ART WOMACK, Plaintiff, Cross-defendant and Respondent, v. DAVID ANGUS LOVELL et al., Defendants, Cross-complainants and Appellants; MARK CABALLERO, Cross-defendant, Cross-complainant and Respondent.
No. G049587
Fourth Dist., Div. Three
June 15, 2015
237 Cal.App.4th 772
Law Offices of Lenore Albert and Lenore L. Albert for Defendants, Cross-complainants and Appellants.
Law Office of Mitchell B. Hannah, Mitchell B. Hannah and Hallie D. Hannah for Plaintiff, Cross-defendant and Respondent, and for Cross-defendant, Cross-complainant and Respondent.
OPINION
BEDSWORTH, Acting P. J.—
I. INTRODUCTION
In their rock-and-roll standard, “End of the Innocence,” Bruce Hornsby and Don Henley note that “The lawyers dwell on small details.” That‘s true. We have to. The devil isn‘t the only resident in the details; sometimes truth and fairness lodge there as well.
In this case, we address a “detail” that was lost or hidden and resulted in what we consider an injustice. Fortunately, as is usually the case, painstaking attention to other small details enables us to correct this injustice. If you dwell on small details with an eye to fairness, the law works well.
Here, a homeowner sued a general contractor for allegedly shoddy and incomplete work in connection with a major home remodeling contract. The homeowner‘s complaint also contained a cause of action against the general
For his part, the general contractor responded with a cross-complaint against the homeowner for unpaid work. The cross-complaint included a copy of their written contract which showed the contractor‘s license number. To that, the homeowner simply filed a general denial of all allegations.
When the case came to trial, the homeowner—contrary to the applicable local rule requiring plaintiffs to identify all controverted issues—did not identify licensure as a controverted issue. The contractor‘s attorney seeing no issue, did not obtain a verified certificate from the Contractors’ State License Board (the License Board) showing the contractor was licensed at all times during his performance. But when the contractor was about to rest his case on the cross-complaint, the homeowner‘s attorney made a motion for nonsuit based on the absence of such a verified certificate as required under
The trial judge was also surprised the licensure issue was raised. He hadn‘t been expecting the issue either. He deferred immediate ruling on the homeowner‘s nonsuit motion. As the contractor learned to his chagrin, it presently takes at least six days to obtain a verified certificate from the License Board even if one drives overnight to Sacramento to pick it up in person. While the contractor was eventually able to obtain a verified certificate of licensure from the License Board, he could not do so until after the close of the trial, in which he prevailed on his claim for unpaid work from the homeowner. Because no certificate of licensure could be produced, the trial judge reluctantly granted the homeowner‘s nonsuit motion, by then denominated a motion for judgment notwithstanding the verdict (JNOV), and this appeal ensued.
We reverse the judgment in favor of the homeowner, with instructions to the trial judge to grant judgment in favor of the general contractor as against
II. FACTS
This litigation arises out of a 2010 Laguna Hills home remodel undertaken by Art Womack. Womack hired a general contractor named Aztec Sunpower (Aztec).2 Aztec, in turn, hired a pool subcontractor, Caballero Pools and Spas (Caballero). By the end of 2010, the relationships had broken down to the point where litigation was imminent.
Womack filed first in January 2011, his complaint alleging breach of contract by Aztec. His first amended complaint, filed in July 2011, alleged Aztec had done an incomplete and sloppy job and thus forced him to incur extra expenses to make things right.
In his first amended complaint, Womack alleged twice that Aztec “at all times” relevant to the suit, “acted in the capacity as a licensed contractor.” The first time was in the standard list of parties often given at the beginning of a complaint. The second time was in connection with a fourth cause of action “on contractor‘s license bonds” against American Contractors License Indemnity Company (American Contractors). In that cause of action Womack alleged that “upon application” by Aztec “to the Registrar of Contractors of the Contractor‘s State License Board of the State of California for a contractor‘s license or renewal thereof, and in accordance with the provisions of
In April 2012, both Womack and Caballero, represented by the same law firm, filed answers to Aztec‘s cross-complaint. Each answer generally denied all of Aztec‘s allegations, which necessarily included the allegation Aztec had been a licensed contractor at all relevant times, a small detail that went unnoticed.
