (a) &800) and "Russo testified he had no knowledge of this license expiration. His declaration stating the opposite is a sham. (D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 22-23.)"
Allied and Evergreen did not dispute that CMCI had not received a "[n]otice from [the Board] that its license had expired in 2016." Additionally, as to Russo's statement that the license suspensions that occurred after CMCI had completed its work on the Allied and Evergreen projects in February 2017 "all stem from the fact that CMCI ceased to conduct any contracting business following the conclusion of this project," Allied and Evergreen asserted that the suspensions and ultimate expiration of CMCI's license in June 2018 were "[u]ndisputed" and "Russo's reason[s] for his numerous violations of California's Contractor's License law and failing to diligently act regarding his license is [sic] immaterial."
Allied and Evergreen did not file any opposition to CMCI's request for judicial notice and made no argument that the certified Board file (which was both appended to Russo's declaration and submitted with the request for judicial notice) was inauthentic or irrelevant.
B. Trial Court's Decision on the Requests for Judicial Notice and Summary Judgment Motion
On February 1, 2022, after hearing oral argument at an unreported proceeding, the trial court issued a written order deciding the parties' requests for judicial notice and granting Allied and Evergreen's summary judgment motion (February 2022 order).
Regarding the requests for judicial notice, pursuant to Evidence Code section 452, subdivision (h), the trial court granted Allied and Evergreen's request for judicial notice of the August 2018 license history. On the same grounds, the court also granted CMCI's request for judicial notice of the February 2019 license history. The court, however, denied CMCI's request for judicial notice of the certified Board file, concluding that CMCI "has not demonstrated that the entire file is relevant to the material issue before the Court."
Evidence Code section 452, subdivision (h), provides that a court may take judicial notice of "[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy."
As to CMCI's request for a continuance, the trial court rejected any continuance because counsel's declaration did not "meet the criteria for a mandatory continuance" (see Code Civ. Proc., § 437c, subd. (h)) and did not "show 'good cause' for a discretionary continuance."
Regarding the merits of the summary judgment motion, the trial court opined that Allied and Evergreen had "established through admissible evidence, including the judicially noticed 'license history' of [CMCI] provided by the [Board], the deposition testimony of Bruce Russo ([CMCI]'s Responsible Managing Officer), and the deposition testimony of Luigi Delucchi . . . that [CMCI] became unlicensed during work on the project[s] and remained so for 49 days. It is therefore barred under [section] 7031(a) from bringing or maintaining this action seeking additional funds from [Allied and Evergreen] for unlicensed work."
The trial court further concluded that "[w]hen the burden shifts" to CMCI on the issue of substantial compliance under Business and Professions Code section 7031(e), "the only evidence submitted by [CMCI] that addresses this point, the declaration of Bruce Russo, fails to raise a triable issue of material fact." The court explained its conclusion as follows: "To the extent Mr. Russo's declaration contradicts his sworn deposition testimony (stating among other things that [on] February [1]4, 2019 was the first he learned of any license suspension or expiration during the work [CMCI] did for [Allied and Evergreen]) it has not been considered. Mr. Russo admits [in his January 2022 declaration] that he is [CMCI]'s President and the 'qualifier' for [CMCI]'s contractor's license. He fails to demonstrate that he, as the sole qualifier for [CMCI]'s license, both 'acted reasonably and in good faith to maintain proper licensure,' and "acted promptly and in good faith to remedy the failure to comply with the licensure requirements upon learning of the failure' such that the 'substantial compliance' exception in [section] 7031(e) applies here and allows [CMCI] to maintain this action despite becoming unlicensed while working on [Allied's and Evergreen's] project[s]."
Additionally, the trial court rejected CMCI's argument for an evidentiary hearing on the substantial compliance issue, stating that that argument was not supported by the precedent cited and "[t]he determination of whether 'substantial compliance' has been shown is made by judges, not juries," citing Judicial Council of California v. Jacobs Facilities, Inc. (2015) 239 Cal.App.4th 882, 913-914 (Judicial Council).
Lastly, the trial court rejected as "unpersuasive and not supported by the cited authority" CMCI's argument that Allied and Evergreen "have somehow 'waived' or are time-barred from raising [Business and Professions Code section] 7031(a) in response to being sued by [CMCI]." The court explained that there was no evidence of any waiver by Allied and Evergreen and any precedent applying a statute of limitations to a "disgorgement" claim under section 7031, subdivision (b), is not relevant "to the analysis of this motion or the issue of whether [CMCI] is barred under [Business and Professions Code section] 7031(a) from suing others for payment for work performed while it was unlicensed."
