Phoenix Mechanical Pipeline v. Space Exploration etc.

Filed 6/13/17
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
PHOENIX MECHANICAL B269186
PIPELINE, INC.,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. BC 568084)
v.
SPACE EXPLORATION
TECHNOLOGIES CORP.,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County. Rafael A. Ongkeko, Judge. Reversed and
remanded with directions.
The Ryan Law Firm, Kelly F. Ryan and Nathaniel P.
Loakes for Plaintiff and Appellant.
Payne & Fears, Benjamin Avery Nix, Scott O. Luskin and
Robert T. Matsuishi for Defendant and Respondent.
____________________________________
Plaintiff and appellant Phoenix Mechanical Pipeline, Inc.
(Phoenix Pipeline), appeals from a judgment entered after the
trial court sustained the demurrer of defendant and respondent
Space Exploration Technologies Corp. (SpaceX) without leave to
amend. The trial court found that Phoenix Pipeline could not
pursue its claims for payment for construction and related
services against SpaceX because Phoenix Pipeline failed to allege
that it had a contractor’s license. After several attempts to cure
this defect, the trial court concluded that Phoenix Pipeline could
not amend to comply with the licensing requirement, and
therefore sustained SpaceX’s demurrer to Phoenix Pipeline’s
second amended complaint (SAC) without leave to amend.
Business and Professions Code section 7031, subdivision (a)
requires a contractor’s license to maintain an action for
compensation for services for which a contractor’s license is
necessary.1 The SAC does not allege that Phoenix Pipeline has
such a license, and Phoenix Pipeline does not claim on appeal
that it is licensed. Rather, Phoenix Pipeline asserts a variety of
reasons why it need not be licensed to pursue this litigation.
Phoenix Pipeline argues that: (1) it sufficiently complied with
section 7031 by alleging that one of its employees, whom Phoenix
Pipeline alleges was its “responsible manager officer,” is a
licensed contractor; (2) it did not need to be licensed to pursue its
claims against SpaceX because SpaceX is a sophisticated
corporate entity and section 7031 is intended to protect
homeowners; and (3) some of the services that it allegedly
performed did not require a contractor’s license. Phoenix
1Subsequent undesignated statutory references are to the
Business and Professions Code.
2
Pipeline also argues for the first time on appeal that the trial
court abused its discretion in denying further leave to amend
because Phoenix Pipeline could have amended the complaint to
show that it was an employee of SpaceX rather than an
independent contractor.
With one exception, we conclude that each of these
arguments is precluded either by settled law or by Phoenix
Pipeline’s own previous allegations. In light of the liberal
pleading standards applicable to this stage of the litigation, we
find that Phoenix Pipeline adequately alleged in its SAC that
some of the services it provided did not require a contractor’s
license. We therefore reverse in part and remand to provide the
opportunity for Phoenix Pipeline to amend its complaint to allege
claims for noncontractor services only.
BACKGROUND
Phoenix Pipeline filed its initial complaint on December 29,
2014, asserting claims for breach of contract and breach of the
duty of good faith and fair dealing; common counts; intentional
and negligent misrepresentation; and unfair business practices.
The complaint alleged that in 2010 SpaceX requested that
Phoenix Pipeline provide a variety of services, including
“plumbing, general maintenance and repair, concrete removal
and pouring, trash clean-up and disposal, demolition, car
washing, electrical, excavation and installation,” all of which the
complaint characterized as “Subcontracting Services.” The
complaint alleged that Phoenix Pipeline provided SpaceX with
invoices detailing the services that it provided, and that each
such invoice constituted “an individual agreement between
[SpaceX and Phoenix Pipeline].”
3
Phoenix Pipeline alleged that SpaceX paid for its services
from 2010 to October 2013, but failed to pay for services
performed between October 2013 and August 2014. Phoenix
Pipeline claimed that “[o]n or about August 15, 2014, [SpaceX]
informed [Phoenix Pipeline] that their services were no longer
required and requested [Phoenix Pipeline] to leave [SpaceX’s]
premises.” Phoenix Pipeline claimed that SpaceX owed
$1,037,045.66 for the services it provided. The complaint did not
allege that Phoenix Pipeline was a licensed contractor.
