Court Opinion

ID: 4668975
Source: CourtListenerOpinion
Date Created: 2021-03-17 23:02:15.89055+00
Date Added: 2024-06-11T07:50:29.335841
License: Public Domain

Filed 3/17/21 Kivel v. McInerney CA4/1
                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                 DIVISION ONE

                                         STATE OF CALIFORNIA

 SCOTT KIVEL et al.,                                                  D074173

      Plaintiffs, Cross-defendants and                                (Super. Ct. No. 37-2016-
 Appellants,                                                          00028099)

           v.

 PATRICK MCINERNEY et al.,

      Defendants, Cross-complainants
 and Appellants.

         APPEALS from judgment and orders of the Superior Court of San
Diego County, Katherine Bacal, Judge. Affirmed in part, reversed in part,
and remanded with directions.

         Scott N. Kivel, in pro. per., and for Plaintiff, Cross-defendant, and
Appellant Lia Lund.

                                                             1
      Schwerdtfeger Law Group, Sean D. Schwerdtfeger and Catherine L.
Coughlin for Defendants, Cross-complainants, and Appellants.

      Defendants Patrick McInerney (Patrick), McInerney & Co, Inc. (M&C),
McInerney & Associates, Inc. (M&A), and McInerney Architects (together
Defendants) appeal a judgment finding M&C and Patrick liable for
reimbursement under Business and Professions Code section 7031,

subdivision (b)1 (§ 7031(b)) for amounts plaintiffs Scott Kivel and Lia Lund
(Plaintiffs) paid to M&C for construction of a single family residence, and a
postjudgment order adding M&A as a judgment debtor. The trial court found
that M&C was not a licensed contractor at all times when it performed
services for Plaintiffs that required a contractor’s license. On appeal,
Defendants contend that the trial court erred by: (1) granting Plaintiffs’
motion for summary adjudication of their section 7031(b) cause of action
against M&C; (2) granting Plaintiffs’ motion for a nonsuit on Defendants’
cross-claims for compensation for architectural services provided to Plaintiffs
by M&C and Patrick and instructing the jury that Patrick was not a licensed
architect when he performed services for Plaintiffs that required an
architect’s license; (3) finding that Patrick was liable for the judgment
amount as an alter ego of M&C; (4) granting Plaintiffs’ request to add, and
amending the judgment to add, M&A as a judgment debtor, as a successor
corporation to M&C; and (5) awarding Plaintiffs attorney fees pursuant to
Code of Civil Procedure section 1029.8 (§ 1029.8). Plaintiffs cross-appeal,
contending that the court erred by denying their request for an award of

1     All statutory references are to the Business and Professions Code
unless otherwise specified.

                                       2
prejudgment interest pursuant to Civil Code section 3287, subdivision (a)
(§ 3287(a)).

      We conclude that the trial court erred by awarding Plaintiffs attorney
fees pursuant to section 1029.8 and denying Plaintiffs’ request for
prejudgment interest pursuant to section 3287(a). Accordingly, we reverse
the judgment and orders to that extent, affirm them in all other respects, and
remand the matter with directions that the court issue a new order and enter
a new judgment reflecting our decision.

               FACTUAL AND PROCEDURAL BACKGROUND

      In June 2013, Plaintiffs hired M&C, a corporation wholly owned by
Patrick, to design a new single-family residence for a property that Plaintiffs
had recently purchased in La Jolla. At that time, neither M&C nor Patrick

was licensed in California to perform architectural services.2

      In March 2014, Plaintiffs and M&C agreed that M&C would serve as
Plaintiffs’ general contractor in the construction of their new residence. At
that time, neither M&C nor Patrick was licensed in California to perform
contractor services. M&C then began performing general contractor services,
including soliciting bids from subcontractors, hiring a subcontractor, and
filing a permit application for the demolition or deconstruction of the existing
residence on the property. In the fall of 2015, with construction of the new
residence not yet complete, a dispute arose between Plaintiffs and M&C,
which led to M&C’s discontinuation of its general contractor services on
Plaintiffs’ new residence.

2    Patrick was apparently registered at that time as an architect in the
United Kingdom.

                                       3
      In August 2016, Plaintiffs filed the instant action against Defendants,
alleging causes of action for: (1) disgorgement of architect’s fees;
(2) disgorgement of contractor’s fees; (3) breach of architect contract;
(4) breach of construction contract; (5) negligence; (6) intentional
misrepresentation; (7) breach of fiduciary duties; and (8) accounting. In
September, Defendants filed a cross-complaint against Plaintiffs. In October,
Defendants filed their operative amended cross-complaint, alleging causes of
action for: (1) breach of oral design contract; (2) breach of oral construction
contract; (3) quantum meruit - design services; and (4) quantum meruit -
construction contract.

      Plaintiffs filed a motion for summary adjudication on the second cause
of action of their complaint as to only M&C and on the second and fourth
causes of action of Defendants’ amended cross-complaint. The court issued
an order granting Plaintiffs’ motion for summary adjudication, finding that
there were no triable issues of material fact regarding whether M&C was
licensed as a contractor at all times during its performance of contractor
services and that M&C was not so licensed at all times. The court therefore
found that under section 7031(b), Plaintiffs were entitled to reimbursement
(or disgorgement) of all amounts that they had paid to M&C for construction
services and materials.

      During November and December 2017, a jury trial was conducted on
the remaining causes of action of Plaintiffs’ complaint and Defendants’
amended cross-complaint. During trial, Plaintiffs moved for a judgment of
nonsuit on Defendants’ first and third cross-claims. The court granted
Plaintiffs’ motion and thereafter instructed the jury that Patrick had
performed architectural services without a California architect’s license. The
jury returned a special verdict, answering 42 questions on the remaining

                                        4
causes of action alleged in Plaintiffs’ complaint and Defendants’ amended
cross-complaint. In particular, the jury found that M&C had breached its
construction contract with Plaintiffs and overcharged Plaintiffs by $325,000.
The jury also found that there were no construction defects and rejected
Plaintiffs’ causes of action against Defendants for negligence, intentional
misrepresentation, and breach of fiduciary duty. In a bifurcated bench trial,
the court subsequently found that Patrick was an alter ego of M&C and
therefore, personally liable for the judgment amount. Plaintiffs subsequently
elected the remedy of reimbursement under their section 7031(b) cause of
action in lieu of the damages awarded by the jury for their cause of action for
breach of the construction contract.

      On February 28, 2018, the trial court entered judgment for Plaintiffs
and against M&C and Patrick in the amount of $2,732,627.87 on Plaintiffs’
section 7031(b) cause of action, reflecting the total amount paid by Plaintiffs
to M&C. The court subsequently awarded Plaintiffs attorney fees in the
amount of $155,008.50 and costs in the amount of $52,689.13. The court also
granted Plaintiffs’ motion to add M&A as a judgment debtor. The court
denied Plaintiffs’ request for an award of prejudgment interest pursuant to
section 3287(a). On January 25, 2019, the court entered a second amended
judgment against M&C, Patrick, and M&A for a total amount of
$2,940,325.50. That judgment did not award Defendants any relief on their
amended cross-complaint.

      Defendants filed notices of appeal challenging the February 28, 2018
judgment, the August 3, 2018 order awarding Plaintiffs attorney fees, and
the January 25, 2019 second amended judgment. Plaintiffs filed a notice of
cross-appeal challenging the November 9, 2018 order denying their motion
for prejudgment interest.

                                       5
                                 DISCUSSION

                           DEFENDANTS’ APPEAL

                                        I

        Order Granting Plaintiffs’ Motion for Summary Adjudication
                 of Their Section 7031(b) Cause of Action
      Defendants contend that the trial court erred by granting Plaintiffs’
motion for summary adjudication against M&C on Plaintiffs’ second cause of
action for reimbursement under section 7031(b) for amounts they paid to
M&C for construction services and materials. In particular, Defendants
argue that a motion for summary adjudication is unavailable under Code of
Civil Procedure section 437c, subdivision (f)(1) (§ 437c(f)(1)) unless the motion
disposes of the cause of action against all defendants and not just a single
defendant. They also contend that the court erred by finding that there were
no triable issues of material fact as to Plaintiffs’ second cause of action and
the second and fourth causes of action of Defendants’ amended cross-
complaint and that Plaintiffs were entitled to summary adjudication on those
causes of action.

                                        A

      Section 7031 generally. The Contractors State License Law (CSLL)
(§ 7000 et seq.) “is a comprehensive legislative scheme governing the
construction business in California. [It] provides that contractors performing
construction work must be licensed unless exempt. [Citations.] ‘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 is] designed to

                                        6
protect the public from incompetent or dishonest providers of building and
construction services. [Citation.]” (White v. Cridlebaugh (2009) 178
Cal.App.4th 506, 517 (White).)

      The CSLL’s “statutory scheme encourages licensure by subjecting
unlicensed contractors to criminal penalties and civil remedies. [Citation.]
The civil remedies ‘affect the unlicensed contractor’s right to receive or retain
compensation for unlicensed work.’ [Citation.] The hiring party is entitled to
enforce these remedies through a defensive ‘shield’ or an affirmative ‘sword.’
[Citation.]” (Alatriste v. Cesar’s Exterior Designs, Inc. (2010) 183 Cal.App.4th
656, 664 (Alatriste).) “The shield, contained in section 7031(a), was enacted
more than 70 years ago, and provides that a party has a complete defense to
claims for compensation made by a contractor who performed work without a
license, unless the contractor meets the requirements of the statutory

substantial compliance doctrine. [Citation.]”3 (Alatriste, at pp. 664-665,
fn. omitted.) Section 7031, subdivision (a) (§ 7031(a)), the “shield” provision,
currently provides:

         “[N]o 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

3     Section 7031, subdivision (e), “the substantial compliance exception,
provides relief only in very narrow specified circumstances . . . .” (Alatriste,
supra, 183 Cal.App.4th at p. 665.) Because Defendants do not assert on
appeal that the substantial compliance exception applies in this case, we do
not discuss its provisions or its potential application to the performance of
contracting acts by M&C.

                                        7
         performance of that act or contract regardless of the merits
         of the cause of action brought by the person . . . .”

      “The California Supreme Court has long given a broad, literal
interpretation to section 7031(a)’s shield provision. [Citation.] The court has
held that section 7031(a) applies even when the person for whom the work
was performed knew the contractor was unlicensed. [Citation.]” (Alatriste,
supra, 183 Cal.App.4th at p. 665.) In MW Erectors, Inc. v. Niederhauser
Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412 (MW Erectors),
the court stated: “[S]ection 7031(a) bars a person from suing to recover
compensation for any work he or she did under an agreement for services
requiring a contractor’s license unless proper licensure was in place at all
times during such contractual performance.” (Id. at p. 419.) Because the
Legislature has determined that the importance of deterring unlicensed
persons from engaging in the contracting business outweighs any harshness
between the parties, the bar of section 7031(a) applies regardless of the
equities. (Id. at p. 423.) “In denying recovery to unlicensed contractors
courts have rationalized the harsh impact on some competent, but
unlicensed, persons by deferring to the legislative determination that
deterrence outweighs the cumulative effect of the penalty suffered by the
contractor and the unjust enrichment obtained by the property owner.”
(Executive Landscape Corp. v. San Vicente Country Villas IV Assn. (1983) 145
Cal.App.3d 496, 498.)

      “In 2001, the Legislature amended section 7031 to add a sword remedy
to the hiring party’s litigation arsenal. That sword remedy, contained in
section 7031(b), currently reads: ‘Except as provided in subdivision (e), a
person who utilizes the services of an unlicensed contractor may bring an
action in any court of competent jurisdiction in this state to recover all

                                        8
compensation paid to the unlicensed contractor for performance of any act or
contract.’ ” (Alatriste, supra, 183 Cal.App.4th at p. 666, italics added.) In
White, the court concluded that the Legislature intended that section 7031(a)
and section 7031(b) be interpreted in a consistent manner so that the same
remedy applies regardless of whether the unlicensed contractor is the
plaintiff or defendant. (White, supra, 178 Cal.App.4th at pp. 519-520; see
also Alatriste, at p. 666.) “In short, those who have not paid [the unlicensed
contractor] are protected from being sued for payment and those who have
paid may recover all compensation delivered.” (White, at p. 520.) Further,
“section 7031(b) applies to allow full reimbursement even if the contractor
obtained a license after he or she began performing the work.” (MW Erectors,
supra, 36 Cal.4th at p. 429, fn. 8; Alatriste, at p. 671.) “[S]ection 7031(b)
provides a reimbursement right for all amounts paid to an unlicensed
contractor if the contractor was unlicensed at any time during the
performance . . . .” (Alatriste, at p. 669, italics added.) Because “the
Legislature intended that section 7031(b) be a mirror image of section
7031(a), . . . section 7031(b) does not permit an offset for work performed
after a license is obtained . . . .” (Alatriste, at p. 672.) “[T]he authorization of
recovery of ‘all compensation paid to the unlicensed contractor for
performance of any act or contract’ means that unlicensed contractors are
required to return all compensation received without reductions or offsets for
the value of material or services provided.” (White, at pp. 520-521.) In
addition, “under section 7031(b), a party is entitled to reimbursement for
amounts paid to an unlicensed contractor even if the party knew the
contractor was unlicensed.” (Alatriste, at p. 668.) From an equitable
viewpoint, the reimbursement remedy provided by section 7031(b) could
therefore, under some circumstances, be considered draconian.

                                         9
                                        B

      Summary adjudication generally. “Motions for summary adjudication
are procedurally identical to motions for summary judgment [citation], and
our review of rulings on those motions is de novo [citation].” (Dunn v. County
of Santa Barbara (2006) 135 Cal.App.4th 1281, 1290 (Dunn).) Under section
437c(f)(1), “[s]ummary adjudication is warranted only if the motion
completely disposes of a cause of action, an affirmative defense, a claim for
damages, or an issue of duty.” (Dunn, at p. 1290.)

      “The purpose of the law of summary judgment [or summary
adjudication] is to provide courts with a mechanism to cut through the
parties’ pleadings in order to determine whether, despite their allegations,
trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).) Aguilar clarified the
standards that apply to motions for summary judgment and summary
adjudication. (Id. at pp. 843-857.) Generally, if all of the papers submitted
by the parties show that there is no triable issue of material fact and that the
“ ‘moving party is entitled to a judgment [or summary adjudication] as a
matter of law,’ [citation]” the court must grant the motion for summary
judgment or summary adjudication. (Id. at p. 843.) Aguilar stated:

         “If a party moving for summary judgment [or summary
         adjudication] in any action . . . would prevail at trial
         without submission of any issue of material fact to a trier of
         fact for determination, then he should prevail on summary
         judgment [or summary adjudication]. In such a case, . . .
         the ‘court should grant’ the motion ‘and avoid a . . . trial’
         rendered ‘useless’ by nonsuit or directed verdict or similar
         device.” (Aguilar, supra, 25 Cal.4th at p. 855.)

                                        10
      On appeal, the appellant has the burden to show that the trial court
erred in granting a motion for summary judgment or summary adjudication.
(Bains v. Moores (2009) 172 Cal.App.4th 445, 455.) It is therefore appellant’s
burden to affirmatively demonstrate error by showing that there are triable
issues of material fact that preclude summary judgment or summary
adjudication. (Ibid.) “On appeal after a motion for summary judgment [or
summary adjudication] has been granted, we review the record de novo,
considering all the evidence set forth in the moving and opposition papers
except that to which objections have been made and sustained.” (Guz v.
Bechtel National, Inc. (2000) 24 Cal.4th 317, 334; see Saelzler v. Advanced
Group 400 (2001) 25 Cal.4th 763, 767.) “On appeal, we exercise ‘an
independent assessment of the correctness of the trial court’s ruling, applying
the same legal standard as the trial court in determining whether there are
any genuine issues of material fact or whether the moving party is entitled to
judgment [or summary adjudication] as a matter of law.’ [Citation.] ‘The
appellate court must examine only papers before the trial court when it
considered the motion, and not documents filed later. [Citation.] Moreover,
we construe the moving party’s affidavits strictly, construe the opponent’s
affidavits liberally, and resolve doubts about the propriety of granting the
motion in favor of the party opposing it.’ ” (Seo v. All-Makes Overhead Doors
(2002) 97 Cal.App.4th 1193, 1201-1202.) Although we generally review de
novo, or independently, a trial court’s ruling on a motion for summary
judgment or summary adjudication, we apply the abuse of discretion
standard in reviewing the trial court’s rulings on a party’s evidentiary
objections. (Powell v. Kleinman (2007) 151 Cal.App.4th 112, 122; Carnes v.
Superior Court (2005) 126 Cal.App.4th 688, 694.)

                                      11
                                        C

      Procedural background. The second cause of action of Plaintiffs’
complaint alleged that in March 2014 Patrick represented to Plaintiffs that
Defendants were general contractors duly licensed in California. It alleged
that in April 2014 Plaintiffs entered into an oral contract with Defendants for
construction of Plaintiffs’ new single-family residence on their La Jolla
property. It further alleged that because Defendants were not duly licensed
contractors in California when they performed contractor services from
March 2014 and thereafter, under section 7031 Defendants must disgorge all
sums Plaintiffs paid them, “which amount is at least $2,732,627.87, plus
interest.”

      Defendants’ amended cross-complaint alleged causes of action against
Plaintiffs for breach of oral construction contract (second cause of action) and
quantum meruit based on the construction contract (fourth cause of action).
Their second cause of action alleged that on or about April 30, 2014, M&C
and Plaintiffs entered into an oral contract for M&C to provide general
contracting services in the construction of Plaintiffs’ new residence “on a cost
plus contract basis” (i.e., costs of construction plus 15 percent). It further
alleged that Plaintiffs breached the oral contract by failing to pay M&C for
the construction services rendered and materials supplied, causing M&C
damages of at least $764,000. Defendants’ fourth cause of action alleged that
the reasonable value of the materials and services provided by M&C to
Plaintiffs for which Plaintiffs had not paid was at least $764,000 and that it
would be inequitable to unjustly enrich Plaintiffs with materials and services
in that amount.

