Rodgers v. HB Construction CA2/5 ( 2023 )

Filed 12/27/23 Rodgers v. HB Construction CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
JOHN Q. RODGERS, B317068
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. YC072916)
v.
HB CONSTRUCTION, INC.,
Defendant and
Respondent.
APPEAL from an order of the Superior Court of Los
Angeles County, Gary Y. Tanaka, Judge. Affirmed.
Peacock Piper Tong + Voss and Albert E. Peacock III, for
Plaintiff and Appellant.
Johnson and Associates and Einar W. Johnson, for
Defendant and Respondent.
I. INTRODUCTION
Plaintiff John Q. Rodgers filed a complaint against
defendant HB Construction Inc., a California corporation (HBCI),
alleging two causes of action under Business and Professions
Code section 7031, subdivisions (a) and (b). After plaintiff
dismissed his complaint, the trial court found HBCI to be the
prevailing party and awarded it attorney fees. Plaintiff appeals
from the attorney fee award, arguing that: (1) plaintiff’s claims
were not actions “on a contract” within the meaning of Civil
Code1 section 1717, subdivision (a) and HBCI therefore was not
entitled to an award of such fees; (2) alternatively, if plaintiff’s
claims were actions “on a contract,” then the safe harbor
provision of section 1717, subdivision (b)(2) barred the recovery of
fees; (3) HBCI was not the prevailing party; and (4) as an
unlicensed contractor, HBCI was barred from recovering attorney
fees as a matter of law. We affirm.
II. BACKGROUND
A. Complaint
Plaintiff alleged that in July 2011, he entered into an oral
contract with HBCI to remodel an office building in Hermosa
Beach (the Property). HBCI represented that it was a licensed
contractor and, in March 2012, the parties memorialized the oral
agreement into a written contract (the Contract), which included
a provision that “[c]ontractors are required by law to be licensed
1 Further statutory references are to the Civil Code unless
otherwise indicated.
2
and regulated by the Contractors’ State License Board . . . .”
HBCI, however, did not have a contractor’s license either when it
entered into the Contract or when it performed work on the
Property.
The Contract included an attorney fee provision, which
stated, “If any legal action or proceeding arising out of or relating
to this [C]ontract is brought by either party to this [C]ontract, the
prevailing party will be entitled to receive from the other party,
in addition to any other relief that may be granted, the
reasonable attorneys’ fees, costs, and expenses incurred in the
action or proceeding by the prevailing party.”
The Contract also included a provision that required the
parties to settle any disputes by arbitration. The Contract bore
the signature of Timothy R. Roth, the owner of HBCI.
On May 30, 2018, plaintiff filed the complaint, which
alleged as its first cause of action a request for declaratory relief
under Business and Professions Code section 7031, subdivision
(a). Specifically, plaintiff sought a declaration that: “(1) [HBCI],
including its owner, is not entitled to any compensation, . . . for
any work self-performed or subcontracted by [HBCI] on the
[Property] as a matter of law under [Business and Professions
Code section 7031, subdivision (a)]” because the work was
performed and the Contract entered into when HBCI did not
have a valid California contractor’s license.
In his second cause of action, plaintiff sought disgorgement
of “all compensation paid to or on behalf of [HBCI] as an
unlicensed contractor for work it self-performed or subcontracted
on the [Property]” under Business and Professions Code section
7031, subdivision (b). In his prayer for relief, plaintiff sought a
3
declaration, disgorgement, interest, and “attorneys fees and
costs.”
After being served with the complaint, HBCI moved for and
obtained a stay of the case pending completion of an ongoing
arbitration, which we discuss further below.
B. Related Arbitration and Dismissal of Complaint
In August 2017, Roth initiated arbitration proceedings
against plaintiff concerning their joint ownership of a limited
liability corporation that owned the Property. In the arbitration
proceedings, plaintiff, among other things, sought damages for
Roth’s allegedly defective construction work on the Property, the
same work that is the subject of plaintiff’s complaint. According
to Roth, plaintiff had entered into an agreement for construction
services with Craig Reitberger, dba HB Construction, a sole
proprietorship (HBSP), who held a valid contractor’s license.