SpaceX demurred on the ground that Phoenix Pipeline was
not licensed. Rather than oppose the demurrer, Phoenix Pipeline
elected to file an amended complaint.
Phoenix Pipeline’s first amended complaint (FAC)
contained essentially the same factual allegations as its initial
complaint, but added the allegation that Harold Hill, whom
Phoenix Pipeline characterized as the “Responsible Managing
Employee” for Phoenix, “oversaw all services that [Phoenix
Pipeline] provided to any contractors, companies, or institutions,
including [SpaceX].” The FAC alleged that Hill was the owner of
another entity, Phoenix Mechanical Plumbing, Inc. (Phoenix
Plumbing), and that he held a California contractor’s license,
No. 670382. The FAC alleged that Hill “supervised the
Subcontracting Services that [Phoenix Pipeline] provided
[SpaceX] for the duration of their relationship.” Phoenix Pipeline
attached a copy of contractor’s license No. 670382 to the FAC.
The copy showed that the license had been issued to Phoenix
Plumbing.
SpaceX filed another demurrer arguing that the license
issued to Phoenix Plumbing was not sufficient to satisfy the
4
requirements of section 7031. On July 13, 2015, the trial court
sustained the demurrer with leave to amend.
Phoenix Pipeline filed its SAC on July 23, 2015. The SAC
made two changes to the allegations in the FAC. First, it
relabeled Hill as a “responsible manager officer” rather than as
the “Responsible Managing Employee” and expanded the
description of his role. The SAC alleged that Hill “supervised
construction related services, managed construction activities by
making technical and administrative decisions, checked jobs for
proper workmanship, and directly supervised construction job
sites.” Second, the SAC distinguished between alleged
construction related services, which it categorized as
“Subcontracting Services,” and alleged nonconstruction related
services, which it labeled as “Non-Contracting Services.” The
SAC claimed that no valid contractor’s license was required for
the Non-Contracting Services.
SpaceX again demurred. Phoenix Pipeline opposed the
demurrer, and in the alternative requested 30 days leave to file a
third amended complaint. Phoenix Pipeline’s opposition did not
explain how it proposed to amend the SAC. The trial court
sustained the demurrer without leave to amend and entered
judgment against Phoenix Pipeline on October 21, 2015.
DISCUSSION
1. Standard of Review
An order sustaining a demurrer is reviewed de novo to
determine whether the complaint states a cause of action as a
matter of law. (Lazar v. Hertz Corp. (1999) 69 Cal. App. 4th 1494,
1501.) On appeal, we “ ‘treat the demurrer as admitting all
material facts properly pleaded, but not contentions, deductions
or conclusions of fact or law.’ ” (Blank v. Kirwan (1985) 39 Cal. 3d
5
311, 318.) However, an appellate court is not required to accept
the truth of alleged facts in an amended complaint that are
inconsistent with the allegations in a superseded complaint
unless the inconsistencies are adequately explained. (Owens v.
Kings Supermarket (1988) 198 Cal. App. 3d 379, 383–384
(Owens).)
When a trial court sustains a demurrer without leave to
amend, the court’s decision not to permit further amendment is
reviewed for abuse of discretion. (Code Civ. Proc., § 472c, subd.
(a); Ellenberger v. Espinosa (1994) 30 Cal. App. 4th 943, 947.) If
the complaint does not state facts sufficient to constitute a cause
of action, the appellate court must determine whether there is a
reasonable possibility that the defect can be cured by
amendment. (Ellenberger, at p. 947.)
2. Phoenix Pipeline’s SAC Fails to State a Claim for
Construction Related Services Because It Does Not
Allege that Phoenix Pipeline is a Licensed Contractor
Section 7031, subdivision (a) provides that, with identified
exceptions not relevant here: “[N]o 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 he or she was 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.” Under section 7025, subdivision (b), “ ‘Person’ ”
includes a corporation.
