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DosRemedios v. Pantheon Design & Construction

California Court of Appeals, First District, Fourth Division
Mar 12, 2008
No. A117517 (Cal. Ct. App. Mar. 12, 2008)

Opinion


RICHARD DosREMEDIOS et al., Plaintiffs and Appellants, v. PANTHEON DESIGN & CONSTRUCTION et al., Defendants and Respondents. A117517 California Court of Appeal, First District, Fourth Division March 12, 2008

NOT TO BE PUBLISHED

Alameda County Super. Ct. No. HG05223414

Sepulveda, J.

Appellants Richard DosRemedios and Cynthia DosRemedios appeal a summary judgment entered in favor of respondents Pantheon Design & Construction (Pantheon), Clint Reed, and Edward Wenger, in their lawsuit over a dispute in connection with faulty construction at a home they own. They claim that there is a triable issue of material fact as to whether the contractor they hired to perform improvements on their home was acting as the ostensible agent for respondents. No other basis for granting summary judgment has been briefed or argued by respondents on appeal. Because we agree with appellants’ contentions on appeal, we reverse.

I. Factual and Procedural Background

Appellants, who are brother and sister, own a home on Arapaho Avenue in Fremont. They were interested in hiring a general contractor to improve the property and, in December 2004, discussed the project with Peter Lewis. Lewis presented a business card to appellants that included his name and contact information, the business name “Lewis ~ Wenger Design and Construction,” and license No. 808958. According to appellants, Lewis told them that he was a general contractor, and that respondent Wenger was his business partner. Lewis, on the other hand, stated in a response to a discovery request that the card was presented to appellants for the sole purpose of providing telephone contact information.

Appellants sued Lewis in this action for breach of contract, negligence, fraud, and other causes of action for his alleged faulty work, and for allegedly failing to complete the construction project on time. He was not a party to respondents’ motion for summary judgment, and he is not a party to this appeal.

Mr. DosRemedios researched Lewis and his business in December 2004, based on the information Lewis provided. He learned from the website of the Better Business Bureau (BBB) that Lewis was listed as the owner of POL Design & Construction (POL), and that POL did business under the name “Lewis-Wenger, LLC.” In December 2004 Mr. DosRemedios also visited the website of the California Contractors State License Board (license board), where he researched the license number provided by Lewis. The website listed respondent Pantheon Design & Construction in connection with the license number, with Lewis and respondent Wenger as general partners, and respondent Reed as the qualifying partner.

Based on Mr. DosRemedios’s research, appellants believed that Lewis was affiliated with Lewis-Wenger, and that Lewis was affiliated with an active contractor’s license (Mr. DosRemedios’s “main concern”). Relying on the fact that Lewis was associated with a contractor’s license, appellants entered into a contract with Lewis in January 2005 for the improvement of their property. The contract was signed by Lewis, and the cover letter stated that payments should be made to Lewis or POL (the company that Lewis owns). The contract and cover letter also featured the same address and telephone number that were listed on the BBB website. (The address on the contract was different from the one listed on the website of the license board.) Respondents were not listed in the contract.

Appellants believed that they had hired Lewis “and his related entities as the general contractor to improve” their property, and that Lewis was a partner in Pantheon and Lewis-Wenger. According to Lewis, however, he never was affiliated with respondent Pantheon (which is owned by Wenger and Reed). He and respondents Wenger and Reed acknowledge that Lewis previously was in a partnership with Wenger and Reed, which was known as Lewis-Wenger or C.P.E. (for Clint, Peter, Ed). They claim, however, that the partnership was terminated in April 2004, months before Lewis entered into a contract with appellants. Wenger and Reed stated that they had not heard of appellants or the project at appellants’ home until they were served with the complaint in this action.

There is a conflict in the evidence over when the partnership supposedly ended. Lewis testified at his deposition that the Lewis-Wenger partnership ended at “[t]he very end of 2004,” and that “[w]e didn’t enter into any agreements [to dissolve the partnership]; we just—we ceased doing business.” However, he (and respondents Reed and Wenger) later submitted declarations to the trial court attaching an undated “Partnership Dissolution Memorandum of Understanding between Edward Wenger & Clint Reed and Peter Lewis,” which purports to dissolve the Lewis-Wenger Design & Construction partnership as of April 1, 2004.