                                        12
      Plaintiffs filed a motion for summary adjudication of their second cause
of action against M&C and the second and fourth causes of action alleged
against them in Defendants’ amended cross-complaint. Plaintiffs argued that
there were no triable issues of material fact as to their allegation that M&C
did not hold a valid contractor’s license at all times during its performance of
their oral construction contract and therefore, M&C was liable under section
7031(b) for disgorgement of all compensation that Plaintiffs had paid to it.
Plaintiffs likewise argued that there were no triable issues of material fact as
to their allegation that M&C did not hold a valid contractor’s license at all
times during its performance of their oral construction contract and
therefore, pursuant to section 7031(a), M&C could not maintain an action to
recover compensation for its acts. In support of their motion for summary
adjudication, Plaintiffs submitted a memorandum of points and authorities;
declarations of Kivel, Lund, and their counsel Christopher A. Elliott; exhibits
to those declarations; a separate statement of undisputed material facts; and
a request for judicial notice.

      In their separate statement of undisputed material facts, Plaintiffs
asserted that it was undisputed that in March 2014 M&C requested bids for
demolition of the existing home on Plaintiffs’ property and for construction of

their new home.4 They asserted that demolition of the existing home began

4     Plaintiffs also asserted that it was undisputed that on March 24, 2014,
Patrick applied for a combination building permit for their new home. They
also asserted that on April 3, 2014, M&C hired someone to excavate the gas
line on Plaintiffs’ property. In support of those assertions, Plaintiffs
submitted an email dated April 1, 2014, from Patrick to Lund, in which he
stated that he had met with SDG&E and had “organized for someone to be at
the house tomorrow to unearth the gas line at the sidewalk and the meter.”
He stated that SDG&E would then return to the site to cut the gas line and
stop the gas service at the sidewalk and remove the meter.
                                       13
in April 2014. Plaintiffs asserted that on May 2, 2014, M&C sent them a
“construction invoice” dated April 30, 2014, in the amount of $50,000, which
they paid by a check dated May 8, 2014. They asserted that on May 9, 2014,
a permit was issued in Patrick’s name for demolition of the existing home.
Importantly, Plaintiffs asserted that it was undisputed that M&C was not
actively licensed as a contractor in California until May 22, 2014. Although
Patrick obtained a California contractor’s license in 2008, he placed his
license on inactive status in 2012 and reactivated and reassigned it to M&C
on May 22, 2014.

      In support of their separate statement, Plaintiffs submitted exhibits,
including an email dated March 30, 2014, from Patrick to Lund, updating her
on deconstruction of the existing home and stating that he had received a
reply from Israel at RRR Green Demolition (RRR) offering to reduce his price
by $2,000, and that he had also asked Dirt Cheap Demolition to confirm that
its bid included the perimeter walls in its pricing. Patrick stated: “It is likely
we will sub-contract with RRR Green Demolition (Israel)” and that he had
asked to meet Israel on the site the following Tuesday to review the work.
Plaintiffs also submitted an email dated April 1, 2014, from Patrick to Lund
in which Patrick stated that he had “received a revised bid from Dirt Cheap
Demo (increased by $5K) and a revised bid from Israel (reduced by $3K). The
two bids are now within $4K with Israel’s work linking directly to the ReCon
company. So I plan to subcontract Israel to move this forward.” (Italics
added.) Patrick also stated that he had “asked each of the subcontracting

firms to provide time lines in respect to each item of work.”5

5     Plaintiffs also submitted an email dated April 13, 2014, from Patrick to
Lund, stating that “[w]e have been organizing all the trades as we move into
this new phase.” Patrick also updated Lund on the status of the building
                                       14
      Plaintiffs also submitted an email dated May 2, 2014, from Patrick to
Plaintiffs, attaching three invoices. Patrick explained that the third invoice
was “an on-account payment to cover the first subcontractors, deconstruction,
shoring, and site set-up.” Plaintiffs submitted a copy of “Invoice No. 441F”
from M&C to Plaintiffs, dated April 30, 2014, which was titled “Construction
Invoice.” That construction invoice was in the amount of $50,000, which was
“[n]ow [d]ue,” and stated:

         “On Account Payment of $50,000 for site-set [sic] up costs
         related to [the property].

         “Temporary Construction Fence
         “Temporary Toilet
         “Shoring (Subcontract)
         “Deconstruction (Subcontract)”

Plaintiffs also submitted a copy of a check dated May 8, 2014, in the amount
of $50,000 from Kivel to M&C, which showed that it had been paid by Kivel’s
bank on May 15, 2014.

      Plaintiffs submitted a copy of the demolition permit issued on May 9,
2014, by City to Patrick, as the permit holder, for demolition of the existing

home and garage.6 Plaintiffs also submitted Elliott’s declaration, which

permit application that he had filed with the City of San Diego (City),
explaining that the City was “running behind schedule” and that he had
“worked through the weekend to answer all of the major issues.” Patrick also
stated that he had received a bid from a local solar firm and would review it
and forward it to Plaintiffs.
6     Plaintiffs also submitted a copy of a City document, showing its
approval on May 27, 2014, of the combination building permit to Patrick, as
the permit holder, for construction of the new residence, and indicating that
the application for the permit had been filed on March 24, 2014.

                                       15
attached as exhibits documents produced by Defendants pursuant to
Plaintiffs’ requests for production served in their action against Defendants.
Those exhibits included copies of bids from demolition subcontractors. On
March 20, 2014, J.T.H, Inc. submitted separate bids for demolition of the
existing house and garage and for the breaking and removal of all concrete.
On March 20, 2014, RRR submitted separate bids for deconstruction of the
existing house and garage and for removal of the hardscape (e.g., driveway,
foundations, sidewalks, and retaining walls). On March 26, 2014, RRR

submitted an additional bid for removal of the hardscape.7 All of the
foregoing subcontractor bids were submitted to Patrick. Elliott also attached
a certification of records, dated April 14, 2017, from the custodian of records
for the California Contractors State License Board, stating that Patrick was
issued a Class B general building contractor’s license on October 22, 2008,
which was renewed as inactive on November 1, 2012, and became active and
was reassigned to M&C on May 22, 2014.

      In its opposition to Plaintiffs’ motion for summary adjudication, M&C
submitted a memorandum of points and authorities, arguing that there were
triable issues of material fact that precluded summary adjudication. In
particular, M&C argued that there were disputed facts regarding whether it
had performed contracting services prior to the issuance of its contractor’s
license on May 22, 2014. In support of its opposition, M&C submitted a
request for judicial notice of the application for a demolition permit signed by

7     Other documents produced by Defendants included bids dated March
26, 2014, and April 8, 2014, from a window and door installer (R.H. Fitch
Incorporated) and a bid dated March 29, 2014, from an excavating company
(Mike Lloyd Excavating, Inc.).

                                       16
Patrick on May 7, 2014, identifying M&C as the permit holder and RRR as
the demolition subcontractor.

      M&C also submitted a separate statement responding to Plaintiffs’
separate statement of undisputed material facts. In particular, M&C
disputed that the existing home was to be demolished, asserting that it was
instead to be deconstructed for salvage of many of its reusable materials, and
asserted that Plaintiffs had instructed M&C to begin investigating

deconstruction vendors in March 2014.8 M&C disputed that deconstruction
of the existing home began in April 2014, asserting instead that
deconstruction by RRR began after the demolition permit was issued on May
7, 2014. M&C agreed with Plaintiffs’ assertion that Plaintiffs had paid M&C
$2,732,627.87 for materials supplied and services rendered in construction of
their new home. M&C asserted that it did not begin working as a contractor
prior to receipt of its license on May 22, 2014. However, M&C did not dispute
that Patrick’s contractor’s license was placed on inactive status in 2008 and
reactivated and reassigned to M&C on May 22, 2014. M&C also did not
dispute that it was not a licensed architect when it performed services for
Plaintiffs.

      In its separate statement, M&C also asserted its own undisputed
material facts, including that on March 20, 2014, RRR submitted a
deconstruction proposal and that in April 2014 Plaintiffs decided that they
wanted to use RRR to deconstruct the existing home. M&C also asserted

8      M&C also disputed that it applied for a combination building permit on
March 24, 2014, asserting instead that it did not apply for such permit until
May 27, 2014. M&C also clarified that it did not hire anyone to excavate the
gas line, asserting instead that Patrick had met with SDG&E to locate the
gas line.
                                      17
that by April 2014, Plaintiffs had indicated that they wanted M&C to serve
as their general contractor and Patrick informed them that he would do so,
but that he would have to reactivate his contractor’s license and transfer it to
M&C before performing any general contracting services.

      Also in support of its opposition, M&C submitted Patrick’s declaration,
which stated that the $50,000 construction invoice transmitted to Plaintiffs
on May 2, 2014, was an “on-account payment [sic] for future construction site
set up costs.” His declaration also stated that on May 7, 2014, M&C
submitted an application for a demolition permit identifying M&C as the
permit holder and RRR as the contractor, and that on May 9, 2014, RRR
“commenced deconstruction of the existing structure.” Also in support of its
opposition, M&C submitted declarations from Paul Benton, a licensed
architect, and William M. Lyons, a licensed contractor.

      In reply to M&C’s opposition, Plaintiffs submitted a supplemental
request for judicial notice and Elliott’s supplemental declaration. In
particular, Elliott’s declaration stated that on August 1 and 2, 2017, his
colleague Hayward Kaiser took Patrick’s deposition in this case. A copy of
excerpts from the deposition transcript were attached to the declaration.
Kaiser asked Patrick at his deposition: “Did you charge a markup on the
expenses and costs you paid in connection with the deconstruction of the old
house?” Patrick asked Kaiser to repeat the question. Kaiser restated his
question: “Did you charge a 15 percent markup on the costs [M&C] incurred
on the deconstruction of the old house?” Patrick answered: “Yes.” Kaiser
then asked: “Do you think that was appropriate?” Patrick answered: “I do.”
Kaiser asked: “Why?” Patrick answered: “Because I procured, managed,
and paid for the deconstruction of the old house.” (Italics added.)

                                       18
      Plaintiffs’ supplemental request for judicial notice asked that the court
take judicial notice of a certified copy of City’s record of permit-related
appointments for their property through May 28, 2014. That record reflected

that a demolition permit was issued on May 9, 2014.9

      On August 30, 2017, the trial court granted Plaintiffs’ motion for
summary adjudication and, in so doing, granted the parties’ requests for
judicial notice. The court stated:

         “[Patrick] is the president and sole shareholder of M&C.
         [Citation.] [Patrick] had a contractor’s license that went
         inactive in 2012. [Citation.] On April 30, 2014, [P]laintiffs
         and M&C entered into an oral contract to provide general
         contracting services in connection with the home.
         [Citations.] On May 22, 2014, [Patrick] reactivated the
         license and reassigned it to M&C. [Citation.]

         “Under section 7031(a), . . . [t]he question . . . is whether
         there is any triable issue of material fact as to whether
         M&C was licensed at all times during contractual
         performance. There is not.

         “On April 30, 2014 . . . , M&C sent [P]laintiffs a
         construction invoice for $50,000 for ‘site set-up costs’
         including a temporary construction fence, shoring and
         deconstruction. [Citation.] Engaging in ‘administrative
         duties’ such as ‘soliciting and accepting payment,’ are ‘in
         the capacity of’ a contractor[] and require a license.
         [Citation.] In other words, there was contractual
         performance -- not just execution -- before M&C was
         licensed.

9     That record also reflected that on March 18, 2014, a building permit
application was submitted for a new single-family dwelling unit and on
March 24, 2014, seven sets of drawings were submitted in support of that
application. It further reflected that on May 27, 2014, the building permit for
the new single-family dwelling unit was issued.

                                        19
         “ . . . A ‘contractor’ includes ‘any person, who undertakes to
         or offers to undertake to or purports to have the capacity to
         undertake or submits a bid’ to construct, alter or repair any
         building. [Citation.] Thus, a valid license was required
         when [P]laintiffs were billed for construction work. The
         fact that the construction invoice also notes that some of
         the work will be subcontracted out is immaterial. ‘The
         California courts have also long held that those who enter
         into construction contracts must be licensed, even when
         they themselves do not do the actual work under the
         contract.’ [Citation.]

         “M&C began soliciting bids for deconstruction of the
         existing house in March 2014. [Citation.] On May 7, 2014,
         [Patrick] submitted an application for a demolition permit
         listing [RRR] as the contractor. [Citation.] Deconstruction
         began on May 9, 2014. [Citation.] Contractors must be
         licensed when they hire subcontractors. [Citation.]
         [Patrick] testified that M&C was entitled to be
         compensated for deconstruction because he ‘procured,
         managed, and paid for the deconstruction.’ [Citation.]
         M&C acted as a contractor by soliciting bids for
         deconstruction, hiring [RRR] and applying for a demolition
         permit. The fact that [RRR] did the actual deconstruction
         work does not exempt M&C from licensing requirements.

         “ . . . Thus there is no triable issue of fact that M&C acted
         as a contractor during a portion of the relevant time
         without having a license. . . .

         “Because M&C is not entitled to recover for the outstanding
         construction costs allegedly owed, it follows that [P]laintiffs
         are entitled to recover their construction costs.
         Accordingly, the motion for summary adjudication is
         granted.”

      After trial, Plaintiffs elected the section 7031(b) remedy of
reimbursement under their second cause of action in lieu of the damages
awarded by the jury for their cause of action for breach of the construction

                                       20
contract. The court subsequently entered the second amended judgment for
Plaintiffs and against M&C, Patrick, and M&A in the amount of
$2,732,627.87 on Plaintiffs’ section 7031(b) cause of action.

                                        D

      Interpretation of section 437c(f)(1). In asserting that the trial court
erred by granting Plaintiffs’ motion for summary adjudication against M&C
on Plaintiffs’ second cause of action for reimbursement under section 7031(b),
which was alleged against all Defendants, Defendants initially argue that a
motion for summary adjudication is unavailable under section 437c(f)(1)
unless the motion disposes of the cause of action against all defendants and
not just a single defendant. Defendants rely on the language of section
437c(f)(1), which provides:

         “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 the party contends that the
         cause of action has no merit, that there is no affirmative
         defense to the cause of action, that there is no merit to an
         affirmative defense to any cause of action, 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.” (Italics
         added.)

Defendants misconstrue the plain language of section 437c(f)(1) in arguing
that a motion for summary adjudication must completely dispose of a cause of
action against all defendants and not just as to a single defendant. To the
contrary, there is no language in section 437c(f)(1) that requires that

                                       21
summary adjudication completely dispose of a cause of action against all
defendants.

      In interpreting a statute, “our fundamental objective is to ascertain the
legislative intent.” (Alatriste, supra, 183 Cal.App.4th at p. 663.) We initially
focus on the words of the statute because statutory language is generally the
most reliable indicator of legislative intent. (Ibid.) The words of the statute
should be given their ordinary and usual meaning and should be construed in
their statutory context. (Ibid.; MW Erectors, supra, 36 Cal.4th at p. 426.) If
the statutory language is unambiguous, we presume that the Legislature
intended what it stated and the plain meaning of the statute governs. (MW
Erectors, at p. 426.) On appeal, we independently review the legal question of
the proper interpretation of a statute. (Alatriste, at p. 664.)

      “Prior to the 1990 amendment to the summary adjudication statute,
parties could seek summary adjudication on any issues raised in a case. The
1990 amendment limited summary adjudication motions to a cause of action,
an affirmative defense, a claim for punitive damages, or an issue of duty.
[Citation.] . . . The clear purpose of the amendment was to ‘ “stop the practice
of adjudication of facts or adjudication of issues that do not completely

dispose of a cause of action or a defense.” ’ [Citation.]”10 (Paramount

10     In 1990, section 437c(f) was amended to provide in pertinent part that
“any party may move for summary adjudication as to [a] cause or causes of
action . . . .” (Lilienthal & Fowler v. Superior Court (1993) 12 Cal.App.4th
1848, 1851-1852 (Lilienthal).) In 1993, section 437c(f) was amended and
renumbered as section 437c(f)(1), reading substantially as it reads today.
(Stats.1993, ch. 276, § 1; see Hood v. Superior Court (1995) 33 Cal.App.4th
319, 323 [“ ‘A party may move for summary adjudication as to one or more
causes of action . . . . A motion for summary adjudication shall be granted
only if it completely disposes of a cause of action . . . .’ ”].)

                                       22
Petroleum Corp. v. Superior Court (2014) 227 Cal.App.4th 226, 241-242
(Paramount).)

      By its express language, section 437c(f)(1) allows “[a] party” to file a
motion for summary adjudication, clearly indicating that a single plaintiff or
defendant may file such a motion. Thus, in any action in which there are
multiple plaintiffs or defendants, one plaintiff or one defendant may file a
motion for summary adjudication. There is nothing in the language of section
437c(f)(1) that precludes a plaintiff or defendant from filing a motion for
summary adjudication of a cause of action as to only one of multiple
defendants or one of multiple plaintiffs. Further, section 437c(f)(1) provides
that a party may file a motion for summary adjudication as to a cause of
action if the party asserts, inter alia, “that one or more defendants either
owed or did not owe a duty to the plaintiff or plaintiffs.” (Italics added.) That
language plainly indicates that summary adjudication may be granted in
favor of, or against, “one or more defendants” if there is no triable issue as to
whether one or more defendants owed a duty to the plaintiff or plaintiffs.
(§ 437c(f)(1).) Based on the plain language of section 437c(f)(1), we conclude
that the Legislature intended that summary adjudication of a cause of action
may be granted against only one of multiple defendants named in that cause
of action if there are no triable issues of material fact on that cause of action
as to that defendant and the plaintiffs are entitled to judgment on that cause
of action. (Cf. Paramount, supra, 227 Cal.App.4th at p. 243 [plaintiff can
obtain summary adjudication of cause of action if plaintiff establishes each
element of cause of action entitling plaintiff to judgment on that cause of
action].)