The purpose of this section is to “protect the public from
incompetence and dishonesty in those who provide building and
6
construction services.” (Hydrotech Systems, Ltd. v. Oasis
Waterpark (1991) 52 Cal. 3d 988, 995 (Hydrotech).) The
section “advances this purpose by withholding judicial aid from
those who seek compensation for unlicensed contract work.”
(Ibid.)
Our Supreme Court has explained that, in light of the
“strength and clarity” of this purpose, “section 7031 applies
despite injustice to the unlicensed contractor. ‘Section 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
such deterrence can best be realized by denying violators the
right to maintain any action for compensation in the courts of
this state.’ ” (Hydrotech, supra, 52 Cal.3d at p. 995, quoting
Lewis & Queen v. N. M. Ball Sons (1957) 48 Cal. 2d 141, 151
(Lewis & Queen).) The court has interpreted the section strictly
to fulfill its purpose. For example, in Hydrotech, the court held
that section 7031 barred a claim for fraud by a subcontractor
against a contractor who was aware that the subcontractor was
unlicensed. (Hydrotech, at p. 997.) And in Lewis & Queen, the
court held that a claim by an unlicensed partnership against a
contractor was barred, even though one of the partners was
individually licensed. (Lewis & Queen, at pp. 146, 148–149.)
More recently, in MW Erectors, Inc. v. Niederhauser Ornamental
& Metal Works Co., Inc. (2005) 36 Cal. 4th 412 (MW Erectors), the
court held that, where applicable, section 7031, subdivision (a)
bars a person from recovering compensation for any work
performed under a contract that requires a contractor’s license if
the person was unlicensed at any time during performance of the
contract. (Id. at p. 419.)
7
Because Phoenix Pipeline did not allege that it was
licensed, section 7031 precludes its claims for work that required
a license. None of the arguments that Phoenix Pipeline makes to
escape the effect of section 7031 can avoid this result, however
harsh.
a. Phoenix Pipeline may not rely upon a license
issued to another
Phoenix Pipeline argues that it did not need its own license
to maintain its action, as its alleged “Responsible Manager
Officer,” Hill, was licensed and supervised all the services that
Phoenix Pipeline provided.2 Phoenix Pipeline cites no authority
for this proposition, which is inconsistent with settled law.
Section 7031 precludes any unlicensed “person” from
maintaining an action for contracting services. Consistent with
this provision, the court in Lewis & Queen rejected the argument
that the partnership that entered into the contract at issue and
filed the action did not need a license because one of its partners
had an individual license. The court held that “[t]he ‘person’ that
did the contracting work, and was required by section 7028 to
have a license . . . was the partnership of Lewis and Queen, and it
had no license.” (Lewis & Queen, supra, 48 Cal.2d at p. 149.)3
2From Phoenix Pipeline’s FAC, it appears that the license
was actually issued to another entity allegedly owned by Hill,
Phoenix Plumbing. However, the ambiguity is irrelevant, as
Phoenix Pipeline may not rely on the license to avoid the
consequences of section 7031 whether the license was held by Hill
or some other entity.
3 Section 7029 even requires that two licensed partners
who engage in a joint venture obtain a separate license for the
joint venture. Section 7031 provides for an exception to the
requirement of a license to bring suit when contractors are “each
8
The “person” that contracted with SpaceX and that has filed suit
here is Phoenix Pipeline. (See § 7025, subd. (b).) It needed its
own license to maintain this action, which it did not have.
WSS Industrial Construction, Inc. v. Great West
Contractors, Inc. (2008) 162 Cal. App. 4th 581 (WSS) is directly on
point. In that case, Division Eight of this district held that a
corporation (WSS) could not maintain an action for contracting
services even though its “Responsible Managing Officer”
“previously qualified a . . . partnership for a contractor’s license
and held various individual contractor licenses of his own at all
times.” (Id. at p. 594.) “WSS, the corporate entity or ‘person’
engaged in the business, which acted in the capacity of
contractor, does not and cannot argue it was ever licensed as a
contractor or held that status at a time that preceded its
performance in this case.” (Id. at p. 596.) Section 7031 therefore
precluded its action.