Appellants presented evidence to the trial court that in June 2004 (after the Lewis-Wenger partnership was supposedly dissolved), Lewis and respondents Reed and Wenger applied to the license board for a renewal of license No. 808958. Appellants also presented evidence to the trial court that in July 2004, respondents Wenger and Reed applied to the license board for a change in their business name, from C.P.E. to Pantheon. Although it was the understanding of respondents Wenger and Reed that Pantheon would be formed with the two of them as personnel, the application form stated that it was to be used only if the new name did not indicate a change in personnel. Reed testified, “I guess I didn’t review it completely. I guess I missed something.” There is also evidence in the record that on November 30, 2004, respondent Reed signed an application to be submitted to the license board to change the name of C.P.E. to Pantheon, again on a form that stated there was no change in personnel. It is unclear from the record why a separate application was submitted to the license board in November 2004.

The trial court ruled that the application itself was inadmissible because it lacked a proper foundation, was not properly authenticated, and was inadmissible hearsay. The parties offered testimony about the application, however, and that testimony was not excluded.

A dispute arose about the quality and timeliness of Lewis’s work on appellants’ home. On July 19, 2005, appellants sued Lewis, respondents, and others. As amended, appellants’ complaint alleged causes of action against respondents for breach of contract, negligence, negligent construction management, fraud, conversion, intentional infliction of emotional distress, constructive trust, accounting, rescission and restitution, and common count. The complaint alleged that respondents Wenger and Reed, along with Lewis, were general partners of respondent Pantheon, and that Pantheon worked in conjunction POL (Lewis’s company) “by allowing POL and its agents to use Pantheon’s contractor’s license number in its business.” The complaint also alleged that “each of the Defendants was the agent and employee of each of the remaining Defendants and, in doing the things hereinafter alleged, was acting within the course and scope of such agency and employment.”

On July 13, 2006, the trial court granted appellants’ unopposed motion to file a first amended complaint.

Respondents filed a motion for summary judgment, which the trial court granted on December 27, 2006. The court concluded: “None of the evidence submitted by Plaintiffs demonstrates any action or omission by [respondents] that would lead Plaintiffs to reasonably believe that Lewis entered his contract with Plaintiffs, or took any other action, on [respondents’] behalf.” The trial court concluded that appellants’ evidence was insufficient to establish Lewis’s ostensible agency on behalf of respondents. Judgment was entered on February 2, 2007. This court denied appellants’ petition for writ of prohibition/mandate, stating that appellants had an adequate remedy at law by appeal from the judgment. Appellants also filed a motion for a new trial, which the trial court denied. Appellants timely appealed.

II. Discussion

A. Standard of Review.

“In order to support summary judgment for a defendant, it must appear from the record either that the plaintiff cannot establish one or more of the elements of the cause of action or that the plaintiff cannot refute an affirmative defense established by the defendant.” (Lewis v. County of Sacramento (2001) 93 Cal.App.4th 107, 115.) “When a defendant’s motion for summary judgment is supported by affidavits and declarations sufficient to sustain the motion, the burden shifts to the plaintiff to show the existence of a triable issue of material fact.” (Id. at pp. 115-116.) “ ‘We review the trial court’s decision de novo, considering all the evidence set forth in the moving and opposition papers except that to which objections were made and sustained.’ ” (State Dept. of Health Services v. Superior Court (2003) 31 Cal.4th 1026, 1035.)

B. Question of Fact Whether Lewis was Respondents’ Ostensible Agent.

In general, a person may do by an agent any act which he might do himself. (Civ. Code, § 2304.) “An agency is either actual or ostensible.” (Civ. Code, § 2298.) “An agency is ostensible when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him.” (Civ. Code, § 2300.) “Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess.” (Civ. Code, § 2317.) “A principal is bound by acts of his agent, under a merely ostensible authority, to those persons only who have in good faith, and without want of ordinary care, incurred a liability or parted with value, upon the faith thereof.” (Civ. Code, § 2334.)