      Contrary to Defendants’ assertion, there is nothing in the language of
section 437c(f)(1) that requires all plaintiffs or all defendants to be either the

                                        23
moving parties or opposing parties on a motion for summary adjudication of a
cause of action. If Defendants’ position were correct, we would expect that
they could cite, or that our research would reveal, a published case so holding
during the almost 30-year period since the current language of section

437c(f)(1) was enacted.11 However, our research shows that courts have
affirmed summary judgments and summary adjudications against one of
multiple defendants or in favor of one of multiple plaintiffs. (See, e.g., Lyons
v. Security Pacific Nat. Bank (1995) 40 Cal.App.4th 1001, 1006, 1023
[affirmed summary judgment in favor of one of two defendants]; Orange
County Water Dist. v. Sabic Innovative Plastics US, LLC (2017) 14
Cal.App.5th 343, 417, fn. 38 [affirmed summary adjudication in favor of one
of multiple defendants]; Archdale v. American Internat. Specialty Lines Ins.
Co. (2007) 154 Cal.App.4th 449, 473 [affirmed summary judgment in favor of
one of multiple plaintiffs].)

      Further, Code of Civil Procedure section 579 provides: “In an action
against several defendants, the court may, in its discretion, render judgment
against one or more of them, leaving the action to proceed against the others,

11    Although Defendants cite Lilienthal, supra, 12 Cal.App.4th 1848, as
their primary case in support of their position, that case is inapposite to this
case and did not address the question whether a motion for summary
adjudication may be granted against one of multiple defendants or one of
multiple plaintiffs. Rather, Lilienthal concluded that because a cause of
action alleged in the complaint in that case combined two separate and
distinct claims (i.e., primary rights or theories of liability), the trial court
erred by refusing to rule on the plaintiffs’ motion for summary adjudication of
one of the two claims that were, in effect, two separate causes of action. (Id.
at pp. 1850, 1854.) Because Lilienthal is inapposite to the issue in this case,
it does not persuade us to reach a contrary conclusion regarding our
interpretation of section 437c(f)(1).

                                       24
whenever a several judgment is proper.” Although that statute does not
expressly apply to a summary adjudication against one or more of several
defendants, one can infer from its provisions that in enacting section
437c(f)(1), the Legislature did not intend to preclude a summary adjudication
against one of multiple defendants. Accordingly, Defendants have not carried
their burden on appeal to show that Plaintiffs could not properly file, and the
trial court could not properly grant, a motion for summary adjudication of the
complaint’s second cause of action as to M&C only, and not as to all
Defendants.

                                           E

      No triable issues of material fact. Defendants alternatively contend
that the trial court erred by granting Plaintiffs’ motion for summary
adjudication because there exist triable issues of material fact as to the
second cause of action of Plaintiffs’ complaint and as to the second and fourth
causes of action of Defendants’ amended cross-complaint. In particular,
Defendants argue that there are triable issues on the factual question of
whether M&C performed contracting services prior to May 22, 2014, the date
on which it became licensed as a contractor in California.

      Section 7026 defines a “contractor” 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, improve, move, wreck or demolish any
building . . . or other structure, . . . or to do any part thereof . . . .” (Italics
added.) As discussed above, section 7031(a) provides: “[N]o 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

                                           25
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 . . . .” Section 7031(b) provides: “[A] person who utilizes
the services of an unlicensed contractor may bring an action in any court of
competent jurisdiction in this state to recover all compensation paid to the
unlicensed contractor for performance of any act or contract.”

      Section 7031(b) allows a plaintiff to recover “full reimbursement even if
the contractor obtained a license after he or she began performing the work.”
(MW Erectors, supra, 36 Cal.4th at p. 429, fn. 8; Alatriste, supra, 183
Cal.App.4th at p. 671.) Importantly, “section 7031(b) provides a
reimbursement right for all amounts paid to an unlicensed contractor if the
contractor was unlicensed at any time during the performance . . . .”
(Alatriste, at p. 669, italics added; see also Judicial Council of California v.
Jacob Facilities, Inc. (2015) 239 Cal.App.4th 882, 896 (Judicial Council) [“[I]f
a contractor is unlicensed for any period of time while delivering construction
services, the contractor forfeits all compensation for the work, not merely
compensation for the period when the contractor was unlicensed.”].) Section
7031(b) does not permit an offset for work performed after a license is
obtained. (Alatriste, at p. 672.) Unlicensed contractors are required to return
all compensation received without reductions or offsets for the value of
material or services provided. (White, supra, 178 Cal.App.4th at pp. 520-
521.) Therefore, if M&C performed any act requiring a contractor’s license
prior to May 22, 2014, it is subject to the shield provisions of section 7031(a)
and the sword provisions of section 7031(b).

      Based on our review of the record, we conclude that there is undisputed
evidence showing that M&C performed one or more acts that required a

                                        26
contractor’s license prior to May 22, 2014, when M&C obtained a California
contractor’s license. In particular, before May 22, 2014, M&C performed
contracting acts related to demolition or deconstruction of the existing home
on Plaintiffs’ property. In March 2014, M&C requested and received bids
from subcontractors for the demolition or deconstruction of the existing home,
garage and hardscape. In support of their motion for summary adjudication,
Plaintiffs submitted Elliott’s declaration, which attached copies of bids from
demolition subcontractors. On March 20, 2014, J.T.H, Inc. submitted
separate bids for demolition of the existing house and garage and for the
breaking and removal of all concrete. On March 20, 2014, RRR submitted
separate bids for deconstruction of the existing house and garage and for
removal of the hardscape (e.g., driveway, foundations, sidewalks, and
retaining walls). On March 26, 2014, RRR submitted an additional bid for
removal of the hardscape. Defendants do not dispute the authenticity of
those bids.

      Plaintiffs also submitted a copy of an email dated March 30, 2014, from
Patrick to Plaintiffs updating her on deconstruction of the existing home and
stating that he had received a reply from RRR offering to reduce its price by
$2,000 and that he had also asked Dirt Cheap Demolition to confirm that its
bid included the perimeter walls in its pricing. Patrick stated: “It is likely
we will sub-contract with [RRR]” and that he had asked to meet with Israel of
RRR on the site the following Tuesday to review the work. Defendants do not
dispute the authenticity of that email or its substance showing that in March
2014 Patrick, on behalf of M&C, solicited bids from subcontractors for the
demolition or deconstruction of the existing home and garage. Plaintiffs also
submitted a copy of an email dated April 1, 2014, from Patrick to Lund in
which he stated that he had “received a revised bid from Dirt Cheap Demo

                                       27
(increased by $5K) and a revised bid from [RRR] (reduced by $3K). The two
bids are now within $4K with [RRR]’s work linking directly to the ReCon
company. So I plan to subcontract Israel [of RRR] to move this forward.”
(Italics added.) Defendants do not dispute the authenticity of that email or
its substance showing that on or before April 1, 2014, Patrick, on behalf of
M&C, solicited bids from subcontractors for the demolition or deconstruction
of the existing home and garage and, in addition, intended to subcontract
with RRR for that demolition or deconstruction work.

      In support of its opposition to Plaintiffs’ motion, M&C submitted a
request for judicial notice (which the trial court subsequently granted) of the
application for a demolition permit signed by Patrick on May 7, 2014,
identifying M&C as the permit holder and RRR as the demolition
subcontractor. Plaintiffs submitted a copy of the demolition permit issued on
May 9, 2014, by City to Patrick, as the permit holder, for demolition of the
existing home and garage. M&C also submitted Patrick’s declaration, stating
that on May 9, 2014, RRR “commenced deconstruction of the existing
structure.” Importantly, Plaintiffs also submitted Elliott’s supplemental
declaration that attached an excerpt from Patrick’s deposition in which
Patrick stated: “I procured, managed, and paid for the deconstruction of the
old house.” (Italics added.)

      Based on the above undisputed evidence, it is clear that during the
period from March 20, 2014, through May 9, 2014, M&C solicited bids from
subcontractors, received bids from subcontractors, hired a subcontractor, and
used a subcontractor to perform the acts of demolition or deconstruction of
the existing home and garage, and that all of those acts by M&C occurred
before May 22, 2014, when M&C received a contractor’s license. Contrary to
Defendants’ assertion, the fact that RRR was listed on the demolition permit

                                      28
as the licensed contractor for performance of the demolition work does not
prove that M&C was not acting as a contractor when it solicited bids from
and hired RRR as the subcontractor to perform that demolition work. Section
7026 includes in its definition of a “contractor” any person “who undertakes
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 . . . or to do any part thereof . . . .” (Italics
added.) Therefore, when a person or entity such as M&C hires a
subcontractor, such as RRR, to perform the act of demolition or
deconstruction of (i.e., “subtract from”) any building, that person or entity is
acting as a contractor and must be licensed as a contractor to perform that
act. (§§ 7026, 7031(a).) In Vallejo Development Co. v. Beck Development Co.
(1994) 24 Cal.App.4th 929, at page 941, the court stated: “[B]oth the person
who provides construction services himself and one who does so ‘through
others’ qualifies as a ‘contractor’ [under section 7026]. The California courts
have also long held that those who enter into construction contracts must be
licensed, even when they themselves do not do the actual work under the
contract.” (Italics added.) Accordingly, there is no triable issue of material
fact as to the question whether M&C performed contracting services by
soliciting bids from subcontractors, and hiring and using a subcontractor, to
perform demolition or deconstruction work on Plaintiffs’ property prior to
May 22, 2014, when M&C obtained its contractor’s license.

      In addition, there is undisputed evidence that prior to May 22, 2014,
M&C performed contracting acts by submitting a construction invoice to
Plaintiffs and accepting payment on that invoice. In support of their motion,
Plaintiffs submitted an email dated May 2, 2014, from Patrick to Plaintiffs,
attaching an invoice for “an on-account payment to cover the first

                                          29
subcontractors, deconstruction, shoring, and site set-up.” Plaintiffs
submitted a copy of “Invoice No. 441F” from M&C to Plaintiffs, dated April
30, 2014, and titled “Construction Invoice.” That construction invoice stated
that the amount of $50,000 was “[n]ow [d]ue” and was for site set-up costs,
including a temporary construction fence, a temporary toilet, a shoring
subcontract, and a deconstruction subcontract. Plaintiffs also submitted a
copy of their check dated May 8, 2014, in the amount of $50,000 to M&C,
which showed that it was paid by Plaintiffs’ bank on May 15, 2014.

      In support of its opposition to Plaintiffs’ motion, M&C submitted
Patrick’s declaration, which stated that the $50,000 construction invoice
transmitted to Plaintiffs on May 2, 2014, was an “on-account payment [sic]
for future construction site set up costs.” However, the construction invoice
does not limit those site set-up costs to only those costs incurred on or after
May 22, 2014, when M&C obtained its contractor’s license. Because
Defendants do not dispute that demolition or deconstruction of the existing
house and garage began on May 9, 2014, the only reasonable inference is that
at least some portion of the demolition costs reflected on the April 30, 2014

construction invoice was incurred by M&C before May 22, 2014.12 The
evidence is therefore undisputed that on May 2, 2014, M&C sent an invoice to
Plaintiffs for construction costs and Plaintiffs’ $50,000 check in payment of
that invoice cleared Plaintiffs’ bank account on May 15, 2014. By carrying
out such administrative duties as “soliciting and accepting payment” prior to

12    Similarly, it could be inferred that the initial set-up costs for a
temporary construction fence and a temporary toilet were also incurred by
M&C on or before May 9, 2014, when that demolition or deconstruction
began, which was before May 22, 2014, when M&C obtained its contractor’s
license.

                                       30
May 22, 2014, M&C engaged in the business of a contractor within the
meaning of section 7026 before it obtained a contractor’s license. (Cf.
Judicial Council, supra, 239 Cal.App.4th at p. 905.) Accordingly, there is no
triable issue of material fact as to the issue of whether M&C performed
contracting services by submitting a construction invoice to Plaintiffs and
accepting payment on that invoice prior to May 22, 2014, when it obtained its
contractor’s license.

      Contrary to Defendants’ assertion, the fact that some of M&C’s services
could alternatively be described as “design” services does not negate the fact
that M&C performed acts requiring a contractor’s license prior to May 22,
2014. In Banis Restaurant Design, Inc. v. Serrano (2005) 134 Cal.App.4th
1035 (Banis), the court addressed a construction contract entered into by an
unlicensed contractor, which included compensation for certain design
services to be provided by the unlicensed contractor, such as “drawings for
electrical and plumbing plans [and] drawing plans for a reflected ceiling.”
(Id. at pp. 1040-1042, 1044.) The court concluded that those services
constituted acts of a contractor under section 7026 and therefore, that section
7031(a) barred the unlicensed contractor’s action for compensation. (Banis,
at pp. 1042-1043; see also WSS Industrial Construction, Inc. v. Great West
Contractors, Inc. (2008) 162 Cal.App.4th 581, 592 [applying Banis to
unlicensed contractor’s preparation of shop drawings].)

      Based on the undisputed evidence that M&C performed acts requiring
a contractor’s license prior to May 22, 2014, when it obtained its contractor’s
license, the trial court correctly concluded that under section 7031(a) and
section 7031(b) there were no triable issues of material fact regarding the
second cause of action of Plaintiffs’ complaint and the second and fourth
causes of action of Defendants’ amended cross-complaint, and that Plaintiffs

                                       31
were therefore entitled to summary adjudication on those causes of action.
(§ 437c(f)(1); Aguilar, supra, 25 Cal.4th at pp. 843, 855; Dunn, supra, 135
Cal.App.4th at p. 1290.) None of the evidence cited by Defendants, including
the conclusory declarations of their two experts that M&C’s acts did not
constitute acts requiring a contractor’s license, persuades us to reach a
contrary conclusion. In particular, to the extent that M&C provided
Plaintiffs with cost estimates and an estimated construction timetable before
proceeding with their construction project, the undisputed evidence discussed
above shows that M&C’s acts prior to May 22, 2014 were not restricted solely

to providing such purported cost and timetable estimate services.13

                                       II

         Nonsuit on Defendants’ Architectural Services Cross-Claims

      Defendants contend that the trial court erred by granting Plaintiffs’
motion for a judgment of nonsuit on Defendants’ cross-claims for
compensation for architectural services provided by M&C and Patrick and by
instructing the jury that Patrick was not a licensed architect when he
performed services for Plaintiffs that required an architect’s license. In
particular, Defendants argue that Patrick’s services in designing an all-
concrete accessory building were exempt from California’s architectural
licensing requirements.

13     Because we dispose of this issue based on our application of section
7031(a) and section 7031(b) to the undisputed evidence of M&C’s contracting
acts performed prior to May 22, 2014, as discussed above, we need not, and
do not, address Plaintiffs’ alternative contention that those statutes also
entitled them to summary adjudication because M&C’s contractor’s license
was automatically suspended under section 7125.2 for failure to carry
worker’s compensation insurance for its employees.

                                       32
                                         A

      The first and third causes of action of Defendants’ amended cross-
complaint alleged cross-claims for breach of an oral design contract and
quantum meruit for design services. At trial, Patrick testified that the house
and garage for which he designed plans were timber-framed (i.e., wood-
framed), but the two-story annex or accessory building that he designed was
made of “poured-in-place concrete.” On conclusion of the evidentiary portion
of the jury trial, Plaintiffs moved for a judgment of nonsuit on Defendants’
first and third cross-claims. The court granted the motion, finding that the
exemptions provided in section 5537 do not apply to exempt the services
provided by Patrick to Plaintiffs in designing the concrete accessory building
from California’s architectural licensing requirements. The court also
instructed the jury:

         “The Court has found that in performing design services for
         Plaintiffs’ home, Patrick McInerney was performing
         architectural services for which a license was required and
         that Mr. McInerney did not have such a license.”

After the jury returned its special verdict, the court, in a bifurcated trial,
denied Plaintiffs’ first cause of action for restitution of architecture fees paid
to Defendants.

                                         B

      An architect must be licensed by the State of California to perform
architectural services in California. (§ 5500 et seq.; Hughes v. Board of
Architectural Examiners (1998) 17 Cal.4th 763, 772-773.) An unlicensed
person cannot recover consideration under a contract for, or the reasonable
value of, any architectural services rendered. (§ 143, subd. (a); Force v. Hart
(1930) 209 Cal. 600, 605.) Section 5537 provides an exception from licensing

                                        33
requirements for architectural services performed relating to certain
woodframe structures, stating:

         “(a) This chapter does not prohibit any person from
         preparing plans, drawings, or specifications for any of the
         following:

         “(1) Single-family dwellings of woodframe construction not
         more than two stories and basement in height.

         “(2) Multiple dwellings containing no more than four
         dwelling units of woodframe construction not more than
         two stories and basement in height. . . .

         “(3) Garages or other structures appurtenant to buildings
         described under subdivision (a), of woodframe construction
         not more than two stories and basement in height.

         “(4) Agricultural and ranch buildings of woodframe
         construction . . . .

         “(b) If any portion of any structure exempted by this section
         deviates from substantial compliance with conventional
         framing requirements for woodframe construction found in
         the most recent edition of Title 24 of the California Code of
         Regulations or tables of limitation for woodframe
         construction, as defined by the applicable building code
         duly adopted by the local jurisdiction or the state, the
         building official having jurisdiction shall require the
         preparation of plans, drawings, specifications, or
         calculations for that portion by, or under the responsible
         control of, a licensed architect or registered engineer. The
         documents for that portion shall bear the stamp and
         signature of the licensee who is responsible for their
         preparation. . . .” (Italics added.)

