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Alatriste v. Cesar's Exterior Designs

April 6, 2010


APPEAL from a judgment of the Superior Court of San Diego County, Charles R. Hayes, Judge. Affirmed. (Super. Ct. No. 37-2007-00074653-CU-NP-CTL).

The opinion of the court was delivered by: Haller, J.


Esaul Alatriste paid Cesar's Exterior Designs, Inc. (Cesar's Designs) $57,500 for landscaping work at his home. Alatriste then sued Cesar's Designs seeking reimbursement of the $57,500 under the statute allowing a party to recover "all compensation paid to [an] unlicensed contractor." (Bus. & Prof. Code, § 7031, subd. (b).)*fn1 Alatriste successfully moved for summary adjudication on this claim. After Alatriste dismissed his remaining claims, the court entered judgment in Alatriste's favor for $57,500 plus interest and costs.

Cesar's Designs concedes it was unlicensed when it began the landscape work, but contends the court erred in granting summary adjudication because it presented facts supporting its defenses and/or offsets to Alatriste's section 7031(b) claim. This contention is without merit. The proffered facts do not support a viable defense or offset to Alatriste's reimbursement claim under section 7031(b). Specifically, we hold that (1) Alatriste's prior knowledge of Cesar's Designs' unlicensed status does not bar his section 7031(b) reimbursement claim; (2) Alatriste is entitled to recover the total amount paid even though Cesar's Designs was licensed during a portion of the work; and (3) Alatriste is entitled to recover payments for materials retained by him (in addition to payments for labor). Accordingly, we affirm.


Alatriste retained Cesar's Designs to perform landscape construction services at Alatriste's newly built home. After working for about five months, Cesar's Designs terminated its services when Alatriste refused to continue to pay for work performed. By that time, Alatriste had paid Cesar's Designs $57,500.

Alatriste then brought an action against Cesar's Designs, alleging fraud, negligent misrepresentation, and unfair competition, and also sought to recover the total amount paid under section 7031(b) because Cesar's Designs was unlicensed when it began the work.*fn2

Alatriste moved for summary adjudication solely on the section 7031(b) claim. In support, Alatriste presented evidence that the parties signed a contract on December 1, 2006, in which Alatriste agreed to pay $91,900 in four installments for the landscape work. This evidence showed that Cesar's Designs began work on December 11 and left the project five months later on May 26, 2007. Alatriste also submitted documents from the state licensing board showing Cesar's Designs did not have a landscaping contractor's license until April 5, 2007, and had never before been licensed. Alatriste said he paid a total of $57,500 to Cesar's Designs.

In opposition, Cesar's Designs conceded that: (1) it entered into a written contract with Alatriste to perform landscape construction work on December 1, 2006 for $91,900; (2) it did not have a license on that date or at any time before that date; (3) it first obtained a contractor's license on April 5, 2007; and (4) Alatriste paid Cesar's Designs a total of $57,500 on the project. But Cesar's Designs argued these facts did not support summary adjudication on Alatriste's statutory reimbursement claim because triable factual issues existed on its defenses, including estoppel, unclean hands, fraud, and unjust enrichment. Cesar's Designs also argued Alatriste was not entitled to recover the portion of the payment: (1) for work performed while Cesar's Designs was licensed (between April 5 and May 26); and (2) for materials (as opposed to labor).

In support of these assertions, Cesar's Designs submitted the declaration of its president (Cesar Hernandez), who stated he had known Alatriste for 12 years and "[a]t the time we were negotiating the contract, [Alatriste] understood that neither I nor my company had a California contractor's license. At that time, my son, Cesar Hernandez Jr., was studying for, and was scheduled to take, the California contractor's license exam. My company was going to operate under my son's license. [¶]... Between September and November of 2006, I informed [Alatriste] on at least three (3) occasions that my son was scheduled to take the California contractor's license exam at the end of 2006 or early 2007. [Alatriste] understood that my company did not yet have a license during this time. [¶]... Knowing that [Cesar's Designs] did not yet have a license at the time, [Alatriste] nonetheless asked [Cesar's Designs] to perform the landscaping work at his new home."

Hernandez also explained the circumstances under which his company became licensed: "On January 23, 2007, before any significant work had been performed at [Alatriste's] home, my son tested for his California contractor's license. On that same day, we found out my son passed the test.... [¶]... Two (2) months later, in March of 2007, not having received any word regarding the issuance of the license, I contacted the State Contractor's License Board... [and] was informed the Board was unable to issue a license because it allegedly never received a $150 processing and license fee when the application was submitted in January. Immediately, I resubmitted the paperwork and the $150 fee." Hernandez said his son was then issued the license on April 5, 2007. Hernandez stated that at least once during the construction period, he "discussed with [Alatriste] the fact that [Cesar's Designs] was awaiting the issuance of a license."

Hernandez also asserted that Alatriste never expressed any dissatisfaction with the work performed during the project and the sole reason Alatriste stopped paying for the work was because Alatriste was having financial problems. In this respect, Hernandez said: "[Alatriste] continually reminded me that we were 'good friends' and [Alatriste] would come up with the money soon. [Cesar's Designs] attempted to accommodate the situation by extending the time for payments, but eventually had to cease work due to [Alatriste's] failure to make payments." Hernandez said that when Cesar's Designs left the site, Alatriste still owed $15,648.55 for work performed. With respect to Cesar's Designs' offset claims, Hernandez said: "Of the amount paid by [Alatriste] to Cesar's Designs, $11,968 was for labor and materials provided while Cesar's Designs had a California contractor's license[,] [¶] [and]... $20,045.16 was for materials used and incorporated into the project."*fn3

In reply, Alatriste submitted his declaration denying that he knew that Cesar's Designs was not licensed during the project, but argued that even if he knew, knowledge by the consumer is not a bar to recovery under section 7031(b). Alatriste also stated that in May 2007, he experienced "serious problems with Cesar's performing substandard, shoddy work on my residence," and identified numerous specific defects. Alatriste said he informed Hernandez and his son of those problems.

After a hearing, the court granted summary adjudication on Alatriste's statutory reimbursement claim. The court found that Alatriste proved he was entitled to full reimbursement, and rejected Cesar's Designs' defenses. Specifically, the court ruled that a plaintiff's prior knowledge of a defendant's unlicensed status does not bar recovery under section 7031(b), and that Cesar's Designs did not establish a substantial compliance defense under the statute. Alatriste then dismissed all remaining causes of actions and defendants. The court entered a final judgment against Cesar's Designs for $57,500 plus interest for a total amount of $66,762.25.


I. Governing Review Standards

A court properly grants summary adjudication on a cause of action if the record establishes no triable issue as to any material fact, and the moving party is entitled to prevail on the claim as a matter of law. (Code Civ. Proc., § 437c, subds. (c) & (f).) The moving party "bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.... A prima facie showing is one that is sufficient to support the position of the party in question." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851.) We conduct a de novo review of the court's summary adjudication ruling. (Id. at p. 860.)

In contending the court erred in granting summary adjudication, Cesar's Designs raises several issues of first impression pertaining to the proper interpretation of section 7031(b). In considering these issues, our fundamental objective is to ascertain the legislative intent. In so doing, we focus initially on the words of the statute " ' " 'because the statutory language is generally the most reliable indicator of legislative intent. [Citation.] The words of the statute should be given their ordinary and usual meaning and should be construed in their statutory context.' [Citation.] If the statutory language is unambiguous, 'we presume the Legislature meant what it ...

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