Also in April 2012, Caballero filed his own cross-complaint against Aztec, alleging damages arising out of its breach of contract. In contrast to Womack‘s earlier complaint, however, Caballero‘s cross-complaint did not allege Aztec was at all times a licensed contractor. Caballero merely alleged Aztec had “represented” itself to be a contractor.
Three days before a September 30, 2013 trial date, Womack and Caballero‘s law firm filed a “joint list of stipulated facts and controverted issues,” though calling it either “joint” or a “list” would be a stretch. It was not joint—certainly not in the sense of reflecting a document agreed to by adversarial parties. The document was neither signed by Aztec‘s counsel nor, as far as we can ascertain, ever served on her. Nor was it a list. It merely stated the parties had stipulated a certain surety bond company had issued a bond to Aztec for a certain period and then said “All other issues are controverted,” without identifying any of them.
The trial was continued, and on November 5, just before trial was about to begin, counsel for American Contractors (Aztec‘s bonding agent) and Womack announced in open court (with counsel for Aztec present) that they had a settlement. Counsel for Womack articulated its terms for the record: They agreed that American Contractors had “issued surety bond number 1000112982 in the amount of $12,500 to DA Lovell Corp., which does business as Aztec Sunpower. [¶] The bond was in effect from February 10th—yeah, February 5th, 2010 through March 23rd, 2012. [¶] American Contractors Indemnity Company agrees that if plaintiff Art Womack obtains a net recovery of at least $12,500 for D.A. Lovell Corp. [doing business as Aztec], that American Contractors Indemnity will pay to Art Womack up to $12,500 from the penal sum of the bond. [¶] If the net is less than $12,500, American Contractors Indemnity shall only be obligated to pay the net recovery, not to exceed $12,500. [¶] And the parties agree that the court will retain jurisdiction pursuant to
The trial judge was taken aback. He reminded defense counsel he had asked at the “outset” of the case whether there were any “dispositive affirmative defenses,” and had heard not a word about the licensure issue. The short colloquy ended with the judge deciding to delay ruling on the matter until sometime after the end of the day.
That day Womack and Caballero‘s counsel filed written briefing on the subdivision (d) issue. It had obviously not been worked up ad hoc over the lunch hour. The gravamen of the briefing was (1) Aztec‘s licensure had been “controverted” by virtue of the general denials filed by Womack and Caballero to Aztec‘s cross-complaint; (2) under
The next day, November 7, Aztec rested its case on the liability phase of trial. It is an interesting, but now academic, question whether, under any circumstance, including optimal funding of the License Board in the best of all possible worlds, any contractor will ever be able to procure a verified certificate of licensure overnight. It certainly did not happen here. Rather, immediately after Aztec rested, Womack and Caballero‘s counsel made an oral motion for nonsuit based on the brief they had filed the previous day.
It appears the trial judge had not yet had time to read that brief. So he denied Womack and Caballero‘s counsel‘s request to have him rule on the issue “immediately.”4 Rather, he said defense counsel could argue his motion the next day. If, in the interim, the jury came back with an adverse verdict, the motion could be treated as a motion for JNOV. As it turned out, the jury
Phase two, the trial on damages, remained so the jury was not dismissed. The next day, November 8, outside the presence of the jury, the judge entertained the motion. By this time there had been oral testimony Aztec was fully licensed, but there was no verified certificate of licensure. Aztec‘s lawyer contended there had been no need to produce such a certificate, pointing to Womack‘s first amended complaint, in which Womack “admitted in his pleading that [Aztec] was a licensed contractor.” The trial judge understood the point to be that Womack had made a judicial admission Aztec was so licensed. Womack and Caballero‘s counsel countered by citing the Advantec case. While the trial judge had read the case a couple of weeks prior to the trial, he had not read it for that day, so he again deferred ruling on the motion.