On October 9, 2019, following the arbitration hearing, the
arbitrator made certain factual findings. As relevant here, the
arbitrator found: “Roth is a licensed contractor. Although
[plaintiff] contends the repairs to the [Property] were done by
Roth’s unlicensed [HBCI], the Arbitrator finds that the repairs
were completed by Craig Reitberger’s licensed sole proprietorship
[HBSP]. . . . [¶] . . . [¶] . . . [Plaintiff] claims Roth is not
entitled to credit for any work on the Property because the work
was done by Roth’s unlicensed [HBCI]. As found above, the work
was completed by Reitberger’s licensed sole proprietorship
[HBSP] and thus did not violate Business and Professions Code
section 7031.”
4
On February 17, 2021, plaintiff filed a request to dismiss
his complaint without prejudice pursuant to Code of Civil
Procedure section 581. The trial court entered the dismissal on
the same date.2
C. Motion for Attorney Fees
On March 12, 2021, HBCI moved for attorney fees in the
amount of $149,379.50. According to HBCI, it was the prevailing
party on the complaint and thus entitled to fees pursuant to
section 1717 and Code of Civil Procedure section 1032,
subdivision (a)(4).
Plaintiff opposed the motion, arguing, among other things,
that plaintiff’s complaint was “not a contract-based claim, but a
statutory claim under Business & Professions Code 7031 for
which attorneys’ fees are not recoverable.” Plaintiff also argued
that HBCI was not the prevailing party.
On October 4, 2021, the trial court issued its ruling,
granting, in part, HBCI’s motion for attorney fees. The court
found that HBCI was the prevailing party, citing the arbitration
award in the other proceeding. The court also concluded that the
Contract’s attorney fee provision was sufficiently “broadly
worded” to apply to this action and “for [d]efendant to base the
motion for attorneys’ fees pursuant to . . . [section] 1717.” The
2 Although the record does not reflect that the clerk of the
superior court entered the dismissal, according to the case
summary of this case, a request for dismissal was entered on
February 17, 2021. (See H.D. Arnaiz, Ltd. v. County of San
Joaquin (2002) 96 Cal.App.4th 1357, 1365 [voluntary dismissal
by written request to clerk is “a ministerial act”].)
5
court rejected plaintiff’s argument that the safe harbor provision
of section 1717, subdivision (b)(2)3 precluded a finding that
defendant was a prevailing party. Citing Santisas v. Goodin
(1998) 17 Cal.4th 599 (Santisas), the court reasoned that section
1717, subdivision (b)(2) only barred the recovery of “the contract
claims rather than the non-contract claims” in plaintiff’s
complaint and therefore awarded fees only for “the time expended
in defending the non-contract claims in this action.” Further, the
court observed that the bulk of the fees incurred by HBCI in the
underlying arbitration “involved numerous issues and claims
that were not at issue in the instant civil action.” It therefore
awarded HBCI $28,413 as reasonable attorney fees.
On December 8, 2021, plaintiff filed his notice of appeal.
III. DISCUSSION
A. Appealability and Adequacy of Appellate Record
Before considering the merits of plaintiff’s appeal, we
consider HBCI’s contentions that: (1) plaintiff failed to include a
notice of appeal in the appellant’s appendix and the notice was
inadequate in any event; (2) plaintiff has appealed from a
nonappealable order; and (3) the appellant’s appendix is defective
and incomplete. In HBCI’s view, these purported deficiencies
support a denial or dismissal of the appeal.
3 Section 1717, subdivision (b)(2) provides in pertinent part,
“Where an action has been voluntarily dismissed . . . , there shall
be no prevailing party for purposes of this section.”
6
We reject each of HBCI’s contentions. First, although
plaintiff failed to comply with California Rules of Court4, rules
8.122(b)(1)(A) and 8.124(b)(1)(A), which require the inclusion of a
notice of appeal in the appellant’s appendix, we decline to impose
a sanction for this violation. (Neville v. Chudacoff (2008) 160
Cal.App.4th 1255, 1261, fn. 5 [waiving appellant’s failure to
include notice of appeal in appendix in violation of rules
8.122(b)(1)(A) and 8.124(b)(1)(A) because “notice of appeal is in
the court file”]; see also DeLuca v. State Fish Co., Inc. (2013) 217
Cal.App.4th 671, 683, fn. 16.) On our own motion, we augment
the record with the notice of appeal filed by plaintiff in this court.
