Opinion
G056426
11-26-2019
OZUNA ELECTRIC COMPANY, INC., Plaintiff, Cross-defendant, and Respondent, v. INTEGRATED PROCESS CONTROL ENGINEERING, INC., Defendant, Cross-complainant, and Appellant.
Clearview Law and Shannon Gallagher for Defendant and Appellant. Chang & Coté, Steven J. Coté and Travis J. Tom for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2015-00827749) OPINION Appeal from a judgment of the Superior Court of Orange County, Deborah C. Servino, Judge. Affirmed. Clearview Law and Shannon Gallagher for Defendant and Appellant. Chang & Coté, Steven J. Coté and Travis J. Tom for Plaintiff and Respondent.
Integrated Process Control Engineering, Inc. (Integrated) appeals from a judgment entered in favor of Ozuna Electric Company, Inc. (Ozuna) on its complaint for breach of contract. Integrated contends Ozuna forfeited its contractual rights because its contractor's license was secured through false statements and its purported use of non-certified electricians. Finding no error, we affirm the judgment.
FACTS
Integrated is a company specializing in the design and implementation of systems for automation of factories. Ozuna works as an electrical contractor. Rich Products Corporation (Rich) manufactures bakery products.
In June 2015, Integrated entered into an agreement with Rich to perform a flour system control upgrade to its flour mixing and delivery system (Rich project). Integrated then entered into an agreement with Ozuna to perform the required electrical contracting services pursuant to the parties' project agreement. Paragraph 1.1 of the agreement provided Ozuna would perform and complete the work described in exhibit A to the agreement. Paragraph 16.16 contained an integration clause which stated, "[t]his [a]greement, attached exhibits, and all executed [c]hange [o]rders constitute the complete integrated agreement between the parties concerning the subject matter hereof."
In December 2015, Ozuna filed suit against Integrated for breach of contract. Integrated filed a cross-complaint for breach of contract and fraud premised upon Ozuna's purported failure to perform pursuant to the agreement and alleged misrepresentations regarding Ozuna's qualifications and ability to perform the work.
The trial court presided over a seven-day trial. At trial, Integrated argued Ozuna's contractor's license, which had been issued by the Contractors State Licensing Board (CSLB), was invalid because it was procured by fraud. Integrated also contended Ozuna used electricians who were not licensed by the Department of Industrial Relations.
The court entered judgment in favor of Ozuna in the amount of $83,322.75. The trial court determined, "Ozuna . . . met its burden of showing that it was a duly licensed contractor. Ruben Ozuna, the original responsible managing officer, passed away. Ozuna . . . properly notified the [CSLB] of [Ruben's] death, and applied for replacing the qualifying individual. [Citation.] Ozuna . . . applied for replacement of the qualifying individual to be [Maria], submitting a Certificate in Support of Experience Qualifications, by general contractor John Duran. On May 27, 1998, the [CSLB] granted a waiver of the exam to [Maria], and approved her as the responsible managing officer. [Citation.] [Integrated] disputes that [Maria] was a qualified individual, and argues that [Maria] obtained through fraud the [CSLB]'s approval of her as the responsible managing officer. Specifically, [Integrated] relies on [Maria's] testimony that prior to [Ruben's] death, [Maria's] work at Ozuna . . . was only administrative. However, [Integrated] did not squarely address Duran's certificate in support of experience qualifications. [Citation.] [¶] Furthermore, [Maria] was the responsible managing officer of Ozuna . . . . For the [Rich p]roject, she exercised direct supervision and control. She had walked the job, familiarizing herself with the equipment and determining what work was required. She attended meetings about the [Rich project], she confirmed with the project manager the work that was done. The court does not find that [Integrated] has proven its theory that there was a defective exercise in Ozuna['s] license. Thus, Ozuna . . . can maintain its case against [Integrated]." In October 2018, the court entered an amended judgment, which contained no substantive changes but added costs and attorney fees.
We refer to Ruben and Maria Ozuna by their first names for ease of reference and clarity and intend no disrespect.
Integrated appealed from both the judgment, the subject of this appeal, and the postjudgment order granting Ozuna's motion for attorney fees, the subject of a companion appeal. (Ozuna Electric Company, Inc. v. Integrated Process Control Engineering, Inc. (Nov. 26, 2019, G056765) [nonpub. opn].)