Four days later, on November 12, the jury returned a verdict on the damages issue in favor of Aztec: Womack owed Aztec $13,100, Caballero owed Aztec $4,340. Aztec‘s counsel told the judge she had ordered a verified certificate from the Licensing Board, but it was not ready yet. The trial judge correctly guessed Womack and Caballero‘s position would be that it made no difference. As he anticipated, in open court, Womack and Caballero‘s response to the fact that Aztec was now shown to have been licensed all along was, ”Advantec case says that he wins anyway.”
That day Aztec‘s counsel filed opposition to Womack and Caballero‘s earlier brief, again asserting Womack had made a judicial admission that Aztec was licensed. After a little more discussion, the parties agreed to resume argument two days later, on November 14. When the parties met again on November 14, the trial judge had made up his mind to grant the motion, based on Advantec.
Aztec‘s counsel once again asserted the argument Womack had made a judicial admission Aztec was “validly licensed.” But the trial judge expressed his concern that, “there‘s no case on point in which that is recognized as an exception to the statute and the Advantec case.” He added, “I just don‘t see any trend here that suggests that on my level, I should do that,” though he added he was “rather sympathetic to the argument.” The judge granted the motion, now effectively a motion for JNOV.
Aztec wasn‘t quite yet ready to throw in the towel. Someone drove to Sacramento on Aztec‘s behalf to pick up the verified certificate ordered earlier from the Licensing Board, and, on November 22, 2013, Aztec brought
It did not work. The trial judge signed a judgment in favor of both Womack and Caballero. A notice of appeal was timely filed.
III. DISCUSSION
A. Background
Subdivision (a) of
Less well known is subdivision (d) of
The best illustration of this possibility—the spectre that haunted the trial judge here—is Advantec, supra, 153 Cal.App.4th 621. There a developer hired a plumber, then terminated the contract with the plumber mid-job. The developer sued for breach of contract. (Id. at p. 625.) The plumber cross-complained for breach of contract, and of course alleged—it had to—that it was licensed.
The result was reminiscent of Sartre‘s play No Exit. There was no escape for the hopeless protagonist. The licensure issue could not be described as “new matter” requiring articulation in an affirmative defense (Advantec, supra, 153 Cal.App.4th at pp. 627-630), and, under an abuse of discretion standard, the denial of the continuance could hardly be said to be unreasonable, especially since the nonsuit motion came near the end of a jury trial that had already consumed four days (see id. at p. 631).6
But the result in Advantec—and we do not disagree with the result or reasoning of the decision—is not without irony. The legislative history of
The history of subdivision (d) is a history of a pendulum swinging, as the great legal philosopher Roger Miller would say, “like a pendulum do.”
A big change came in 1989, in the form of Assembly Bill No. 841 (1989–1990 Reg. Sess.; Assembly Bill 841). The sponsor of Assembly Bill 841 was the License Board itself, and the board‘s main purpose was to close what the License Board considered the “loophole” of the judicially recognized substantial compliance doctrine, which allowed for the possibility of recovery for some unlicensed work.7 The legislation took dead aim at the substantial compliance doctrine with a new subdivision, then subdivision (d), that sought to exclude all possibility of the doctrine‘s application to contractor licensing actions.8 It was Assembly Bill 841 that first inserted a verified certificate requirement into
But as written in the 1989 version of the statute, subdivision (c) had no “if controverted” clause. Rather, the requirement of a verified certificate was absolute. Contractors had to have a verified certificate of licensure to prove licensure, and they had to prove licensure to recover. The effect was that a verified certificate was required in every case. The theory behind the new need for a verified certification was tied to the overall purpose of Assembly Bill 841, which was to eliminate the judicial doctrine of “substantial compliance.” The point of a verified certificate was to provide a bright-line criterion to verify licensure; without such a bright line it was feared courts might find a way to relapse into their old ways of excusing some unlicensed activity.10
But it did not take long for the doctrine of unintended consequences to rear its ugly head. By 1992, the need to obtain a verified certificate in every case
The License Board, swamped by having gotten what it wished for in 1989, again sponsored an amendment to
But there were still two major changes to be made before the verified certificate subdivision reached today‘s version: In 1993, Assembly Bill No. 628 (1993–1994 Reg. Sess.; Assembly Bill 628) clarified that contractors still had the burden of proving licensure and there was no need for persons they were suing for compensation to produce the verified certificate. (See