(Rule 8.155(a)(1)(A).) Further, and contrary to HBCI’s
contention, the notice of appeal, which states that plaintiff
appeals from an “[o]rder after judgment” entered on “10/4/21,”
“‘identifie[d] the particular judgment or order being appealed’”
and therefore provided sufficient notice. (See D’Avola v.
Anderson (1996) 47 Cal.App.4th 358, 362.)
We also reject HBCI’s contention that because plaintiff
voluntarily dismissed his complaint without prejudice, there is no
final judgment from which plaintiff can appeal. An order
awarding attorney fees following a voluntary dismissal without
prejudice is appealable, either as a final judgment (Gassner v.
Stasa (2018) 30 Cal.App.5th 346, 354), or pursuant to the
collateral order doctrine (Sanchez v. Westlake Services, LLC
(2022) 73 Cal.App.5th 1100, 1107–1108).
Finally, HBCI’s contention that the appellant’s appendix is
“incomplete” is meritless. HBCI devotes much of its brief to
complaining that the appellant’s appendix is incomplete in that it
4 Further rule references are to the California Rules of
Court.
7
includes only the first 121 pages of what should be (according to
the opening brief) a longer appendix. The appellant’s appendix
that was filed with this court is 221 pages in length and includes
the records referenced in plaintiff’s opening brief.5
B. Attorney Fees as Costs
“‘The determination of the legal basis for an award of
attorney fees is a question of law which we review de novo.
[Citation.]’ [Citation.]” (Hyduke’s Valley Motors v. Lobel
Financial Corp. (2010) 189 Cal.App.4th 430, 434.) And, “[w]hile
it is true that, generally, a trial court’s determination that a
litigant is a prevailing party is reviewed for abuse of discretion, it
is equally well settled that, if the challenge to that determination
is solely one of law, the de novo standard applies.” (Khan v. Shim
(2016) 7 Cal.App.5th 49, 55, fn. 3.)
“‘Under the American rule, each party to a lawsuit
ordinarily pays its own attorney fees. . . . Code of Civil Procedure
section 1021, which codifies this rule, provides: “Except as
attorney’s fees are specifically provided for by statute, the
measure and mode of compensation of attorneys and counselors
at law is left to the agreement, express or implied, of the parties
. . . .” . . . Thus, “‘[p]arties may validly agree that the prevailing
party will be awarded attorney fees incurred in any litigation
between themselves, whether such litigation sounds in tort or in
contract.’”’ (Mountain Air [Enterprises, LLC v. Sundowner
Towers, LLC (2017)] 3 Cal.5th [744, 751 (Mountain Air)].)
5 HBCI’s respondent’s brief also references records in a
respondent’s appendix. But HBCI did not file a respondent’s
appendix in this court.
8
“‘If such litigation does sound in contract, however, an
agreement allocating attorney fees may be “within the scope of
section 1717” and subject to its restrictions. [Citation.] “Before
section 1717 comes into play, it is necessary to determine
whether the parties entered an agreement for the payment of
attorney fees and, if so, the scope of the attorney fee agreement.”
[Citation.] This determination requires us to apply traditional
rules of contract interpretation.’ (Mountain Air, supra, 3 Cal.5th
at p. 752, fn. omitted.)” (Orozco v. WPV San Jose, LLC (2019) 36
Cal.App.5th 375, 406–407 (Orozco).)
If the fee agreement is sufficiently broad to cover the
litigation between the parties, we next consider whether the
litigation “sounds in contract.” If it does, then section 1717,
subdivision (b)(2) provides that “[w]here an action has been
voluntarily dismissed or dismissed pursuant to a settlement of
the case, there shall be no prevailing party for purposes of this
section.”