Similarly, in Opp v. St. Paul Fire & Marine Ins. Co. (2007)
154 Cal. App. 4th 71, the court held that neither the owner of an
unlicensed corporation nor the corporation itself could maintain
an action for contracting services performed by the corporation
despite the fact that the owner was licensed. The contracting
entity was the unlicensed corporation, and it could not show that
individually licensed under this chapter but who fail to comply
with Section 7029.” But this express exception, which obviously
does not apply here, simply serves to reinforce the Legislature’s
intention that the “person” that files suit—whether an individual
or an entity—must have a license to maintain the action unless a
statutory exception exists. (See also § 7075.1, subd. (a) [“No
license, regardless of type or classification, shall be transferable
to any other person or entity under any circumstances”].)
9
it complied with section 7031 by virtue of its owner’s individual
license. (Id. at pp. 76–79.)
Thus, the allegation that Phoenix Pipeline’s responsible
manager officer was licensed is not sufficient to permit Phoenix
Pipeline to sue for work that it contracted to perform. Phoenix
Pipeline was the contracting entity and the entity that filed suit.
Its inability to allege that it was licensed is fatal to its claims for
compensation for work that required a license.
b. Section 7031 is not limited to contracts with
unsophisticated persons or homeowners
Phoenix Pipeline argues that it does not need a contractor’s
license to sue SpaceX because the “underlying purpose” of section
7031 is to “protect unsuspecting homeowners and not meant to
shield sophisticated corporate entities.” The contention is not
supported by the language of section 7031 or by decisions
applying that section.
Nothing in section 7031 either limits its application to a
particular class of homeowners or excludes protection of
“sophisticated” persons.4 Reading that limitation into the statute
would be inconsistent with its purpose of “ ‘deterring unlicensed
persons from engaging in the contracting business.’ ” (Hydrotech,
supra, 52 Cal.3d at p. 995.) Indeed, in Hydrotech, the court
rejected the argument that section 7031 should not be applied to
4 The vagueness of such a supposed class reinforces the
conclusion that the Legislature would not have intended such a
limitation without definition. Phoenix Pipeline’s interpretation of
section 7031 would create an unworkable standard. What should
the courts do with a particularly sophisticated homeowner? How
about an unsophisticated small business owner who hires a
contractor for a commercial project?
10
a lawsuit by a subcontractor against a contractor because the
subcontractor “did not hold itself out to the public.” (Id. at
p. 997.) The court applied section 7031 even though the suit was
against a general contractor for a large commercial construction
project who allegedly was aware of the subcontractor’s unlicensed
status. (Ibid.) The court declined to find an implied exception in
section 7031 for a foreign contractor who allegedly engaged in
“isolated” activities in California. (Id. at p. 996.)
The holdings in Hydrotech and in numerous other cases
contradict Phoenix Pipeline’s assertion that California courts
have only “exacted [the] severe prohibition” in section 7031 “in
contractor-homeowner relationships.” For example, in Lewis &
Queen, our Supreme Court applied section 7031 to a suit by a
subcontractor against a contractor on a contract for construction
of a roadway, noting that “[t]he class protected by the statute
includes those who deal with a person required by the statute to
have a license.” (Lewis & Queen, supra, 48 Cal.2d at pp. 145,
153.) WSS applied section 7031 to a lawsuit by a subcontractor
against a contractor for work involving “improvements on a
public works project” at a school. (WSS, supra, 162 Cal.App.4th
at p. 585.) WSS cited Banis Restaurant Design, Inc. v. Serrano
(2005) 134 Cal. App. 4th 1035 (Banis), which involved a contract
for design services for a restaurant and market construction
project. (See WSS at p. 591; see also Vallejo Development Co. v.