“Liability of the principal for the acts of an ostensible agent rests on the doctrine of ‘estoppel,’ the essential elements of which are representations made by the principal, justifiable reliance by a third party, and a change of position from such reliance resulting in injury.” (Preis v. American Indemnity Co. (1990) 220 Cal.App.3d 752, 761; see also Kaplan v. Coldwell Banker Residential Affiliates, Inc. (1997) 59 Cal.App.4th 741, 747.) “Ostensible authority must be established through the acts or declarations of the principal and not the acts or declarations of the agent.” (Preis, supra, at p. 761; see also 3 Witkin, Summary of Cal. Law (10th ed. 2005) Agency and Employment, § 96, p. 143.) Appellants argue that the trial court erred in concluding that there was no triable issue of fact as to whether respondents took any action that would allow appellants to reasonably believe that Lewis was respondents’ ostensible agent in performing work on their home.

We first dismiss out of hand respondents’ argument that we should decline to consider appellants’ ostensible agency argument because appellants did not plead ostensible agency in their complaint, and ostensible agency was therefore a “surprise new theory” raised for the first time in appellants’ opposition to respondents’ motion for summary judgment. In fact, respondents argued in their moving papers that one of the issues to be decided was whether a builder can be considered “either the ostensible or actual agent of his former partners . . . .” (Italics added.) It was respondents’ burden on summary judgment to show that one or more elements of a cause of action could not be established. (Code Civ. Proc., § 437c, subd. (p)(2).) Respondents cannot now argue that ostensible agency was a “surprise” theory that was not properly pleaded in appellants’ complaint, since they themselves considered it necessary to address this issue in their moving papers to show that appellants’ complaint lacked merit. (Ibid.)

As to the merits of appellants’ argument, although the question is a close one, we conclude that there is a triable issue of fact as to whether Lewis was acting as respondents’ ostensible agent. As the trial court acknowledged, appellants presented evidence that the license board’s website indicated that respondent Pantheon was issued the same contractor license number that was on the business card that Lewis gave appellants when they first met, and that the website also listed Lewis (along with respondents Reed and Wenger) as a general partner in Pantheon. The trial court concluded that this was insufficient to show that respondents intentionally or negligently caused appellants to reasonably believe that Lewis was their agent on appellants’ construction project, for two reasons. The court first focused on the fact that appellants presented no evidence demonstrating that respondents authorized Lewis to pass out business cards with license No. 808958 and the name “Lewis Wenger Design and Construction.” Although the evidence in the record indeed suggests that Lewis was not authorized to pass out such business cards or represent that he was associated with respondents, the trial court never addressed the significance of the information appellants learned in their research of license No. 808958.

It is beyond dispute that the license board’s website listed respondent Pantheon in connection with the license number, and that Lewis and respondents Wenger and Reed were listed as partners. We disagree with respondents’ characterization of this evidence as “circumstantial.” The information on the license board’s website could be considered, in effect, a public statement by respondents that Lewis was a partner of Reed and Wenger in Pantheon. (Associated Creditors’ Agency v. Davis (1975) 13 Cal.3d 374, 404 [posting liquor license with defendants’ names could constitute representation that person operating premises was defendants’ agent]; Kaplan v. Coldwell Banker Residential Affiliates, Inc., supra, 59 Cal.App.4th at p. 747 [although no specific representations made to plaintiff, statements in advertisements to general public could lead plaintiff to believe franchisor gave franchisee ostensible authority].) It was therefore arguably reasonable for appellants to believe that Lewis was respondents’ agent. (Civ. Code, § 2300.) We agree with respondents that there is no evidence that they intentionally caused appellants (or anyone else) to believe that Lewis was their agent. However, their failure to properly notify the license board that Lewis was no longer the partner of Reed and Wenger is arguably evidence that they negligently led the public (and appellants in particular) to believe that Lewis was their partner. (Ibid.) Although respondents apparently believed that they had notified the license board that they were forming a new partnership without Lewis, we may infer from the evidence that the use of a wrong form led to the listing of Lewis as being affiliated with their new partnership. There is therefore a triable issue of material fact as to whether respondents’ “want of ordinary care” caused appellants to believe that Lewis was respondents’ agent. (Kaplan, supra, at p. 747.)