                                       C

      Defendants assert that the trial court erred by granting Plaintiffs’
motion for a judgment of nonsuit on the first and third causes of action of

                                      34
Defendants’ amended cross-complaint because the exception in section 5537
applied to allow Patrick and M&C, each of which was unlicensed as an
architect in California, to design the construction plans for Plaintiffs’
property, including a wood-framed single family residence and a two-story
all-concrete accessory building, which were then certified by a licensed
structural engineer. In particular, Defendants argue that section 5537,
subdivision (b) applies to their design of the all-concrete accessory building.

      As discussed above, in interpreting the meaning of a statute, we
initially focus on the words of the statute because statutory language is
generally the most reliable indicator of legislative intent. (Alatriste, supra,
183 Cal.App.4th at p. 663.) The words of the statute should be given their
ordinary and usual meaning and should be construed in their statutory
context. (Ibid.; MW Erectors, supra, 36 Cal.4th at p. 426.) If the statutory
language is unambiguous, we presume that the Legislature intended what it
stated and the plain meaning of the statute governs. (MW Erectors, at
p. 426.) On appeal, we independently review the legal question of the proper
interpretation of a statute. (Alatriste, at p. 664.)

      Based on our independent review of the plain language of section 5537,
we conclude that statute does not provide any exemption from California’s
architectural services licensing requirements for the design of an all-concrete
accessory building. Section 5537, subdivision (a) provides exemptions from
California’s architectural services license requirements for the preparation of
plans for four specified types of wood-frame structures. There are two types
of wood-framed structures designed by Patrick for Plaintiffs that presumably
are covered by section 5537, subdivision (a)’s exemptions: (1) the single
family residence (§ 5537, subd. (a)(1) [“[s]ingle-family dwellings of woodframe
construction”]); and (2) the wood-framed garage (§ 5537, subd. (a)(3)

                                        35
[“[g]arages or other structures appurtenant to buildings described under
subdivision (a), of woodframe construction”]). However, the plain language of
section 5537, subdivision (a) does not set forth any exemption for an all-
concrete building.

      Further, the plain language of section 5537, subdivision (b) does not
apply in this case to provide any exemption from California’s architectural
services licensing requirements for Patrick’s design of Plaintiffs’ all-concrete
accessory building. Section 5537, subdivision (b) applies only to the four
specified structures exempted under section 5537, subdivision (a).
Importantly, section 5537, subdivision (b) begins with the prefatory phrase:
“If any portion of any structure exempted by this section [i.e., section 5537,
subdivision (a)] deviates from substantial compliance with conventional
framing requirements for woodframe construction . . . .” (Italics added.) By
its plain language, section 5537, subdivision (b) applies only if there is any
portion of a structure of woodframe construction exempted in section 5537,
subdivision (a) that does not substantially comply with requirements for
woodframe construction. Accordingly, section 5537, subdivision (b)’s
provisions apply only if the structure in question is made in part of
woodframe construction and in part of non-woodframe construction (e.g.,
concrete). Section 5537, subdivision (b) is thus plainly inapplicable to an all-
concrete structure, such as the two-story all-concrete accessory building
designed by Patrick in this case. Because Patrick and M&C were not
licensed as architects in California and section 5537 did not apply to exempt
their design of Plaintiffs’ all-concrete accessory building from licensing
requirements, we conclude that the trial court correctly granted Plaintiffs’
motion for a judgment of nonsuit on the first and third causes of action of

                                       36
Defendants’ amended cross-complaint.14 Further, based on the reasoning
above, we conclude that the court properly instructed the jury that Patrick
performed architectural services for which a license was required and that he
did not have such a license. Defendants do not cite any case or other

authority persuading us to reach a contrary conclusion.15

                                      III

                         Patrick’s Alter Ego Liability

      Defendants contend that the trial court erred by finding that Patrick is
liable for the judgment amount as an alter ego of M&C. In particular,
Defendants argue that there is insufficient evidence to support the court’s

14    Although the parties have not raised the issue on appeal, we presume
that under section 143, subdivision (a), an unlicensed architect, like an
unlicensed contractor under section 7031(b), generally cannot obtain
compensation for services performed if any part of a project requires a
license. (Cf. Banis, supra, 134 Cal.App.4th at pp. 1046-1047 [because work
performed by unlicensed contractor that required license was part of
integrated whole, § 7031(a) precluded recovery by unlicensed contractor for
both part of work that required license and part of work that did not require
license]; WSS Industrial Construction, Inc., supra, 162 Cal.App.4th at
pp. 591-592 [same].)

15    Assuming, for purposes of argument, that the trial court erred by
granting Plaintiffs’ nonsuit motion and by instructing the jury as described
above, we nevertheless would conclude that Defendants have not carried
their burden on appeal to affirmatively show that those errors were
prejudicial under the standard of review set forth in People v. Watson (1956)
46 Cal.2d 818, 836 (i.e., that it is reasonably probable Defendants would have
obtained a more favorable result if the errors had not occurred). (Pool v. City
of Oakland (1986) 42 Cal.3d 1051, 1069; Cassim v. Allstate Ins. Co. (2004) 33
Cal.4th 780, 800; Citizens for Open Government v. City of Lodi (2012) 205
Cal.App.4th 296, 308-310.)

                                      37
finding that if the acts of M&C were treated as those of the corporation alone,
an inequitable result would follow.

                                       A

      The alter ego doctrine is an equitable doctrine, which one court
described as follows: “A corporate identity may be disregarded--the ‘corporate
veil’ pierced--where an abuse of the corporate privilege justifies holding the
equitable ownership of a corporation liable for the actions of the corporation.
[Citation.] Under the alter ego doctrine, then, when the corporate form is
used to perpetuate a fraud, circumvent a statute, or accomplish some other
wrongful or inequitable purpose, the courts will ignore the corporate entity
and deem the corporation’s acts to be those of the persons or organizations
actually controlling the corporation, in most instances the equitable owners.
[Citations.]” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th
523, 538 (Sonora Diamond Corp.).)

      “In California, two conditions must be met before the alter ego doctrine
will be invoked. First, there must be such a unity of interest and ownership
between the corporation and its equitable owner that the separate
personalities of the corporation and the shareholder do not in reality exist.
Second, there must be an inequitable result if the acts in question are treated
as those of the corporation alone. [Citations.]” (Sonora Diamond Corp.,
supra, 83 Cal.App.4th at p. 538.) “Whether a party is liable under an alter-
ego theory is normally a question of fact. [Citations.] ‘The conditions under
which the corporate entity may be disregarded, or the corporation be
regarded as the alter ego of the stockholders, necessarily vary according to
the circumstances in each case inasmuch as the doctrine is essentially an
equitable one and for that reason is particularly within the province of the

                                       38
trial court.’ [Citation.]” (Zoran Corp. v. Chen (2010) 185 Cal.App.4th 799,
811 (Zoran).)

      “The first requirement for disregarding the corporate entity under the
alter ego doctrine--whether there is sufficient unity of interest and ownership
that the separate personalities of the individual and the corporation no
longer exist--encompasses a series of factors. Among the many factors to be
considered in applying the doctrine are one individual’s ownership of all stock
in a corporation; use of the same office or business location; commingling of
funds and other assets of the individual and the corporation; an individual
holding out that he is personally liable for the debts of the corporation;
identical directors and officers; failure to maintain minutes or adequate
corporate records; disregard of corporate [or legal] formalities; absence of
corporate assets and inadequate capitalization; and the use of the corporation
as a mere shell, instrumentality or conduit for the business of an individual.
[Citation.] This list of factors is not exhaustive, and these enumerated
factors may be considered with others under the particular circumstances of
each case. ‘ “No single factor is determinative, and instead a court must
examine all the circumstances to determine whether to apply the doctrine.” ’
[Citation.]” (Misik v. D’Arco (2011) 197 Cal.App.4th 1065, 1073 (Misik).)

      “The second requirement for application of the alter ego doctrine is a
finding that the facts are such that adherence to the fiction of the separate
existence of the corporation would sanction a fraud or promote injustice.
[Citation.] The test for this requirement is that if the acts are treated as
those of the corporation alone, it will produce an unjust or inequitable result.
[Citation.]” (Misik, supra, 197 Cal.App.4th at p. 1073, italics added.)
“Application of the alter ego doctrine does not depend upon pleading or proof
of fraud.” (Engineering Service Corp. v. Longridge Inv. Co. (1957) 153

                                       39
Cal.App.2d 404, 415 (Engineering Service Corp.).) “It is enough if the
recognition of the two entities as separate would result in an injustice.”
(Gordon v. Aztec Brewing Co. (1949) 33 Cal.2d 514, 523 (Gordon); see also
Automotriz del Golfo de California S.A. de C.V. v. Resnick (1957) 47 Cal.2d
792, 796 (Automotriz).)

      On appeal, we apply the substantial evidence standard in reviewing a
trial court’s finding that the alter ego doctrine applies. (Wolf Metals Inc. v.
Rand Pacific Sales, Inc. (2016) 4 Cal.App.5th 698, 703 (Wolf Metals Inc.); Las
Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d
1220, 1248; Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d 39, 46-
47.) In applying the substantial evidence standard of review, we review the
whole record in the light most favorable to the judgment to determine
whether it discloses substantial evidence—that is, evidence that is
reasonable, credible, and of solid value—to support the finding of fact.
(People v. Rodriguez (1999) 20 Cal.4th 1, 11.) We do not reweigh the
evidence, resolve conflicts in the evidence, or reevaluate the credibility of
witnesses. (People v. Cochran (2002) 103 Cal.App.4th 8, 13.) The substantial
evidence standard of review involves two steps. “First, one must resolve all
explicit conflicts in the evidence in favor of the respondent and presume in
favor of the judgment all reasonable inferences. [Citation.] Second, one must
determine whether the evidence thus marshaled is substantial. While it is
commonly stated that our ‘power’ begins and ends with a determination that
there is substantial evidence [citation], this does not mean we must blindly
seize any evidence in support of the respondent in order to affirm the
judgment. . . . [Citation.] ‘[I]f the word “substantial” [is to mean] anything at
all, it clearly implies that such evidence must be of ponderable legal
significance. Obviously the word cannot be deemed synonymous with “any”

                                       40
evidence. It must be reasonable . . . , credible, and of solid value . . . .’
[Citation.] The ultimate determination is whether a reasonable trier of fact
could have found for the respondent based on the whole record.” (Kuhn v.
Department of General Services (1994) 22 Cal.App.4th 1627, 1632-1633, fns.
omitted.)

                                          B

      Before trial, Plaintiffs filed a trial brief, arguing that all Defendants
were alter egos of each other and should therefore be found liable on the
causes of action alleged against them. The parties agreed that the issue of
alter ego liability would be tried by the court at a bifurcated hearing after the
jury trial. After the jury returned its special verdict against M&C, the court
heard Plaintiffs’ request to add Patrick, M&A, and McInerney Architects as
judgment debtors, as alter egos of M&C. The court granted the request as to
Patrick and denied it as to M&A and McInerney Architects. The court stated:

         “The Court finds [Patrick] is in fact an alter ego of [M&C].
         The Court notes it is not making that finding just because,
         as [Patrick] testified, he was the sole officer, director,
         shareholder and employee of [M&C]. [Patrick] also notes
         that [M&C] and [Patrick] shared a home office computer
         and CPA.

         “It notes that moneys [sic] appear to have been diverted
         from [M&C] for [Patrick’s] individual use. Moneys [sic]
         were not kept separate. Corporate formalities were not
         honored. There was no evidence of adequate capitalization.

         “Furthermore -- and this was not argued by the parties, but
         the Court considered the fact that [Patrick] testified that he
         kept separate calendars and diaries for the separate
         entities and work. No such diaries and calendars were ever
         produced. As a result, I am construing that evidence
         against the defendant.

                                         41
         “On the question of bad faith, the Court notes that all of the
         acts of [M&C], in particular, the act of acting as an
         architect, were taken individually by [Patrick]. The court
         finds that this is sufficient in this case to support alter ego.
         It rises to the level that it would be inequitable to allow the
         corporate formalities to prevent individual liability against
         [Patrick]. The Court finds further the responsible
         corporate officer doctrine supports this result.”

The court imposed alter ego liability on Patrick on all causes of action and
included him as a judgment debtor in the initial judgment and the second
amended judgment.

                                        C

      Defendants contend that there is insufficient evidence to support the
trial court’s finding that Patrick was an alter ego of M&C and that he should
therefore be held liable for the full amount of the judgment awarded against
M&C. Based on our review of the record, we conclude that there is
substantial evidence to support the court’s finding that both requirements for
alter ego liability were satisfied.

      On the first requirement, we conclude that there is substantial
evidence that there was “such a unity of interest and ownership between the
corporation and its equitable owner that the separate personalities of the
corporation and the shareholder do not in reality exist.” (Sonora Diamond
Corp., supra, 83 Cal.App.4th at p. 538.) As Patrick testified, and other
evidence admitted at trial showed, Patrick was the sole shareholder, sole
director, sole officer, and sole employee of M&C. M&C’s business office was
located at Patrick’s home. Patrick and M&C shared the same accountant.
Importantly, the evidence showed that Patrick commingled M&C’s funds
with his personal funds and used M&C’s funds to pay his personal expenses.

                                       42
Plaintiffs presented the testimony of Jennifer Ziegler, a forensic accountant,
who stated that about $500,000 in credit card charges were paid from M&C’s
bank subaccount for Plaintiffs’ project for expenses that were not for
Plaintiffs’ project. Also, Patrick testified that he used M&C’s funds (i.e.,
M&C’s bank subaccount for the Plaintiffs’ project) to pay his personal
expenses (e.g., personal vacation expenses, car insurance payments, taxes,
retirement deposits, housekeeper payments, home mortgage payments,

etc.).16 Based on the above evidence showing that Patrick paid his personal
expenses with M&C’s funds and other evidence showing that he
interchangeably used his own name (e.g., “Patrick McInerney, architect”) on
emails and other documents in conducting M&C’s construction business, the
court could reasonably infer that Patrick used M&C as a mere conduit for his
construction business.

      Further, the trial court could reasonably infer from the evidence that
M&C did not maintain adequate capitalization for the nature and scope of its
business and potential liabilities. In imposing alter ego liability on Patrick,
the court found that there was no evidence of adequate capitalization for
M&C. Although Patrick testified that he left certain funds (i.e., up to
$113,000) that he had purportedly “earned” in M&C’s subaccount to
capitalize that account in order to pay the potential costs of Plaintiffs’ project,
the court could nevertheless reasonably infer that such fluctuating bank
account funds did not prove that M&C had adequate capitalization for its
construction business. Defendants do not cite to any M&C balance sheets or

16    Although Patrick claimed that he maintained a diary that apparently
tracked M&C’s funds that were used for his personal expenses, he did not
present any such diary as evidence at trial to support that claim.

                                        43
other evidence in the record showing the amounts of M&C’s capitalization, if
any, from 2014 through December 2017 (when the court made its alter ego
finding). The court could therefore reasonably infer that M&C had little, if

any, capitalization by December 2017.17 Notably, as discussed in more detail
below, Patrick suspended M&C’s business operations and, in effect,
abandoned M&C in late 2017, when he began using M&A instead of M&C for
his construction business. Even assuming that M&C had capitalization of up
to $113,000 from 2014 through December 2017, the court could reasonably
infer that this amount of capitalization was inadequate when considering the
nature and scope of M&C’s construction business, its potential liabilities, and
the $2,732,627.87 amount awarded against M&C on Plaintiffs’ section
7031(b) cause of action in this case. (Cf. Automotriz, supra, 47 Cal.2d at
p. 798 [court “could have inferred that $5,000 was an insufficient capital
investment in view of the volume of business conducted” by the corporation];
Claremont Press Pub. Co. v. Barksdale (1960) 187 Cal.App.2d 813, 815, 817
[$500 in capitalization was irresponsible degree of undercapitalization when
corporation owed $7,000 to creditor and collapsed the following year].)

      The factors that the trial court could consider in making its alter ego
finding included: Patrick’s ownership of all stock in M&C; his capacity as
M&C’s sole director, officer, and employee; his use of the same office as
M&C’s office; the commingling of his funds with M&C’s funds (e.g., by paying
his personal expenses with M&C’s funds and charging M&C’s expenditures

17    To the extent that Defendants argue that Patrick capitalized M&C by
carrying commercial general liability insurance for M&C, they do not cite,
and we are unaware of, any authority holding that liability insurance can
constitute part of a corporation’s capitalization or otherwise substitute for the
lack of adequate capitalization.

                                       44
on his personal credit cards); the absence of adequate capitalization of M&C;
disregard of corporate formalities; and Patrick’s use of M&C as a mere
conduit for his construction business. (Misik, supra, 197 Cal.App.4th at
p. 1073.) Based on our review of the record, there is substantial evidence to
support the court’s finding that the above factors showed that there was such
a unity of interest and ownership between M&C and Patrick that the
separate personalities of M&C and Patrick did not in reality exist. (Sonora
Diamond Corp., supra, 83 Cal.App.4th at p. 538.) There is thus substantial
evidence from which the trial court could have found that the first
requirement for Patrick’s alter ego liability was satisfied. To the extent that
Defendants cite evidence and inferences therefrom that would have
supported a contrary finding by the court, they misconstrue and/or misapply
the substantial evidence standard of review.