Beck Development Co. (1994) 24 Cal. App. 4th 929, 943–944
(Vallejo) [rejecting the argument “that there is less reason to
regulate incompetence and dishonesty among master developers
than among others who act in the capacity of a general
engineering contractor for smaller-scale projects”].)
11
None of the cases that Phoenix Pipeline cites supports its
position. Phoenix Pipeline cites Matchett v. Gould (1955) 131
Cal. App. 2d 821, but our Supreme Court disapproved that case in
Lewis & Queen to the extent the opinion reasoned that section
7031 did not apply to a suit by a subcontractor against a
contractor. (Lewis & Queen, supra, 48 Cal.2d at pp. 152–154.) In
Lewis & Queen, the Supreme Court also distinguished Norwood
v. Judd (1949) 93 Cal. App. 2d 276, Galich v. Brkich (1951) 103
Cal. App. 2d 187, and Wold v. Luigi Consenstino & Sons (1952)
109 Cal. App. 2d 854, which Phoenix Pipeline also cites, on the
ground that those cases were actions against partners for a share
of profits in an unlicensed enterprise, not suits against third
parties who contracted with an unlicensed entity. (See Lewis &
Queen, at pp. 151–152.)
In Gatti v. Highland Park Builders, Inc. (1946) 27 Cal. 2d
687, both plaintiffs had individual contractors’ licenses but
formed a partnership that did not have its own license during
performance of the contract. The court found “substantial
compliance” with section 7031 under circumstances that are now
covered by an express exception to the licensing requirement.
(Id. at pp. 689–690; see §§ 7029, 7031, subd. (a).) Moreover, as
the court noted in WSS, the judicial substantial compliance
doctrine as described in Gatti is “no longer the law” in light of
legislative changes to codify the doctrine strictly. (See WSS,
supra, 162 Cal.App.4th at p. 595.)
In Citizens State Bank v. Gentry (1937) 20 Cal. App. 2d 415,
the plaintiff contractor was licensed at the time of the contract
but renewed the license while work was still ongoing in the name
of a corporation that he owned. Under those facts, the court
concluded that “the individual plaintiff in whose name the license
12
stood at the time the contract was made and the corporate entity
organized by him in whose name the license stood at the time the
cause of action accrued, should be considered as one.” (Id. at
p. 420.) Those facts are not applicable here.
There is no basis to read into section 7031 the limitation
that Phoenix Pipeline suggests. Phoenix Pipeline’s claim that
SpaceX is a sophisticated corporate entity is therefore irrelevant
to Phoenix Pipeline’s obligation to show that it was licensed.
3. Phoenix Pipeline Adequately Alleged that It Provided
Some Services for Which No Contractor License Was
Necessary
In a brief argument, Phoenix Pipeline asserts that some of
the tasks that it performed were “non-construction related
services” and therefore did not require a contractor’s license.
These tasks, which the SAC labels as “Non-Contracting Services,”
allegedly included work such as “general maintenance and
repair, trash clean-up, hauling, and disposal, and car washing.”
The SAC distinguishes these services from “construction related
services,” which it alleges included “plumbing, concrete
pouring/removal, excavation, demolition, and electrical.”
Phoenix Pipeline’s argument raises several questions,
including: (1) whether the tasks that Phoenix Pipeline groups in
the category of “Non-Contracting Services” actually were
nonconstruction related work for which no license was necessary,
and (2) whether those tasks can be segregated from other work
that Phoenix Pipeline performed that admittedly did require a
license. Phoenix Pipeline does not attempt to answer these
questions with any analysis or citation to authority.
Nevertheless, on review of an order sustaining a demurrer we
liberally construe the allegations of the complaint “to attain
13
substantial justice.” (Scientific Cages, Inc. v. Banks (1978) 81
Cal. App. 3d 885, 887 (Scientific Cages).) Applying that standard,
we answer these questions in Phoenix Pipeline’s favor.
