Opinion
D039261.
10-16-2003
PAUL ANDERSON et al., Plaintiffs, Cross-Defendants, and Appellants, v. P.J. ZIMMERMANN, as Trustee, etc. Defendant, Cross-Complainant, and Respondent.
Paul and Robyn Anderson sued Countrywide Mobile Home Center, Inc. (Countrywide Inc.) and other related entities, alleging contract and tort causes of action arising from the Andersons purchase of a manufactured home. Countrywide Inc. cross-complained, seeking money owed by the Andersons on the purchase contract. The court, sitting without a jury, found: (1) the Andersons did not prove their claims; and (2) Countrywide Inc. proved the Andersons owed $132,892 on the contract. The court thus entered judgment in Countrywide Inc.s favor on its cross-complaint for $132,892 plus attorney fees of $26,437.50.
On appeal, the Andersons contend: (1) Countrywide Inc. was not entitled to relief on its cross-complaint because it did not hold a contractors license; and (2) attorney fees were improperly awarded. For the reasons explained below, we reject these contentions and affirm the judgment.
After the appeal was filed, respondent Countrywide Inc. filed for bankruptcy and the bankruptcy trustee substituted as the named respondent in the case. Although the bankruptcy trustee did not file a respondents brief, the Andersons have the burden of showing prejudicial error. (See In re Bryce C. (1995) 12 Cal.4th 226, 233.)
FACTUAL AND PROCEDURAL SUMMARY
In July 1999, the Andersons signed a written purchase agreement in which Countrywide Homes agreed to provide and install a manufactured home on the Andersons property. Countrywide Homes was the umbrella name for a group of related companies involved in marketing, selling, and installing prefabricated homes. Countrywide Inc. was one of these entities.
The initial purchase price for the Andersons home was $162,119, but this price was later increased to $185,754 because of various additions and amendments to the contract. After numerous issues arose concerning various aspects of the purchase, Countrywide Homes delivered the manufactured home to the Andersons on March 15, 2000. The Andersons moved into the house in August 2000. However, by that time, the Andersons had paid only $27,000 of the total purchase price.
The Andersons then filed a superior court action against Countrywide Inc. and two related entities, alleging these defendants made material misrepresentations in connection with the purchase transaction and installed the home in an incomplete and/or defective manner.[] Countrywide Inc. filed a cross-complaint, alleging it complied with the terms of the purchase contract and thus was entitled to recover the balance of the purchase price.
The Andersons erroneously named Countrywide Inc. without using its corporate form, i.e., the word "Inc." was not included with the name. The Andersons also initially named the president of several of the Countrywide entities, Bernard Truax, as a defendant, but Truax was later dismissed.
At trial, one of the Andersons primary defenses to the cross-complaint was that the cross-complainant, Countrywide Inc., was not a licensed contractor, and therefore Countrywide Inc. was barred as a matter of law from recovering on the contract. The Andersons also argued that Countrywide Inc. was not entitled to the purchase price because the home was defective in various ways. In a written statement of decision, the court rejected both of these defenses and found that the Andersons breached the contract by not paying for the home and for the work performed by the Countrywide entities. The court found Countrywide Inc. proved it was entitled to $132,892, calculated by determining the total contract price, minus the amount of the Andersons down payment and the value of the work that was not completed by Countrywide Inc. or its affiliated entities. The court further found the Andersons failed to prove the Countrywide defendants breached the purchase contract or committed any of the alleged torts.
DISCUSSION
I. Countrywide Inc. is Not Barred From Recovering Because of its License Status
It was undisputed at trial that the cross-complainant, Countrywide Inc., was not a licensed general contractor. The Andersons contend the trial court erred in failing to find this fact barred Countrywide Inc. from recovering on its claims.
Under Business and Professions Code section 7031, "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 . . . without alleging that he or she was a duly licensed contractor at all times during the performance of that act or contract . . . ." (Italics added.) Section 7026.2 states the term "contractor" in section 7031 "does not include a seller of a manufactured home or mobilehome who holds a retail manufactured home or mobilehome dealers license . . . , if the installation of the manufactured home or mobile home is to be performed by a licensed contractor and the seller certifies that fact in writing to the buyer prior to the performance of the installation. The certification shall include the name, business address, and contractors license number of the licensed contractor by whom the installation will be performed." (§ 7026.2, subd. (c), italics added.)
All further statutory references are to the Business and Professions Code unless otherwise specified.
Under these statutes, a manufactured home dealer need not hold a general contractors license if: (1) the manufactured home dealer holds a proper dealers license; (2) the installation of the home is to be performed by a licensed contractor; and (3) the dealer certifies this fact in writing to a buyer, including the name, address and license number of the licensed contractor.
The first statutory element was satisfied here. It was undisputed that Countrywide Inc. held the necessary retail manufactured home dealers license.
The second statutory element was also satisfied. The court made a factual finding that the entity that performed the installation work for the Andersons manufactured home was Countrywide Construction, Inc. ("Countrywide Construction") and that Countrywide Construction was properly licensed as a general contractor at all relevant times. The court also found that Countrywide Constructions project manager (Curtis Joyner), who directed the installation of the Andersons manufactured home, was also a licensed general contractor. These findings were supported by substantial evidence. Although Countrywide Inc. did not prove its license status through a verified certificate of licensure, this form of proof is required only where the licensure is "controverted." (§ 7031, subd. (d).) The fact that Countrywide Construction was a licensed contractor was never controverted at trial.
