Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC321403. James C. Chalfant, Judge.
Mark M. Hathaway and Everett L. Skillman for Defendant, Cross-complainant and Appellant.
Manning & Marder, Kass, Ellrod, Ramirez, Darin L. Wessel; Law Office of Aaron B. Booth and Aaron B. Booth for Plaintiff, Cross-defendant and Respondent.
COOPER, P. J.
In this construction litigation, Boenanza Investments, LLC (Boenanza) appeals from a judgment, following a court trial, entered in favor of Patterson Builders, Inc. (Patterson Builders). We reverse the judgment because Patterson Builders was not licensed at the time the construction project began and therefore could not sue for any of the causes of action alleged in its complaint. We remand the case to the trial court to reconsider the attorneys’ fee award. We find no merit to any of Boenanza’s arguments related to its cross-complaint against Patterson Builders.
FACTUAL AND PROCEDURAL BACKGROUND
Patterson Builders sued Boenanza for breach of contract and quantum meruit and Boenanza cross-complained for breach of contract and breach of warranty. Patterson Builders is a general contractor and was incorporated in August 2001. Dru Patterson, president of Patterson Builders, negotiated the project with Henrik Johansen, part owner of Boenanza. Patterson Builders and Boenanza contracted to construct two buildings and repair a third.
Steve Patterson, Dru’s father, had a contractor’s license; Dru did not. Patterson Builders contractor’s license was issued May 14, 2002. According to Dru Patterson, work began on March 4, 2002. Checks were issued to Patterson Builders in March 2002. Between March 22 and May 24, 2002, Dru Patterson did “lots of work on it [the project].” This was Patterson Builders first big project.
In a court trial, the parties agreed that their contract was cost plus with an agreed budget of $1.714 million and change orders to be approved by Boenanza. This means that Boenanza was to pay the cost of the work plus an agreed upon fee, insurance, and general conditions. The court found the parties initially agreed to a $2 million budget, but revised it to $1.7 million in order for Boenanza to qualify for a Small Business Administration loan. Neither party intended the $1.7 million figure to be a maximum budget. The court calculated the amount of the budget plus the change orders, and found Boenanza owed Patterson Builders $30,565.50.
The court found evidence that Patterson Builders breached its warranty with respect to the concrete flooring, but concluded Boenanza failed to provide evidence of a cost of repair for defective workmanship. The court had excluded such evidence because Boenanza did not include cost of repair as a subject in its expert’s declaration.
Following trial, the court awarded Patterson $30,565.50 on its beach of contract claim and nothing on its quantum meruit claim. The court found in favor of Patterson on Boenanza’s cross-complaint. The court also ordered Boenanza to pay Patterson Builders’ costs and attorney fees.
DISCUSSION
I. The Appeal From Judgment Includes An Appeal From The Complaint and Cross- Complaint and Attorneys’ Fees Award
Patterson Builders argues that because the notice of appeal designates Boenanza as the defendant/respondent and does not also designate it as the cross-complainant, the notice of appeal does not include an appeal from the cross-complaint.
On May 15, 2006, Boenanza appealed from the judgment after court trial. The judgment provides:
“1. Plaintiff PATTERSON BUILDERS, INC. shall have and recover from defendant BOENANZA INVESTMENTS, LLC for breach of contract the principal sum of $30,565.50 with interest therein from January 17, 2003 at the rate of 10% per annum to date hereof in the sum of ____ for a total sum of ___, together with interest upon the principal sum at the rate of 10% from the date of the entry of this judgment until paid.
“2. Plaintiff PATTERSON BUILDERS, INC. shall have and recover from defendant BOENANZA INVESTMENTS, LLC costs in the sum of ___ and attorneys fee’s in the sum of ___ together with interest upon said sums at the rate of 10% from the date of the entry of this Judgment until paid.
“3. Plaintiff PATTERSON BUILDERS, INC. shall take nothing by way of its claim for quantum meruit.
“4. Cross-Complainant BOENANZA INVESTMENTS shall take nothing by way of its cross-complaint against cross-defendant PATTERSON BUILDERS, INC. for construction defects and breach of warranty.”