Respondents note that the trial court sustained objections to some of appellants’ evidence, and they complain that appellants continue to rely upon the stricken evidence on appeal. The documents that showed the results of Mr. DosRemedios’s online research were attached to his declaration in support of appellants’ opposition to summary judgment. Although respondents objected to this evidence, the trial court overruled all objections to the declaration of Mr. DosRemedios, and we may therefore consider this evidence on appeal.

The trial court also concluded that because appellants’ contract with Lewis and POL Design & Construction did not mention Pantheon, the information on the license board’s website could not have led appellants to reasonably believe that Lewis entered into a construction contract with them as respondents’ agent. Although it may very well be that a jury would conclude that it was not reasonable for appellants to reach this conclusion, we believe that this is a question for the jury. As Mr. DosRemedios explained, “The inclusion of Lewis as a partner of the contractor with license number 808958, as shown on [the license board’s] records, confirmed my belief that Lewis was a licensed general contractor and actively associated with license number 808958. And as Lewis had represented that Wenger was his business partner, the inclusion of Wenger as a partner of the contractor with license number 808958 further confirmed that Lewis was engaged in a licensed business under that license number. Even though license number 808958 was associated with a different business name (Pantheon Design & Construction), because all other information that I found online was consistent with the information Lewis provided to my sister and me, my sister and I relied on the information Lewis represented [to] us and subsequently entered into a contract with him for the improvement of [our] property.” While it may be true, as respondents argue, that there is not enough evidence to show that respondents should be liable to appellants for their contract with Lewis, again, we believe that this is a question for a jury to decide in light of the fact that the license number Lewis provided showed a connection between Lewis and respondents. We recognize that the license number did not appear on the contract between Lewis and appellants. It was, however, on the business card that Lewis provided to appellants, and there is evidence that appellants relied on the license number in entering into a contract with Lewis.

We therefore find unpersuasive respondents’ attempt to distinguish cases upon which appellants rely, on the basis that those cases involved situations where the principal sought to be bound was named in the relevant contracts. (Federal Deposit Ins. Corp. v. Superior Court (1997) 54 Cal.App.4th 337, 341, 343-344, 348 [question of fact as to whether loan recipients had ostensible authority to bind former partners even though signatures of partners were forged, where partnership continued to list loan recipients on tax returns]; Preis v. American Indemnity Co., supra, 220 Cal.App.3d at pp. 762-763 [question of fact as to whether insurance agency was ostensible agent of insurance carrier]; Thompson v. Occidental Life Ins. Co. (1969) 276 Cal.App.2d 559, 563-564 [question of fact as to whether insurer’s agent had authority to act as he did].) Again, the focus here is on whether respondents were holding themselves out to the public as being affiliated with a license number that listed Lewis, no matter which entity was listed under that number. Respondents emphasize that Pantheon did not appear in Lewis’s contract with appellants, and that Lewis never had a business relationship with Pantheon. Appellants’ belief that he did have such a relationship was, however, arguably reasonable in light of the public statement to that effect on the license board’s website.

The reliance on the information found in a valid contractor’s license is similar to the reliance on a posted liquor license in Associated Creditors’ Agency v. Davis, supra, 13 Cal.3d 374. There, a concessionaire opened a restaurant and bar on defendants’ golf course under a liquor license in defendants’ name. (Id. at pp. 379-380.) The concessionaire filed for bankruptcy, and his creditors sued defendants to recover for unpaid supplies. (Id. at pp. 381-382.) The Supreme Court held that although the underlying agreement to use the liquor license was illegal, creditors were entitled “to rely on the appearances created by the use of the license,” and that the use of the license was a factor to be considered in determining whether there was an ostensible agency. (Id. at pp. 402-403.) Likewise here, there is at least a question of fact as to whether appellants could rely on Lewis’s use of license No. 808958, under which Lewis and respondents were listed. Respondents attempt to distinguish Associated Creditors’ by noting that, unlike in that case, Lewis and his company did not have permission to use the license number at issue. (Cf. id. at p. 401.) But respondents point to no evidence (and our independent review of the record reveals none) that appellants had any reason to doubt that Lewis did, in fact, have respondents’ permission to use the license number. The court in Associated Creditors’ focused on whether the concessionaire’s creditors would have discovered whether the concessionaire had permission to use the liquor license had the creditors investigated. (Id. at pp. 401-402.) Here, appellants submitted evidence that Mr. DosRemedios investigated whether Lewis had permission to conduct business under the license number he showed to them, and that his research confirmed that he did.