The trial court did not address Allied and Evergreen's alternative motion for summary adjudication of the fourth and eighth causes of action for prompt payment penalties.
On February 10, 2022, the trial court filed a judgment for Allied and Evergreen.
CMCI timely appealed the judgment.
II. DISCUSSION
CMCI contends the trial court erred in granting summary judgment because CMCI "raised a question of material fact as to CMC[I]'s license status and of law pursuant to application of the doctrine of substantial compliance to CMC[I] and its license status." CMCI asserts that the facts show that it "squarely meets each element of [s]ection 7031(e), and a finding of substantial compliance is clearly warranted." CMCI further contends the trial court abused its discretion and prejudiced CMCI by denying its request for judicial notice of the certified Board file because "the file is directly relevant to the procedures of the [Board] with regard[] to notification of a licensee when a contractor's license is suspended, revoked, or not renewed, and directly relevant to whether or CMC[I] acted in good faith to maintain licensure and that its purported failure to maintain licensure." CMCI also contends that the trial court erred by granting summary judgment on the issue of substantial compliance without holding an evidentiary hearing. Additionally, CMCI asserts that "its apparent non-licensure was caused by an error of the [Board], which is now admitted, and corrected by the [Board,] which further demonstrates that CMC[I] substantially complied with all licensing requirements." CMCI urges this court to reverse the trial court's order granting summary judgment and to direct the trial court to hold an evidentiary hearing on the issue of substantial compliance.
Allied and Evergreen (collectively, respondents) respond that we should uphold the trial court's grant of summary judgment because they proved CMCI was unlicensed for 49 days during its performance of the contracts and the trial court properly exercised its discretion "to find CMCI did not show it was entitled to relief from its failure to maintain its license at all times during the course of construction." Respondents further assert that CMCI waived any challenge to "the trial court's discretionary ruling not to consider Russo's declaration to the extent it contradicts his testimony" because CMCI "did not appeal" that ruling. Respondents also assert that, in any event, the trial court did not abuse its discretion under D'Amico in refusing to consider Russo's declaration and, further, Russo's declaration fails to demonstrate the elements of substantial compliance. Regarding CMCI's argument that the trial court should have held an evidentiary hearing, respondents note that "CMCI did not seek an evidentiary hearing under [s]ection 7031(e) for over six years." Alternatively, respondents contend that if this court were to reverse the trial court's order granting summary judgment, we should direct the trial court to grant summary adjudication of the fourth and eighth causes of action for prompt payment penalties.
In its reply brief, CMCI contends that because the trial court's exclusion of evidence was decided "on questions of law like relevancy and inconsistency, the applicable standard of review here" is de novo. CMCI further contends that it did not waive a challenge to the trial court's exclusion of Russo's declaration because CMCI "appealed to set aside the entire grant of [s]ummary [j]udgment." CMCI further asserts that even if we were to review the trial court's rulings for an abuse of discretion, the trial court's refusal to take judicial notice of the relevant Board file and failure to consider Russo's non-contradictory declaration amount to an abuse of discretion. CMCI argues that it timely complied with the Board's licensing requirements and has a right to an evidentiary hearing on the substantial compliance issue. In addition, regarding the prompt payment penalties causes of action, CMCI contends that summary adjudication is not appropriate because respondents "ha[ve] not established that [their] good faith dispute, if any, is directly related to the issue of [r]etention [payments] thus allowing [them] to withhold the amounts due. The facts in evidence are clearly susceptible to more than one reasonable inference. There is very clearly a triable issue of fact and law as to whether or not there is a good faith dispute that relates directly to the payment of retention."
Concurrently with its appellate briefing, CMCI filed two motions for judicial notice in this court. The first motion was filed with its opening brief on September 2, 2022. That motion requests that we take judicial notice of the certified Board file and the February 2019 license history (both of which were presented to the trial court for judicial notice). The motion also requests that we take judicial notice of a postjudgment letter from the Board to Russo, dated March 22, 2022 (March 2022 Board letter), informing Russo that the Board had "corrected" its "error" regarding "the gap" in his license. The letter states: "There was no gap in your license between 7/1/2016 and 8/18/2016."
Soon after CMCI filed its first motion for judicial notice, this court issued an order deferring a ruling on the motion for consideration with this appeal. Respondents did not file any objection to CMCI's motion. In addition, respondents did not address either CMCI's motion or the postjudgment March 2022 Board letter in their respondents' brief.