“ ‘Ordinarily [an appeal from a specific portion of a judgment] would leave the parts not appealed from unaffected, and it would logically follow that such unaffected parts must be deemed final, being a final judgment of the facts and rights which they determine . . . [T]he court upon such partial appeal can inquire only with respect to the portion appealed from.’ ” (Gonzales v. R. J. Novick Constr. Co. (1978) 20 Cal.3d 798, 804-805.) But, this is not an appeal from a specific portion of the judgment. Instead it is an appeal from the entire judgment; the notice of appeal designates the entire judgment.
As Patterson Builders argues, Boenanza could have more clearly designated itself as both a defendant and a cross-complainant. However, because we must liberally construe notices of appeal, we reject Patterson Builders’ limiting construction of the ambiguity in the party designation. (Walker v. Los Angeles County Metropolitan Transportation Authority (2005) 35 Cal.4th 15, 20-22.) The judgment includes both the complaint and cross complaint. The judgment also includes an attorneys’ fees order and that issue therefore also is cognizable. (R. P. Richards, Inc. v. Chartered Construction Corp. (2000) 83 Cal.App.4th 146, 158 [where judgment specifies award of attorney’s fee no separate notice of appeal is required].)
II. Patterson Builder’s Was Not A Licensed Contractor And Therefore Could Not Sue Under Business & Professions Code § 7031.
Under Business and Professions Code section 7031, a contractor may not sue to recover compensation for work requiring a license unless it was a licensed contractor. Section 7031 provides in pertinent part: “Except as provided in subdivision (e), 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 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 . . . .” (§ 7031, subd. (a).)
Undesignated statutory citations are to the Business and Professions Code.
The purpose of the licensing law is to protect the public from incompetence and dishonesty in those who provide services of a contractor. (Lewis & Queen v. N.M. Ball Sons (1957) 48 Cal.2d 141, 149-150.) “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 . . . .” (Id. at p. 151)
The court found that from August 2001 through May 14, 2002, Patterson Builders was not licensed. The court further concluded that Patterson Builders nevertheless could sue because “Boenanza did not raise the issue as an affirmative defense.” The court also found that, although there was no evidence that Steve Patterson was the responsible managing employee, that conclusion could be inferred. On appeal, Patterson Builders argues (1) that Boenanza failed to preserve the issue of licensing and (2) Patterson Builders substantially complied with the licensing requirements.
A. Boenanza Preserved the Issue of Patterson Builder’s License
Patterson Builders argues that Boenanza failed to raise the issue of Patterson Builder’s licensure because it did not raise the issue as an affirmative defense in its answer. This argument is not persuasive because licensure is not required to be raised as an affirmative defense. For example, in Banis Restaurant Design, Inc. v. Serrano (2005) 134 Cal.App.4th 1035, the issue of licensure successfully was raised in a demurrer. Similarly, in Albaugh v. Moss Construction Co. (1954) 125 Cal.App.2d 126, the court found that a complaint failed to state a cause of action where it did not allege that the contractor was licensed. Boenanza’s answer contains the affirmative defense that the complaint fails to state a cause of action.
Where the complaint is not included in the record or no contrary evidence is introduced at trial, court’s have excused the requirement for a contractor to allege proper licensure. (Cosenza v. Kramer (1984) 152 Cal.App.3d 1100, 1102; Stephens v. Baker & Baker (1957) 150 Cal.App.2d 558, 561.) However, here, in contrast to those cases, there was no proof of proper licensure. Instead, the trial court expressly found that from August 2001 through May 14, 2002, Patterson Builders was not licensed. Therefore, the principle that the appellate court may deem a complaint amended to conform to proof of licensure does not apply to this case.
Patterson Builders’ forfeiture argument is faulty for another reason. As Boenanza points out, Patterson Builders amended the complaint on the first day of trial to indicate that Patterson Builders was the plaintiff. Therefore, the trial was Boenanza’s first opportunity to raise the issue and, in the context of this case, Boenanza timely raised the issue. Nor is there any unfairness to Patterson Builders by our conclusion as the licensure issue was fully litigated and Dru Patterson testified about the subject.
B. Patterson Builders Did Not Substantially Comply With The Licensing Requirements
Patterson Builders argues that Steve Patterson was a licensed contractor and his license was in effect before construction and eventually he became the corporate responsible managing officer. The court found that Steve Patterson held a contractor’s license. Under prior law, this would have been sufficient to show substantial compliance with the licensing requirements. For example, in 1985, the Supreme Court concluded that a plaintiff who qualified for a contractor’s license on behalf of his sole proprietorship substantially complied with the licensing requirements even though he signed the contract in his own name. (Asdourian v. Araj (1985) 38 Cal.3d 276, 294.) However, this holding was abrogated in 1989. (MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 439, fn. 16.) Patterson Builder’s reliance on the prior law is misplaced.
