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Cannan Construction & Management, Inc., et al v. Craig Majewski


December 16, 2010


APPEAL from the Superior Court of Riverside County. William Burby, Judge. (Retired judge of the Los Angeles Super. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) (Super.Ct.No. RIC429713)

The opinion of the court was delivered by: Miller J.

Cannan Construction v. Majewski CA4/2


California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.



The trial court entered judgment in favor of plaintiff, cross-defendant, and appellant Matt Cannan (Cannan) on the jury's special verdicts finding that Cannan was entitled to remuneration in quantum meruit in an amount of $185,946.70, for construction related services he rendered on three separate projects to defendants, cross-complainants, and appellants Craig and Linda Majewski (the Majewskis). The judgment also reflected that the court had granted a directed verdict in favor of the Majewskis on all Cannan Construction & Management, Inc.'s (CCM) causes of actions on the ground that it was barred from recovery because it was an unlicensed contractor. In addition, the court entered judgment in favor of the Majewskis in the amount of $98,446.71 against CCM as statutorily disgorged payments, which the Majewskis had paid to CCM as an unlicensed contractor. The court denied, without prejudice, CCM's request for declaratory relief regarding whether it would be deemed indemnified by the Majewskis in the event CCM was found liable for damages to cross-complainant Cuthers Construction (Cuthers), a subcontractor on two of the projects, in subsequent litigation. The court denied an award of attorney's fees finding no prevailing party.

On appeal, the Majewskis contend that Cannan was improperly added as a plaintiff on the fourth cause of action for quantum meruit, judgment was improperly entered in favor of Cannan in quantum meruit because as an unlicensed contractor he was statutorily barred from recovery, and the judgment was inconsistent with the special verdicts rendered by the jury. CCM and Cannan appeal contending they were entitled to an award of attorney's fees. We affirm the judgment.


In early 2004, Cannan and the Majewskis entered into discussions regarding the utilization of Cannan for construction related services on three of the Majewskises' proposed construction projects. The projects were (1) a residence (Sandia), (2) a tilt-up commercial building (Roick), and (3) two industrial block buildings (Enterprise). Cannan held a general contractor's license in his own name.*fn1 Cannan had started his own company, a sole proprietorship called Cannan Construction & Management, which he had registered as his fictitious business name on May 9, 1995. He incorporated his business sometime in 2003, registering his corporation in the fictitious name of CCM on September 25, 2003. Cannan was the sole shareholder of CCM; he and his wife are its only officers; Cannan ran the company himself, overseeing all construction or management in the field.

The parties entered into two separate written agreements with respect to each project: "General Contractor Management Contract" (management contracts), and general contracting agreement (GC contracts).*fn2 The Majewskis agreed to pay CCM $50,000 for Sandia, $40,000 for Enterprise, and $40,000 for Roick.*fn3 Cannan testified that the Majewskis had determined through their oral discussions that they would prefer to have Cannan act as construction manager rather than a general contractor in order to keep costs down.*fn4 Cannan testified that after entering into the management contracts, Majewski came back and asked if Cannan would sign the general contractor agreements that the bank was requiring. Cannan signed the latter contracts believing that the management contracts would supersede the GC contracts; the management contracts contained language reflecting that they would supersede all other contracts.

Craig Majewski, on the other hand, testified that the parties first signed the GC contracts. He later signed the management contracts solely at the insistence of Cannan: "In my mind, there was never a management contract. It was signed solely for the purposes of Matt Cannan getting better insurance rates." Craig Majewski believed that the GC contracts, rather than the management contracts, were the operative agreements.

After working on and substantially completing the projects over the course of several months, Cannan testified he walked off all three projects in April 2005, because the Majewskis had not paid him in over a month.

Plaintiffs sued the Majewskis alleging causes of action for breach of contract, breach of implied covenant of good faith and fair dealing, foreclosure on mechanic's liens previously filed by CCM, fraud, quantum meruit, unjust enrichment, and equitable indemnity. The causes of action were alleged on behalf of both CCM and Cannan. They requested a total award of damages of $95,710.05: $22,878.37 on Enterprise, $32,560.21 on Roick, and $40,271.47 on Sandia.

