Case Name: Shahkarami v. Baig, et al.
Case No.: 2014-1-CV-275135, consolidated with 2016-1-CV-295525

After full consideration of the evidence, the separate statements submitted by the parties, and the authorities submitted by each party, the court makes the following rulings:

Plaintiff Mina Shahkarami, individually and as Trustee of the 2011 Mina Shahkarami Revocable Trust, alleges that she is the victim of a fraudulent scheme perpetrated by defendants Niaz Baig, Villa Developer, Inc. (“VD, Inc.”), and Villa Developers & Investment, LLC (“VDI, LLC”) to evade the requirements of California’s contractor licensing and construction laws and extract approximately $327,700 for illegal and unlicensed contractor services related to the construction of her home in Mountain View (the “Project”). (Complaint, ¶¶ 1-4, 13-14, 19-20.)

On December 31, 2014, plaintiff filed the operative complaint, alleging causes of action for: (1) recovery of compensation paid pursuant to Business & Professions Code section 7031; (2) violations of the Consumers Legal Remedies Act (“CLRA”), Civil Code section 1750, et seq.; (3) unfair business practices in violation of Business & Professions Code section 17200, et seq.; (4) violations of Business & Professions Code sections 7160 and 7161; (5) negligence; (6) rescission and restitution; (7) breach of contract; and (8) declaratory relief.

Plaintiff moved for summary adjudication of the first through third causes of action and her entitlement to prejudgment interest, asserting that the defendants were not licensed contractors, and thus Plaintiff is entitled to recover all compensation paid pursuant to Business and Professions Code section 7031, and acted as unlicensed contractors and misrepresented their certifications as contractors. On April 21, 2016, the Court denied Plaintiff’s motion, stating:

Business and Professions Code section 7031, subdivision (b), creates a private right of action that entitles a consumer who “utilizes the services of an unlicensed contractor … to recover all compensation paid,” without regard to whether the contractor breached a contract or performed defective work. (See White v. Cridlebaugh (2009) 178 Cal.App.4th 506, 519 [discussing the Legislature’s determination that “deterrence can best be realized by compelling violators to return all compensation received from providing their unlicensed services”].) Section 7031 “will be applied, regardless of equitable considerations, even when the person for whom the work was performed has taken calculated advantage of the contractor’s lack of licensure. Thus, it matters not that the beneficiary of the contractor’s labors knew the contractor was unlicensed.” (MW Erectors, Inc. v. Niederhauser Ornamental and Metal Works Co., Inc. (2005) 36 Cal.4th 412, 424.)

It is undisputed that neither Baig nor VD, Inc. was a licensed contractor at the time the Project was performed. (See Defendants’ Separate Statement of Undisputed and Disputed Material Facts, no. 2.) The parties dispute, however, whether the defendants actually served as “contractors” on the Project.

The statute provides that
a contractor is 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, improve, move, wreck or demolish any building, … or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or other structures or works in connection therewith, or the cleaning of grounds or structures in connection therewith, … and whether or not the performance of work herein described involves the addition to, or fabrication into, any structure, project, development or improvement herein described of any material or article of merchandise.

(Bus. & Prof. Code, § 7026.) “ ‘Contractor’ includes subcontractor and specialty contractor.” (Ibid.)

Only “those who actually perform or supervise the performance of construction services” are contractors under the statute; “[t]hus, a person or company in the business of supplying equipment or hiring out laborers to be supervised by others is not deemed to act in the capacity of a contractor and is not required to have a license.” (Contractors Labor Pool, Inc. v. Westway Contractors, Inc. (1997) 53 Cal.App.4th 152, 165.) In addition, a “construction manager” who merely “act[s] as the Owner’s agent with respect to the various parties connected with the development of the project” and has “no responsibility or authority to perform any construction work on the project, or to enter into any contract or subcontract for the performance of such work” is not a contractor. (Fifth Day, LLC v. Bolotin (2009) 172 Cal.App.4th 939, 948.)

To show that Baig and VD served as contractors on the Project, plaintiff submits her own declaration stating in conclusory fashion that defendants provided “construction contractor services,” along with the contract governing the parties’ relationship. The contract indicates that the “Project Description” is to “[p]rovide labor and material to construct a new 3,150 square feet single family residence.” (Plaintiff’s Compendium of Evidence, Ex. 1.) Under “Scope of Work,” it states that

Villa Developers and Investment (VDI) will provide labor and material to construct a new single family residence in the City of Mountain View. VDI will demolish the existing house upon Client obtaining the Demolition Permit from the City of Mountain View. VDI will prepare the site for construction and erect a fence in the front of the property. The construction work will be performed according to the designated structure in the approved plans.