With respect to the third ("certification") statutory requirement, the parties initial purchase agreement contains a statement that "the dealer certifies that the installation contractor is . . . Countrywide Homes." The agreement also identifies the shared address and telephone number of the Countrywide Homes entities. A license number appears on the top of the purchase agreement, but it is the license number of a prior owner of the business. As recognized by the trial court, this certification contains two errors: (1) the installation contractor was in fact Countrywide Construction, rather than "Countrywide Homes"; and (2) the license number indicated on the top of the contract was not the correct number. We agree with the trial court, however, that neither of these certification errors provided a sufficient basis to bar recovery under the particular circumstances of this case.
With respect to the identification of the entity, the evidence established that "Countrywide Homes" was used as a blanket marketing term to include all related entities, including Countrywide Construction. The evidence further showed that the Andersons had actual notice that the installation was in fact performed by Countrywide Construction, a licensed contractor. The trial court found that the license number error arose "simply because the sales agent in this case mistakenly used an outdated form that still contained the license number of the former owner. . . . [¶] It is clear there was no untoward motive here, and nothing to be gained by identifying the wrong license number. To the contrary, it would be nonsensical for Countrywide to knowingly use a suspended license number belonging to someone else when a valid contractors license was then in existence and available to it."
Although Mr. Anderson testified he was unaware of this fact, the trial court, as the finder of fact, was entitled to find this testimony not credible.
Based on the facts found by the trial court, we concur in the trial courts conclusion that the failure to identify the correct license number and the correct Countrywide corporate entity did not bar Countrywide Inc. from recovering for the cost of the house and the installation work. The purposes of section 7026.2 are to ensure that the installation of a manufactured home is performed by a licensed contractor and that the purchaser has actual notice of the identity and license number of that contractor. These purposes were fulfilled in this case. The evidence established the installation work was performed by a properly licensed contractor (Countrywide Construction), and that the purchasers were fully aware of the identity of this licensed contractor. On this record, there is no basis for finding that clerical mistakes in the notification process should bar recovery by the manufactured home dealer.
The Andersons reliance on Pacific Custom Pools, Inc. v. Turner Construction Co. (2000) 79 Cal.App.4th 1254 and Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929 is misplaced. In each of those cases, the plaintiff was attempting to recover for work performed by an unlicensed party. In Hydrotech Systems, Ltd. v. Oasis Waterpark (1991) 52 Cal.3d 988, the California Supreme Court explained the important policy reasons for the Legislatures decision to strictly bar any such action: "[t]he purpose of the licensing law is to protect the public from incompetence and dishonesty in those who provide building and construction services . . . . [¶] Section 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 section 7031 applies despite injustice to the unlicensed contractor." (Id. at p. 995.)
Section 7031 and its underlying public policy are inapplicable here. Unlike the situation where an unlicensed individual is attempting to recover for work performed, the deterrent policies underlying section 7031 were not implicated here because the entity performing the installation work was properly licensed. The sole issue was whether a technical failure to comply with section 7026.2s certification requirements precludes any recovery as a matter of law. We conclude that it does not. Where, as here, the factfinder determines that the installation work was performed by a licensed contractor and the buyers had actual notice of the identity and license number of this contractor, a manufactured home dealer is not precluded from recovering for amounts unpaid on the contract.
Finally, we reject the Andersons assertions in their appellate brief that Countrywide Inc.s judicial admissions in its pleadings somehow barred the action. On our review of these pleadings, we have found no admissions that are contrary to the factual and legal conclusions reached in this decision.
II. Attorney Fees
The Countrywide defendants/cross-complainant moved for attorney fees of $31,495.66 under Civil Code section 1717 based on an attorney fees provision in the parties contract. After deducting certain amounts for duplicative billing and for services pertaining to claims on which the Countrywide entities were not successful, the court determined these entities incurred $26,437.50 in reasonable attorney fees and the court awarded them this amount as prevailing parties.
On appeal, the Andersons maintain the court erred because the attorney fees provision did not permit an attorney fees award under the facts of the case. The attorney fees provision states:
"In the event of breach of any of the terms of the agreement, or shall it become necessary for either party to seek legal redress against the other to enforce any of the terms of this agreement, the party not in default shall be awarded reasonable attorneys fees and court costs as well as other damages to which it may be entitled."
(Italics added.)
Without any citation to the record, the Andersons maintain the Countrywide defendants were "in default" and therefore they were not entitled to attorney fees. This contention is not supported by the record. There is nothing in the courts oral remarks or written statement of decision showing the court found the Countrywide parties were in default under the written contract. Although the court did not award Countrywide Inc. the full extent of the contract price, this was based on the courts finding that Countrywide Inc. did not perform certain work because it was prevented from doing so by the Andersons. The court expressly found the Countrywide defendants had not materially breached the contract. Thus, we reject the Andersons argument that the Countrywide entities were not entitled to enforce the attorney fees provision because they were not prevailing parties under the terms of the attorney fees provision.
DISPOSITION
Judgment affirmed.
WE CONCUR: McCONNELL, P. J. and OROURKE, J.