This case is therefore unlike People v. Surety Ins. Co. (1982) 136 Cal.App.3d 556, 559, which reversed an order denying relief from forfeiture of an appeal bond. There, the court found that the county clerk’s office was “patently negligent” in failing to check its records, which would have revealed the revocation of the authority for an attorney-in-fact to act on behalf of a bail surety. (Id. at p. 562.) Again, a check of public records here revealed that Lewis was, in fact, associated with respondents. It is certainly true, as respondents argue, that the issue of ostensible agency may be resolved on summary judgment where the only evidence of an agency relationship “ ‘is essentially based on conjecture and speculation.’ ” (Universal Bank v. Lawyers Title Ins. Corp. (1997) 62 Cal.App.4th 1062, 1067 [marketing brochures regarding title insurance company did not establish that its issuing agent had authority in sub-escrow matters].) Here, by contrast, there was evidence that Lewis was acting with ostensible authority when he entered into a contract with appellants.

Respondents argue in passing that public policy supports the trial court’s order granting summary judgment, because they should not suffer liability for a project with which they were not involved and about which they knew nothing before this lawsuit. Although we are sympathetic to this argument, we also recognize that there are policy reasons for permitting homeowners to rely on the public records of licensing agencies when researching which contractor to hire.

We find a triable issue of material fact exists as to whether respondents as principals negligently caused or allowed appellants to believe that Lewis was acting as their agent when he entered into a contract with appellants, and as to whether Lewis was acting as their ostensible agent. “We obviously express no opinion on whether a trier of fact will so conclude or whether appellant[s were themselves] negligent.” (Kaplan v. Coldwell Banker Residential Affiliates, Inc., supra, 59 Cal.App.4th at p. 748.) Our opinion should not be taken to reflect any view of the ultimate merits of any of appellant’s causes of action. Nor does it preclude the filing of a future motion for summary judgment premised on additional facts or on legal arguments other than those rejected in this opinion.

In reaching our conclusion, we need not consider appellants’ argument, raised for the first time on appeal, that respondents are liable under the Uniform Partnership Act. Nor do we consider appellants’ argument, also raised for the first time on appeal, that the purpose of the Contractors’ State License Law is to promote public safety, and that respondents’ actions supposedly violated the law and “constituted a crime.” Although provisions of the license law may arguably be relevant on remand to demonstrate whether respondents were negligent in failing to properly notify the license board that Lewis was not a partner of respondents Reed and Wenger, appellants did not seek relief from respondents under the license law. (E.g., Swickheimer v. King (1971) 22 Cal.App.3d 220, 225 [various provisions of Contractors’ State License Law are “regulatory and disciplinary in nature,” and not basis for civil liability].)

III.

Disposition

The judgment is reversed. The case is remanded to the trial court for proceedings consistent with this opinion. Appellants shall recover their costs on appeal.

We concur: Ruvolo, P.J. Reardon, J.


Summaries of

DosRemedios v. Pantheon Design & Construction

California Court of Appeals, First District, Fourth Division
Mar 12, 2008
No. A117517 (Cal. Ct. App. Mar. 12, 2008)
Case details for

DosRemedios v. Pantheon Design & Construction

Case Details

Full title:RICHARD DosREMEDIOS et al., Plaintiffs and Appellants, v. PANTHEON DESIGN…

Court:California Court of Appeals, First District, Fourth Division

Date published: Mar 12, 2008

Citations

No. A117517 (Cal. Ct. App. Mar. 12, 2008)