Section 7026 defines a “contractor” as one who undertakes
particular tasks. Performing those tasks requires a license. (See
§ 7028 [acting in the capacity of a contractor without a license is
a misdemeanor]; WSS, supra, 162 Cal.App.4th at pp. 592–593
[preparation of shop plans was included within the scope of
section 7026 and therefore required a license].) And, as
discussed, section 7031 prohibits any unlicensed person “engaged
in the business or acting in the capacity of a contractor” from
maintaining any action for compensation “for the performance of
any act or contract where a license is required by this chapter.”
(§ 7031, subd. (a).)
The scope of the tasks that section 7026 identifies is broad.5
However, Phoenix Pipeline’s SAC identifies several tasks (e.g.,
5 Under section 7026, the capacity of “contractor” applies to
persons who “construct, alter, repair, add to, subtract from,
improve, move, wreck or demolish any building, highway, road,
parking facility, railroad, excavation or other structure, project,
development or improvement, or to do any part thereof, including
the erection of scaffolding or other structures or works in
connection therewith, or the cleaning of grounds or structures in
connection therewith, or the preparation and removal of roadway
construction zones, lane closures, flagging, or traffic diversions,
or the installation, repair, maintenance, or calibration of
monitoring equipment for underground storage tanks, and
whether or not the performance of work herein described involves
the addition to, or fabrication into, any structure, project,
development or improvement herein described of any material or
article of merchandise.” Subsequent sections also elaborate upon
the definition of a contractor in particular circumstances and
14
“hauling” and “car washing”) that might not be included within
the scope of work that requires a contractor’s license. The
invoices attached as exhibit C to Phoenix Pipeline’s SAC (which
Phoenix Pipeline alleges constitute the agreements governing the
Non-Contracting Services that it performed) appear to describe
some such services, such as car washing and transporting “tools
and material.”
We do not attempt to resolve whether Phoenix Pipeline has
appropriately identified the tasks that did not require a
contractor’s license.6 At this stage of the proceedings, it is
sufficient to conclude that a “reasonable interpretation of the
agreement[s] between the parties” is that at least some of the
work that Phoenix Pipeline performed did not require a license.
(Scientific Cages, supra, 81 Cal.App.3d at p. 888 [demurrer
should have been denied where a “reasonable interpretation” of
the agreement between the parties would bring the agreement
within the licensing exception for persons who simply supply
materials under section 7045]; Executive Landscape Corp. v. San
Vicente Country Villas IV Assn. (1983) 145 Cal. App. 3d 496, 501
[demurrer should not have been sustained, as the contract at
issue “can reasonably be interpreted to require Executive to
perform work for which no license was required”].)
with respect to particular license classifications. (See §§ 7026.1,
7026.2, 7026.3, 7055–7058.)
6 For example, section 7026 includes in the scope of a
contractor’s tasks the “cleaning of grounds or structures” in
connection with construction. Phoenix Pipeline includes “trash
clean up” in the category of Non-Contracting Services. We cannot
tell from the SAC whether the “trash clean up” that Phoenix
Pipeline performed falls within the scope of section 7026.
15
This leads to the second question as to whether that work
can be severed from tasks that admittedly did require a
contractor’s license. Several cases have held that specific tasks
that do not require a license may not be carved out of a single
contract where those tasks are “ ‘part of an integrated whole.’ ”
(WSS, supra, 162 Cal.App.4th at p. 593 [tasks of ordering anchor
bolts and preparing shop drawings could not be severed from the
parties’ integrated agreement to avoid the license requirement
under section 7031], quoting Banis, supra, 134 Cal.App.4th at
p. 1047.)
However, we are guided again by the standards applicable
to reviewing an order sustaining a demurrer. We must accept as
true all facts pleaded in the complaint. (Tameny v. Atlantic
Richfield Co. (1980) 27 Cal. 3d 167, 170.) Among Phoenix
Pipeline’s allegations is the claim that Phoenix Pipeline did work
on a “project-by-project basis” and that each invoice that it
submitted for the work “constitutes an individual agreement”
between SpaceX and Phoenix Pipeline. Phoenix Pipeline
included this allegation in each iteration of its complaint.
