Luzuriaga v. R.C. Berger Construction CA4/2

• Court: California Court of Appeal
• Decided: February 23, 2021
• Docket: E072526
• Status: Unpublished

Opinion

Filed 2/23/21 Luzuriaga v. R.C. Berger Construction CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

DEBORAH LUZURIAGA,

Plaintiff and Appellant, E072526

v. (Super.Ct.No. RIC1602017)

R.C. BERGER CONSTRUCTION, INC. et OPINION al.,

Defendants and Respondents.

APPEAL from the Superior Court of Riverside County. Raquel A. Marquez and

Angel M. Bermudez, Judges.* Affirmed.

Law Offices of Jonathan C. Stevens and Jonathan C. Stevens for Plaintiff and

Appellant.

* Judge Marquez ruled on the motions for summary judgment/summary adjudication, although Judge Bermudez signed the formal order on those motions. Judge Bermudez also denied the motion for leave to amend and entered judgment.

1 The Mouzis Law Firm, Gerald W. Mouzis, and Amanda L. Voivedich for

Defendants and Respondents R.C. Berger Construction, Inc., Carla Berger, and Ronald

Berger.

Richard A. Nervig for Defendant and Respondent Gary Cuellar.

Deborah Luzuriaga sought to construct a veterinary hospital on property that she

owned in Wildomar. Mechanic’s liens against the property started to mount up, and she

came to believe that the general contractor (not a party to this action) had embezzled

construction funds. She fired the general contractor and took over management of the

project herself. Needless to say, litigation ensued, on several fronts. This is not even the

first time that some of that litigation has come before this court. (See Precision Framing

Systems Inc. v. Luzuriaga (2019) 39 Cal.App.5th 457, 459.)

In this particular action, Luzuriaga sued the grading subcontractor, along with

various other individuals and entities that were also involved in the grading. She alleges

that the grading was not done in accordance with the plans and specifications. As a

result, she had to pay to have it partially redone; moreover, she incurred additional

expenses to obtain the release of a mechanic’s lien. She also alleges that some of the

defendants carried out grading work without being licensed to do so, and that some of the

defendants claimed a mechanic’s lien without being legally entitled to do so.

The grading subcontractor defaulted. Its owner declared bankruptcy. The trial

court granted summary judgment in favor of all the other defendants. It ruled that they

were not required to have contractor’s licenses. It also ruled that they were not negligent

2 because they did not owe Luzuriaga a duty of care. Finally, it ruled that Luzuriaga had

failed to plead her theory that one of the defendants improperly claimed a mechanic’s lien

because it acted only as a go-between and thus did not provide work for the work of

improvement. It denied Luzuriaga’s motion for leave to amend to plead this theory.

Luzuriaga appeals. We will uphold the trial court on all points. Hence, we will

affirm.

I

STATEMENT OF FACTS

We consider all of the evidence set forth in the papers, except evidence to which

the trial court sustained an objection. (Code Civ. Proc., § 437c, subd. (c).) Moreover,

because the evidence in support of the three motions was generally consistent, and

because it appears that the trial court considered all three motions together, we consider

the evidence offered in connection with all three motions collectively.

A. Grading Work.

Luzuriaga and her husband own a piece of property in Wildomar. She undertook

to develop it as a veterinary hospital.

She hired a general contractor. The contract between them was an American

Institute of Architects (AIA) standard form construction contract. It incorporated the

plans and specifications. It provided that the contractor must require each subcontractor

to be bound by the plans and specifications. It also provided that a subcontractor must

require each sub-subcontractor to be bound by the plans and specifications, “[w]here

3 appropriate.” It defined a “sub-subcontractor” as “a person or entity who has a direct or

indirect contract with a Subcontractor to perform a portion of the Work at the site.”

1. July 2013 grading work.

In July 2013, the general contractor hired B&T Works, Inc. (B&T) as a grading

subcontractor. The contract between them required B&T’s work to conform to the plans

and specifications.

Giovanni Nanci, the owner of B&T, testified that it was “exclusively” the duty of

B&T to ensure that the grading work was done in accordance with the plans and

specifications and within the standard of care.

B&T had a contractor’s license; however, its license was suspended from July 17,

2013, through August 22, 2013.

