Case Name: Mark Cambra dba Cambra Construction Company v. Todd Leffler, et al.

Case No.: 2015-1-CV-284492

Motion for Summary Judgment or in the Alternative for Summary Adjudication of Issues

On or about September 2012, defendant Todd Leffler (“Leffler”) orally requested plaintiff Mark Cambra dba Cambra Construction Company (“Cambra”) remodel his home, inclusive of an addition, (“Project”) located at 4090 Shona Court in San Jose. (Complaint, ¶¶2 – 3.) Defendant Leffler agreed to pay plaintiff Cambra $60 per hour for plaintiff’s time, $54 per hour for experienced contractor assistance, and $40 per hour for laborers. (Complaint, ¶3.) Defendant Leffler also agreed to provide labor and materials for construction of the Project. (Id.)

Plaintiff Cambra began work on September 24, 2012 and completed the Project on February 1, 2013. (Complaint, ¶7.) Plaintiff Cambra regularly billed defendant Leffler, reflected by sixteen separate billings totaling $71,379.17, all of which were uncontested by defendant Leffler. (Complaint, ¶9.) Defendant Leffler paid all but $16,013.35 which defendant Leffler promised to pay when able. (Id.)

On August 16, 2013, defendant Leffler disputed the balance for the first time and asked for copies of plaintiff Cambra’s invoices. (Id.) Plaintiff Cambra provided any and all invoices, but defendant Leffler failed to respond or make any further payment. (Id.) Plaintiff Cambra made a formal written demand for payment on July 10, 2014, but defendant Leffler has failed to make any further payment. (Id.)

On August 17, 2015, plaintiff Cambra filed a complaint against defendant Leffler asserting causes of action for:

(1) Breach of Oral Contract
(2) Reasonable Value of Labor & Materials
(3) Account Stated
(4) Book Account

On October 26, 2015, the plaintiff Cambra obtained entry of default and default judgment against defendant Leffler. On December 14, 2015, pursuant to stipulation, the court set aside default. On January 20, 2016, defendant Leffler filed an answer to plaintiff Cambra’s complaint. On January 19, 2016, defendant Leffler filed a cross-complaint against plaintiff Cambra asserting claims for:

(1) Negligent Breach of Contractual and Legal Duties
(2) Misrepresentation and Violation of Business and Professions Code §7160
(3) Declaratory Relief re Restitution and Disgorgement based on Violations of the Contractor’s State License Law

On February 16, 2016, plaintiff Cambra filed an answer to defendant Leffler’s cross-complaint.

On May 10, 2017, defendant Leffler filed the motion now before the court, a motion for summary judgment/ adjudication of plaintiff Cambra’s complaint.

On July 21, 2017, plaintiff Cambra filed opposition.

I. Defendant Leffler’s motion for summary adjudication of the first cause of action [breach of oral contract] is DENIED.

In moving for summary judgment, defendant Leffler argues plaintiff Cambra’s claim for breach of oral contract is barred by the statute of limitations set forth in Code of Civil Procedure section 339 which sets forth a two year statute of limitations for “[a]n action upon a contract, obligation or liability not founded upon an instrument of writing.”

“Ordinarily, a cause of action for breach of contract accrues on the failure of the promisor to do the thing contracted for at the time and in the manner contracted.” (Waxman v. Citizens Nat. Trust & Savings Bank of Los Angeles (1954) 123 Cal.App.2d 145, 149.) Here, the alleged breach is defendant Leffler’s failure to make payment when due. Plaintiff Cambra’s periodic invoices during the Project did not specify when payment was due. The last work performed by plaintiff Cambra on the Project was no later than January 28, 2013. Plaintiff Cambra’s last four invoices on the Project were issued December 24, 2012; January 20, 2013; January 27, 2013; and February 3, 2013.

“If no time is specified for the performance of an act required to be performed, a reasonable time is allowed.” (Civ. Code, § 1657.) Since the parties did not specify a time for when payment would be due, defendant Leffler contends payment would be due within a reasonable time. Defendant Leffler contends a reasonable period of time would have expired long before August 17, 2013 given completion of plaintiff Cambra’s work on the Project by January 28, 2013 and issuance of the last invoice on February 3, 2013. If a reasonable time for performance occurred prior to August 17, 2013 and plaintiff Cambra did not file his complaint until more than two years later on August 17, 2015, the claim would be barred.