(Ibid.) Clearly, the scope of work pertains to “demolish[ing] any building,” “the erection of scaffolding or other structures or works in connection therewith, or the cleaning of grounds or structures in connection therewith,” which are services provided by a contractor. (Bus. & Prof. Code, § 7026.)

However, the contract repeatedly identifies “Villa Developers and Investment, LLC” as the builder, with Baig signing as the “Project Manager.” (Plaintiff’s Compendium of Evidence, Ex. 1.) Plaintiff submits no evidence regarding whether VDI, LLC was a licensed contractor. Nor does she submit evidence of VD, Inc. or Baig’s role on the Project, other than Baig’s “Project Manager” title, which is not elucidating given the rule stated in Fifth Day. While plaintiff alleges that Baig does business as VD, Inc. and VDI, LLC and that Baig and these entities are alter egos of one another, she introduces no evidence on either point. Nor does she explain why she seeks summary adjudication against Baig and VD, Inc. only, when VDI, LLC is identified by the contract as the builder and is also a defendant to this action.

Consequently, plaintiff fails to meet her initial burden to show that Baig and VD, Inc. served as contractors on the project.

(April 21, 2016 order re: Pl.’s motion for summary adjudication, pp.2:22-28, 3:1-27, 4:1-25.)

Plaintiff now again moves for summary adjudication of the first and third causes of action of her complaint, and additionally for summary adjudication of the first amended cross-complaint.

Plaintiff’s burden of proof for summary judgment

The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact—one sufficient to support the position of the party in question that no more is called for. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851.) Plaintiffs moving for summary judgment bear the burden of persuasion that each element of the cause of action in question has been proved, and hence that there is no defense thereto. (Cal. Code Civ. Proc. § 437c.) Plaintiffs, who bear the burden of proof at trial by preponderance of evidence, therefore “must present evidence that would require a reasonable trier of fact to find the underlying material fact more likely than not—otherwise he would not be entitled to judgment as a matter of law, but would have to present his evidence to a trier of fact.” (Aguilar, supra, 25 Cal.4th at p.851.)

Plaintiff motion for summary adjudication of the first and third causes of action is DENIED.

Code of Civil Procedure section 437c, subdivision (f)(2) states that “[a] party shall not move for summary judgment based on issues asserted in a prior motion for summary adjudication and denied by the court unless that party establishes, to the satisfaction of the court, newly discovered facts or circumstances or a change of law supporting the issues reasserted in the summary judgment motion.” (Code Civ. Proc. § 437c, subd. (f)(2).) As defendants Baig, VD, Inc. and VDI LLC note, the instant motion is based on issues asserted in the prior motion for summary adjudication and denied by the Court. Plaintiff does not attempt to establish newly discovered facts or circumstances or a change of law. The motion for summary adjudication of the first and third causes of action of Plaintiff’s complaint is DENIED.

Cross-defendant’s burden on summary judgment

“A defendant seeking summary judgment must show that at least one element of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action. … The burden then shifts to the plaintiff to show there is a triable issue of material fact on that issue.” (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72; internal citations omitted; emphasis added.)

“The ‘tried and true’ way for defendants to meet their burden of proof on summary judgment motions is to present affirmative evidence (declarations, etc.) negating, as a matter of law, an essential element of plaintiff’s claim.” (Weil et al., Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2007) ¶ 10:241, p.10-91, citing Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 334; emphasis original.) “The moving party’s declarations and evidence will be strictly construed in determining whether they negate (disprove) an essential element of plaintiff’s claim ‘in order to avoid unjustly depriving the plaintiff of a trial.’” (Id. at § 10:241.20, p.10-91, citing Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107.)

“Another way for a defendant to obtain summary judgment is to ‘show’ that an essential element of plaintiff’s claim cannot be established. Defendant does so by presenting evidence that plaintiff ‘does not possess and cannot reasonably obtain, needed evidence’ (because plaintiff must be allowed a reasonable opportunity to oppose the motion.) Such evidence usually consists of admissions by plaintiff following extensive discovery to the effect that he or she has discovered nothing to support an essential element of the cause of action.” (Id. at ¶ 10:242, p.10-92, citing Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855.)

Plaintiff’s requests for judicial notice

Plaintiff requests judicial notice of certain certificates of nonlicensure issued by the Construction State License Board. This is a proper request for judicial notice. (Evid. Code § 452, subds. (c, (h).) Plaintiff’s request for judicial notice is GRANTED.

Plaintiff fails to meet her initial burden to demonstrate the existence of a joint venture between Juarez and defendants.