Neither of the two main California Supreme Court cases explicating
Like Hydrotech, MW Erectors focused on subdivision (a) of
There were no judicial admissions in the MW Erectors case for the court to confront. There was a judicial estoppel argument, based on the idea that in
The MW Erectors court noted that neither the cross-complaint filed by the specialty metal contractor against the owner and its general contractor, nor its mechanic‘s lien, contained any mention of the steel contractor‘s work. However, in any event, said the high court, the steel contractor could not “invoke judicial estoppel for the simplest of reasons,” namely, subdivision (a) expressly precludes any action in law or equity. (MW Erectors, supra, 36 Cal.4th at p. 423.) In that regard, the MW Erectors court quoted Hydrotech for the proposition that the “bar of section 7031(a) applies ‘[r]egardless of the equities.’ ” (MW Erectors, supra, 36 Cal.4th at p. 423, quoting Hydrotech, supra, 52 Cal.3d at p. 997.) Thus the MW Erectors court concluded, citing subdivision (a), that acceptance of MW‘s judicial estoppel argument would mean that MW could “recover compensation for work that required a license, even if MW was not licensed ‘at all times’ during the performance of that work. (§ 7031(a).)” (MW Erectors, supra, 36 Cal.4th at p. 423.)
However, after emphasizing that subdivision (a) would be applied regardless of its harsh consequences and even if it means one party obtains an unjust windfall (MW Erectors, supra, 36 Cal.4th at p. 424), the court ended its judicial estoppel discussion with a passage that took a somewhat wider-angle view of the judicial estoppel issue. We quote the entirety of the passage in the margin,14 but two aspects of it stand out. One is the qualification that “Nothing we say here is intended to authorize or condone abusive manipulation of the courts” and we emphasize the words “abusive manipulation.” (MW Erectors, at p. 424.) The other is that such abuse can be avoided by normal discovery and investigation in that case, by the owner and its general contractor. (See ibid.) We note, however, that the MW Erectors court
B. Application
In our case, counsel for Aztec was effectively trapped in a room with several doors, all locked from the outside, and in her opposition to the JNOV motion she tugged at all of them. And we conclude the trial judge had no choice but to keep them all locked—save one.
That one is the clear statement in Womack‘s complaint admitting Aztec was licensed, and even going so far as to sue Aztec‘s license bonding company under
Womack‘s complaint effectively told both the court and Aztec—twice—that the issue of Aztec‘s licensure was not controverted for purposes of
Womack makes two arguments against application of the doctrine of judicial admission here: his complaint was unverified and he denied Aztec‘s licensure allegation in his general denial to Aztec‘s cross-complaint. Under the circumstances of this case, though, Womack‘s plain admissions in his original complaint override these two arguments.
First, even unverified complaints can contain judicial admissions, as shown in Reichert, supra, 68 Cal.2d 822. There, the plaintiff in an insurance bad faith case admitted in his initial, unverified pleading that he had filed for bankruptcy prior to filing his complaint. In later pleadings, however, he conveniently omitted mention of the bankruptcy. It did not work. Because he had made no attempt to show his admission of the bankruptcy was the product of some sort of mistake or inadvertence, he was stuck with the admission. (Id. at p. 837.)
Here, as in Reichert, Womack had a tactical reason to include the admission of Aztec‘s licensure in his original complaint. He wanted to assure recovery against Aztec‘s contractor‘s bond under
The second argument—the actual denial in the answer to Aztec‘s cross-complaint—fails because of the sham pleading doctrine. Under the sham pleading doctrine, a pleader cannot circumvent prior admissions by the easy device of amending a pleading without explanation. (See Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1189, fn. 1; Hardy v. Admiral Oil Co. (1961) 56 Cal.2d 836, 840-841; Wennerholm v. Stanford Univ. Sch. of Med. (1942) 20 Cal.2d 713, 716; Larson v. UHS of Rancho Springs, Inc. (2014) 230 Cal.App.4th 336, 344; Hahn v. Mirda (2007) 147 Cal.App.4th 740, 751 [“The purpose of the doctrine is to enable the courts to prevent an abuse of process.“]; Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 426 [noting sham pleading doctrine is not intended to prevent honest corrections of error but is to prevent abuse of process].) Significantly, the sham pleading rule encompasses prior pleadings even when made on information and belief. (See Hendy v. Losse (1991) 54 Cal.3d 723, 742-743.)