CMCI filed a second motion for judicial notice with its reply brief on April 13, 2023. That motion requests that we take judicial notice of CMCI contractor's license history as produced and certified by the Board on February 17, 2023 (February 2023 license history). The February 2023 license history covers the period July 1, 2015, to February 17, 2023. In contrast to the two prior license histories of which the trial court took judicial notice, and consistent with the March 2022 Board letter, the postjudgment February 2023 license history does not indicate any lapse in CMCI's license in July and August 2016.
As with CMCI's first motion for judicial notice, this court issued an order deferring a ruling on CMCI's second motion for consideration with the merits of this appeal. Respondents did not file any objection to CMCI's second motion.
We now consider the issues raised by the parties in their appellate briefing as well as CMCI's motions for judicial notice.
A. Section 7031
"Section 7031 is part of the Contractors State License Law (§ 7000 et seq.). It 'imposes strict and harsh penalties for a contractor's failure to maintain proper licensure. Among other things, the [Contractors State License Law] 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).)'" (Kim v. TWA Construction, Inc. (2022) 78 Cal.App.5th 808, 823.)
As relevant here, current Business and Professions Code section 7031(a) 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 they were 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."
Although Business and Professions Code section 7031 was amended by the Legislature in 2017, and again in 2021, the current version of section 7031(a) is not materially different from the prior versions that were in effect during the relevant period for this case. (Compare Stats. 2003, ch. 289, § 1 and Stats. 2016, ch. 244, § 1, eff. Jan. 1, 2017 with Stats. 2020, ch. 312, § 56, eff. Jan. 1, 2021; deleting "he or she was" and replacing it with "they were.")
Regarding proof of licensure, Business and Professions Code section 7031, subdivision (d), provides: "If licensure or proper licensure is controverted, then proof of licensure pursuant to this section shall be made by production of a verified certificate of licensure from the Contractors State License Board which establishes that the individual or entity bringing the action was duly licensed in the proper classification of contractors at all times during the performance of any act or contract covered by the action. Nothing in this subdivision shall require any person or entity controverting licensure or proper licensure to produce a verified certificate. When licensure or proper licensure is controverted, the burden of proof to establish licensure or proper licensure shall be on the licensee." (§ 7031, subd. (d).)
Business and Professions Code section 7031(e) is a safe harbor that "provides the sole exception to the contractor's licensure requirements." (WSS Industrial Construction, Inc. v. Great West Contractors, Inc. (2008) 162 Cal.App.4th 581, 588.) Current Business and Professions Code section 7031(e)-which originally became effective on January 1, 2017-states in pertinent part: "[N]otwithstanding subdivision (b) of [s]ection 143, the court may determine that there has been substantial compliance with licensure requirements under this section if it is shown at an evidentiary hearing that the person who engaged in the business or acted in the capacity of a contractor (1) had been duly licensed as a contractor in this state prior to the performance of the act or contract, (2) acted reasonably and in good faith to maintain proper licensure, and (3) acted promptly and in good faith to remedy the failure to comply with the licensure requirements upon learning of the failure." (Italics added.) (Stats. 2016, ch. 244, § 1, eff. Jan. 1, 2017; see also Stats. 2020, ch. 312, § 56, eff. Jan. 1, 2021.)
We note that at the time CMCI and respondents signed the contracts in this case (i.e., in 2014 and 2015), and when the alleged unlicensed work by CMCI occurred (i.e., in July and August 2016), the elements of substantial compliance under Business and Professions Code section 7031(e) were different than they are currently. Former Business and Professions Code section 7031(e) provided that a court could determine there was substantial compliance if it were shown at an evidentiary hearing that the contractor "(1) had been duly licensed as a contractor in this state prior to the performance of the act or contract, (2) acted reasonably and in good faith to maintain proper licensure, (3) did not know or reasonably should not have known that he or she was not duly licensed when performance of the act or contract commenced, and (4) acted promptly and in good faith to reinstate his or her license upon learning it was invalid." (Stats. 2003, ch. 289, § 1, italics added.) The parties made no argument in the trial court and make no argument in this court about whether this former version of section 7031(e) should apply in this case. Furthermore, in ruling on respondents' summary judgment motion, the trial court applied the current version of Business and Professions Code section 7031(e). Under these circumstances, we will assume without deciding that current section 7031(e) applies to the substantial compliance issue raised in this appeal.