However, “What constitutes reasonable time is always a question of fact.” (Pico Citizens Bank v. Tafco, Inc. (1962) 201 Cal.App.2d 131, 137; see also C.O. Bashaw Co. v. A.U. Pinkham Co. (1926) 77 Cal.App. 591, 594—“What is a reasonable time is usually a question of fact and must be determined from all the circumstances of the individual case, but where the facts are not disputed or the matter can be ascertained from the language of the contract, it may be determined as a matter of law.”) Defendant Leffler proffers no additional facts or argument to support his position that a reasonable time for payment would have expired prior to August 17, 2013. Even if he had, plaintiff Cambra proffers evidence in opposition which would create a triable issue of material fact. Particularly, plaintiff Cambra proffers evidence of the long relationship and friendship he shared with defendant Leffler. Notably, plaintiff Cambra held an expectation that payment would be made within 30 days of billing, but that “because of our long friendship we would work together to meet each other’s needs. [Leffler] said that payment would be made as funds were available, and that he did not expect any problems with financing the addition.” Also, “[Leffler] stated that while we didn’t agree to any specific payment schedule, he expected me to work with him.” At the very least, this presents a triable issue of material fact with regard to what constitutes a reasonable time for performance.

Defendant Leffler additionally seeks summary adjudication of the first cause of action for breach of oral contract by arguing that such oral contract is void or voidable because the Contractor’s State License Law requires such contracts to be in writing pursuant to Business and Professions Code section 7159 et seq. Business and Professions Code section 7159 “applies to ‘home improvement contracts’ between a contractor and an ‘owner or tenant’ for ‘work upon a building or structure for proposed repairing [or] remodeling’ where the aggregate contract price exceeds $500. Section 7159 provides that every such contract and any changes in the contract ‘shall be evidenced by a writing and shall be signed by all the parties to the contract….’ [Footnote.]” (Asdourian v. Araj (1985) 38 Cal.3d 276, 289–90 (Asdourian).) The agreement between plaintiff Cambra and defendant Leffler for the remodeling of defendant Leffler’s residence was oral.

“Generally a contract made in violation of a regulatory statute is void.” (Asdourian, supra, 38 Cal.3d at p. 291.) “However, ‘the rule is not an inflexible one to be applied in its fullest rigor under any and all circumstances. A wide range of exceptions has been recognized.’ [Citation.]” (Ibid.) “In compelling cases, illegal contracts will be enforced in order to ‘avoid unjust enrichment to a defendant and a disproportionately harsh penalty upon the plaintiff.’ [Citation.] ‘ “In each case, the extent of enforceability and the kind of remedy granted depend upon a variety of factors, including the policy of the transgressed law, the kind of illegality and the particular facts.” ’ [Citation.]” (Id. at p. 292.)

In Asdourian, the court held a contract which violated Business and Professions Code section 7159 to be enforceable nonetheless.

First, the policy of section 7159 is to encourage written contracts for home improvements in order to protect unsophisticated consumers. [Citation.] However, defendants are not members of the group primarily in need of the statute’s protection. In this context, the misdemeanor penalties provided in the statute should be sufficient. It will not defeat the statutory policy to allow plaintiff to recover for the reasonable value of the work performed.

Second, a contract made in violation of section 7159 does not involve the kind of illegality which automatically renders an agreement void. The contracts at issue here were not malum in se. They were not immoral in character, inherently inequitable or designed to further a crime or obstruct justice. [Citation.] There was nothing “intrinsically illegal” about the agreements between plaintiff and defendant to repair and remodel the residential property. Rather, the contracts were malum prohibitum, and hence only voidable depending on the factual context and the public policies involved. [Citation.]

Finally, the facts of this case support the conclusion that the contracts between plaintiff and defendant, while they violated section 7159, should nevertheless be enforced. Defendant is a real estate investor, not an unsophisticated homeowner or tenant. Further, because plaintiff and defendants were friends, who had had business dealings in the past, the failure to comply with the strict statutory formalities is, perhaps, understandable. [Citation.] Plaintiff fully performed according to the oral agreements. Defendants accepted the benefits of the oral agreements. If defendants are allowed to retain the value of the benefits bestowed by plaintiff without compensating him, they will be unjustly enriched.

(Asdourian, supra, 38 Cal.3d at pp. 292–93.)

Plaintiff Cambra proffers facts here which would support enforcement, or at the very least, proffers facts which would create a triable issue with regard to whether the oral agreement should be enforced despite violation of Business and Professions Code section 7159. Both plaintiff Cambra and defendant Leffler are licensed by the Contractor’s State License Board, not unsophisticated home consumers who might be in need of such protection. As with Asdourian, there is nothing intrinsically illegal about an agreement between plaintiff Cambra and defendant Leffler for the remodel of a residential property. Also as with Asdourian, plaintiff Cambra proffers evidence that defendant Leffler was a sophisticated owner-builder and the two were friends with past dealings.

Accordingly, defendant Leffler’s motion for summary judgment is DENIED. Defendant Leffler’s alternative motion for summary adjudication of the first cause of action in plaintiff Cambra’s complaint is DENIED.