      On the second requirement, we conclude that there is substantial
evidence to support the trial court’s finding that there would be an
inequitable result if M&C’s acts in this case were treated as those of the
corporation alone. (Sonora Diamond Corp., supra, 83 Cal.App.4th at p. 538.)
As discussed above, under that second requirement, alter ego liability may be
imposed if treating the acts as those of the corporation alone would produce
an unjust or inequitable result. (Misik, supra, 197 Cal.App.4th at p. 1073.)
“Application of the alter ego doctrine does not depend upon pleading or proof
of fraud.” (Engineering Service Corp., supra, 153 Cal.App.2d at p. 415.) “It is
enough if the recognition of the two entities as separate would result in an
injustice.” (Gordon, supra, 33 Cal.2d at p. 523.) The California Supreme
Court has recognized that a corporation’s inadequate capitalization may be
sufficient to find that there would be an inequitable result if the corporate
veil were not pierced and alter ego liability imposed, stating:

                                       45
         “ ‘If a corporation is organized and carries on business
         without substantial capital in such a way that the
         corporation is likely to have no sufficient assets available to
         meet its debts, it is inequitable that that shareholders
         should set up such a flimsy organization to escape personal
         liability. The attempt to do corporate business without
         providing any sufficient basis of financial responsibility to
         creditors is an abuse of the separate entity and will be
         ineffectual to exempt the shareholders from corporate
         debts. It is coming to be recognized as the policy of the law
         that shareholders should in good faith put at the risk of the
         business unincumbered [sic] capital reasonably adequate
         for its prospective liabilities. If the capital is illusory or
         trifling compared with the business to be done and the
         risks of loss, this is a ground for denying the separate
         entity privilege.’ ” (Automotriz, supra, 47 Cal.2d at p. 797,
         quoting from Ballantine on Corporations (rev. ed. 1946), at
         pp. 302-303, italics added.)

      The trial court found that there was no evidence that M&C was
adequately capitalized for the nature and scope of its construction business
and potential and actual liabilities, and, as discussed above, the record
includes evidence showing that Patrick disregarded corporate formalities and
that he used M&C, his wholly owned corporation, as a mere conduit to carry
out his personal construction business. Based our review of the record, we
conclude that there is substantial evidence to support the court’s finding that
it would be inequitable to treat M&C’s acts in this case as those of M&C
alone and thereby limit Plaintiffs’ ability to enforce their judgment to only
the amount of assets that the inoperative corporation held at the time of the
judgment. There is thus substantial evidence to support the trial court’s
finding that the second requirement for Patrick’s alter ego liability was
satisfied (Sonora Diamond Corp., supra, 83 Cal.App.4th at p. 538), and that
Patrick, as the alter ego of M&C, should be held jointly liable with M&C for

                                       46
the amount of the judgment in Plaintiffs’ favor.18 To the extent that
Defendants cite evidence and inferences therefrom that would have
supported a contrary finding by the court, they again misconstrue and/or
misapply the substantial evidence standard of review.

      Contrary to Defendants’ assertion, there is nothing in the jury’s special
verdict that precluded the trial court from finding, in a bifurcated bench trial,
that Patrick was an alter ego of M&C and imposing on him joint liability for
the amount of the judgment. As the trial court noted, the jury did not find
Patrick liable on Plaintiffs’ causes of action for breach of contract, negligence,
breach of fiduciary duty, and fraud. However, in making those findings, the
jury did not address the question of whether Patrick should be held liable
together with M&C as its alter ego. In particular, the jury was not asked to
make findings on the two requirements for alter ego liability: (1) whether
there was such a unity of interest and ownership between M&C and Patrick
that the separate personalities of the corporation and the shareholder do not
in reality exist; and (2) whether there would be an inequitable result if the
acts in question were treated as those of M&C alone. (Sonora Diamond
Corp., supra, 83 Cal.App.4th at p. 538.) Further, because alter ego liability is
an equitable issue, that determination must be made by the trial court and
not a jury. In this case, that determination was, in fact, made by the trial
court per the parties’ stipulation to a bifurcated trial on that issue. (Dow

18     Because we conclude that there is substantial evidence to support the
trial court’s alter ego finding, we need not, and do not, address Plaintiffs’
alternative argument that the trial court also properly found Patrick jointly
liable with M&C under the responsible officer doctrine. (See, e.g., People v.
Roscoe (2008) 169 Cal.App.4th 829, 832, 839 [discussing elements for
imposing liability on corporate officer under responsible officer doctrine].)

                                        47
Jones Co. v. Avenel (1984) 151 Cal.App.3d 144, 147-148; Stark v. Coker (1942)
20 Cal.2d 839, 846 (Stark); Zoran, supra, 185 Cal.App.4th at p. 811
[determination of alter ego liability is equitable issue within province of trial
court].) Accordingly, Defendants have not carried their burden on appeal to
show that the jury’s special verdict precluded the trial court from finding that
Patrick was an alter ego of M&C and imposing on Patrick liability for the
judgment amount based thereon.

      Also, contrary to Defendants’ assertion, neither fraud nor bad faith is
required for a finding of alter ego liability. “Application of the alter ego
doctrine does not depend upon pleading or proof of fraud.” (Engineering
Service Corp., supra, 153 Cal.App.2d at p. 415.) “It is enough if the
recognition of the two entities as separate would result in an injustice.”
(Gordon, supra, 33 Cal.2d at p. 523.) It is correct, as Defendants note, that in
1932, the California Supreme Court stated that to impose alter ego liability,
it must be shown, among other things, that “the observance of the fiction of
[the] separate existence would, under the circumstances, sanction a fraud or
promote injustice. Bad faith in one form or another must be shown before the
court may disregard the fiction of separate corporate existence.” (Hollywood
Cleaning & Pressing Co. v. Hollywood Laundry Service (1932) 217 Cal. 124,
129 (Hollywood).) However, in the almost 90-year period since that case, the
California Supreme Court has not repeated or reaffirmed its statement in
Hollywood that bad faith is required for alter ego liability and has instead
consistently adopted and applied the less stringent requirement of an
inequitable result, as discussed above. (See, e.g., Mesler v. Bragg Mgt. Co.
(1985) 39 Cal.3d 290, 300-301; Automotriz, supra, 47 Cal.2d at p. 796 [second
requirement described as “if the acts are treated as those of the corporation
alone, an inequitable result will follow”]; Gordon, at p. 523 [“It is not

                                        48
necessary that the plaintiff prove actual fraud. It is enough if the recognition
of the two entities as separate would result in an injustice.”]; Stark, supra, 20
Cal.2d at p. 846 [same]; Watson v. Commonwealth Ins. Co. (1936) 8 Cal.2d 61,
68 [second requirement described as “adherence to the fiction of separate
existence would, under the circumstances, promote fraud or injustice . . . .
[I]t is sufficient that it appear that recognition of the acts as those of a
corporation only will produce inequitable results.”].) It therefore appears
that just four years after Hollywood was decided (i.e., in 1936 in Watson v.
Commonwealth Ins. Co., at p. 68) the California Supreme Court abandoned
any requirement of a finding of fraud or bad faith in order to impose alter ego
liability and has consistently held since that time that the second
requirement is satisfied when a court finds that if the acts are treated as
those of the corporation alone, an inequitable result will follow. As we
concluded above, there is substantial evidence to support the trial court’s
finding in this case that the second requirement for Patrick’s alter ego

liability was satisfied.19

19    Further, if the second requirement for alter ego liability were
interpreted more broadly than current case law provides so as to include
consideration of the equities of section 7031(b) reimbursement liability, it is
possible that the trial court could have reached a contrary finding and/or we
might have concluded that this requirement was not satisfied. As
Defendants suggest, there appears on its face to be an inequity in allowing
Plaintiffs to retain the fruits of M&C’s labor and materials (i.e., the
apparently defect free La Jolla residence valued at $2.7 million) while also
awarding Plaintiffs a judgment for reimbursement of all amounts they paid
to M&C for construction of that residence. The result in this case is
unquestionably harsh. However, given the statutory language of, and
current case law pertaining to, section 7031(b) as discussed above, we are
constrained from considering those underlying equities in determining
whether there is substantial evidence to support the trial court’s finding that
the second requirement for alter ego liability is satisfied. To absolve Patrick
                                        49
      Further, contrary to Defendants’ assertion, the trial court did not err by
denying their request for a written statement of decision on its finding of
alter ego liability. As Defendants concede, the trial court conducted its
bifurcated trial on the alter ego issue on December 20, 2017, and in an oral
ruling the court explained its reasons for finding that Patrick was liable for
the judgment as M&C’s alter ego. Because that trial took less than one day,
Defendants were not entitled to a written statement of decision under Code of

Civil Procedure section 632.20 Contrary to Defendants’ assertion, the fact
that the trial court may have relied, in part, on evidence that was admitted
during the jury trial on the other issues in ruling on the alter ego issue, did
not convert the alter ego bifurcated trial into a three-week trial, which would
have required, upon request, a written statement of decision. Defendants do
not cite, nor are we aware of, any case so holding. Because Defendants have
not carried their burden on appeal to affirmatively show that they were

of alter ego liability based on a perceived inequitable result would be contrary
to, and in fact would negate, the remedy that the Legislature intended by
enacting section 7031(b).

20     Code of Civil Procedure section 632 provides: “In superior courts, upon
the trial of a question of fact by the court, written findings of fact and
conclusions of law shall not be required. The court shall issue a statement of
decision explaining the factual and legal basis for its decision as to each of
the principal controverted issues at trial upon the request of any party
appearing at the trial. The request must be made within 10 days after the
court announces a tentative decision unless the trial is concluded within one
calendar day or in less than eight hours over more than one day in which
event the request must be made prior to the submission of the matter for
decision. . . . [¶] The statement of decision shall be in writing, unless the
parties appearing at trial agree otherwise; however, when the trial is
concluded within one calendar day or in less than 8 hours over more than one
day, the statement of decision may be made orally on the record in the
presence of the parties.” (Italics added.)

                                       50
entitled to a statement of decision, we conclude that the court did not err by
denying Defendants’ request for a written statement of decision on its alter
ego finding. In any event, Defendants have not carried their burden on
appeal to affirmatively show that the court’s purported error was prejudicial
to them (i.e., that there was a miscarriage of justice or that they would have
obtained a more favorable result if the court had issued a written statement
of decision). (F.P. v. Monier (2017) 3 Cal.5th 1099, 1108.)

                                      IV

                   Addition of M&A as a Judgment Debtor

      Defendants contend that the trial court erred by granting Plaintiffs’
request to add M&A as a judgment debtor as a successor corporation to M&C
and amending the judgment accordingly.

                                       A

      After the initial judgment was entered in January 2018, Plaintiffs filed
a motion to add M&A as a judgment debtor, arguing that M&A was a
successor corporation to M&C. Plaintiffs argued that after the trial in this
case, Patrick allowed M&C to be suspended as a California corporation,
ceased conducting his construction business through M&C, and instead
began using M&A to conduct his construction business. They argued that, as
M&C’s successor corporation, M&A should be added as a judgment debtor
together with M&C and Patrick. Plaintiffs submitted evidence showing that
at about the time of the January 2018 judgment, Patrick switched his
business from M&C to M&A and began operating his construction business
through M&A. Defendants opposed the motion, arguing that it would be
inappropriate in the circumstances of this case to find that M&A was an alter

                                      51
ego of M&C. However, Defendants did not dispute Plaintiffs’ assertion that
M&A was a successor corporation to M&C.

      At the hearing on Plaintiffs’ motion, citing McClellan v. Northridge
Park Townhome Owners Assn., Inc. (2001) 89 Cal.App.4th 746 (McClellan),
the trial court granted the motion to add M&A as a judgment debtor on the
ground that M&A was a successor corporation to M&C. In its minute order,
the court stated:

         “Corporations ‘cannot escape liability by a mere change of
         name or a shift of assets when and where it is shown that
         the new corporation is, in reality, but a continuation of the
         old,’ especially when the rights of creditors are involved.
         [Citations.] As noted, the Court previously found that
         M&C was [Patrick’s] alter ego. M&C has not done any
         work since it completed its last project in 2017. [Citation.]
         M&C then became ‘dormant’ and [Patrick] began working
         for M&A. [Citation.] [Patrick] is the sole owner and
         employee of M&A. [Citation.] M&A was not doing any
         business as of August 2017. [Citation.] At his debtor’s
         exam, [Patrick] said he switched companies because M&A
         primarily deals with design. [Citation.] However, during
         his deposition [Patrick] said he created M&A to service his
         foreign clients and M&C for local clients. [Citation.]
         [Patrick] also conceded that M&C also did design work.
         [Citation.] M&A’s 2017 Statement of Information says the
         company is in the ‘construction’ business. [Citation.]
         [Patrick] said he receives a salary from M&A but was
         unable to recall how the salary is determined. [Citation.]
         In 2018, M&A paid for some of the McInerney family’s
         personal expenses such as a personal trainer and
         housekeeper. [Citation.] [Patrick] similarly used M&C to
         pay personal expenses. Based on the foregoing, [P]laintiffs
         have proven that M&A is merely a continuation of M&C. It
         appears that [Patrick] has sought to frustrate [P]laintiffs’
         ability to collect on the judgment by essentially changing
         the name of his business while carrying on the same
         business as before. Under these circumstances, it is

                                      52
         appropriate to hold M&A liable as a judgment debtor.
         Accordingly, the motion to add M&A as a judgment debtor
         is granted.”

      On January 25, 2019, the trial court entered a second amended
judgment adding M&A as a judgment debtor together with M&C and Patrick
for a total judgment amount of $2,940,325.50, which included an award of
Plaintiffs’ attorney fees and costs.

                                         B

      Under Code of Civil Procedure section 187, the “trial court has
jurisdiction to modify a judgment to add additional judgment debtors.”
(McClellan, supra, 89 Cal.App.4th at p. 752.) As an alternative to alter ego
liability, modification of a judgment to add a judgment debtor may also be
proper under the successor corporation theory. (Wolf Metals Inc., supra, 4
Cal.App.5th at p. 704.) “According to that theory, when a corporation sells or
transfers all of its assets to another corporation constituting its ‘ “mere
continuation,” ’ the latter is also liable for the former’s debts and liabilities.
[Citations.]” (Id. at pp. 704-705.) “ ‘California decisions holding that a
corporation acquiring the assets of another corporation is the latter’s mere
continuation and therefore liable for its debts have imposed such liability
only upon a showing of one or both of the following factual elements: (1) no
adequate consideration was given for the predecessor corporation’s assets and
made available for meeting the claims of its unsecured creditors; (2) one or
more persons were officers, directors, or stockholders of both corporations.
[Citations.]’ ” (McClellan, at p. 754, fn. 4, quoting Ray v. Alad Corp. (1977) 19
Cal.3d 22, 29.) Alternatively stated, “ ‘corporations cannot escape liability by
a mere change of name or a shift of assets when and where it is shown that
the new corporation is, in reality, but a continuation of the old. Especially is

                                         53
this well settled when actual fraud or the rights of creditors are involved,
under which circumstances the courts uniformly hold the new corporation
liable for the debts of the former corporation.’ ” (Cleveland v. Johnson (2012)
209 Cal.App.4th 1315, 1327 (Cleveland), quoting Blank v. Olcovich Shoe
Corp. (1937) 20 Cal.App.2d 456, 461 (Blank).)

      The application of the successor corporation theory is an equitable issue
to be decided based on the unique facts of a case. (Cleveland, supra, 209
Cal.App.4th at p. 1330.) Accordingly, on appeal, we apply the substantial
evidence standard in reviewing a trial court’s determination to apply the
successor corporation theory to add a successor corporation as a judgment
debtor. (Wolf Metals Inc., supra, 4 Cal.App.5th at p. 703; McClellan, supra,
89 Cal.App.4th at pp. 751-752.)

                                       C

      Based on our review of the record, we conclude that there is substantial
evidence to support the trial court’s finding that M&A is a successor
corporation to M&C and therefore, should be added as a judgment debtor.
The evidence showed that Patrick was the sole shareholder, sole director, sole
officer, and sole employee of both M&C and M&A. Patrick incorporated M&C
in 2011 and M&A in July 2014. M&C’s statement of information for 2016
stated that it was in the business of construction, while its statement of
information for 2017 stated that it was in the business of architecture.
M&A’s statements of information for 2016 and 2017 stated that it was in the
business of construction. Patrick testified that he did not know why he had
two corporations that engaged in construction in California. Patrick testified
that M&C and M&A share the same office, the same computers, and the
same accountant. He testified that he maintained a diary in which he

                                       54
recorded his time worked for each of M&C and M&A, but was unable to find
that diary.

      At his judgment debtor’s examination in July 2018, Patrick testified
that he did not recall receiving any compensation from M&A prior to January
2, 2018. After Patrick ceased working for M&C in late 2017, M&C became
dormant. He could not recall working on any projects for M&A prior to 2018.
Patrick testified that M&C was initially a design company and became a
design and construction company because of Plaintiffs’ project, while M&A
focused only on design. He testified that he received a salary from M&A, but
could not recall how that salary was determined. Patrick’s attorney
instructed him not to answer questions regarding M&A, such as balances in
its bank accounts, its gross revenues, and the projects it worked on.