On September 26, 2008, the jury entered special verdicts finding that no contracts existed between the Majewskis and CCM, and that Craig Majewski was liable to Cannan in quantum meruit for $185,946.70. The jury additionally found that Cannan made a promise to Craig Majewski, intended to perform his promise, actually performed the promised act, and that Craig Majewski's reliance upon the promise was not a substantial factor causing harm to Craig Majewski. Further, the jury found that neither CCM nor Cannan were negligent in the performance of their duties.



The Majewskis contend that on September 24, 2008, the court improperly substituted Cannan individually as a plaintiff on its own motion under the fourth cause of action for quantum meruit. We disagree. We hold that Matt Cannan was an individual plaintiff in the suit at least as early as the filing of the third amended complaint. Thus, the trial court did err because it did not "add" or "substitute" a plaintiff upon the close of evidence. To the extent the Majewskis contend that the court erred in permitting Cannan to be added as an individual to the second or third amended complaint, we hold that the court acted within its discretion.

On September 19, 2005, at the hearing on the Majewskises' demurrer to plaintiffs' first amended complaint, the Majewskises' counsel noted that "we are not sure from . . . the amended pleading whether it's the corporation that was conducting the business or whether it's Matt Cannan, the individual, that's conducting the business."*fn5 The court sustained the demurrer on the ground that the complaint was ambiguous, but granted leave to amend.

On October 14, 2005, CCM and, apparently, Cannan individually, filed a second amended complaint.*fn6 In the Majewskises' demurrer to the second amended complaint, they asserted that Matt Cannan lacked standing to sue because he asserted CCM had entered into the contracts with the Majewskis: "By so pleading, Matt Cannan is requesting to be allowed to stand in a proverbial bull pen as some sort of relief plaintiff, in the event he is needed to save the claims after the Corporation has had an opportunity to bat, but strikes out." In their opposition, plaintiffs admitted that "Although Matt Cannan intended to enter into the agreements with the Majewskis on behalf of the corporation, only he is identified in the agreements. In light of this and the issue of licensure, Mr. Cannan is also named as a plaintiff out of an abundance of caution." Thus, "because Mr. Cannan is licensed and did the work, he should be permitted to sue in his individual capacity if the court determines that his license is not sufficient for the corporation."

At the hearing on the demurrer to the second amended complaint, plaintiffs' counsel offered "a very simple solution. If counsel will stipulate that the contract is with the corporation, that will dispose of the whole issue, and I can voluntarily dismiss Matt Cannan." The Majewskis declined the stipulation. The court ruled that "[Cannan is] incorporated in each cause of action the allegations that the contract is either made on behalf of the corporation or on behalf of him . . . ." The court reasoned that "Although the agreements do not identify the corporation, or that the signatures are in a corporate capacity, he remains as a plaintiff. [¶] If the evidence is such that in the end, . . . [the Majewskis] argue the contract was with him, instead of the corporation, because of the way the contract paper document . . . doesn't indicate the corporation, then he's protected." The court overruled the Majewskises' demurrer to the second amended complaint finding that "Matt Cannan is properly named as a plaintiff to preserve the right to recovery in the event he, not Cannan Construction & Management, Inc., is deemed the proper party."

On March 6, 2006, Cannan and CCM filed a third amended complaint naming both Cannan and the corporation as plaintiffs. Plaintiffs again conceded that "Mr. Cannan intended the contracts to be on behalf of Cannan Construction & Management, although the agreements do not identify the corporation or that the signatures are in a corporate capacity. Each cause of action below is thus alleged on behalf of Cannan Construction & Management." Nevertheless, "Out of an abundance of caution, Matt Cannan, individually, remains a plaintiff so that, in the event Cannan Construction & Management is not deemed the contracting party or properly licensed, Matt Cannan can recover in his individual [capacity]. For present purposes, however, each cause of action below is alleged on behalf of Cannan Construction & Management . . . ."