Under Business and Professions Code section 7031(e), whether a contractor substantially complied with the licensing requirements is a factual issue to be determined by a court. (Pacific Caisson &Shoring, Inc. v. Bernard Bros. Inc. (2015) 236 Cal.App.4th 1246, 1253 [factual issue]; Judicial Council, supra, 239 Cal.App.4th at pp. 914-916 [court determination]; see also Oceguera v. Cohen (2009) 172 Cal.App.4th 783, 792 ["To the extent the interpretation of the statute [is] based on undisputed facts, it presents a question of law subject to de novo review. [Citations.] However, we review disputed factual matters for substantial evidence."].)
The parties dispute whether the trial court must always conduct a hearing to determine whether a contractor substantially complied with the licensing requirements. As discussed further below (see pt. II.C.2), we conclude that we need not resolve that question in this appeal.
B. Summary Judgment and Standard of Review
The purpose of summary judgment is to determine "whether, despite [the parties'] allegations, trial is in fact necessary to resolve their dispute." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).) "A defendant moving for summary judgment has the burden of showing that a cause of action lacks merit because one or more elements of the cause of action cannot be established or there is a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (o); Aguilar, [at p. 850].)" (Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935, 945 (Jones).)
" 'Defendants are entitled to summary judgment only if "all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." [Citation.] To determine whether triable issues of fact do exist, we independently review the record that was before the trial court when it ruled on defendants' motion. [Citations.] In so doing, we view the evidence in the light most favorable to plaintiffs as the losing parties, resolving evidentiary doubts and ambiguities in their favor.'" (Elk Hills Power, LLC v. Board of Equalization (2013) 57 Cal.4th 593, 605-606 (Elk Hills Power).)
In conducting our independent review of summary judgment, we "consider only the facts that were properly before the trial court when it ruled on the motion and apply the same three-step analysis as the trial court: first we' "identify the issues framed by the pleadings" '; next we' "determine whether the moving party's showing has satisfied his burden of proof and justifies a judgment in movant's favor" '; and finally we' "determine whether the opposition demonstrates the existence of a triable issue of material fact." '" (Pipitone v. Williams (2016) 244 Cal.App.4th 1437, 1449 (Pipitone).)
The first step of the summary judgment analysis is both defined and limited by the pleadings, which" 'set the boundaries of the issues to be resolved at summary judgment.'" (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1250.) In the second step of our review, we examine the moving party's evidence to determine whether it has satisfied its burden of production. (Pipitone, supra, 244 Cal.App.4th at p. 1449.) "Typically, to meet this burden, a defendant moving for summary judgment can either negate an element of the cause of action or demonstrate a complete defense to plaintiff's claim. [Citation.] Only if the defendant meets its initial burden does the burden shift to the plaintiff to show a triable issue exists." (Jones v. Awad (2019) 39 Cal.App.5th 1200, 1207.)
If the moving party has satisfied its prima facie showing, in the third step of the summary judgment analysis we consider whether the party opposing summary judgment has raised a triable issue of material fact. Such an issue "exists '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.'" (Jones, supra, 230 Cal.App.4th at p. 945.)" 'The [plaintiff] . . . may not rely upon the mere allegations or denials' of his 'pleadings to show that a triable issue of material fact exists but, instead,' must 'set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.' (Code Civ. Proc., § 437c, subd. (o)(2).)" (Aguilar, supra, 25 Cal.4th at p. 849.)
Whether the trial court erred in granting a defendant's motion for summary judgment is a question of law subject to de novo review. (Samara v. Matar (2018) 5 Cal.5th 322, 338.) Moreover, we generally review a trial court's interpretation and application of statutes de novo. (Carmel Development Company, Inc. v. Anderson (2020) 48 Cal.App.5th 492, 503.)
The parties here dispute the standard of review for the trial court's evidentiary rulings. Respondents contend that we should review all the trial court's rulings under an abuse of discretion standard. There is a split of authority on the standard of review for evidentiary objections made in connection with a motion for summary judgment. Prior rulings of this court have reasoned that de novo review is the appropriate standard because the trial court's rulings "were determined on the papers and based on questions of law." (Pipitone, supra, 244 Cal.App.4th at p. 1451; see also Strobel v. Johnson &Johnson (2021) 70 Cal.App.5th 796, 817; Alexander v. Scripps Memorial Hospital La Jolla (2018) 23 Cal.App.5th 206, 226.) Other courts have held that the abuse of discretion standard applies to evidentiary issues in the summary judgment context. (See LAOSD Asbestos Cases (2023) 87 Cal.App.5th 939, 946; Doe v. SoftwareONE Inc. (2022) 85 Cal.App.5th 98, 103.) That is," '[t]he appropriate test of abuse of discretion is whether or not the trial court exceeded the bounds of reason, all of the circumstances before it being considered.'" (Alexander, at p. 226.) We conclude that we need not resolve this legal dispute here; we will assume without deciding that the abuse of discretion standard applies to the trial court's evidentiary rulings.