We think this case cries out for application of the sham pleading doctrine—all the more so since this case does not seem to involve an honest,
Finally, all doubt as to the application of the sham pleading doctrine in this case is removed by Womack‘s failure to comply with the local rule requiring specification of all “controverted issues.” Recall that the MW Erectors court pointed out that abusive manipulation of the courts could be curtailed by normal discovery and investigation. Well, one of the purposes of the Superior Court of Orange County, Local Rules, rule 317 is to do just that—prevent ambushes like the one that took place here—by flushing out all controverted issues prior to trial.16 Orange County Superior Court, Local Rules, rule 317 follows the salutary practice employed by most federal courts of requiring parties in civil cases to meet and confer prior to a trial and identify what is, and what is not, controverted. The language of the rule does not allow for silent gamesmanship. Both parties have the duty to stipulate to what can be readily stipulated to, and identify what is to be controverted for the trial. By the time trial began, Womack was still prosecuting his complaint. The onus was thus on him, as plaintiff, to prepare the paperwork that stipulated to all facts “amenable to stipulation” and provide a “list” of identified issues, not just a coy “everything else is controverted” statement.
IV. CONCLUSION
We reverse and remand the judgment in favor of Womack and direct the trial court to enter judgment for Aztec on its cross-complaint against Womack. It is a different story for Caballero. He never admitted that Aztec was licensed, or sued Aztec‘s license bond insurer. He was not the plaintiff required to facilitate an honest identification of controverted issues. Accordingly we affirm the defense judgment in his favor.
As to appellate costs, we direct the trial court on remand to ascertain that portion of the appellate costs of Aztec attributable to its appeal from the judgment in favor of Womack, and assess all those costs against Womack. As to that portion of appellate costs attributable to Aztec‘s appeal from the judgment in favor of Caballero, those costs are to be borne by each side, Aztec and Caballero.
Aronson, J., and Fybel, J., concurred.
Notes
In this opinion all undesignated references are to the Business and Professions Code, and all undesignated references to any subdivision of a statute are to section 7031.
” ‘While attorneys who represent contractors are aware they must plead licensure, many are not aware that a certificate from the board is necessary to prove it. [¶] The sponsor thinks that production of the certificate of licensure should only be required if licensure is at issue in the case. That is, if the contractor swears under oath that he or she was licensed, and the defendant‘s attorney has determined that the contractor was not, only then would the contractor be required to produce a copy of the certificate of licensure. . . . The board may take up to 6 months to issue the certificate. The sponsor states that cases involving licensure status are rare, and contractors are losing cases [e.g., by nonsuit] where they might otherwise prevail but for this technicality.’ (Assem. Com. Consumer Protection, Gov. Efficiency and Economic Dev., Analysis of Assem. Bill No. 2413 (1991-1992 Reg. Sess.) May 6, 1992.)” (Buzgheia, supra, 60 Cal.App.4th at p. 391, italics added.)
“An issue conference is required in all cases at least 10 days prior to the date set for trial, at which time the parties are to meet and confer and execute necessary documents as listed below. Plaintiff or petitioner must arrange the issue conference at a mutually agreeable time and location.
“At the issue conference the parties must: [¶] . . . [¶]
“B. Stipulate to all facts amenable to stipulation. [¶] . . . [¶]
“E. Prepare a Joint List of Controverted Issues. If all the parties fail to agree that an issue is uncontroverted, then the issue is controverted. [¶] . . . [¶]
“The Plaintiff or Petitioner is responsible for providing courtesy copies of the Joint Statement of the Case, the Joint Witness List, and the Joint List of Controverted issues.” (Italics added.)