In its April 3, 2006, answer to the third amended complaint, the Majewskis prayed that Cannan and CCM be dismissed for lack of standing. On September 24, 2008, at the close of evidence, the Majewskis moved for a directed verdict on the entire third amended complaint. The court granted the motion as to CCM's first through fifth causes of action, but denied the motion as to the sixth cause of action. The court also denied the motion with respect to the fourth cause of action for quantum meruit as to Cannan as an individual. The court noted that "the Majewskis' motion for directed verdict does not mention anything about a verdict against [sic] Matt Cannan individually . . . ." Cannan's counsel indicated he would be pursuing only Cannan's individual claim for quantum meruit in the fourth cause of action and CCM's claim for indemnity on the sixth cause of action. The Majewskises' counsel subsequently interposed an oral motion for directed verdict on the first, second, third, fifth, and sixth causes of action against Cannan individually. The court requested that counsel prepare a brief on the issue for future ruling.

The Majewskis filed an amended motion for directed verdict the next day. The motion was based, in part, on a contention that because CCM was the contracting party and lacked a construction license, Business and Profession Code Section 7031 precluded Cannan's individual substitution as a party to the litigation.*fn7 Likewise, the Majewskis objected to the court's instruction to the jury that Cannan had made an individual claim against them "'for the value of the services he rendered, which is also called a quantum meruit.'" The Majewskis contended that "Matt Cannan does not have standing to bring a claim in [his] individual capacity, so it's an error in law." "This is simply an error in law. It's going to lead the jury to believe that they can award damages to Matt Cannan, the individual, and the individual cannot disregard the corporate entity when it becomes inconvenient based on non-licensure." Cannan's counsel argued that the quantum meruit cause of action as to Cannan individually had been properly plead in the third amended complaint. The court denied the Majewskises' motion for directed verdict on the quantum meruit claim as to Cannan individually.

Contrary to the Majewskises' contention, it is clear the trial court did not "substitute" or "determine" that Cannan stood in the stead of CCM only upon completion of trial. Rather, Cannan was a plaintiff under all causes of actions since the hearing on the demurrer to plaintiffs' second amended complaint.*fn8

Pleading "alternative factual allegations relying on alternative legal theories" has long been deemed permissible under both the common and statutory law. (Williams v. Southern California Gas Co. (2009) 176 Cal.App.4th 591, 598; see also 4 Witkin, Cal. Proc. (5th ed. 2008), Pleading, §§ 402-407, pp. 542-546.) Indeed, "[a] plaintiff may plead inconsistent, mutually exclusive remedies . . . in the same complaint." (Walton v. Walton (1995) 31 Cal.App.4th 277, 292.) Moreover, while "plaintiffs [cannot] recover on both theories does not mean they may not plead both theories. Plaintiffs are entitled to plead inconsistent causes of action, and to submit to the trier of fact any theory which is supported by the evidence. [Citation.]" (Ramsden v. Western Union (1977) 71 Cal.App.3d 873, 881.) "Since, then, inconsistent causes of action may be pleaded, it is not proper for the judge to force upon the plaintiff an election between those causes which he has a right to plead. Plaintiff is entitled to introduce his evidence upon each and all of these causes of action, and the election, or in other words the decision as to which of them is sustained, is, after the taking of all the evidence, a matter for the judge or the jury. There is, of course, a corresponding right in the defendant to move for a non-suit upon any of these causes which may not have been adequately supported by the evidence." (Tanforan v. Tanforan (1916) 173 Cal. 270, 274.) "In general, courts liberally allow amendments for the purpose of permitting plaintiffs who lack or have lost standing to substitute as plaintiffs the true real parties in interest. [Citations.]" (Foundation For Taxpayer And Consumer Rights v. Nextel Communications, Inc. (2006) 143 Cal.App.4th 131, 136.) Indeed, the amendment of a complaint to add plaintiffs is broadly permitted even where the statute of limitations would normally bar the suit. (Jensen v. Royal Pools (1975) 48 Cal.App.3d 717, 720-721.)