C. Analysis
1. Triable Issue as to Substantial Compliance
We begin our analysis of the issues presented by reiterating facts that were before the trial court regarding the status of CMCI's license in July and August 2016 (setting aside the postjudgment March 2022 Board letter and February 2023 license history that now state there was no lapse at all in CMCI's license).
In its complaint, CMCI alleged that it was licensed by the Board "at all relevant times" to perform construction work under the contracts with respondents. Nevertheless, the two license histories of which the trial court took judicial notice (i.e., the August 2018 license history submitted by respondents and the February 2019 license history submitted by CMCI) indicate that CMCI's license had expired at the end of June 2016 and was not renewed until August 18, 2016. In addition, in its own separate statement of undisputed facts, CMCI did not dispute the June 30, 2016 license expiration date or the August 18, 2016 license renewal date.
Based on the facts that were before the trial court and given the lack of any dispute in the trial court that CMCI's license had lapsed for 49 days in July and August 2016 (during the Allied and Evergreen projects), we agree with the trial court's conclusion that respondents met their initial burden to demonstrate a complete defense to CMCI's action under Business and Professions Code section 7031(a). (See Judicial Council, supra, 239 Cal.App.4th at p. 896; see also § 7031, subd. (d).)
Given that the facts before the trial court supported a conclusion that Business and Professions Code section 7031(a) barred CMCI's action, we turn to whether CMCI set forth facts in the trial court raising a triable issue of material fact as to the substantial compliance exception under Business and Professions Code section 7031(e).
As a threshold matter, we reject respondents' contention that CMCI waived any appellate challenge to the trial court's refusal to consider Russo's January 2022 declaration because of purported contradictions to his February 2019 deposition testimony. In its opening brief, CMCI relies on Russo's declaration and the attached Board file to argue that the trial court erred in granting summary judgment. CMCI describes facts from Russo's declaration as well as the Board file and uses those facts to argue that the trial court erred in concluding that CMCI failed to satisfy the elements of substantial compliance. CMCI also notes in its opening brief that respondents had argued to the trial court that CMCI "could not have acted reasonably and in good faith because . . . Russo testified[] he knew nothing of the break in CMC[I]'s licensure." Based on Russo's declaration, CMCI further asserts that the missing date on CMCI's renewal application "was corrected as soon as the [Board] brought it to CMC[I]'s attention." Moreover, CMCI's assertions have not gone unanswered by respondents. Rather, in their respondent's brief, respondents argue that summary judgment was warranted because the trial court's refusal to consider Russo's declaration was supported by substantial evidence and not an abuse of discretion.
Under these circumstances, we conclude that we can review the propriety of the trial court's treatment of Russo's January 2022 declaration. (See Pipitone, supra, 244 Cal.App.4th at p. 1452.) Specifically, we examine whether the trial court correctly determined that it should not consider the facts set forth in Russo's declaration for the existence of a triable issue of fact based on alleged contradictions to his deposition.
"In D'Amico, the California Supreme Court held,' "[w]here . . . there is a clear and unequivocal admission by the plaintiff, himself, in his deposition"' and the plaintiff contradicts that admission in a subsequent declaration,' "we are forced to conclude there is no substantial evidence of the existence of a triable issue of fact." '" (Ahn v. Kumho Tire U.S.A., Inc. (2014) 223 Cal.App.4th 133, 144; see also Harris v. Thomas Dee Engineering Co., Inc. (2021) 68 Cal.App.5th 594, 604 (Harris) ["Properly understood, D'Amico does not state a rule regarding the admissibility of evidence; instead, the case provides guidance in determining whether a declaration that contradicts prior discovery responses is sufficient to create a triable issue of fact."].) Courts have applied the D'Amico rule "where the declaration and the discovery responses are 'contradictory and mutually exclusive.' [Citation.] Or 'diametrically opposed.' [Citation.] Or in conflict. [Citation.] Or where the declaration contradicts 'unequivocal admissions' in discovery.'" (Turley v. Familian Corp. (2017) 18 Cal.App.5th 969, 983.)
Regarding the standard of review that applies to a trial court's ruling under D'Amico, we note that there is a split of authority on whether an appellate court should review the trial court ruling de novo or for an abuse of discretion. (See Harris, supra, 68 Cal.App.5th at p. 604, fn. 8.) Given this split (as well as the overarching split regarding review of a trial court's evidentiary rulings in the context of summary judgment, discussed ante), we will assume without deciding that an abuse of discretion standard applies to the trial court's refusal to consider Russo's declaration to the extent it contradicts his February 2019 deposition testimony.