II. Defendant Leffler’s motion for summary adjudication of the second cause of action [reasonable value of labor and materials] is DENIED.

“[W]here services have been rendered under a contract which is unenforceable because not in writing, an action generally will lie upon a common count for quantum meruit. [Citation.] “The statute of limitations for quantum meruit claims is two years (see Code Civ. Proc., § 339 [action upon an ‘obligation’ … not founded upon an instrument in writing])”. [Citation.]” (Iverson, Yoakum, Papiano & Hatch v. Berwald (1999) 76 Cal.App.4th 990, 996.)

According to defendant Leffler, a cause of action for quantum meruit based upon services performed accrues on either the date the last payment was made toward the service rendered or the last date the services were performed. The last work performed by plaintiff Cambra on the Project was no later than January 28, 2013.

Even if the court accepts defendant Leffler’s argument, plaintiff Cambra proffers evidence in opposition which would create a triable issue of material fact with regard to whether defendant Leffler is equitably estopped from asserting a statute of limitations defense.

“A defendant will be estopped to invoke the statute of limitations where there has been ‘some conduct by the defendant, relied on by the plaintiff, which induces the belated filing of the action.’ It is not necessary that the defendant acted in bad faith or intended to mislead the plaintiff. It is sufficient that the defendant’s conduct in fact induced the plaintiff to refrain from instituting legal proceedings. ‘Whether an estoppel exists—whether the acts, representations or conduct lulled a party into a sense of security preventing him from instituting proceedings before the running of the statute, and whether the party relied thereon to his prejudice—is a question of fact and not of law.’”

(Shaffer v. Debbas (1993) 17 Cal.App.4th 33, 43; internal citations omitted.)

Plaintiff Cambra proffers evidence that until November 30, 2012, defendant Leffler typically paid plaintiff within a week to 30 days from billing. When invoices went unpaid, Plaintiff Cambra and defendant Leffler engaged in a months long exchange in which defendant Leffler promised payment. Based on their long friendship, plaintiff Cambra trusted defendant Leffler to pay the balance due and cooperated with defendant Leffler to meet their financial needs.

Defendant Leffler anticipated an equitable estoppel argument by plaintiff Cambra and argued preemptively that the doctrine does not apply for several reasons. First, defendant Leffler contends equitable estoppel does not apply because plaintiff Cambra provided factually devoid responses to an interrogatory asking for the identity of persons or documents to support plaintiff Cambra’s claim that defendant Leffler continued to make promises of payment after July 31, 2013. The court does not find plaintiff’s discovery response to be factually devoid. To the extent defendant Leffler contends plaintiff did not provide a complete response, the appropriate remedy was to bring a motion to compel.

Defendant Leffler further contends equitable estoppel does not apply relying on Gundogdu v. King Mai, Inc. (2009) 171 Cal.App.4th 310, 317 (Gundogdu) where the court wrote:

a defendant may be equitably estopped from asserting the statute of limitations as defense to an action concerning latent construction defects in improvement to real property under the following conditions: “(1) if one potentially liable for a construction defect represents, while the limitations period is still running, that all actionable damage has been or will be repaired, thus making it unnecessary to sue, (2) the plaintiff reasonably relies on this representation to refrain from bringing a timely action, (3) the representation proves false after the limitations period has expired, and (4) the plaintiff proceeds diligently once the truth is discovered….”

(Emphasis added.)

The Gundogdu court determined that equitable estoppel did not apply because the undisputed facts showed that the defendant actually “refused to make any repairs” after being confronted with alleged defects and stated this intent before the expiration of the limitations period. Thus the doctrine of equitable estoppel in the context of construction defects did not apply. The Gundogdu also noted that plaintiffs were made aware of the defects “at the latest by February 11, 2004” and “did not file their complaint until April 2006.” Under these facts, the Gundogdu court concluded, “plaintiffs [did not] proceed diligently once the truth was discovered.”

Gundogdu’s application of equitable estoppel appears to be limited to an action concerning latent construction defects in improvement to real property. This court will not extend its application to the case here which involves the nonpayment of a construction agreement.

Accordingly, defendant Leffler’s alternative motion for summary adjudication of the second cause of action in plaintiff Cambra’s complaint is DENIED.