Here, alternative pleading was appropriate because while Plaintiffs were certain of their legal rights to recover for work completed, they had some doubt as to the appropriate legal theory upon which to base such recovery. Although Cannan intended to enter into contractual arrangements with the Majewskis on behalf of his corporation, the contracts did not identify the corporate identity of CCM; Cannan signed the contracts in his personal capacity, not as an officer of the corporation; and Cannan personally performed the work. Plaintiffs reasonably, but the trial court later determined wrongly, believed that Cannan's personal licensure was statutorily adequate for the corporation. Indeed, in ruling on the demurrer to the first amended complaint on September 19, 2005, the court indicated that "the owner of the business who is licensed is sufficient to establish the requirements of the contractor's licensing board." Thus, the court concluded that since "Matt Cannan, they allege he is a licensed contractor. He is the owner of the business. That's alleged. So that should be sufficient." Even in the court's later clarification of that order, it ruled "only that the pleading is sufficient but not that such licensure is proven." Thus, plaintiffs had before them a court's ruling that once they proved Cannan's licensure, they would have made an adequate showing of licensure for CCM sufficient to render null the statutory proscription against unlicensed contractors seeking recompense in court. Finally, the jury rendered special verdicts finding that no contracts had been entered into between CCM and the Majewskis. Rather, the jury found that Cannan was entitled to recover personally and individually from the Majewskis for the value of the services he rendered and the goods he furnished as alleged in his fourth cause of action for quantum meruit. Thus, because the jury determined that no contracts existed and that Cannan personally rendered services to the Majewskis, Cannan's individual license was sufficient to overcome any deficiency in his corporation's licensure.

The Majewskis repeatedly and extensively litigated the licensure issue both in pretrial and posttrial pleadings and argument, and during trial itself. The Majewskis produced a certificate of non-licensure for CCM from the Contractor's State Licensing Board for the period between January 1, 2004, and May 10, 2007; the period that included all negotiations and performance of work with respect to the three projects at issue. The jury itself rendered a finding that CCM failed to produce a verified certificate of licensure. Nevertheless, the licensure issue is subsumed within the jury's finding that Cannan personally rendered services to the Majewskis for which he was entitled to recompense.

Finally, to the extent the Majewskis contend that the court abused its discretion in permitting the addition of Cannan as plaintiff at the time of the second or third amended complaints, we find no such abuse. As plaintiffs maintained at the time of the amendment, they could not be sure that the Majewskis would not argue and present evidence that Cannan individually entered into the agreements with them. Moreover, while plaintiffs' primary contention was that CCM entered into the contracts with the Majewskis, they could not be sure that the evidence would not show that Cannan had personally entered into the agreements with them. Indeed, this is precisely what the jury found. Furthermore, the Majewskis aver no prejudice from the amendment. The Majewskises' demurrer to the second amended complaint, which is the first document in the record on appeal reflecting an objection to the addition of Cannan as a plaintiff, was filed on November 1, 2005. The hearing on the demurrer to the second amended complaint took place on February 15, 2006; the third amended complaint was filed on March 6, 2006. Thus, the Majewskis had more than adequate time to obtain discovery and adequately prepare for trial on the additional plaintiff prior to the commencement of trial on July 28, 2008. Therefore, the court acted within its broad and liberal discretion in permitting the addition of Cannan as an individual plaintiff to the complaint.

The Majewskises' contention that Cannan was barred from recovery because of CCM's non-licensure is, thus, an irrelevant diversion from the substantive legal issue. "'Regardless of the equities, section 7031 bars all actions, however they are characterized, which effectively seek "compensation" for illegal unlicensed contract work. [Citation.] Thus, an unlicensed contractor cannot recover either for the agreed contract price or for the reasonable value of labor and materials. [Citations.]' [Citation.]" (Ranchwood Communities Limited Partnership v. Jim Beat Construction Co. (1996) 49 Cal.App.4th 1397, 1409, superseded by statute on other grounds as stated in White v. Cridlebaugh (2009) 178 Cal.App.4th 506, 516, fn. 5.) However, "The issue, then, is not who 'did the work,' but who was 'engaged in the business or acting in the capacity of a contractor.'" (Opp v. St. Paul Fire & Marine Ins. (2007) 154 Cal.App.4th 71, 75.) The court in Opp ruled that an unlicensed corporate contractor could not rely upon its president's personal contractor's license to escape the prohibitions of section 7031 in seeking recompense for work performed. (Opp, at pp. 75-79.) However, the contract was signed by the contractor in his capacity as president of the corporation. (Id. at p. 77.) Moreover, the court noted that "there is nothing in the record that shows [the president] personally performed . . . services on the construction project nor that he personally employed others to perform such services, which would be necessary allegations for any hypothetical quantum meruit cause of action." (Id. at p. 74, fn. 1.)

