H.E.M. C. Environmental Management Corp. v. Chaldean American Assn

Filed 5/17/06  H.E.M. C. Environmental Management Corp. v. Chaldean American Assn. CA4/1

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

            APPEAL from a judgment of the Superior Court of San Diego County, Lillian  Y. Lim, Judge.  Affirmed.

            H.E.M.C. Environmental Management Corporation (HEMC) appeals from a judgment in favor of Chaldean American Association (the Association), Hatra Engineering and Construction, Uthman Kalashu, Nabil N. Kachi and Muwafaq aka Mike Sittu (collectively the defendants) entered after the trial court granted the defendants' motion for nonsuit as to HEMC's breach of contract claim on the ground HEMC was an unlicensed contractor and could not maintain the action as a matter of law.  (Bus. & Prof. Code §  7031, subd. (a), all undesignated statutory references are to this code.)  HEMC appeals, contending:  (1) the contract did not require a general contractor's license; (2) the California general engineer contractor's license it possessed was sufficient; and (3) it was entitled to the owner-builder exemption to the licensing requirement.  We reject these contentions and affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

            Because we are reviewing a judgment after a nonsuit, we summarize the facts in the light most favorable to HEMC.  (Hoff v. Vacaville Unified School Dist. (1998) 19 Cal.4th 925, 930.)

            In March 2001, HEMC and the Association entered into a written contract for HEMC to demolish the mezzanine portion of the Association's clubhouse building and reconstruct it into a restaurant.  The work involved building a restaurant, including demolition, asbestos testing, waste handling, structural welding and seismic retrofitting.  The parties agreed to multiple change orders and HEMC alleges that the Association breached the contract by not paying the sums due under the change orders.

            Jibran Joseph Hannaney is HEMC's president and owner and is also a part owner of the Association.  Hannaney is a licensed civil engineer and has a California general engineer contractor's license, with a hazardous materials removal certification, a home improvement certification and a well water drilling license.  HEMC was not the " general contractor" for the entire project and much of the work was done by others, including:  stucco, drywall, piping, concrete cutting, framing, roofing, painting and waste handling.  Hannaney and HEMC contend they were duly licensed to perform the work required by the contract and change orders or, alternatively, they used subcontractors that were duly licensed.  Additionally, Hannaney claims he was an owner-builder and exempt from the licensing requirement.

            HEMC filed a complaint containing a single cause of action for breach of contract and alleging $61,500 in damages.  The Association answered the complaint, asserting that HEMC could not maintain the action because it was not properly licensed.  Defendants moved in limine to dismiss the complaint because HEMC did not possess a general building contractor's license.  After considering plaintiff's written opening statement, the trial court granted a nonsuit and entered judgment in defendants' favor.  HEMC appeals.

DISCUSSION

            A defendant is entitled to nonsuit if the trial court determines as a matter of law that the evidence presented by the plaintiff is insufficient to permit a jury to find in the plaintiff's favor.  (Campbell v. General Motors Corp. (1982) 32 Cal.3d 112, 117-118.)  In determining whether a nonsuit based upon a plaintiff's opening statement is proper, we accept as true all facts asserted in the opening statement and indulge every legitimate inference in favor of the plaintiff; nonsuit is proper if it can be said those facts and inferences lead to the inescapable conclusion that the plaintiff cannot establish an essential element of its cause of action or has inadvertently established an affirmative defense.  (Galanek v. Wismar (1999) 68 Cal.App.4th 1417, 1424.)  Applying these standards on an independent review of the record (Saunders v. Taylor (1996) 42 Cal.App.4th 1538, 1541-1542), we concur in the trial court's conclusion that even assuming the truth of HEMC's evidence, it lacked a general building contractor's license and cannot maintain this action.

            The contracting business includes three branches, consisting of:  general engineering contracting (Class A); general building contracting (Class B); and specialty contracting.  (§  7055; see Cal. Constr. L. Manual (6th ed., 2005) §  4:6.)  A contractor is defined as " any person who undertakes to  .  .  .  construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building  .  .  .  ."   (§  7026.)  By statute, certain persons or entities are deemed to be contractors, including " [a]ny  .  .  .  corporation  .  .  .  which undertakes, offers to undertake, purports to have the capacity to undertake, or submits a bid, to construct any building  .  .  .  or part thereof."   (§  7026.1, subd. (b).)  A general building contractor is a contractor whose principal business is " in connection with any structure built, being built, or to be built, for the support, shelter, and enclosure of persons  .  .  .  requiring in its construction the use of at least two unrelated building trades or crafts  .  .  .  ."   (§  7057, subd. (a).)  Only a person classified as a general building contractor can take a prime contract or subcontract as authorized by section 7057.  (16 Cal. Code Reg., §  834(b).)

            In contrast, general engineering contractors are contractors whose principal business is in connection with fixed works requiring specialized engineering knowledge and skill, including land-leveling and earth-moving projects, excavating, grading, trenching, paving and surfacing work and cement and concrete works in connection with such fixed works.  (§  7056.)  A person with a general engineering contractor's license can only operate within those areas defined in section 7056.  (16 Cal. Code Reg., §  834(a).)  Contractors licensed in one classification are prohibited from contracting in the field of any other classification.  (16 Cal. Code Reg., §  830(b).)

            Here, HEMC claims it had a California general engineer contractor's license and this was sufficient.  Assuming the truth of this assertion, HEMC's opening statement did not refer to facts showing the work it performed was that of a general engineering contractor (§  7056); rather, the facts it presented show it undertook structural demolition and reconstruction work that could only be performed by a general building contractor.  (§  7057.)  As such, it was required to have a general building contractor's license and is precluded from maintaining this action because it lacks this license.  (§  7031, subd. (a).)  Because HEMC has never been a duly licensed general building contractor in California, the doctrine of substantial compliance cannot apply.  (§  7031, subd. (e).)  Although HEMC claims it was not the " general contractor" of the entire project and much of the work was done by other properly licensed contractors, these facts are irrelevant.  A person who contracts to perform a project is considered a " contractor" even if the work is performed through others.  (§  7026; Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 938 [party entering into contract must be licensed even where most of the work is performed by others].)

            Finally, we reject HEMC's assertion that because Hannaney was a part owner of the Association, it qualified for the owner-builder exemption.  Although licensing requirements do not apply to a property owner who does the work personally or uses employees for whom wages are the sole compensation for their efforts if the structure is not intended or offered for sale (§  7044, subd. (a)) or if the owner of property contracts with a licensed contractor for the work (§  7044, subd. (b)), the owner-builder exemption does not apply here because there are no facts showing Hannaney personally performed the work or hired HEMC to do the work; additionally, HEMC is not a licensed general building contractor.

DISPOSITION

            The judgment is affirmed.  Respondents are entitled to their costs of appeal.

McINTYRE, J.

WE CONCUR:

         NARES, Acting P. J.

McDONALD, J.

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