C. Scope of Attorney Fee Provision
We begin our review of the trial court’s attorney fee award
by considering the language of the Contract’s attorney fee
provision. (Orozco, supra, 36 Cal.App.5th at p. 407.) The
provision provides that if any party to the Contract brings a legal
action “arising out of or relating to this contract,” the “prevailing
party” can recover reasonable attorney fees. “The language
‘arising out of or relating to’ . . . is generally considered a broad
provision.” (Khalatian v. Prime Time Shuttle, Inc. (2015) 237
Cal.App.4th 651, 659.) Here, plaintiff sought: (1) a declaration
that it did not owe HBCI any money for contracting work
9
purportedly performed by HBCI under the Contract and to
disgorge from HBCI any payments already made. On its face,
plaintiff’s claims therefore “arose out of” or “related to” the
Contract. (See Santisas, supra, 17 Cal.4th at p. 608 [“If a
contractual attorney fee provision is phrased broadly enough, as
this one is, it may support an award of attorney fees to the
prevailing party in an action alleging both contract and tort
claims”]; see also Code Civ. Proc., § 1021 [compensation of
attorneys is generally left to agreement of parties “except as . . .
specifically provided for by statute”].)6
D. Applicability of Section 1717
Having concluded that plaintiff’s complaint “arose out of”
and “related to” the Contract, within the meaning of the broadly
worded attorney fee provision, we next consider whether the
complaint “sounds in contract,” such that the limitation set forth
at section 1717, subdivision (b)(2) applies. (Santisas, supra, 17
Cal.4th at p. 617.) “The requirement under . . . section 1717 that
the action be ‘“on a contract”’ has been liberally construed.
[Citation.] As one court has stated, ‘“‘[i]t is difficult to draw
definitively from case law any general rule regarding what
actions and causes of action will be deemed to be “on a contract”
for purposes of [section] 1717.’”’ [Citation.] “Nevertheless, we
distill . . . the following principle: An action (or cause of action) is
“on a contract” for purposes of section 1717 if (1) the action (or
cause of action) “involves” an agreement, in the sense that the
6 Plaintiff notes in his reply brief that HBCI had “disavowed”
the Contract during the arbitration. Plaintiff does not dispute on
appeal that the Contract is between plaintiff and HBCI.
10
action (or cause of action) arises out of, is based upon, or relates
to an agreement by seeking to define or interpret its terms or to
determine or enforce a party’s rights or duties under the
agreement, and (2) the agreement contains an attorney fees
clause.’ [Citation.]” (Orozco, supra, 36 Cal.App.5th at pp. 407–
408.)
Plaintiff’s causes of action were premised on Business and
Professions Code section 7031.7 “The purpose of [this] licensing
law is to protect the public from incompetence and dishonesty in
those who provide building and construction services. [Citation.]
. . . [¶] [Business and Professions Code] [s]ection 7031 advances
this purpose by withholding judicial aid from those who seek
compensation for unlicensed contract work. The obvious
statutory intent is to discourage persons who have failed to
comply with the licensing law from offering or providing their
unlicensed services for pay. [¶] Because of the strength and
clarity of this policy, it is well settled that [Business and
Professions Code] section 7031 applies despite injustice to the
unlicensed contractor. ‘[Business and Professions Code] [s]ection
7031 represents a legislative determination that the importance
of deterring unlicensed persons from engaging in the contracting
business outweighs any harshness between the parties, and that
7 Business and Professions Code section 7031, subdivision (a)
provides in relevant part: “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 a California
court “for the collection of compensation for the performance of
any act or contract where a license is required . . . 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 . . . .”
11
such deterrence can best be realized by denying violators the
right to maintain any action for compensation in the courts of
this state. [Citation.]” (Hydrotech Systems, Ltd. v. Oasis
Waterpark (1991) 52 Cal.3d 988, 995.)
Although plaintiff’s complaint “arose out of” and “related
to” the Contract, it did not “seek[] to define or interpret its terms
or to determine or enforce a party’s rights or duties under the
agreement.” (Orozco, supra, 36 Cal.App.5th at p. 408.) Instead,
the complaint sought a declaration that HBCI was not entitled to
any compensation for work it had performed under the purported
contract and disgorgement of all compensation that it had been
paid under that contract pursuant to statute. (See San Francisco
CDC LLC v. Webcor Construction L.P. (2021) 62 Cal.App.5th 266,
286, 288 [noting that neither side contended that an action for
statutory disgorgement under Bus. & Prof. Code, § 7031 “was an
action to enforce the terms of the Contract” and describing the
cause of action as “a statutory claim”].) Therefore, plaintiff’s
complaint did not “sound in contract.”