B&T, in turn, entered into a contract with R.C. Berger Construction, Inc., dba RC

Grading (RC) (owned by Ronald and Carla Berger). RC did not have a contractor’s

license at all.

According to Carla Berger, RC is an equipment broker; it rents out equipment,

with or without an operator, to construction projects. It may or may not own the

equipment. Its contract with B&T merely required it to provide equipment and an

operator, which would not require a contractor’s license. According to Luzuriaga,

however, the contract required RC to do grading work, which would require a

contractor’s license.

4 RC carried out grading work between July 17 and July 22, 2013; it billed B&T, on

an hourly basis, a total of $3,759. The work was done by Ronald Berger, using a skip

loader that RC did not own, but rather leased from one L. Moreno.

Ronald Berger worked under the supervision and control of B&T; RC never

reviewed the plans and specifications for the project.

RC received full payment for its work in June.

2. December 2013 grading work.

In October 2013, the general contractor rehired B&T to do additional grading

work. By this time, B&T was properly licensed.

Once again, B&T entered into a contract with RC. RC, in turn, contracted with

Gary Cuellar, dba Cuellar Grading & Excavation. Cuellar was a licensed grading

contractor. He did the work using a skip loader that he owned. He worked under the

supervision and control of B&T. He did exactly what the B&T foreman told him to do.

He never reviewed the plans and specifications for the project.

Cuellar carried out grading work between December 11 and 16, 2013, for which

he billed RC, on an hourly basis, a total of $2,852. RC turned around and billed B&T

$3,850. RC, and thus Cuellar, were never paid for the December work.

On January 30, 2014, Luzuriaga fired the general contractor. She then assumed

control of the project.

5 On June 19, 2014, RC recorded a mechanic’s lien against the property. Luzuriaga

obtained a release of the lien by filing a bond, issued by American Contractors Indemnity

Company (American).

Luzuriaga hired a different grading subcontractor to complete the project.

Meanwhile, she discovered that the grading work already done, first by Ronald Berger

and then by Cuellar, was not in conformance with the plans and specifications. It cost her

$22,657.88 to correct their nonconforming work.

B. The Prior Action.

In September 2014, RC filed an action against American to recover against the

bond. As the bond required, Luzuriaga provided American with a defense.

RC was seeking the $3,850 that it had billed for the December work. On the eve

of trial, American and RC settled for $2,500. On behalf of American, Luzuriaga paid RC

this amount. RC then paid Cuellar $1,000. Luzuriaga also incurred attorney fees and

costs.

II

STATEMENT OF THE CASE

Luzuriaga filed this action in 2016. The operative (second amended) complaint

named B&T (along with Giovanni Nanci), RC (along with Ronald and Carla Berger),1

and Cuellar as defendants. It asserted causes of action for:

1 Because the interests of Ronald and Carla Berger are aligned with RC’s, references to RC, as a litigant, will include them, unless the context otherwise requires.

6 First: Unlawful business practices (Bus. & Prof. Code, § 17200), against RC. In

support of this cause of action, it alleged that RC:

(1) Was an unlicensed contractor; and

(2) Recorded a mechanic’s lien for “equipment, work, service, and/or materials

that were not performed or provided to the Project by RC . . . .”2

Second: Acting as an unlicensed contractor (Bus. & Prof. Code, § 7031), against

RC;

Third and fourth: Negligence, against RC and Cuellar;

Fifth: Statutory contribution, against B&T (Civ. Code, § 8470); and

Sixth: Indemnity, against B&T.

B&T defaulted; Luzuriaga eventually obtained a default judgment against it.

Nanci filed for bankruptcy, resulting in an automatic stay of the case as against

him.

Luzuriaga filed a motion for summary adjudication against RC on her first cause

of action (unlawful business practices). She argued that RC had claimed a mechanic’s

lien improperly, because it was only a “broker” or a “middleman,” and as such, it did not

actually provide any work on the project.

RC and Cuellar each filed a cross-motion for summary judgment.

2 It also alleged that RC recorded a mechanic’s lien prematurely, when it had abandoned the project. Luzuriaga did not argue this in connection with the motions for summary judgment, nor does she argue it on appeal.

7 With respect to the first (unlawful business practices) and second (unlicensed

contractor) causes of action, RC argued, among other things, that it was not required to

have a contractor’s license because it was a “lessor of equipment and labor” rather than a

contractor.

