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MKB Management, Inc. v. Melikian

May 13, 2010

MKB MANAGEMENT, INC., PLAINTIFF AND APPELLANT,
v.
ANDRE O. MELIKIAN, INDIVIDUALLY AND AS TRUSTEE, ETC., ET AL., DEFENDANTS AND RESPONDENTS.



APPEAL from a judgment of the Superior Court of Los Angeles County, AllanáJ.áGoodman, Judge. Reversed. (Los Angeles County Super. Ct. No. SC098336).

The opinion of the court was delivered by: Croskey, Acting P. J.

CERTIFIED FOR PUBLICATION

MKB Management, Inc. (MKB), appeals a judgment of dismissal following the sustaining of a demurrer to its complaint without leave to amend. MKB alleges that AndreáO.áMelikian and several related companies failed to pay amounts due to MKB as the manager of rental properties under a property management agreement. The trial court concluded that the principal object of the agreement was the performance of acts for which a real estate broker's license was required and that MKB could not enforce any part of the agreement or recover any compensation because it did not possess such aálicense.

MKB contends it is entitled to maintain this action to recover compensation for services for which no real estate broker's license was required regardless of whether other services that it provided required such a license. We conclude that the sustaining of the demurrer to the counts for breach of contract based on the absence of a real estate broker's license was error and that the trial court must exercise its discretion to determine whether the doctrine of severability applies so as to allow the recovery of compensation for services for which no such license was required. We also conclude that the sustaining of the demurrer to the common counts was error and that the judgment cannot be affirmed based on the absence of a contractor's license. We therefore will reverse the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

1. Property Management Agreement

MKB and Melikian entered into a New Management Agreement dated Januaryá1, 2007, in which Melikian as owner granted MKB "the exclusive right to rent, lease, operate and manage" several apartment buildings. Melikian granted MKB the authority to advertise rentals; sign, renew, and cancel leases; collect rents and other charges; terminate tenancies and sign notices on behalf of the owner; prosecute unlawful detainer actions; cause repairs and alterations to be made; decorate the premises; purchase supplies; hire and supervise employees to operate and maintain the premises; and contract with others for services on behalf of the owner. MKB agreed to deposit in Melikian's account at a financial institution all receipts less disbursements. Melikian agreed to pay any expenses in excess of the receipts and also agreed to pay aámanagement fee of the greater of $2,000 per month or 4 percent of the gross rents.

2. Complaint, Demurrer, and First Amended Complaint

MKB filed a complaint in June 2008 against Melikian, individually and as trustee of the AndreáO. Melikian 2003 Trust; 228 S. Mariposa LLC; 452 S. Mariposa LLC; 470áS.áMariposa LLC; 5030-5032 Maplewood LLC; and 4122 W. 2nd LLC. MKB alleged that the defendants failed to pay amounts due under the property management agreement and failed to pay for services rendered and money paid by MKB at the defendants' request. A copy of the property management agreement was attached to the complaint. MKB alleged that Melikian was a party to the written agreement and that the other defendants had orally agreed to pay amounts due under the agreement. MKB alleged counts for (1)ábreach of a written contract, against Melikian; (2)ábreach of an oral contract, against the other defendants; and (3)ácommon counts for quantum meruit and money paid, against all defendants.

The defendants jointly demurred to the complaint, arguing that MKB failed to allege possession of a real estate broker's license. They argued that such a license was required for the services described in the property management agreement and that absent an allegation of licensure MKB could not recover payment for the alleged services.

MKB filed a first amended complaint in August 2008, before the scheduled hearing on the demurrer, alleging the same three counts against the same defendants. MKB also alleges that it was exempt from the real estate license requirement because any services for which such a license was required were of the types described in Business and Professions Code sectioná10131.01, subdivisioná(a)(3), and it performed those services under the supervision and control of Melikian, a licensed real estate broker. MKB alleges further that it was exempt from the contractor's license requirement pursuant to Business and Professions Code sectioná7048 because the charges for any services for which such a license otherwise might be required were less than $500 per undertaking or project. MKB seeks damages in the amount of not less than $37,919.63 on each count.

3. Demurrer to First Amended Complaint

The defendants jointly demurred to the complaint, repeating the same arguments from their original demurrer. They also argued that the exemption of Business and Professions Code sectioná10131.01, subdivision (a)(3) was inapplicable because Melikian was not an employee of MKB and because the services rendered under the property management agreement were beyond the scope of those specified in the statute. The defendants argued further that a contractor's license was required for some of the services provided under the contract, that the exemption for projects under $500 was inapplicable, and that MKB could not recover payment for those services.

MKB argued in opposition to the demurrer that some of the services provided did not require either a real estate license or a contractor's license and that it was entitled to recover payment for those services even if it could not recover payment for other services for which it did not have the required license. MKB also argued that it was exempt from the real estate license requirement with respect to some of the services provided, that the agreement was severable as to those services, and that it was ...


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