Here, as noted above, Cannan did not sign the contracts in his capacity as president of CCM, he personally performed the services, and the jury specifically found that he was entitled to recover for those services. Thus, Cannan, who had a license both at the time he entered into the agreements and during the time he performed services related to those agreements, was entitled to receive recompense notwithstanding the proscriptions of section 7031.


The Majewskis contend that the judgment entered by the trial court was inconsistent with the special verdicts rendered by the jury.*fn9 In particular, they contend the court erroneously entered judgment in favor of Cannan against Linda Majewski and that the judgment incorrectly reflected a jury determination with regard to Cuthers's performance.

"'[A] special verdict is that by which the jury find[s] the facts only, leaving the judgment to the Court. The special verdict must present the conclusions of fact as established by the evidence, and not the evidence to prove them; and those conclusions of fact must be so presented as that nothing shall remain to the Court but to draw from them conclusions of law.' [Citation.]" (Contreras v. Goldrich (1992) 10 Cal.App.4th 1431, 1433.) "It is the function of the trial judge to interpret the verdict from its language considered in connection with the pleadings, evidence and instructions, and if the trial court has refused to do so or has interpreted it erroneously, the appellate court will interpret the verdict if it is possible to give a correct interpretation. [Citations]" (Telles v. Title Ins. & Trust Co. (1969) 3 Cal.App.3d 179, 185.) "'A verdict should be interpreted so as to uphold it and to give it the effect intended by the jury, as well as one consistent with the law and the evidence.' [Citation.]" (All-West Design v. Boozer (1996) 183 Cal.App.3d 1212, 1223.) A judgment entered by the trial court upon verdicts rendered by the jury will not be reversed unless the "'record affirmatively shows that the trial court's interpretation is erroneous.' [Citation.]" (Telles, at p. 187.)

Here, the record does not show that the trial court's interpretation of the verdicts was erroneous. Question No. 1 of the special verdicts asked if "Matt Cannan [is] entitled to recover from the Majewskis for the value of services rendered and goods furnished, also called quantum meruit?" The instructions informed the jury to "Answer 'yes' or 'no' separately for Craig and Linda Majewski." The answer form lists the names of both Craig and Linda Majewski with an adjacent blank line presumably upon which the jury could write "yes" or "no." However, the jury merely circled the word "yes" in the instruction and placed a checkmark in the blank next to Craig Majewski's name, but not next to Linda Majewski's. Thus, it is not at all clear, as maintained by the Majewskis, that the jury did not find Linda Majewski liable to Cannan. Indeed, the jury circled "yes" which could legitimately have indicated liability for both the Majewskis. To the extent the verdict suffered from any ambiguity, the Majewskis forfeited the issue by failing to request a clarification prior to release of the jury. (Code Civ. Proc., § 619; see Loyd v. Boulevard Express (1926) 79 Cal.App.406, 409-410 [failure to render finding on one defendant]; Jensen v. BMW of North America (1995) 35 Cal.App.4th 112, 131 [failure to object to form of special verdict].) Furthermore "an ambiguous verdict will be upheld where it is possible to give it a correct interpretation based upon the pleadings, evidence and instructions in the case." (Schienbeck v. Haight (1992) 7 Cal.App.4th 869, 875.)

Here, the amended complaint clearly alleged Cannan performed work on behalf of Linda Majewski. Furthermore, the evidence adduced at trial adequately established that Cannan's work benefitted both the Majewskis. Sandia was a residence in which both Linda and Craig would reside. Both the Majewskis were involved in making myriad design changes to the blueprints provided by Cannan. At the same time they were discussing Sandia, they began to confer about Enterprise and Roick. The general management contracts for all three projects identified both Craig and Linda Majewski. Linda Majewski testified that "we," she and Craig Majewski, hired Cannan on all three projects. She testified that she and Craig "went to Temecula Valley Bank to sign loan documents." Ultimately, all the Majewskises' property was owned jointly by them as trustees in a revocable trust. Likewise, nothing in the record indicates that any of the projects were anything other than community property. (Century Surety Co. v. Polisso (2006) 139 Cal.App.4th 922, 942 ["'[T]he community estate is liable for a debt incurred by either spouse . . . during marriage, regardless of which spouse has the management and control of the property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt.'"] Thus, the evidence clearly established that Cannan provided services that benefitted Linda Majewski. Therefore, the judgment entered against Linda Majewski was not erroneous.