Plaintiff asserts that the defendants’ defenses and cross-complainants’ causes of action are without merit because these parties “entered into a written joint venture contract to provide jointly to Plaintiff construction contractor services to build Plaintiff’s home while such Defendants together were not properly licensed at all as a contractor as required by California law…” (Pl.’s memorandum of points and authorities in support of motion for summary adjudication (“Pl.’s memo”), p.1:1-9.) As Plaintiff states, “[a] joint venture is an undertaking by two or more persons jointly to carry out a single business enterprise for profit.” (580 Folsom Associates v. Prometheus Development Co. (1990) 223 Cal.App.3d 1, 15.) “The elements necessary for its creation are: (1) joint interest in a common business; (2) with an understanding to share profits and losses; and (3) a right to joint control.” (Id. at pp.15-16; see also Jacobs v. Locatelli (2017) 8 Cal.App.5th 317, 328, fn. 10.)

To demonstrate a joint venture between the defendants and cross-complainants, Plaintiff presents: the declaration of Baig in opposition to the prior motion for summary adjudication; Baig’s responses to special interrogatories; Juarez’ response to form interrogatories; the cross-complaint; business records of Darryl Mueller Construction Inc. indicating that Villa Development ordered and paid for work done by Darryl Mueller Construction; checks indicating that Villa Developers & Investment, LLC paid for work performed by Enrique Medina; business records of Star Quality Concrete indicating that Villa Developers ordered and paid for work done by Star Quality Concrete; business records of Trench Plate Rental Company Inc. indicating that Villa Developers ordered and paid for work done by Trench Plate Rental Company; checks indicating payments made by Villa Developers & Investment LLC to Alan Garcia; checks indicating payments made by Villa Developers & Investment LLC to Jose Chavac; a check indicating a payment made by Villa Developers & Investment LLC to Cesar Chavez; a check indicating a payment made by Villa Developers & Investment LLC to Jesus Chavez; a check indicating a payment made by Villa Developers & Investment LLC to Alfonso Trevino; a check indicating a payment made by Villa Developers & Investment LLC to Antonio Soriano; checks indicating payments made by Villa Developers & Investment LLC to Juan Rivera; checks indicating payments made by Villa Developers & Investment LLC to Ramon Sanchez; a check indicating a payment made by Villa Developers & Investment LLC to Carlos Bravo; checks indicating payment from Plaintiff to Baig; checks indicating payments made by Villa Developers & Investment LLC to Jesus Juarez; checks indicating payments made by Villa Developers & Investment LLC to Donald Browne Insurance; a letter from the Contractors State License Board indicating that on July 17, 2017, a diligent search of the records for the Board was made and there was no record found to indicate that the parties had entered into a joint venture agreement and were licensed as such; a letter from the Contractors State License Board indicating that on January 16, 2018, a diligent search of the records for the Board was made and there was no record found to indicate that Villa Developers & Investment LLC was licensed as a California contractor; a letter from the Contractors State License Board indicating that on May 6, 2015, a diligent search of the records for the Board was made and there was no record found to indicate that “Niaz Baig Villa Developer Inc.” was licensed as a California contractor; and, screenshots of Villa Developers & Investment LLC’s website. (See Pl.’s compendium of evidence in support of motion for summary adjudication, exhs. 1-25; see also evidence cited by Pl.’s separate statement in support of motion for summary adjudication, issue number 1, undisputed material facts nos. (“UMFs”) 1-4.)

Despite the over 450 pages of evidence, Plaintiff does not demonstrate that Juarez has an understanding with the defendants to share profits and losses, or that Juarez had a right to joint control defendants. If anything, it is clear that Villa Developers & Investments LLC primarily coordinated the payments for services rendered on the project. Plaintiff also fails to demonstrate that the defendants shared in Juarez’s profits or indicated that it would be responsible for any losses. Although there is a project proposal for Plaintiff that lists Villa Developers & Investment, Villa Developer Inc. and Icon Innovation Inc. on the proposal, this is not equivalent to an agreement between defendants and Juarez to share profits and losses and jointly control each other. In Connor v. Great Western Sav. & Loan Ass’n (1968) 69 Cal.2d 850, a case cited by Plaintiff in support of its motion, the California Supreme Court specifically stated that even though “Great Western and Conejo combined their property, skill, and knowledge to carry out the tract development, … shared in the control of the development, … anticipated receiving substantial profits therefrom, and … cooperated with each other in the development,” this did not demonstrate that there was a joint interest, that Great Western and Conejo agreed to share in the profits or losses that the other was to realize or suffer. (Id. at p.863 (stating that “[a]lthough the profits of each were dependent on the overall success of the development, neither was to share in the profits or the losses that the other might realize or suffer… [and a]lthough each received substantial payments as seller, lender, or borrower, neither had an interest in the payments received by the other… [u]nder these circumstances, no joint venture existed”).) Plaintiff fails to meet her initial burden to demonstrate the existence of a joint venture between Juarez and defendants. Accordingly, the motion for summary adjudication of the first amended cross-complaint is DENIED.

The Court will prepare the order.