Under current law, to show substantial compliance with the contracting licensing requirements, a contractor must comply with section 7031, subdivision (e) which provides: “the court may determine that there has been substantial compliance with the licensure requirements under this section if it is shown at an evidentiary hearing that the person who engaged in the business or acted in the capacity of a contractor (1) had been duly licensed as a contractor in this state prior to the performance of the act or contract, (2) acted reasonably and in good faith to maintain proper licensure, (3) did not know or reasonably should not have known that he or she was not duly licensed when performance of the act or contract commenced, and (4) acted promptly and in good faith to reinstate his or her license upon learning it was invalid.” Patterson Builders was not duly licensed as a contractor prior to the performance of “the act or contract.” Dru Patterson testified that his father and he started Patterson Builders as a corporation. The court found that Patterson Builders was not licensed until May 14, 2002, after the contract was signed and after work had begun. Patterson Builders simply failed to establish the first statutory requirement for substantial compliance. Because the first requirement was not satisfied, we need not consider the remaining requirements.
Patterson Builders also did not substantially comply with the law as it was when the contract was made. Prior to 2003, subdivision (d) of section 7031 provided “the court may determine that there has been substantial compliance with licensure requirements under this section if it is shown at an evidentiary hearing that the person who engaged in the business or acted in the capacity of a contractor (1) had been duly licensed as a contractor in this state prior to the performance of the act or contract, (2) acted reasonably and in good faith to maintain proper licensure, and (3) did not know or reasonably should not have known that he or she was not duly licensed.” (Former § 7031.) Therefore, assuming that former section 7031 should be applied, Patterson Builders has not shown it had been duly licensed before performance of the act or contract.
A corporation must qualify for a license through either a responsible managing officer or a responsible managing employee. (Construction Financial v. Perlite Plastering Co. (1997) 53 Cal.App.4th 170, 177; § 7068, subd. (b)(3).) Steve Patterson may have qualified as the responsible managing officer of Patterson Builders when Patterson Builders eventually received its license. But, Steve Patterson’s individual license does not show that Patterson Builders substantially complied with the licensing requirements at the time it began work on the Boenanza project. Because there is no evidence Patterson Builder’s substantially complied with the licensing requirements, Patterson Builders was not allowed to sue for breach of contract or for quantum meruit. (MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 434.) The judgment of $30,565.50 in its favor must be reversed.
Dru Patterson testified that Steve Patterson was the responsible managing officer for Patterson Builders.
Therefore, we need not consider Boenanza’s argument that it was not required to perform the contract because Patterson Builders breached a condition precedent or that the court erred in interpreting the terms of the contract.
III. Boenanza’s Expert Witness Testimony Was Properly Excluded
The court excluded Geoffrey Hichborn’s testimony about the cost of repair of the concrete floor because that was not a subject included in his expert declaration. The court denied Boenanza’s motion to amend its expert witness declaration to include opinions on cost of repair for correcting defects and flaws in the concrete slab. The court then found that Boenanza failed to show damages for the faulty installation of the floor. Boenanza argues that Hichborn should have been allowed to testify regarding the cost of repair.
A. Factual Background
In its expert witness declaration, Boenanza described Hichborn’s anticipated testimony as follows: “Geoffrey Hichborn, Hichborn Consulting Group, is qualified to testify as an expert in the field of design, installation and performance of concrete and related materials of construction on the basis of his education, experience, and professional license . . . . [¶] The general substance of the testimony that Geoffrey Hichborn is expected to give is the determination of the concrete design, concrete installation, and concrete performance of the concrete flooring at the property that is the subject of the contract between plaintiff Patterson Builders and the defendant and cross-complainant.”
B. Analysis
“[T]he very purpose of the expert witness discovery statute is to give fair notice of what an expert will say at trial. This allows the parties to assess whether to take the expert’s deposition, to fully explore the relevant subject area at any such deposition, and to select an expert who can respond with a competing opinion on that subject area. ‘The opportunity to depose an expert during trial, particularly if the testimony relates to a central issue, often provides a wholly inadequate opportunity to understand the expert’s opinion and to prepare to meet it. [Citations.]’ [Citations.]” (Bonds v. Roy (1999) 20 Cal.4th 140, 146-147 (Bonds).)