As to the Majewskises' complaints about the judgment's mention of claims arising from the work of Cuthers, as Cannan notes, this issue was well within the claims framed by the Majewskises' cross-complaint. Indeed, the fourth cause of action in the Majewskises' cross-complaint specifically requested indemnity from Cannan for Cuthers's mechanic's liens on Roick. The parties fully litigated the issue of Cuthers's contractual obligations to Cannan and the Majewskis. Tim Cuthers, owner of Cuthers, himself testified at length regarding his work on the projects and his interactions with Cannan and the Majewskis. Thus, the jury's special verdicts against the Majewskis on all causes of action necessarily included "the Majewskis claims for damages allegedly arising from delays in the commencement of Cuthers Construction's work, Cuthers Construction's charges for additional work, and Cuthers Construction terminating work," as reflected in the judgment.


Cannan cross-appeals contending that as the prevailing party below he was entitled to an award of attorney's fees. Cannan alleges that he is entitled to attorney's fees under the specific provisions in two of the three GC contracts. We hold that since the jury specifically found that that parties had not entered into the GC contracts, Cannan was not entitled to an award of attorney's fees pursuant to the provisions of those contracts. Moreover, the court acted within its discretion in denying Cannan attorney's fees pursuant to the relevant statutory provisions.

"When a party obtains a '"simple, unqualified win"' by completely prevailing on, or defeating, the contract claims in the action and the contract contains a provision for attorney fees, the successful party is entitled to attorney fees as a matter of right, eliminating the trial court's discretion to deny fees under [Code of Civil Procedure] section 1717. [Citation.] 'If neither party achieves a complete victory on all the contract claims, it is within the discretion of the trial court to determine which party prevailed on the contract or whether, on balance, neither party prevailed sufficiently to justify an award of attorney fees.' [Citation.]" (Silver Creek, LLC v. Blackrock Realty Advisors, Inc. (2009) 173 Cal.App.4th 1533, 1538.) "A trial court has wide discretion in determining which party is the prevailing party under [Code of Civil Procedure] section 1717, and we will not disturb the trial court's determination absent 'a manifest abuse of discretion, a prejudicial error of law, or necessary findings not supported by substantial evidence." [Citation.]" (Id. at p. 1539.)

The trial court denied Cannan's request for attorney's fees below, finding that Cannan did not recover under a contract theory, that the Majewskis prevailed on their motion for directed verdict, and the Majewskis obtained a judgment on their cross-complaint for indemnity with respect to the payments they made to Cannan in the amount of $98,446.71. Thus, the court reasoned, "Neither plaintiffs Matt Cannan and Cannan Construction nor Cross-complainants Craig and Linda Majewski, individually and as trustees of the Majewski revocable trust, are deemed prevailing parties."

Here, Cannan did not obtain a "simple, unqualified win" on either his own complaint or in defending against the Majewskises' cross-complaint. The trial court granted the Majewskises' motion for directed verdict on five of CCM's six causes of action. While Cannan individually obtained a favorable verdict on his fourth cause of action, he did not obtain verdicts on the first, second, third, or fifth causes of action. Moreover, his win on the fourth cause of action was based on the value of the services he performed, not on enforcement of the contracts. Furthermore, the court denied CCM's cause of action for declaratory relief. Finally, as the trial court noted, judgment was entered in favor of the Majewskis on its cross-complaint with respect to "amount[s] to be disgorged as payments received by an unlicensed contractor [Cannan]." Therefore, the court acted within its broad discretion in denying Cannan attorney's fees.


The judgment is affirmed. All parties are to bear their own costs on appeal.


We concur:



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