      The above evidence supports findings by the trial court that one person
(i.e., Patrick) was the shareholder, director, and officer of both M&C and
M&A, thereby satisfying one of the two factors, and thus the minimum
required, for application of the successor corporation doctrine to add M&A as
a judgment debtor. (McClellan, supra, 89 Cal.App.4th at p. 754, fn. 4; Ray v.
Alad Corp., supra, 19 Cal.3d at p. 29.) In addition, based on the evidence
showing that Patrick ceased working for and, in effect, abandoned M&C and
then immediately began to conduct his business through M&A, the court
could reasonably infer that Patrick transferred his construction and design
business from M&C to M&A in late 2017 or early 2018 and that there was no
evidence showing that M&A paid M&C any consideration for the transfer of
M&C’s business and other assets (e.g., business goodwill). Based on this
evidence, the court could reasonably infer that no adequate consideration was
given by M&A for M&C’s assets, which could have been made available for
meeting the claims of unsecured creditors (e.g., Plaintiffs), thereby satisfying

                                       55
the other (and non-essential) factor for application of the successor
corporation doctrine. (McClellan, at p. 754, fn. 4; Ray v. Alad Corp., at p. 29.)
Even in the absence of an actual transfer of assets from M&C to M&A, the
court could reasonably infer that Patrick switched his design and
construction business from M&C to M&A to hinder Plaintiffs’ recovery of the
judgment against M&C (cf. McClellan, at pp. 750, 755-756), and thus, that
“in reality” M&A was a mere continuation of the business of M&C.
(Cleveland, supra, 209 Cal.App.4th at p. 1327; Blank, supra, 20 Cal.App.2d at
p. 461.) We therefore conclude that there is substantial evidence to support
the court’s finding that the successor corporation doctrine applied and that
M&A should be added as a judgment debtor. (Wolf Metals Inc., supra, 4
Cal.App.5th at p. 703; McClellan, at pp. 751-752.) To the extent that
Defendants cite evidence or inferences therefrom that would have supported
a contrary finding by the trial court, they again misconstrue and/or misapply
the substantial evidence standard of review. (Wolf Metals Inc., at p. 703;
McClellan, at pp. 751-752.) Accordingly, Defendants have not carried their
burden on appeal to affirmatively show that the trial court erred by granting
Plaintiffs’ motion to add M&A as a judgment debtor and entering the second

amended judgment adding M&A as a judgment debtor.21

21     In particular, we are not persuaded by Defendants’ conclusory
assertion that application of the successor corporation doctrine in this case
would violate the constitutional prohibition against involuntary servitude.
(U.S. Const., 13th Amend., § 1 [“Neither slavery nor involuntary
servitude . . . shall exist within the United States . . . .”].) Defendants do not
cite, and we are not aware of, any case holding that the 13th Amendment
applies to preclude the application of the successor corporation doctrine to
cases involving two corporations with the same sole shareholder and sole
employee.

                                        56
                                        V

                 Award of Attorney Fees under Section 1029.8

      Defendants contend that the trial court erred by awarding Plaintiffs
attorney fees under section 1029.8 in the amount of $155,008.50 for
prevailing on Plaintiffs’ section 7031(b) cause of action.

                                        A

      Originally enacted in 1985, section 1029.8 currently provides:

         “(a) Any unlicensed person who causes injury or damage to
         another person as a result of providing goods or performing
         services for which a license is required under . . . Division 3
         (commencing with Section 5000) . . . of the Business and
         Professions Code . . . shall be liable to the injured person
         for treble the amount of damages assessed in a civil action
         in any court having proper jurisdiction. The court may, in
         its discretion, award all costs and attorney’s fees to the
         injured person if that person prevails in the action.
         [¶] . . . [¶]

         “(d) For the purposes of this section, the term ‘unlicensed
         person’ shall not apply to any of the following: [¶] (1) Any
         person, partnership, corporation, or other entity providing
         goods or services under the good faith belief that they are
         properly licensed and acting within the proper scope of that
         licensure. . . .” (Stats. 1985, ch. 895, § 1; amended by Stats.
         2004, ch. 575, § 1.)

      As discussed above, in interpreting a statute, “our fundamental
objective is to ascertain the legislative intent.” (Alatriste, supra, 183
Cal.App.4th at p. 663.) We initially focus on the words of the statute because
statutory language is generally the most reliable indicator of legislative
intent. (Ibid.) The words of the statute should be given their ordinary and
usual meaning and should be construed in their statutory context. (Ibid.;

                                        57
MW Erectors, supra, 36 Cal.4th at p. 426.) If the statutory language is
unambiguous, we presume the Legislature intended what it stated and the
plain meaning of the statute governs. (MW Erectors, at p. 426.) On appeal,
we independently review the legal question of the proper interpretation of a
statute. (Alatriste, at p. 664; Kirby v. Immoos Fire Protection, Inc. (2012) 53
Cal.4th 1244, 1250 [independent, or de novo, review of questions of statutory
construction].) Accordingly, we review, de novo, the trial court’s
interpretation of section 1029.8 in this case. (Rony v. Costa (2012) 210
Cal.App.4th 746, 756 [de novo review of interpretation of § 1029.8].)

                                         B

      As noted above, Plaintiffs elected the remedy of reimbursement under
their section 7031(b) cause of action in lieu of the damages awarded by the
jury for their cause of action for breach of the construction contract. After the
trial court entered its initial judgment in favor of Plaintiffs, Plaintiffs filed a
motion for an award of attorney fees requesting that the court award fees
pursuant to section 1029.8. Defendants opposed the motion, arguing that
section 1029.8 was inapplicable to Plaintiffs’ award of reimbursement
pursuant to section 7031(b) because Plaintiffs were not an “injured” party
under that statute. In reply, Plaintiffs argued that section 1029.8 could
apply to their section 7031(b) reimbursement award because they were
“injured” by M&C’s actions.

      On August 3, 2018, the trial court issued an order granting Plaintiffs’
motion for attorney fees under section 1029.8, stating:

         “Defendants argue that [P]laintiffs do not qualify as an
         ‘injured party’ because [P]laintiffs elected the remedy of
         disgorgement under . . . section 7031 which does not
         require a showing of injury or damage. Defendants’

                                         58
         argument fails to acknowledge that section 1029.8
         specifically incorporates Division 3 of the Business and
         Professions Code, which includes . . . section 7031. Thus,
         section 1029.8 contemplates that fees may be awarded in
         cases where an unlicensed contractor is required to forfeit
         their compensation. Moreover, section 1029.8 does not
         ‘affect or limit any other remedy, including, but not limited
         to, a claim for exemplary damages.’ [Citation.] Thus, the
         fact that [P]laintiffs elected a statutory remedy does not
         preclude them from seeking fees.”

Accordingly, the court awarded Plaintiffs attorney fees in the amount of
$155,008.50 that they incurred in prevailing on their motion for summary
adjudication of their section 7031(b) cause of action.

                                       C

      In challenging the attorney fee award, Defendants assert that the trial
court erred in interpreting section 1029.8 in a manner that would allow an
award of attorney fees to a party that prevails on a cause of action for section
7031(b) reimbursement. Defendants argue that the plain language of section
1029.8 requires that an unlicensed person “cause[] injury or damage” to
another person (i.e., the “injured person”) as a result of providing goods or
performing services for which a license is required and provides that the
court may award attorney fees “to the injured person”. (§ 1029.8.) Because
Plaintiffs elected the section 7031(b) remedy of reimbursement, which is not
based on injury or damage, Defendants argue that Plaintiffs are not injured
persons within the meaning of section 1029.8 and the court therefore erred by
awarding Plaintiffs attorney fees.

      As Defendants note, a section 7031(b) reimbursement award is, in
effect, a statutory penalty imposed on an unlicensed contractor based on
public policy and not on the equities of a particular case or any injury

                                       59
suffered by a customer of an unlicensed contractor. (MW Erectors, supra, 36
Cal.4th at pp. 418, 423, 425; Hydrotech Systems, Ltd. v. Oasis Waterpark
(1991) 52 Cal.3d 988, 995, 997 (Hydrotech).) The California Supreme Court
stated that the CSLL “imposes strict and harsh penalties for a contractor’s
failure to maintain proper licensure.” (MW Erectors, at p. 418, italics added.)
Those penalties apply “regardless of the merits of” an action. (Ibid.) In
enacting section 7031(a), the Legislature intended “to impose a stiff all-or-
nothing penalty for unlicensed work.” (Id. at p. 426.) We infer that the
Legislature had the same intent in enacting section 7031(b) in 2001. “By
adding this [section 7031(b)] remedy, the Legislature sought to further
section 7031(a)’s policy of deterring violations of licensing requirements by
‘allow[ing] persons who utilize unlicensed contractors to recover
compensation paid to the contractor for performing unlicensed work.
[Citation.]’ [Citation.]” (Alatriste, supra, 183 Cal.App.4th at p. 666.) “[T]he
Legislature intended that courts interpret section[s] 7031(a) and [7031](b) in
a consistent manner, resulting in the same remedy regardless of whether the
unlicensed contractor is the plaintiff or defendant.” (Ibid.) Alternatively
stated, “the Legislature enacted section 7031(b) to ensure the same penalties
apply for an unlicensed contractor regardless whether the contractor was the
plaintiff or the defendant.” (Id. at p. 667, italics added.) Accordingly, to
establish a section 7031(b) reimbursement cause of action, a plaintiff need
not prove that the unlicensed contractor/defendant caused the plaintiff an
injury by reason of negligent or deficient services, defective materials, or
other injurious acts, but need simply show that the unlicensed
contractor/defendant was paid for services or materials for which a
contractor’s license was required. (Miller v. Municipal Court of Los Angeles
(1943) 22 Cal.2d 818, 837 [“The test generally underlying most of the cases

                                       60
. . . is that a ‘penalty’ includes any law compelling a defendant to pay a
plaintiff other than what is necessary to compensate him for a legal damage
done him by the former.”].) Therefore, a section 7031(b) reimbursement
cause of action can be successful even where, as in this case, the unlicensed
contractor’s services and materials met prevailing construction standards
and, as a result, the plaintiff did not suffer any actual injury or damage from
those services and materials. (Cf. Siry Investment, L.P. v. Farkhondehpour
(2020) 45 Cal.App.5th 1098, 1141 [no attorney fee award allowed under
§ 1029.8 because plaintiff did not allege contractor’s unlicensed status caused
its injury].)

      Independently construing the language of section 1029.8, we conclude
that its plain language allows an award of attorney fees only when an
unlicensed person “causes injury or damage” to another person (i.e., the
“injured person”) as a result of providing goods or performing services for
which a license is required. (§ 1029.8.) Next, independently construing the
language of section 7031(b), we conclude that its plain language requires, as
a statutory penalty, reimbursement of all compensation paid to an unlicensed
contractor for all services performed and all materials provided for which a
contractor’s license is required. (§ 7031(b); see also MW Erectors, supra, 36
Cal.4th at pp. 418, 423, 425; Hydrotech, supra, 52 Cal.3d at pp. 995, 997;
Alatriste, supra, 183 Cal.App.4th at p. 667.) A section 7031(b)
reimbursement award is a statutory penalty that applies regardless of
whether the plaintiff has suffered any legal injury or damage as a result of
services or goods provided by an unlicensed contractor within the meaning of
section 1029.8.

      The trial court’s order granting Plaintiffs’ motion for summary
adjudication on their second cause of action under section 7031(b) made no

                                       61
finding regarding any legal injury or damage suffered by Plaintiffs caused by
M&C’s unlicensed status. Rather, the amount of the section 7031(b)
reimbursement award was based solely on the total amount of compensation
paid by Plaintiffs to M&C. The judgment awarding Plaintiffs reimbursement
for the amounts paid to M&C was therefore a statutory penalty under section
7031(b) that was imposed without any nexus or connection to any legal injury
or damage suffered by Plaintiffs. (MW Erectors, supra, 36 Cal.4th at pp. 418,
423, 425; Hydrotech, supra, 52 Cal.3d at pp. 995, 997; Alatriste, supra, 183
Cal.App.4th at p. 667.) Because the jury did not find that Plaintiffs suffered
any legal injury or damage caused by M&C’s unlicensed status, section
1029.8’s plain language does not apply to allow an award of attorney fees.
Accordingly, we conclude that the trial court erred by awarding Plaintiffs

attorney fees of $155,008.50 pursuant to section 1029.8.22

      Plaintiffs assert, and the trial court found, that section 1029.8 applied
to a section 7031(b) reimbursement award because section 1029.8,
subdivision (a) lists Division 3 of the Business and Professions Code, which
includes section 7031(b) and other contractor licensing provisions (i.e., § 7000
et seq.), within the types of licenses covered by section 1029.8. Initially, we
agree that it is a prerequisite to a section 1029.8 attorney fee award that the
defendant be an unlicensed contractor. Specifically, section 1029.8(a) lists
those types of licenses for which an attorney fee award may be imposed
against an unlicensed person for provision of services that require a license.

22    Because we dispose of this issue based on section 1029.8’s plain
language, we need not, and do not, address Defendants’ alternative assertion
that no section 1029.8 attorney fee award was appropriate because M&C
acted “under a good faith belief” that it was properly licensed within the
meaning of section 1029.8, subdivision (d).

                                       62
However, contrary to Plaintiffs’ and the trial court’s apparent understanding,
that unlicensed status is insufficient, by itself, to support an attorney fee
award under section 1029.8; there must also be a finding that the unlicensed
person caused a legal injury or damage to the plaintiff as a result of providing
goods or performing services for which a license is required. (§ 1029.8, subd.
(a).) Because, as discussed above, Plaintiffs’ section 7031(b) reimbursement
award was not based on any legal injury or damage that they suffered,
Plaintiffs are not entitled to an award of their attorney fees under section
1029.8.

                        PLAINTIFFS’ CROSS-APPEAL

                                       VI

                     Section 3287(a) Prejudgment Interest

      In their cross-appeal, Plaintiffs contend that the trial court erred by
denying their request for prejudgment interest under section 3287(a).
Plaintiffs assert that because they timely and sufficiently requested an award
of prejudgment interest under section 3287(a), they are entitled to an award
of prejudgment interest under that statute as a matter of law.

                                        A

      Section 3287(a) provides:

          “A person who is entitled to recover damages certain, or
          capable of being made certain by calculation, and the right
          to recover which is vested in the person upon a particular
          day, is entitled also to recover interest thereon from that
          day . . . .”

One purpose of section 3287(a) prejudgment interest is to provide
compensation to the plaintiff for the loss of use of the award during the

                                       63
prejudgment period. (Lakin v. Watkins Associated Industries (1993) 6 Cal.4th
644, 663.) Under section 3287(a), “the court has no discretion, but must
award prejudgment interest upon request . . . .” (North Oakland Medical
Clinic v. Rogers (1998) 65 Cal.App.4th 824, 828 (North Oakland).)

      “[T]here is no authority mandating any particular procedure for
securing an award of prejudgment interest.” (North Oakland, supra, 65
Cal.App.4th at p. 829.) “[N]o statute or rule of court establishes a procedure
for requesting an award of prejudgment interest, or a time limit therefor, in
the superior court.” (Id. at pp. 829-830.) Nevertheless, a party must make a
reasonably timely request for prejudgment interest. “[P]rejudgment interest
is not a cost, but an element of damages,” and therefore “prejudgment
interest should be awarded in the judgment on the basis of a specific request
therefor made before entry of judgment.” (Id. at p. 830.) “A general prayer in
the complaint is adequate to support an award of prejudgment interest.” (Id.
at p. 829.) Regarding the timeliness of a request, “at the latest, a request for
prejudgment interest under section 3287 may be sought as part of a motion
for new trial pursuant to Code of Civil Procedure section 657 . . . .” (North
Oakland, at p. 830.) In the absence of a statute or a rule of court setting
forth procedural requirements for a request for prejudgment interest, the
court in North Oakland concluded that “requests for prejudgment interest
under section 3287 by a successful plaintiff must be made by way of motion
prior to entry of judgment, or the request must be made in the form of a
motion for new trial no later than the time allowed for filing such a motion.
(Code Civ. Proc., § 659.)” (North Oakland, at p. 831.)

      However, at least one other court has held, instead, that a formal
motion is not a prerequisite for an award of section 3287 prejudgment
interest. In Watson Bowman Acme Corp. v. RGW Construction, Inc. (2016) 2

                                       64
Cal.App.5th 279 (Watson), the court stated: “[T]he fact that Watson’s request
[for prejudgment interest] was not labeled as [a] motion for new trial or as a
motion for modification under Code of Civil Procedure section 657 does not

render its format defective. [Citations.]”23 (Watson, at p. 299.) Rather, a
request for prejudgment interest is sufficient if it “provides the relevant
information to the opposing party and the court and gives the adverse party a
reasonable opportunity to oppose the request on its merits. [Citations.]”
(Ibid.) In the circumstances of Watson, the court concluded that “Watson’s
request clearly identified (1) the relief requested (i.e., the addition of
prejudgment interest to the amount of the judgment) and (2) the grounds
upon which the request was based--specifically, [section 3287(a)] and its
contention that the damages were a liquidated sum. Furthermore, Watson
provided RGW a sufficient opportunity to oppose the request, as is evident
from the written opposition filed by RGW with the court. Consequently, we
conclude Watson’s request provided RGW with the [sic] sufficient notice and a
reasonable opportunity for opposition, thus satisfying the purpose and
requirements of Code of Civil Procedure section 659, subdivision (a).”
(Watson, at p. 299, italics added.) Accordingly, the court concluded that “the
format of Watson’s request for prejudgment interest was not defective.” (Id.
at p. 300.)

23    Watson further clarified that “[a] request for prejudgment interest is
not a request for a new trial . . . , but a request to modify the decision to
include an award of prejudgment interest.” (Watson, supra, 2 Cal.App.5th at
p. 298, fn. 14.)

                                        65
                                        B

      In their complaint, Plaintiffs alleged that they had made 10 payments
to Defendants, which totaled $2,732,627.87, and they specified the amounts
of each of those 10 payments. In their second cause of action for section
7031(b) reimbursement (or disgorgement), Plaintiffs sought reimbursement
of all amounts paid to Defendants, “which amount is at least $2,732,627.87,
plus interest.” (Italics added.) In their prayer for relief, Plaintiffs included
the following request: “7. For prejudgment interest according to law.”
(Italics added.)