DISCUSSION
Integrated presents two arguments on appeal. First, it claims Ozuna was barred from bringing suit against Integrated because it was an unlicensed contractor. Second, Integrated contends Ozuna was also barred from recovering on its breach of contract claim because of its alleged use of unlicensed electricians. None of Integrated's assertions have merit.
As an initial matter, we disagree with Integrated that our standard of review is de novo. Integrated correctly cites to authority stating pure questions of law and statutory construction are reviewed de novo. However, this appeal presents neither a question of law nor one of statutory construction. Instead, Integrated asks us to reconsider the trial court's factual and credibility determinations.
The trial court considered Ozuna's evidence and testimony regarding its license issued by the CSLB and its use of purportedly unlicensed electricians. To reach its decision, the court weighed the credibility of witnesses and resolved disputed facts. The proper standard of review is therefore substantial evidence. In applying this standard, "[w]e do not consider the credibility of witnesses or reweigh the evidence" but "consider the entire record, drawing all reasonable inferences in support of the [judgment] and affirming the [judgment] even if other evidence supports a different finding." (In re Isabella F. (2014) 226 Cal.App.4th 128, 138.)
I. Ozuna's Contractor's License
Integrated contends Business and Professions Code section 7031 presents a complete bar to Ozuna's breach of contract claim and the trial court erred in allowing the corporation to proceed with the cause of action. We disagree.
All further statutory references are to the Business & Professions Code.
"The Contractors' State License Law (CSLL) (§ 7000 et seq.) is a comprehensive legislative scheme governing the construction business in California. 'The licensing requirements provide minimal assurance that all persons offering such services in California have the requisite skill and character, understand applicable local laws and codes, and know the rudiments of administering a contracting business. [Citations.]' [Citation.] The CSLL's purpose is to "''protect the public from incompetent or dishonest providers of building and construction services''" and to prohibit a contractor who has violated the statute from recovering ""for the fruits of his labor."" (Pacific Caisson & Shoring, Inc. v. Bernards Bros. Inc. (2011) 198 Cal.App.4th 681, 687.) Pursuant to the CSLL, contractors 'must be licensed unless exempt.' [Citation.]" (E.J. Franks Construction, Inc. v. Sahota (2014) 226 Cal.App.4th 1123, 1128.)
"Section 7031, subdivision (a) requires all persons engaged in the business or acting in the capacity of a contractor to be licensed. A contractor is defined as 'any person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, . . . [or] improve . . . any building . . . or other structure, project, development or improvement, or to do any part thereof . . . , whether or not the performance of work . . . involves the addition to, or fabrication into, any . . . project . . . of any material or article of merchandise. "Contractor" includes subcontractor or specialty contractor.' (§ 7026.) 'Persons' engaged in the business or acting in the capacity of a contractor is broadly defined to include 'an individual, a firm, copartnership, corporation, association or other organization, or any combination of any thereof.' (§ 7025.) A corporation applying for a contractor's license must qualify through either a 'Responsible Managing Officer' (RMO) or 'Responsible Managing Employee' (RME), who is him- or herself eligible for the same license qualification. (§ 7068, subd. (b)(3).) The 'qualifier' RMO or RME must be a bona fide officer or employee of the corporation and actively engaged in work encompassed by the license. (§ 7068, subd. (d).)" (WSS Industrial Construction, Inc. v. Great West Contractors, Inc. (2008) 162 Cal.App.4th 581, 587-588.)
We hold section 7031 does not apply here. At no time was work performed by an unlicensed contractor on the Rich project. The evidence demonstrated Ozuna held a valid contractors' license. Indeed, Integrated concedes Ozuna's license was valid in that it was neither forged, expired, nor held by another entity. However, Integrated contends Ozuna should be treated as unlicensed because there was no qualified RMO. Not so. Ruben, the original RMO of Ozuna, passed away in 1998. Maria then applied to be the replacement RMO. In support of its application to the CSLB, Ozuna submitted a certificate in support of experience qualifications by general contractor Duran. Duran certified, under penalty of perjury, the following: "As a corporate officer since [Ozuna's] inception, Maria has been involved in all phases of this company. Which includes administrative skills as well as supervision of the installation of wires, fixtures, appliances, conduits, installed 110 to 220 volts; single phase and 3-phase. [¶] Maria is very precise and knowledgeable in this field." On May 27, 1998, the CSLB approved Maria as Ozuna's RMO.