The trial court did not delineate in its written order which statements in Russo's January 2022 declaration and his February 2019 deposition were contradictory. Rather, the court broadly stated that it did not consider Russo's declaration "[t]o the extent" it contradicted his deposition testimony and noted only that Russo had testified at his deposition that he was learning, for the first time, of "any license suspension or expiration" that had occurred during CMCI's work on the Allied and Evergreen projects. Because application of the D'Amico rule requires an exacting determination of the extent to which statements are contradictory, we consider Russo's deposition and declaration in greater detail.
As described ante (pt. I.A.1), at Russo's February 2019 deposition, respondents' counsel asked Russo if it were true that CMCI's license had expired in June 2016. Russo stated he was not aware that CMCI's license had expired in June 2016 and had not before heard of such an expiration. In the same vein, when respondent's counsel showed Russo the license history indicating a June 30, 2016 expiration date and an August 18, 2016 renewal date, Russo questioned the correctness of the license history and asserted his disbelief about CMCI having worked on the Allied and Evergreen projects under an expired license.
In his January 2022 declaration, Russo addressed the circumstances surrounding CMCI's effort to renew its license in 2016. As described ante (pt. I.A.3), Russo declared that CMCI's license renewal application was mailed to the Board prior to the June 30, 2016 expiration date, the Board deposited CMCI's check for the renewal fee in mid-July, and the Board sent Russo a letter (dated July 19, 2016) notifying him of the need to date his signature on the renewal application. Russo explained that "[u]pon receipt of the request for corrections, [he] immediately signed the application, on August 19, 2016, and returned the application to the [Board]." Russo further declared that he "was unaware of any suspension of CMCI's license as [he] never received any notice of suspension following the resubmission of [his] application with the required correction, adding a date to [his] signature." Russo explained that because the renewal application had been timely submitted, he "understood that there would be no break in [CMCI's] licensing" and the license application itself "indicates that breaks in licensing occur when licenses are renewed after the expiration date, not when renewed before." Russo also contrasted the lack of notice from the Board about any license expiration in 2016 with the notice of expiration subsequently sent by the Board to CMCI when its license ultimately expired at the end of June 2018. In addition, Russo offered his recollection regarding the meeting he had with Delucchi and respondents, disputing that it concerned a lapse in CMCI's license occurring in July and August 2016.
By contrast to the trial court, we fail to see any contradiction between Russo's deposition testimony and his declaration, including between his statements about his ignorance of the 2016 license expiration and his effort to renew CMCI's license in 2016. In his declaration, Russo explained why he did not know of any expiration or lapse of CMCI's license in 2016 and described his efforts to comply with the licensure requirements when the Board notified him that CMCI's renewal application needed correction. Russo did not contradict his deposition testimony by stating, for example, that he knew all along that CMCI's license had lapsed at the end of June 2016. Rather, in his declaration, and consistent with his deposition, Russo reaffirmed that he did not know the Board had deemed CMCI's license expired as of June 30, 2016, and further discussed the steps he took to ensure that CMCI's license would be timely renewed in 2016.
"[T]he D'Amico rule only applies where there has been a' "clear and unequivocal admission by the plaintiff."' [Citation.] 'In a nutshell, the rule bars a party opposing summary judgment from filing a declaration that purports to impeach his or her own prior sworn testimony.' [Citation.] It does not apply where there is a 'reasonable explanation for the discrepancy' or 'countenance ignoring other credible evidence that contradicts or explains that party's answers or otherwise demonstrates there are genuine issues of factual dispute.'" (Mackey v. Trustees of California State University (2019) 31 Cal.App.5th 640, 658.)
Under these circumstances, we reject respondents' argument that "substantial evidence supports the trial court's discretionary decision" under D'Amico. We conclude that there was no substantial evidence to support a finding that Russo's declaration contradicted his deposition. Therefore, we decide the trial court abused its discretion by ruling that portions of Russo's declaration would not be considered because they contradicted his deposition testimony.