      On January 22, 2018 (after the jury had returned its special verdict),
Plaintiffs served Defendants with their proposed judgment, which included a
provision stating: “On the Second Cause of Action for Disgorgement of
Contractor’s Fees, the sum of $2,732,627.87, plus prejudgment interest at the
rate of 10% per annum to the date hereof in the amount of $___________.” In
submitting that proposed judgment, Christopher Elliott, Plaintiffs’ counsel,
stated in an accompanying letter:

         “For the Court’s ease in calculating prejudgment interest,
         prejudgment interest from the dates of the payments to be
         disgorged to the date of this filing [i.e., January 22, 2018]
         totals $795,297.20 at 10% per annum, and increases by
         $748.66 per day thereafter until entry of judgment
         ($2,732,627.87 times 10% divided by 365). A chart
         summarizing the accumulated interest through the date of
         this filing is attached (hereto as Exhibit B).”

Exhibit B, as referenced above and attached to Plaintiffs’ submission of their
proposed judgment, set forth a table or chart that listed the date and amount
of each of the 10 payments made by Plaintiffs to M&C, as follows:

                                        66
         “Check Date                  Amount

         “05/08/14             $      50,000.00
         “08/25/14                    346,901.62
         “11/25/14                    633,127.47
         “02/26/15                    430,000.00
         “02/26/15                    250,000.00
         “03/12/15                    180,000.00
         “07/25/15                    741,418.00
         “10/21/15                    2,799.19
         “10/21/15                    19,627.29
         “10/21/15                    78,754.30
                               $      2,732,627.87”24

      On February 1, 2018, Defendants filed their objection to Plaintiffs’
proposed judgment, arguing that “the judgment should not provide for any
award of prejudgment interest to Plaintiffs.”

      On February 8, 2018, Plaintiffs filed their response to Defendants’
objections to their proposed judgment, arguing: “Plaintiffs are entitled to an
award of interest pursuant to . . . section 3287.” (Italics added.) Plaintiffs
quoted section 3287(a) and argued: “That test is obviously met here. Here,
prejudgment interest on Plaintiffs’ section 7031 claim is required because the
amounts ordered disgorged were ‘certain, or capable of being made certain by
calculation.’ They are simply the amounts paid for construction by Plaintiffs
to [M&C]. Those amounts are certain. . . . The amount of prejudgment
interest to be awarded is easily calculated. . . . Defendants have not
challenged [Plaintiffs’ calculation attached to their proposed judgment].”

24    Exhibit B also listed the check number and invoice number for each of
those 10 payments.

                                        67
Plaintiffs further argued that the court, and not the jury, must determine
their entitlement to prejudgment interest under section 3287.

      On February 28, 2018, the trial court entered a judgment for Plaintiffs,
which included the above provision in their proposed judgment stating: “On
the Second Cause of Action for Disgorgement of Contractor’s Fees, the sum of
$2,732,627.87, plus prejudgment interest at the rate of 10% per annum to the
date hereof in the amount of $___________.” The judgment did not set forth
the amount of prejudgment interest in the blank provided, nor did it
expressly provide that an award of prejudgment interest, or the amount

thereof, was yet to be determined.25

      On March 16, 2018, Plaintiffs filed a document titled: “PLAINTIFFS’
REQUEST TO ADD AMOUNT OF PREJUDGMENT INTEREST TO
JUDGMENT.” Plaintiffs’ request for prejudgment interest asked the trial
court to add to its February 28, 2018 judgment prejudgment interest in the
amount of $822,998.51 through the date of that judgment. Noting that the
amount of prejudgment interest had been left blank in the February 28, 2018
judgment, Plaintiffs calculated the correct amount of total prejudgment
interest (i.e., $822,998.51) and attached an exhibit setting forth the dates and
amounts of the 10 payments made by Plaintiffs to M&C and the amount of
prejudgment interest that should be awarded with respect to each such
payment.

25    In contrast, the judgment entered on February 28, 2018, included the
handwritten acronym “TBD” in three subsequent blanks relating to Plaintiffs’
recovery of costs, their recovery of attorney fees, and the total amount of the
judgment award. We presume that “TBD” is an acronym used by the court to
indicate that those three other issues remained “to be determined.”

                                       68
      On April 23, 2018, Defendants filed their objection to Plaintiffs’ request
for prejudgment interest and proposed nunc pro tunc amended judgment that
would set forth the amount of prejudgment interest awarded (i.e.,

$822,998.87).26 Citing North Oakland, Defendants argued that the time for
Plaintiffs to file a motion for an award of prejudgment interest had expired.
They argued that in requesting an award of prejudgment interest, Plaintiffs
did not request a hearing date or briefing schedule and therefore, Defendants
“have never received due process” as required by North Oakland. Defendants
also argued that section 3287(a) prejudgment interest cannot be awarded on
a section 7031(b) disgorgement judgment because Plaintiffs did not suffer any
actual monetary loss.

      On April 25, 2018, Plaintiffs filed their response to Defendants’
objection to their request for prejudgment interest. Plaintiffs argued that
their request was timely and that it satisfied the requirements set forth in
North Oakland and Watson. Specifically, Plaintiffs argued that they had
timely requested an award of section 3287(a) prejudgment interest both
before the judgment was entered and soon thereafter, and that Defendants
had an opportunity to respond to Plaintiffs’ requests for prejudgment interest
and had, in fact, filed their written opposition to those requests. Plaintiffs
also argued that an award of section 3287(a) prejudgment interest is
appropriate on the amount of a section 3071(b) judgment because the
amounts of the payments to be reimbursed pursuant to that judgment were
certain or capable of being made certain by calculation within the meaning of
section 3287(a).

26    Defendants represented that on April 13, 2018, they had been served
with Plaintiffs’ proposed nunc pro tunc amended judgment.

                                       69
      The record on appeal does not contain any order by the trial court
either expressly approving or denying Plaintiffs’ request to add prejudgment
interest to its judgment, until the court’s November 9, 2018 order discussed
below. At a March 2, 2018 hearing on Defendants’ motion for reconsideration
of the court’s denial of their request for a statement of decision, Plaintiffs’
counsel inquired why the court had not included the amount of prejudgment
interest in its February 28, 2018 judgment. The court stated that its
judgment included several blanks that would have to be determined at a later
date. At the initial June 8, 2018 hearing on Defendants’ motion to tax costs,
in addressing a Code of Civil Procedure section 998 issue, the court stated
that it would not sign Plaintiffs’ proposed nunc pro tunc amended judgment
that sought prejudgment interest, based on its apparent belief that it had
already ruled on that issue. At the continued August 3, 2018 hearing on
Defendants’ motion to tax costs, the court maintained that it had already
ruled on Plaintiffs’ request for prejudgment interest and had not awarded
them prejudgment interest. Plaintiffs argued that the court had yet to rule
on their request for prejudgment interest. The court disagreed and stated
that to the extent Plaintiffs were asking the court to reconsider the
prejudgment interest issue, it denied that renewed request as having been
made without proper notice thereof.

      On September 27, 2018, Plaintiffs filed a notice of motion and motion
for an order granting their request for an award of prejudgment interest. On
October 29, Defendants filed their opposition to Plaintiffs’ motion. On
November 2, Plaintiffs filed their reply to Defendants’ opposition. At a
hearing on November 9, the trial court denied Plaintiffs’ motion to add
prejudgment interest. The court stated in part:

                                        70
         “Judgment was entered on February 28, 2018. [Citation.]
         Although the judgment included a blank line where an
         award of prejudgment interest could have been inserted, no
         amount was entered because prejudgment interest had not
         been requested by motion.

         “Plaintiffs’ motion for prejudgment interest was filed
         September 27, 2018. [Citation.] The motion was filed
         beyond the time to bring a motion for new trial. . . . [¶]
         [P]laintiffs never before filed a motion under section 3287.
         The submission of a proposed judgment is not sufficient.
         Indeed, the first indication that [P]laintiffs were seeking
         interest under section 3287 was in response to
         [D]efendants’ objection to the proposed judgment.
         [Citations.]

         “ . . . In contrast to Watson, the motion now before the
         Court was not made within the time for a new trial motion.
         Thus, it does not substantially comply with the statute
         governing new trial motions.”

Accordingly, the court denied Plaintiffs’ motion.

      On January 25, 2019, the court entered a second amended judgment
against M&C, Patrick, and M&A for a total amount of $2,940,325.50, which
included the attorney fee award and costs and did not include an award of
prejudgment interest.

                                        C

      At the outset, we address Plaintiffs’ assertion that their cross-appeal of
the November 9, 2018 order is timely. Defendants argue that because
Plaintiffs’ notice of cross-appeal was not timely filed, this court lacks
jurisdiction to consider Plaintiffs’ challenge to the November 9, 2018 order.
As we explain below, we agree with Plaintiffs that their cross-appeal of the
November 9, 2018 order is timely.

                                        71
      On November 9, 2018, the trial court issued its order denying Plaintiffs’
motion to add prejudgment interest to the judgment. On December 30, 2018,
Plaintiffs filed a notice of cross-appeal challenging the court’s November 9,
2018 order, but the notice misidentified the case number and apparently was
electronically filed in the San Diego County Superior Court’s register of
actions under a different case. Responding to this court’s letter of inquiry,
Plaintiffs submitted a letter on January 28, 2019, informing us that on
December 30, 2018, they had filed a notice of cross-appeal challenging the
November 9, 2018 order in the instant case, but that their notice of cross-
appeal had been mistakenly filed in a different case (i.e., Case No. 37-2018-
00049647-CU-MC-CTL). On January 25, 2019, the court entered its second
amended judgment, which crossed-out language included in the February 28,
2018 judgment relating to its award on the second cause of action that read:
“plus prejudgment interest at the rate of 10% per annum to the date hereof in
the amount of $___________.” On February 5, 2019, Plaintiffs served on all
parties a notice of entry of the January 25, 2019 second amended judgment.
On February 13, 2019, Defendants filed their notice of appeal challenging the
January 25, 2019 second amended judgment. On March 6, 2019, Plaintiffs
filed a second notice of cross-appeal, again challenging the November 9, 2018
order. This notice of cross-appeal correctly identified the instant case
number.

      Code of Civil Procedure section 904.1, subdivision (a)(2) provides that a
party may appeal “an order made after a judgment made appealable by
paragraph (1).” Because the February 28, 2018 judgment was appealable
pursuant to Code of Civil Procedure section 904.1, subdivision (a)(1), the
November 9, 2018 order, which was issued after that judgment, is appealable
pursuant to Code of Civil Procedure section 904.1, subdivision (a)(2).

                                       72
      The timeliness of an appeal is generally determined by California Rules

of Court, rule 8.104(a).27 That rule provides:

         “(1) Unless a statute or rules 8.108, 8.702, or 8.712 provide
         otherwise, a notice of appeal must be filed on or before the
         earliest of:

         “(A) 60 days after the superior court clerk serves on the
         party filing the notice of appeal a document entitled ‘Notice
         of Entry’ of judgment or a filed-endorsed copy of the
         judgment, showing the date either was served;

         “(B) 60 days after the party filing the notice of appeal
         serves or is served by a party with a document entitled
         ‘Notice of Entry’ of judgment or a filed-endorsed copy of the
         judgment, accompanied by proof of service; or

         “(C) 180 days after entry of judgment.”28 (Cal. Rules of
         Court, rule 8.104(a).)

Rule 8.104(b) provides: “Except as provided in rule 8.66, no court may extend
the time to file a notice of appeal. If a notice of appeal is filed late, the
reviewing court must dismiss the appeal.”

      Defendants argue, in a conclusory manner, that Plaintiffs’ notice of
cross-appeal was untimely because it was not filed within 60 days of the
November 9, 2018 order. However, in so arguing, Defendants do not cite to
any document in our records or the record on appeal (or, for that matter, in
the register of actions maintained by the San Diego County Superior Court)
showing that a notice of entry of that order, or a filed-endorsed copy of that

27    All references to rules are to the California Rules of Court.

28   Rule 8.108(g) provides for 20-day extensions for the time to file a cross-
appeal in certain circumstances, which we need not address in this case.

                                         73
order, was served by either the San Diego County Superior Court clerk or a
party. Such service would have triggered a shortened 60-day appeal period
pursuant to rule 8.104(a)(1)(A) or (B) in lieu of the default 180-day appeal
period pursuant to rule 8.104(a)(1)(C). Although the November 9, 2018 order
expressly directed Plaintiffs “to serve notice on all parties within 2 court days
of this ruling,” there is nothing in our records or the record on appeal (nor
apparently in the San Diego County Superior Court’s register of actions)

showing that Plaintiffs served notice of the order on all parties.29 Because
Defendants do not cite to, and we are not aware of, any document showing
that either the superior court clerk or a party served a notice of entry, or a
filed-endorsed copy, of the November 9, 2018 order, the default 180-day
appeal period pursuant to rule 8.104(a)(1)(C) applies to Plaintiffs’ cross-
appeal of that order. Therefore, regardless of whether Plaintiffs’ notice of
cross-appeal filed on December 30, 2018 or their second notice of cross-appeal
filed on March 6, 2019 is the operative notice of appeal, Plaintiffs timely filed
a notice of cross-appeal within the 180-day appeal period that began to run
on November 9, 2018. Defendants do not cite to any document or authority
persuading us to reach a contrary conclusion.

      Even assuming that a 60-day appeal period applied pursuant to rule
8.104(a)(1)(A) or (B), we would nevertheless conclude that Plaintiffs timely

29    The November 9, 2018 order addressed both Plaintiffs’ request for
prejudgment interest and their motion to add M&A as a judgment debtor.
We presume that the trial court’s direction to Plaintiffs to serve all parties “of
this ruling” was not limited to just its ruling on Plaintiffs’ motion to add
M&A as a judgment debtor.

                                       74
filed a notice of cross-appeal within that period.30 The notice of cross-appeal
filed by Plaintiffs on December 30, 2018 expressly appealed from orders
“entered on 11/09/2018 and 11/30/2018.” The only order filed by the court on
November 9, 2018 that was adverse to Plaintiffs was its order denying their
request for prejudgment interest. Rule 8.100(a)(2) provides: “The notice of
appeal must be liberally construed. The notice is sufficient if it identifies the
particular judgment or order being appealed.” When it is reasonably clear
what an appellant is trying to appeal from and the respondent would suffer
no prejudice, an appellate court should treat a notice of appeal as being from
that underlying judgment or order. (Walker v. Los Angeles County
Metropolitan Transportation Authority (2005) 35 Cal.4th 15, 18; see also Luz
v. Lopes (1960) 55 Cal.2d 54, 59-60.) Even though Plaintiffs’ December 30,
2018 notice of cross-appeal misidentified the superior court case number for
this case, it clearly identified the order being appealed (i.e., November 9,
2018 order) and thereby gave Defendants notice of what order they were
appealing. Accordingly, when Defendants were served with a notice of that
cross-appeal, they were not prejudiced by the (presumably clerical) error in
identifying the case number for Plaintiffs’ cross-appeal of the November 9,
2018 order. (Cf. D’Avola v. Anderson (1996) 47 Cal.App.4th 358, 362 [“The

30     On August 5, 2019, Plaintiffs filed the civil case information statement
for their second notice of cross-appeal challenging the November 9, 2018
order. Plaintiffs state therein that a notice of entry of that order was served
on February 5, 2019, by either the superior court clerk or a party. However,
our review of the San Diego County Superior Court’s register of actions shows
that the notice of entry served by Plaintiffs on February 5, 2019, was a copy
of the January 25, 2019 second amended judgment and not the November 9,
2018 order. We therefore remain unpersuaded that a notice of entry of the
November 9, 2018 order was served, which service would have triggered a
shortened 60-day appeal period pursuant to rule 8.104(a)(1)(A) or (B).

                                       75
fact that the wrong superior court case number was affixed to the notice of
appeal does not change the result” because the California Rules of Court do
not require any case number to be affixed to a notice of appeal to be effective];
Aguilar v. Gostischef (2013) 220 Cal.App.4th 475, 479 [applying D’Avola’s
reasoning to allow appeal where notice of appeal was filed in a different
case].) Accordingly, construing Plaintiffs’ December 30, 2018 notice of cross-
appeal liberally, we conclude that Plaintiffs timely cross-appealed the
November 9, 2018 order. (Rule 8.100(a)(2); D’Avola, at p. 362; Aguilar v.
Gostischef, at p. 479.)

                                       D

      Addressing the merits of Plaintiffs’ contention, we agree with Plaintiffs
that the trial court erred by denying their request for an award of section
3287(a) prejudgment interest on the ground that their request was not
timely. As discussed above, while the trial court based its ruling at least in
part on the fact that Plaintiffs had not filed a timely noticed motion for
prejudgment interest, there is no statute or rule of court that establishes a
procedure, or time limit, for requesting an award of section 3287(a)
prejudgment interest. (Watson, supra, 2 Cal.App.5th at p. 297; Steiny & Co.,
Inc. v. California Electric Supply Co. (2000) 79 Cal.App.4th 285, 294; North
Oakland, supra, 65 Cal.App.4th at pp. 829-830.) Rather, a request for section
3287(a) prejudgment interest requires only that the party opposing the
request be provided sufficient notice of the request and a reasonable
opportunity to oppose the request. (Watson, at p. 299.) Further, that request
must be timely made either before entry of judgment or, at the latest, within
the time period for new trial motions under Code of Civil Procedure section
659. (North Oakland, at p. 831; Watson, at p. 298.)

                                       76
      Based on our review of the record on appeal, we conclude that Plaintiffs
provided Defendants with both sufficient notice of their request for an award
of section 3287(a) prejudgment interest and a reasonable opportunity to
oppose their request. From the beginning of this action in 2016, Plaintiffs
alleged that they were entitled to an award of interest on their section
7031(b) cause of action. Plaintiffs’ complaint alleged that they had made 10
payments to Defendants, which totaled $2,732,627.87, and their second cause
of action sought section 7031(b) reimbursement of all amounts paid to
Defendants, “which amount is at least $2,732,627.87, plus interest.” (Italics
added.) Further, Plaintiffs’ prayer for relief requested: “prejudgment interest
according to law.” (Italics added.)