Thus, Phoenix Pipeline has not alleged one contract, but
rather a series of agreements for each separate task that it was
asked to perform. It may therefore seek compensation under
those alleged agreements that apply to tasks for which no license
was required.7
7 We therefore need not reach the issue whether there are
any circumstances in which tasks performed pursuant to a single
contract may be segregated between those that require a license
and those that do not. (Compare Johnson v. Mattox (1968) 257
Cal. App. 2d 714, 719 [rejecting the argument that the
construction contract at issue was “an entire one and not
16
SpaceX argues that Phoenix Pipeline’s argument
concerning noncontractor services is precluded by the allegations
in the first two versions of its complaint. Those two versions
labeled all of the services that Phoenix Pipeline provided as
“Subcontracting Services” without distinguishing between those
services that required a contractor’s license and those that
allegedly did not. SpaceX characterizes this label as an
“admission” that all the services Phoenix Pipeline performed for
SpaceX “were subcontracting services.”
We do not find a fatal inconsistency between the use of the
label “Subcontracting Services” in prior complaints and the later
allegation that some of those services did not require a
contractor’s license. The factual allegations identifying the
particular services that Phoenix Pipeline provided did not change
materially; Phoenix Pipeline simply added the allegation that
some of those services required a license and some did not.
Moreover, the label “Subcontracting Services” does not
necessarily imply that all the services included in that category
required a contractor’s license. “Subcontracting” as used in that
label could simply refer to services that were covered by a
contract rather than to services that could be performed only by a
“contractor” as defined in section 7026. Construing the
divisible,” and permitting recovery for the sale of a tractor and
mowers pursuant to the contract despite the lack of a license]
with The Fifth Day, LLC v. Bolotin (2009) 172 Cal. App. 4th 939,
964 (dis. opn. of Mosk, J.) [to permit an unlicensed contractor to
recover compensation for services not requiring a license under
the same contract that governs services that do require a license
would be inconsistent with the Supreme Court’s decision in MW
Erectors, supra, 36 Cal. 4th 412].)
17
allegations liberally, we conclude that Phoenix Pipeline was not
precluded from alleging in its SAC that it entered into some
agreements with SpaceX for services that did not require a
license.
We offer no view as to whether the facts will ultimately
support the allegation that Phoenix Pipeline’s work was governed
by separate agreements for each task, or its claim that some of
those tasks required no contractor’s license. At this stage of the
case, we hold only that Phoenix Pipeline has adequately alleged
particular agreements to perform work that did not require a
contractor’s license. Section 7031 does not bar an action for
compensation for such work.
4. The Trial Court Acted Within Its Discretion in
Declining to Permit an Amendment Alleging that
Phoenix Pipeline Was an Employee
For the first time on appeal, Phoenix Pipeline argues that it
could amend its SAC to allege that it was an employee rather
than a contractor. We need not consider whether this theory is
legally viable, as it is inconsistent with Phoenix Pipeline’s own
allegations.
As mentioned, each version of Phoenix Pipeline’s complaint,
including its SAC, alleged that Phoenix Pipeline entered into a
series of individual agreements with SpaceX to perform
particular services. Phoenix Pipeline alleged that each of its
invoices memorialized the services that Phoenix Pipeline
performed under these agreements. Each of the invoices
attached to the complaints stated that it was from Phoenix
Pipeline and billed to SpaceX. Thus, Phoenix Pipeline has
consistently characterized itself as a contractor and it cannot rely
upon the possibility of new, inconsistent allegations to save its
18
claim. (See Owens, supra, 198 Cal.App.3d at pp. 383–384;
Vallejo, supra, 24 Cal.App.4th at p. 946.)
DISPOSITION
The judgment is reversed, and the case is remanded to
permit further pleading consistent with this opinion. Each party
is to bear its own costs on appeal.
CERTIFIED FOR PUBLICATION
LUI, J.
We concur:
ROTHSCHILD, P. J.
CHANEY, J.
19