We note that in their separate statement of undisputed facts, respondents raised both the D'Amico rule and Evidence Code sections 702, subdivision (a), and 800 when objecting to certain statements in Russo's January 2022 declaration. The trial court did not mention either of those Evidence Code sections in its February 2022 order. Likewise, respondents do not cite to or make any argument about those Evidence Code sections in their appellate arguments about the trial court's refusal to consider Russo's declaration. Under these circumstances, we construe respondent's Evidence Code objections as subsumed within, and not independent of their assertions under the D'Amico rule. Furthermore, even assuming respondent's Evidence Code objections amount to independent grounds to disregard Russo's declaration statements, those objections lack merit. (See People v. Anderson (2001) 25 Cal.4th 543, 573 [" '[T]he court may exclude the testimony of a witness for lack of personal knowledge only if no jury could reasonably find that he has such knowledge.' "]; People v. Leon (2015) 61 Cal.4th 569, 601 ["A lay witness may offer opinion testimony if it is rationally based on the witness's perception and helpful to a clear understanding of the witness's testimony."].)
Having concluded that the trial court erred in refusing to consider Russo's declaration when it decided that CMCI had failed to show substantial compliance under Business and Professions Code section 7031(e), we must determine whether, based on the record before the trial court, including the factual assertions in Russo's declaration, CMCI raised a triable issue of fact on the issue of substantial compliance.
There is no dispute here that CMCI was duly licensed as a contractor at the time it contracted with Allied and Evergreen and through June 30, 2016, thus satisfying the first of the three elements of substantial compliance under Business and Professions Code section 7031(e). Nevertheless, respondents contend that Russo's declaration fails to satisfy the second and third elements of substantial compliance because it does not show that he" 'acted reasonably and in good faith to maintain proper licensure'" and" 'acted promptly and in good faith to remedy the failure to comply with the licensure requirements upon learning of the failure.'" (§ 7031(e).) Respondents note that "it took Russo a month to perform" the requested correction to CMCI's renewal application. Respondents also challenge Russo's declaration as being "deliberately vague about when CMCI received the July 19, 2016 notice of request for corrections." In addition, respondents mention that after CMCI completed its work on the Allied and Evergreen projects, its license "was suspended multiple times for multiple violations of the [state licensing law], and finally expired again [in 2018] while under suspension."
When considering the record before the trial court to determine whether CMCI raised a triable issue regarding substantial compliance, we must" 'view the evidence in the light most favorable to [CMCI].'" (Elk Hills Power, supra, 57 Cal.4th at p. 606.) We also "generally cannot resolve questions about a declarant's credibility in a summary judgment proceeding." (AARTS Productions, Inc. v. Crocker National Bank (1986) 179 Cal.App.3d 1061, 1065.)
In the trial court, Russo declared, inter alia, that CMCI's license renewal application was mailed to the Board before the June 30, 2016 expiration date and, upon receipt of the Board's July 19, 2016 letter notifying him of the need for a correction, he immediately corrected the renewal application on August 19, 2016 and returned it to the Board. Additionally, Russo explained his lack of awareness of any suspension or break in CMCI's license during its work on the Allied and Evergreen projects and that the subsequent suspensions and June 2018 expiration "result[ed] from CMCI ceasing to perform contracting work."
Russo's conduct as described in his declaration and supported by the appended Board file, along with the judicially noticed license histories demonstrated a triable issue regarding whether Russo "acted reasonably and in good faith to maintain proper licensure" for CMCI. (§ 7031(e).) That same evidence also showed a triable issue as to whether Russo "acted promptly and in good faith to remedy the failure to comply with the licensure requirements" (i.e., Russo's failure to date his signature on CMCI's renewal application) "upon learning of the failure" (i.e., upon receiving the Board's letter about the missing date). (Ibid.; see C. W. Johnson &Sons, Inc. v. Carpenter (2020) 53 Cal.App.5th 165, 169; see also Airfloor Co. of California, Inc. v. Regents of University of California (1978) 84 Cal.App.3d 1004, 1010; cf. Twenty-Nine Palms Enterprises Corp. v. Bardos (2012) 210 Cal.App.4th 1435, 1453-1454; Slatkin v. White (2002) 102 Cal.App.4th 963, 966-967, 971; Pacific Custom Pools, Inc. v. Turner Construction Co. (2000) 79 Cal.App.4th 1254, 1258-1259, 1262-1264.)
For these reasons we conclude that the trial court erred in ruling that CMCI failed to meet its burden to show a triable issue of material fact on the issue of substantial compliance under Business and Professions Code section 7031(e). We therefore reverse the judgment and direct the trial court to vacate its February 2022 order granting summary judgment for respondents.
2. Evidentiary Hearing on Substantial Compliance
Given our conclusion that the record before the trial court showed a triable issue of material fact on CMCI's substantial compliance and therefore summary judgment on the entire action should not have been granted to respondents, we need not address CMCI's argument that "[t]he trial court errored in granting summary judgment on the issue of substantial compliance which must be subject of an evidentiary hearing" (capitalization omitted). Because we direct the trial court to vacate its grant of summary judgment in full, we need not decide whether an evidentiary hearing under Business and Professions Code section 7031(e) was a prerequisite to the now void order.