According to plaintiff, because the causes of action in his
complaint did not “sound in contract,” the trial court erred in
awarding attorney fees. His argument, however, is premised on a
misapprehension that contractual attorney fees may be awarded
as costs only under section 1717, an argument that has been
rejected by our Supreme Court in Santisas, supra, 17 Cal.4th at
page 618.8 Because, as we noted above, the attorney fee
8 Although we agree with plaintiff that the trial court erred
in citing section 1717 in support of its award of attorney fees, we
review the trial court’s ruling, not its reasoning, and affirm if it is
correct on any ground. (Travis v. Brand (2023) 91 Cal.App.5th
12provision encompasses causes of action that “arise from or relate
to” the Contract, plaintiff’s causes of action pursuant to Business
and Professions Code section 7031 were within the scope of the
attorney fee provision. (See Code Civ. Proc., § 1021.) Moreover,
because section 1717 does not apply to the award of fees on
plaintiff’s complaint, its safe harbor provision set forth at
subdivision (b)(2) also does not apply to preclude a finding that
HBCI is not a prevailing party “for purposes of this section.”
E. Prevailing Party
We next consider plaintiff’s argument that HBCI was not
“the prevailing party” in the litigation within the meaning of the
Contract’s attorney fee provision. According to plaintiff, because
the trial court did not make any substantive decisions in the
lawsuit before plaintiff dismissed his action, HBCI was not the
“prevailing party.”9 We disagree.
Where, as here, the attorney fee provision does not define
the term “prevailing party,” “we will assume, in the absence of
evidence to the contrary, that the parties understood the term in
its ordinary or popular sense.” (Santisas, supra, 17 Cal.4th at
p. 609.)10 Applying the ordinary meaning of the term, the trial
996, 1006; Loeffler v. Medina (2009) 174 Cal.App.4th 1495, 1504,
fn. 11.)
9 As we discuss above, we have concluded that section 1717,
subdivision (b)(2) does not bar a finding that HBCI is the
prevailing party.
10 “For purposes of the cost statutes, the term ‘prevailing
party’ includes a party in whose favor a judgment of dismissal
13
court did not err when it concluded that HBCI was the prevailing
party. Plaintiff’s objective in bringing this complaint was to seek
a declaration and disgorgement pursuant to Business and
Professions Code section 7031. HBCI’s objective was to prevent
such relief. Moreover, as noted by the trial court, the arbitrator
found that HBCI did not violate Business and Professions Code
section 7031. Because plaintiff failed to meet its litigation
objective while HBCI satisfied its objective, the trial court did not
abuse its discretion by finding HBCI to be the prevailing party.
(Santisas, supra, 17 Cal.4th at p. 609.)
F. Legality of Contract
Finally, we consider plaintiff’s contention that Business
and Professions Code section 7031 prevents HBCI, as an
unlicensed contractor, from recovering attorney fees as a matter
of law. Business and Professions Code section 7031, subdivision
(a) forecloses an unlicensed contractor from recovering
compensation. But the section does not, as plaintiff contends,
render contracts between clients and unlicensed contractors void.
To the contrary, “the [Contractors’ State License Law (Bus. &
Prof. Code, § 7000 et seq.)] does not automatically void all
contracts entered by unlicensed contractors.” (MW Erectors, Inc.
v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36
Cal.4th 412, 440; see Templo Calvario Spanish Assembly of God
v. Gardner Construction Corp. (2011) 198 Cal.App.4th 509, 519
[“entering into a contract with a contractor who is later shown to
be unlicensed at the time of execution of the contract does not
has been entered. (Code Civ. Proc., § 1032, subd. (a)(4).)”
(Santisas, supra, 17 Cal.4th at p. 609.)
14
automatically render the contract void”].)11 Plaintiff’s contention
therefore is meritless.
11 To the extent Ranchwood Communities Limited
Partnership v. Jim Beat Construction Co. (1996) 49 Cal.App.4th
1397, and S & Q Construction Co. v. Palma Ceia Development
Organization (1960) 179 Cal.App.2d 364, cited by plaintiff, hold
to the contrary, our Supreme Court’s decision takes precedence.
(See Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d
450, 455.)
15
IV. DISPOSITION
The order awarding attorney fees is affirmed. In the
interests of justice and given the misrepresentations in its brief
concerning the record, we deny an award of costs to HBCI. (Rule
8.278(a)(5).)
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
KIM, J.
We concur:
RUBIN, P. J.
MOOR, J.
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