Boenanza shows no error. It failed to identify cost of repair as an issue prior to trial. The court found that an amendment would prejudice Patterson Builders because it did not designate its own cost of repair expert. That conclusion is reasonable and consistent with the critical purpose of pretrial discovery. “When an expert is permitted to testify at trial on a wholly undisclosed subject area, opposing parties . . . lack a fair opportunity to prepare for cross-examination or rebuttal.” (Bonds, supra, 20 Cal.4th at p. 147.)
Boenanza seeks to factually distinguish Bonds a medical malpractice case, but the distinction is irrelevant. The holding that an expert witness can not testify beyond the scope of his declaration unless a party successfully moves for leave to amend the declaration is equally applicable to this construction case. (Bonds, supra, 20 Cal.4th at p. 149.)
C. Code of Civil Procedure Section 2034.300
Code of Civil Procedure Section 2034.300 does not compel a different result as Boenanza argues. Under section 2034.300, “on objection of any party who has made a complete and timely compliance with Section 2034.260, the trial court shall exclude from evidence the expert opinion of any witness that is offered by any party who has unreasonably failed to do any of the following: (a) List that witness as an expert under Section 2034.260. [¶] (b) Submit an expert witness declaration. [¶] (c) Produce reports and writings of expert witnesses under Section 2034.270. [¶] (d) Make that expert available for a deposition . . . .” (Code Civ. Proc. § 2034.300.) There is no evidence in the record that Patterson Builders failed to make a complete and timely compliance with Section 2034.260.
Any party may demand an exchange of the identity and expected expert witness testimony under Code of Civil Procedure section 2034.210. Patterson Builders in its motion to exclude the testimony of Hichborn and in its opposition to Boenanza’s motion for a new trial states that such a demand was made. Boenanza shows no contrary finding and makes no citation to the record for its statement that Patterson Builders failed to make such a demand. Boenanza also fails to show it raised this issue in the trial court.
IV. The Trial Court Should Reconsider The Attorneys’ Fee Award
The court awarded Patterson Builders $9,507.43 in costs and $90,760.58 in attorneys fees. The contract provides: “Should any party institute any action or proceeding to enforce or interpret the Contract Documents or any provision hereof, for damages by reason of any alleged breach of the Contract Documents or of any provision hereof, or for a declaration of rights hereunder, the prevailing parties in any such action or proceeding shall be entitled to receive from the other parties all attorneys’ and other fees, incurred by the prevailing party in connection with such action or proceeding.” Because the judgment in favor of Patterson Builders must be reversed, Patterson Builders is no longer the prevailing party. Therefore, the attorneys’ fee award in favor of Patterson Builders must be reversed.
The entire attorneys’ fee provision is not included in the record. The remaining portion of the provision that is included in the record provides: “If any party files for protection under, or voluntarily or involuntarily becomes subject to, any chapter of the United States Bankruptcy Code or similar state insolvency laws, the other parties shall be entitled to any and all attorneys’ and other fees incurred to protect such party’s[.]” The remainder of the sentence and the provision is missing from the record.
Upon remand, the trial court should consider whether Boenanza is the prevailing party or whether there is no prevailing party. “When there are cross-actions on a contract containing an attorney fees provision, and no relief is awarded in either action, a trial court is not obligated to find that there is no party prevailing on the contract for purposes of section 1717. If the court concludes that the defendant’s cross-action against the plaintiff was essentially defensive in nature, it may properly find the defendant to be the party prevailing on the contract.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 875, fn. 10.) “The prevailing party determination is to be made . . . by ‘a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions.’ ” (Id. at p. 876.) We express no opinion on whether Boenanza is the prevailing party.
DISPOSITION
The judgment is affirmed in part and reversed in part. Judgment in favor of Patterson Builders on Boenanza’s cross-complaint is affirmed. Judgment in favor of Patterson Builders on its complaint is reversed. The order awarding Patterson Builders attorneys’ fees is reversed. The case is remanded to the trial court to consider whether Boenanza is entitled to attorney fees. Each party to bear its own costs on appeal.
We concur: RUBIN, J., FLIER, J.