Integrated relies on Maria's limited testimony to assert, "the true facts, as established by her own testimony at trial, were that while her husband was alive, [Maria] performed only administrative tasks for the entity." The trial court noted that "[a]ny disciplinary action by the [CSLB] against the alleged false certificate may be time-barred." It went on to decide, however, that Maria's testimony satisfied Ozuna's burden of showing it was a duly licensed entity. The court credited Maria's testimony and determined she exercised direct supervision and control over the Rich project.
Integrated cites to Jeff Tracy, Inc. v. City of Pico Rivera (2015) 240 Cal.App.4th 510, 514-515 (Jeff Tracy), for the proposition that "[t]he qualifying individual must be a 'bona fide officer or employee of the corporation and must be actively engaged in the work covered by the license."' The supposed RMO in Jeff Tracy, however, testified he was never an employee of the corporation that obtained the license. (Id. at p. 519.)
Here, in contrast to Jeff Tracy, Maria was an employee of Ozuna and the trial court heard and considered evidence concerning her role in the company. "A variety of activities can constitute direct supervision and control, including '"one or any combination of the following activities: supervising construction, managing construction activities by making technical and administrative decisions, checking jobs for proper workmanship, or direct supervision on construction job sites.'" [Citations.] All of these are factual questions . . . ." (Jeff Tracy, supra, 240 Cal.App.4th at p. 519.) Based on the evidence, the court determined Maria was a proper RMO for Ozuna.
Ozuna maintained proper licensure at all times during the Rich project. "The purpose of section 7031 is to deter unlicensed contractors from recovering compensation for their work." (E.J. Franks Construction, Inc. v. Sahota (2014) 226 Cal.App.4th 1123, 1129.) It is not intended to deter licensed contractors from changing a RMO after the qualified individual passes away. It is certainly not intended to bar contract claims nearly 20 years after such a change was made. We find no error.
II. Ozuna's Purported Use of Unlicensed Electricians
Integrated also contends Ozuna used unlicensed electricians on the Rich project, and asserts such a violation permits the forfeiture of the contractor's contractual rights with third parties. We disagree.
Integrated sought to establish Ozuna was not competent to handle the Rich project because many of its employees were unlicensed electricians. Integrated makes much of the testimony that three Ozuna employees made electrical connections and were not licensed electricians. Assuming without deciding the three individuals were not properly supervised by a licensed contractor, Integrated presents no authority to support its contention the use of unlicensed electricians operates as a bar to Ozuna's contractual rights.
Section 7031 applies to contractors, not to individual laborers. Integrated fails to point to any legal authority supporting its proposition that such a violation requires a forfeiture of Ozuna's contractual rights against Integrated. The sole case cited by Integrated is not on point. (Lewis & Queen v. N. M. Ball Sons (1957) 48 Cal.2d 141, 145 [concerning licensing of contractors, not individual electricians].) We find no error.
Integrated asks us to take judicial notice of a letter of admonishment issued by the CSLB to Ozuna regarding the use of unlicensed electricians in August 2015 at the Rich project. We decline to do so. This letter was not before the trial court and Integrated does not establish why it would be a proper subject for judicial notice. Furthermore, Integrated fails to link how a sole admonishment by the CSLB deprives Ozuna of its contractual rights.
DISPOSITION
The judgment is affirmed. Integrated's request for judicial notice is denied. Integrated's motion for transmission of exhibits is granted. Ozuna is awarded its costs on appeal.
Integrated moved for an order permitting the transmission of trial exhibits 1A, 1B, and 1C, which were referenced in briefing but not made a part of the initial record on appeal. (Cal. Rules of Court, rule 8.224.) The exhibits provided details regarding Ozuna's contractor's license. Ozuna did not object to the motion.
O'LEARY, P. J. WE CONCUR: MOORE, J. GOETHALS, J.