We leave it to the parties and trial court on remand to determine what procedures should follow regarding respondents' asserted affirmative defense that CMCI was unlicensed during the Allied and Evergreen projects and any counter assertion by CMCI about its licensure or substantial compliance with licensure requirements under Business and Professions Code section 7031.
3. Requests for Judicial Notice
Because we have concluded that the trial court erred in ruling that CMCI had failed to show a triable issue of fact and nullify the court's order granting of summary judgment, we need not address CMCI's argument that the trial court further erred by denying its request for judicial notice of the certified Board file.
Additionally, regarding CMCI's motion for judicial notice filed in this court on September 2, 2022, we grant judicial notice of "exhibit B - a true and correct and certified copy of the [Board]'s contractor's license history for CMC[I]" (capitalization &boldface omitted). Exhibit B is identical to the February 2019 license history of which the trial court took judicial notice. (See Evid. Code, § 459, subd. (a) ["The reviewing court shall take judicial notice of [] each matter properly noticed by the trial court."]; People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.) However, we deny, without prejudice to filing any additional request for judicial notice in a future proceeding in this matter, CMCI's motion for judicial notice of "exhibit A - a true and correct, and certified copy of the Contractors State License Board's ('CSLB') license file for CMC[I]" and "exhibit C - a true and correct copy of correspondence from CSLB dated March 22, 2022 regarding correction of a CSLB error as to CMC[I]'s license status" (some capitalization &boldface omitted). Because we direct a vacatur of the February 2022 order based on the trial court record, exhibit A and exhibit C are not necessary to our resolution of the issues presented in this appeal.
Likewise, we deny without prejudice CMCI's motion for judicial notice filed in this court on April 13, 2023, requesting judicial notice of "exhibit D [] a true and correct copy of February 17, 2023, letter from CSLB to CMC[I] along with CMC[I]'s certified license history" (some capitalization &boldface omitted). Exhibit D is not necessary to our resolution of the issues presented in this appeal based on the trial record. CMCI may file any additional request for judicial notice of exhibit D in a future proceeding in this matter.
4. Prompt Payment Penalties
As discussed ante (pt. I.A.2), in the alternative to summary judgment, respondents moved the trial court for summary adjudication of CMCI's fourth and eighth causes of action for prompt payment penalties on due retention payments. CMCI opposed summary adjudication, arguing it was unwarranted because "[t]here is very clearly a triable issue of fact and law as to whether or not there is a good faith dispute that relates directly to the payment of the retention." In its February 2022 order granting summary judgment of the entire action, the trial court did not address respondents' request for summary adjudication of CMCI's prompt payment penalties causes of action.
On appeal, respondents argue that if we reverse the trial court's order granting summary judgment, we "should direct the trial court to grant summary adjudication of the fourth and eighth causes of action for prompt payment penalties." In its reply brief, CMCI reiterates its opposition to summary adjudication.
Although in some instances a reviewing court may affirm the grant of summary adjudication on a basis not relied on by the trial court (see Code Civ. Proc., § 437c, subd. (m)(2); Bains v. Moores (2009) 172 Cal.App.4th 445, 471, fn. 39; Byars v. SCME Mortgage Bankers, Inc. (2003) 109 Cal.App.4th 1134, 1147, fn. 7), we decline to do so here in the absence of a trial court determination in the first instance. Instead, we direct the trial court to address respondents' motion for summary adjudication on remand.
III. DISPOSITION
The judgment is reversed. The matter is remanded to the trial court with directions to vacate its February 1, 2022 order granting Allied and Evergreen's motion for summary judgment and to conduct further proceedings consistent with this opinion, including on Allied and Evergreen's motion for summary adjudication of CMCI's fourth and eighth causes of action.
CMCI's motion for judicial notice, filed September 2, 2022, is granted as to exhibit B and denied as to exhibit A and exhibit C, without prejudice to CMCI filing any additional request for judicial notice of exhibit A and/or exhibit C in a future proceeding in this matter.
CMCI's motion for judicial notice of exhibit D, filed April 13, 2023, is denied without prejudice to CMCI filing any additional request for judicial notice of exhibit D in a future proceeding in this matter.
CMCI is entitled to its costs on appeal. (Cal. Rules of Court, rule 8.278(a).)
WE CONCUR: Bamattre-Manoukian, Acting P.J. Wilson, J.