III. Defendant Leffler’s motion for summary adjudication of the third cause of action [account stated] is DENIED.

“An account stated is an agreement, based on prior transactions between the parties, that the items of an account are true and that the balance struck is due and owing. [Citation.] To be an account stated, ‘it must appear that at the time of the statement an indebtedness from one party to the other existed, that a balance was then struck and agreed to be the correct sum owing from the debtor to the creditor, and that the debtor expressly or impliedly promised to pay to the creditor the amount thus determined to be owing.’ [Citation.] The agreement necessary to establish an account stated need not be express and is frequently implied from the circumstances. When a statement is rendered to a debtor and no reply is made in a reasonable time, the law implies an agreement that the account is correct as rendered. [Citation.]” (Maggio v. Neal (1987) 196 Cal.App.3d 745, 752 – 753 (Maggio).) “The key element in every context is agreement on the final balance due.” (Maggio, supra, 196 Cal.App.3d at p. 753; emphasis added; see also H. Russell Taylor’s Fire Prevention Service, Inc. v. Coca-Cola Bottling Corp. (1979) 99 Cal.App.3d 711, 726 – 727—“ To constitute an account stated, it must appear that at the time of the statement an indebtedness from one party to the other existed, that a balance was then struck and agreed to be the correct sum owing from the debtor to the creditor, and that the debtor expressly or impliedly promised to pay to the creditor the amount thus determined to be owing. In addition, the amount agreed upon must be either specifically stated or readily calculable.”.)

In addition to arguing that the statute of limitation bars the third cause of action, defendant Leffler argues the third cause of action for account stated fails because there was never an agreement that the balance due was $16,013.35. However, a triable issue of material fact exists because plaintiff Cambra proffers evidence in opposition that there was an agreement.

For the reasons discussed above, defendant Leffler’s alternative motion for summary adjudication of the third cause of action in plaintiff Cambra’s complaint is DENIED.

IV. Defendant Leffler’s motion for summary adjudication of the fourth cause of action [book account] is DENIED.

The term “book account” means a detailed statement which constitutes the principal record of one or more transactions between a debtor and a creditor arising out of a contract or some fiduciary relation, and shows the debits and credits in connection therewith, and against whom and in favor of whom entries are made, is entered in the regular course of business as conducted by such creditor or fiduciary, and is kept in a reasonably permanent form and manner and is (1) in a bound book, or (2) on a sheet or sheets fastened in a book or to backing but detachable therefrom, or (3) on a card or cards of a permanent character, or is kept in any other reasonably permanent form and manner.

(Code Civ. Proc. §337a.)

It is not entirely clear to this court, but the court understands defendant’s argument to be that plaintiff Cambra cannot escape the two year statute of limitations by converting his breach of oral agreement into a book account cause of action. Even so, as discussed above, the court finds a triable issue with regard to whether the doctrine of equitable estoppel applies.

Accordingly, defendant Leffler’s alternative motion for summary adjudication of the fourth cause of action in plaintiff Cambra’s complaint is DENIED.

V. Defendant Leffler’s motion for summary adjudication as to plaintiff Cambra’s claim for 2% per month interest and attorney fees pursuant to Business and Professions Code section 7108.5 and/or Civil Code sections 3260 and 3260.1 is DENIED.

In the notice of motion, defendant Leffler asks this court, in the alternative, for summary adjudication of plaintiff Cambra’s claim for 2% per month interest and attorney fees pursuant to Business & Professions Code section 7108.5 and/or Civil Code sections 3260 and 3260.1.

Summary adjudication of such issues is not available. Code of Civil Procedure section 437c, subdivision (f)(1) states, “A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if that party contends that the cause of action has no merit or that there is no affirmative defense thereto, or that there is no merit to an affirmative defense as to any cause of action, or both, or that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Emphasis added.)

The statute does not authorize the relief being sought. The language of the summary adjudication statute suggests a claim for damages may be summarily adjudicated only if it pertains to punitive damages. This is so because of the reference to the punitive damages statute, Civil Code section 3294. To read it otherwise would render the reference to Civil Code section 3294 superfluous.

Even the practice guide authors limit this type of summary adjudication to a claim for punitive damages. (Weil & Brown, CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2015) ¶¶10:41 – 10:43, p. 10-12 citing Catalano v. Superior Court (2000) 82 Cal.App.4th 91 (Catalano).) In Catalano, the court reiterated the policy behind summary adjudication motions and stated, “The purpose of the enactment of Code of Civil Procedure section 437c, subdivision (f) was to stop the practice of piecemeal adjudication of facts that did not completely dispose of a substantive area.” (Catalano, supra, 82 Cal.App.4th at p. 97.)

Such an interpretation is also supported by Code of Civil Procedure section 437c, subdivision (t) which states, in relevant part, “Notwithstanding subdivision (f), a party may move for summary adjudication of a legal issue or a claim for damages other than punitive damages that does not completely dispose of a cause of action, affirmative defense, or issue of duty pursuant to this subdivision.” (Emphasis added.)

Defendant Leffler requests relief which does not completely dispose of plaintiff Cambra’s cause of action, claim for damages, or issue of duty. The only avenue for such relief is to comply with Code of Civil Procedure section 437c, subdivision (t) which defendant has not done here.