      On January 22, 2018, Plaintiffs served Defendants with their proposed
judgment, which included a provision for an award of prejudgment interest as
follows: “On the Second Cause of Action for Disgorgement of Contractor’s
Fees, the sum of $2,732,627.87, plus prejudgment interest at the rate of 10%
per annum to the date hereof in the amount of $___________.” (Italics added.)
Together with their proposed judgment, Plaintiffs’ counsel submitted a table
setting forth the date and amount of each of the 10 payments made by
Plaintiffs to M&C and provided the calculations for prejudgment interest
through January 22, 2018 (i.e., $795,297.20) and the daily accrual amount
(i.e., $748.66) until entry of the judgment.

      Having received notice of Plaintiffs’ request for an award of
prejudgment interest in Plaintiffs’ complaint and in their proposed judgment,
Defendants had an opportunity to oppose, and did in fact oppose, Plaintiffs’
request. Specifically, on February 1, 2018, Defendants opposed Plaintiffs’
request for prejudgment interest by filing their objection to Plaintiffs’

                                       77
proposed judgment, arguing that “the judgment should not provide for any
award of prejudgment interest to Plaintiffs.” (Italics added.)

      On February 8, 2018, Plaintiffs responded to Defendants’ opposition to
their request for prejudgment interest and objections to their proposed
judgment, arguing: “Plaintiffs are entitled to an award of interest pursuant
to . . . section 3287” on their section 7031(b) claim. (Italics added.)

      Based on the above pleadings, we conclude that Plaintiffs provided
Defendants sufficient notice of their request for an award of section 3287(a)
prejudgment interest and that Defendants had a reasonable opportunity to
oppose that request, which is confirmed by Defendants’ filing an opposition to
that request. Further, Plaintiffs’ request for section 3287(a) prejudgment
interest was timely because it was made before entry of judgment on
February 28, 2018. (North Oakland, supra, 65 Cal.App.4th at p. 831; Watson,
supra, 2 Cal.App.5th at pp. 298-299.)

      Even if we were to presume that Plaintiffs’ prejudgment request for an
award of section 3287(a) prejudgment interest was not sufficient to give
Defendants notice of that request, we would nevertheless conclude that
Plaintiffs’ subsequent additional request after entry of the judgment provided
Defendants sufficient notice of that request and a reasonable opportunity to
oppose it. On February 28, 2018, the court entered a judgment for Plaintiffs,
including a provision stating: “On the Second Cause of Action for
Disgorgement of Contractor’s Fees, the sum of $2,732,627.87, plus
prejudgment interest at the rate of 10% per annum to the date hereof in the
amount of $___________.” On March 16, 2018, presumably because the
judgment did not set forth the amount of prejudgment interest in the blank
provided therefor, Plaintiffs filed a request for the court to add to its

                                        78
February 28, 2018 judgment prejudgment interest in the amount of
$822,998.51 through the date of that judgment.

      We conclude that Plaintiffs’ March 16, 2018 request for prejudgment
interest was timely made, provided Defendants with sufficient notice of that
request, and allowed Defendants a reasonable opportunity to oppose it.
Plaintiffs’ request was timely because it was filed within the time period for
filing a motion for new trial. As with a motion for new trial, a request for
prejudgment interest must be filed “[w]ithin 15 days of the date of mailing
notice of entry of judgment by the clerk of the court . . . or service upon
[Plaintiffs] by any party of written notice of entry of judgment, or within 180
days after the entry of judgment, whichever is earliest.” (Code Civ. Proc.,
§ 659, subd. (a)(2); North Oakland, supra, 65 Cal.App.4th at pp. 830-831;
Watson, supra, 2 Cal.App.5th at pp. 298-299.) Our review of the record on
appeal did not locate, and Defendants do not cite to, any notice of entry of the
February 28, 2018 judgment that was served by either the superior court

clerk or a party.31 Therefore, the applicable period for a timely motion for
new trial, and thus for a timely request for section 3287(a) prejudgment

31     Further, the superior court’s register of actions does not appear to
contain a notice of entry of that judgment served by either its court clerk or a
party. Although Plaintiffs state in their cross-appellants’ opening brief that
they served a notice of entry of judgment on March 16, 2018, they provide no
citation to the record in support of that statement and our review of the
record on appeal does not reflect any such notice of entry. Nevertheless, even
if Plaintiffs had served a notice of entry on March 16, 2018, their request for
an award of section 3287(a) prejudgment interest was filed on March 16,
2018, and was therefore timely filed within the 15-day period for filing new
trial motions (i.e., on or before March 31, 2018). (Code Civ. Proc., § 659, subd.
(a)(2).)

                                        79
interest, is within 180 days after the entry of the judgment on February 28,
2018. (Code Civ. Proc., § 659, subd. (a)(2); North Oakland, at pp. 830-831;
Watson, at pp. 298-299.) Because Plaintiffs’ March 16, 2018 request for an
award of section 3287(a) prejudgment interest was filed 16 days after the
judgment was entered on February 28, 2018, their request was timely.

      Further, Plaintiffs’ March 16, 2018 request was sufficient because it
provided Defendants and the trial court with the relevant information that
Plaintiffs were requesting an award of section 3287(a) prejudgment interest.
(Watson, supra, 2 Cal.App.5th at p. 299.) In particular, Plaintiffs’ request,
like the request in Watson, clearly identified the relief requested (i.e., the
addition of prejudgment interest to the judgment amount) and the grounds
on which that request was based (i.e., § 3287(a) and Plaintiffs’ assertion that
their § 7031(b) award was liquidated). (Cf. Watson, at p. 299.) Also,
Plaintiffs’ request, like the request in Watson, provided Defendants with a
reasonable opportunity to oppose the request, as is evident from Defendants’
written opposition filed with the court on April 23, 2018. We therefore
conclude that Plaintiffs’ request gave Defendants sufficient notice of their
request for an award of section 3287(a) prejudgment interest and that
Defendants had a reasonable opportunity to oppose that request, which is
confirmed by Defendants’ actual opposition to that request, filed on April 23,
2018. Accordingly, we conclude that the trial court erred in determining that
Plaintiffs’ additional request for an award of section 3287(a) prejudgment
interest filed on March 16, 2018 was untimely and/or insufficient to provide
Defendants with notice of Plaintiffs’ request and a reasonable opportunity to
oppose the request. As noted, contrary to the trial court’s apparent belief and
Defendants’ argument, unlike a motion for new trial, no formal motion is
required to request an award of section 3287(a) prejudgment interest.

                                        80
(Watson, supra, 2 Cal.App.5th at p. 299.) To the extent that there is
language in North Oakland that would support a contrary position, we
disagree with it and decline to adopt it and instead conclude that the

reasoning in Watson is more persuasive.32

                                       E

      Plaintiffs also contend that they are entitled to an award of
prejudgment interest under section 3287(a) as matter of law because their
section 7031(b) reimbursement award was certain or capable of being made
certain by calculation. Plaintiffs’ complaint alleged that they had made 10
payments to Defendants, which totaled $2,732,627.87, and their second cause
of action sought section 7031(b) reimbursement of all amounts paid to
Defendants. Their complaint specifically alleged the date and amount of each
of those 10 payments. In support of Plaintiffs’ motion for summary
adjudication of their second cause of action against M&C, they submitted a
separate statement of undisputed material facts, which asserted that

32     North Oakland stated that “requests for prejudgment interest under
section 3287 by a successful plaintiff must be made by way of motion prior to
entry of judgment, or the request must be made in the form of a motion for
new trial no later than the time allowed for filing such a motion. (Code Civ.
Proc., § 659.)” (North Oakland, supra, 65 Cal.App.4th at p. 831.) Watson
subsequently declined to require a formal motion for a request for
prejudgment interest, instead stating: “[T]he fact that Watson’s request [for
prejudgment interest] was not labeled as [a] motion for new trial or as a
motion for modification under Code of Civil Procedure section 657 does not
render its format defective. [Citations.]” (Watson, supra, 2 Cal.App.5th at
p. 299.) As Watson noted, “[n]o statutes specify the timing or mechanism for
seeking prejudgment interest” and “no rule of court specifies when
prejudgment interest must be sought.” (Id. at p. 297.)

                                      81
Plaintiffs had paid M&C $2,732,627.87 for the construction of their home. In
support of their opposition to the motion, Defendants submitted their
separate statement that, in effect, admitted that Plaintiffs had paid
Defendants that amount, stating: “Plaintiffs disbursed to M&C
$2,732,627.87 for the materials supplied and services rendered during the
construction of [Plaintiffs’ home].” As discussed above, the trial court
subsequently granted Plaintiffs’ motion for summary adjudication, finding
that Plaintiffs were entitled to section 7031(b) reimbursement from M&C in
the amount of $2,732,627.87. The court thereafter entered the judgment
awarding Plaintiffs $2,732,627.87 on their section 7031(b) reimbursement
cause of action.

      Based on the record, Plaintiffs’ section 3287(a) reimbursement damages
(i.e., $2,732,627.87) were clearly “certain, or capable of being made certain by
calculation,” within the meaning of section 3287(a). Specifically, Defendants
knew, or should have known, the date and amount of each of Plaintiffs’ 10
payments to M&C. An award of section 3287(a) prejudgment interest to
Plaintiffs is therefore mandatory and not within the discretion of the trial
court. (North Oakland, supra, 65 Cal.App.4th at p. 828 [under § 3287(a), “the
court has no discretion, but must award prejudgment interest upon
request.”]; Watson, supra, 2 Cal.App.5th at p. 293 [same].)

                                        F

      Contrary to Defendants’ argument, an award of section 3287(a)
prejudgment interest is mandated on a section 7031(b) reimbursement award
if the amount of reimbursement was certain or capable of being made certain
by calculation. (§ 3287(a).) The purpose of section 3287(a) prejudgment
interest is to “compensate[] the plaintiff for the loss of the use of property or

                                        82
money during the period before the judgment is entered.” (Watson, supra, 2
Cal.App.5th at p. 293.) Alternatively stated, “[f]rom a plaintiff’s perspective,
prejudgment interest compensates [the plaintiff] for the loss of use of the
money during the period between the assertion of the claim and the rendition
of judgment.” (Ibid.) Section 3287(a) prejudgment interest is intended to
compensate a plaintiff “for loss of use of the award during the prejudgment
period.” (Lakin v. Watkins Associated Industries, supra, 6 Cal.4th at p. 663,
italics added.) Contrary to Defendants’ assertion, section 3287(a)
prejudgment interest is not limited to contractual or compensatory damages
and their citation to North Oakland, supra, 65 Cal.App.4th at page 826, does
not set forth any such limitation. Rather, as Plaintiffs note, section 3287(a)
applies to causes of action arising in tort, contract, or otherwise, provided
that the damages awarded were readily ascertainable. (Wisper Corp. v.
California Commerce Bank (1996) 49 Cal.App.4th 948, 958 [§ 3287’s
“application to actions other than contract actions, such as tort actions, is
well established”]; Marine Terminals Corp. v. Paceco, Inc. (1983) 145
Cal.App.3d 991, 995 [§ 3287(a) “allows recovery of prejudgment interest in
causes of action other than contract. The crucial factor is . . . whether the
damages were readily ascertainable”].) “When Civil Code section 3287 was
‘adopted in 1872, the key distinguishing factor was not . . . whether the cause
of action arose in tort or contract, but rather whether the damages were
readily ascertainable.’ [Citation.]” (Wisper Corp., at p. 958, quoting Levy-
Zentner Co. v. Southern Pac. Transportation Co. (1977) 74 Cal.App.3d 762,
795.) Section 3287(a) “has been applied consistently to allow the recovery of
prejudgment interest in causes of action other than those in contract.” (Levy-
Zentner Co., at p. 796.) There is nothing in the language of section 3287(a)
that limits its provisions for prejudgment interest to only contract causes of

                                       83
action. Further, there is nothing in its language that precludes an award of
prejudgment interest on section 7031(b) reimbursement awards.

      Section 3287(a) generally provides that prejudgment interest must be
awarded to “[a] person who is entitled to recover damages certain, or capable
of being made certain by calculation . . . .” Section 7031(b) provides that a
person who uses an unlicensed contractor “may bring an action . . . to recover
all compensation paid to the unlicensed contractor . . . .” By providing for the
recovery of all compensation paid, section 7031(b), in effect, allows a plaintiff
to recover, as damages, all compensation paid to the unlicensed contractor.
Therefore, the damages sought by a plaintiff under section 7031(b) consist of
all compensation paid to an unlicensed contractor, which are sought to be
recovered in a section 7031(b) reimbursement action.

      To the extent that section 3287(a) prejudgment interest is arguably
limited to cases in which compensatory damages are sought in a contract,
tort, or other cause of action, a section 7031(b) reimbursement cause of action
has been viewed as “fundamentally contractual in nature since it is based on
an unlicensed contractor’s agreement with the beneficiary to provide services,
and the beneficiary’s agreement to pay for same.” (Goldstein v. Barak
Construction (2008) 164 Cal.App.4th 845, 854.) Because a section 7031(b)
plaintiff seeks compensatory damages in the form of reimbursement for all
compensation paid to an unlicensed contractor pursuant to an express
written or oral contract or an implied construction agreement, that plaintiff is
entitled to an award of prejudgment interest under the express provisions of
section 3287(a) if the plaintiff shows that those compensatory damages were
certain or capable of being made certain by calculation. Contrary to
Defendants’ apparent assertion, we discern no inconsistency in viewing a
section 7031(b) award as compensatory damages while also viewing such an

                                       84
award as a statutory penalty, as discussed in part V above. (See, e.g., MW
Erectors, supra, 36 Cal.4th at pp. 418, 423, 425; Hydrotech, supra, 52 Cal.3d
at pp. 995, 997; Alatriste, supra, 183 Cal.App.4th at pp. 666-667.) Rather, we
conclude that a section 7031(b) reimbursement award is properly, and
consistently, viewed as both an award of compensatory damages based on the
amount of compensation paid to an unlicensed contractor and a statutory
penalty imposed against an unlicensed contractor based on section 7031(b)’s
public policy purpose of deterring violations of contractor licensing laws.
(MW Erectors, at pp. 418, 423, 425; Hydrotech, at pp. 995, 997; Alatriste, at
pp. 666-667.) Defendants do not cite any case in support of their assertion or
otherwise persuade us to reach a contrary conclusion. Further, contrary to
Defendants’ assertion, an award of section 3287(a) prejudgment interest on a
section 7031(b) reimbursement award would not constitute “punitive
damages,” but instead, is compensation for the loss of the use of that money
paid to an unlicensed contractor from the time of payment through the date
of the judgment.
                                       G

      The legislative intent underlying section 7031(b) also supports a
plaintiff’s entitlement to prejudgment interest under section 3287(a). As
discussed above, the Legislature intended that section 7031(a) and section
7031(b) be interpreted in a consistent manner so that the same remedy
applies regardless of whether the unlicensed contractor is the plaintiff or
defendant. (White, supra, 178 Cal.App.4th at pp. 519-520; see also Alatriste,
supra, 183 Cal.App.4th at p. 666.) The Legislature therefore intended that a
section 7031(b) plaintiff be placed in as good a position as a section 7031(a)
defendant. A section 7031(a) defendant uses that statute as a shield,
preventing an unlicensed contractor from obtaining compensation for services

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performed or materials provided that require a contractor’s license. As a
result, a section 7031(a) defendant naturally will not suffer any loss of the
use of money from the time those services were performed or materials
provided through the date of the judgment and therefore, would have no need
for an award of section 3287(a) prejudgment interest. (Cf. Watson, supra, 2
Cal.App.5th at p. 293.)

      In contrast, a section 7031(b) plaintiff necessarily will have suffered a
loss of the use of money from the time the plaintiff paid an unlicensed
contractor for services or materials through the date of the judgment.
Regardless of the length of that time period (e.g., months or years), there is a
“time-value” to that money during the period that the unlicensed contractor
retains that money and the plaintiff has lost use of that money. In order to
place a section 7031(b) plaintiff in the same position as a section 7031(a)
defendant, as the Legislature intended, a section 7031(b) plaintiff should be
compensated for the loss of the use of the money paid to an unlicensed
contractor by an award of prejudgment interest on the amount of a section
7031(b) reimbursement award.

      Accordingly, an award of section 3287(a) prejudgment interest on a
section 7031(b) reimbursement award carries out the legislative intent
underlying section 7031(b). To deny a section 7031(b) plaintiff prejudgment
interest would have the practical effect of treating section 7031(a) defendants
and section 7031(b) plaintiffs disparately and would, in effect, deprive section
7031(b) plaintiffs of the same remedy that section 7031(a) defendants have.
(White, supra, 178 Cal.App.4th at pp. 519-520; Alatriste, supra, 183
Cal.App.4th at p. 666.) Further, if the Legislature had intended to disallow a
section 3287(a) prejudgment interest award for section 7031(b) plaintiffs, we
presume that it would have expressly so provided. “The Legislature is

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presumed to be aware of existing laws . . . when it enacts legislation.”
(Alatriste, at p. 670.) Because the Legislature did not do so, we conclude that
it intended section 7031(b) plaintiffs to recover section 3287(a) prejudgment
interest on section 7031(b) reimbursement awards. (Cf. Alatriste, at p. 670.)

                                DISPOSITION

      The order dated August 3, 2018, granting in part Plaintiffs’ motion for
attorney fees under section 1029.8, and the order dated November 9, 2018,
denying Plaintiffs’ request for prejudgment interest under section 3287(a),
are reversed. In all other respects, the judgment and orders are affirmed.
The matter is remanded with directions that the superior court issue a new
order denying Plaintiffs’ motion for an award of section 1029.8 attorney fees
and granting their request for an award of section 3287(a) prejudgment
interest and enter a new judgment consistent with this opinion.

                                                                     AARON, J.

WE CONCUR:

HUFFMAN, Acting P. J.

GUERRERO, J.

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