With respect to the third (negligence) cause of action, both RC and Cuellar argued,

among other things, that they did not owe Luzuriaga a duty of care.

The trial court denied Luzuriaga’s motion and granted RC and Cuellar’s motions.

It agreed that “because RC . . . merely acted to furnish an operated skip loader, it was not

required to be a licensed contractor.” It rejected Luzuriaga’s argument that RC was not

entitled to claim a mechanic’s lien because it was only a go-between, in part because

Luzuriaga had not pleaded this theory. Finally, it agreed that RC and Cuellar did not owe

Luzuriaga a duty of care.

Luzuriaga filed a motion for leave to file an amended complaint. In January 2019,

the trial court denied that motion. In February 2019, it entered separate judgments in

favor of RC and Cuellar.

III

STANDARD OF REVIEW

“Summary judgment is appropriate only ‘where no triable issue of material fact

exists and the moving party is entitled to judgment as a matter of law.’ [Citation.]”

(Regents of University of California v. Superior Court (2018) 4 Cal.5th 607, 618.)

“There is a triable issue of material fact if, and only if, the evidence would allow a

8 reasonable trier of fact to find the underlying fact in favor of the party opposing the

motion in accordance with the applicable standard of proof.” (Aguilar v. Atlantic

Richfield Co. (2001) 25 Cal.4th 826, 850.)

“Courts deciding motions for summary judgment or summary adjudication may

not weigh the evidence but must instead view it in the light most favorable to the

opposing party and draw all reasonable inferences in favor of that party. [Citations.]”

(Weiss v. People ex rel. Department of Transportation (2020) 9 Cal.5th 840, 864.)

“Whether the trial court erred by granting [the] motion for summary judgment is a

question of law we review de novo. [Citation.]” (Samara v. Matar (2018) 5 Cal.5th 322,

338.)

IV

THE CONTRACTOR’S LICENSE REQUIREMENT

Luzuriaga contends that the trial court erred by ruling that RC was not required to

be licensed.

Under the Contractors’ State License Law (Bus. & Prof. Code, § 7000 et seq.),

absent an exemption, it is a crime to act as a contractor without a license. (Bus. & Prof.

Code, § 7028, subd. (a)(1).) An unlicensed contractor cannot “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 . . . .” (Bus. & Prof. Code, § 7031, subd. (a).) Moreover, “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

9 unlicensed contractor for performance of any act or contract.” (Bus. & Prof. Code,

§ 7031, subd. (b).)

“Contractor,” as relevant here, is defined as “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, highway, road, parking facility,

railroad, excavation or other structure, project, development or improvement, or to do any

part thereof, including . . . .” (Bus. & Prof. Code, § 7026.) The term “contractor”

includes a subcontractor. (Ibid.)

Andrew v. Conner (1951) 101 Cal.App.2d 621 (Andrew) held that one who merely

rents out equipment, even with an operator, is not a contractor. (Id. at p. 623.) There, the

“defendants desired to clear, grade and level land, as well as construct a harbor and

levees . . . , and . . . to accomplish their purpose they rented equipment and operators

from [the] plaintiffs over which [the] defendants retained complete supervision, direction

and control.” (Ibid.) “Perhaps it is true,” the court acknowledged, “that the operations

here involved were such as normally come within the purview of the provisions of

section 7026 of the Business and Professions Code.” (Ibid.) In the case before it,

however, they did not, because “the trial court . . . found that [the] plaintiffs did not agree

to do the work for [the] defendants on a contract basis but only agreed to rent to [the]

defendants certain equipment at a certain price.” (Ibid.)

Rodoni v. Harbor Engineers (1961) 191 Cal.App.2d 560 is to similar effect.

There, the plaintiff contracted to provide earth-moving equipment and drivers to do

10 bulldozing, excavation, grading, and surfacing. (Id. at pp. 561-562.) He was paid by the

hour. (Id. at p. 562.) He “made a profit over and above the wages paid his operators and

the cost of maintaining his equipment and . . . he paid his drivers’ wages, social security

and unemployment insurance and withheld their income tax.” (Id. at p. 563.)

Nevertheless, the court of appeal upheld the trial court’s finding that he was an employee

rather than a contractor. (Id. at pp. 561-563.) It noted that “[a]ctual supervision was by

[the grading subcontractor], whose representative directed the work done by plaintiff and

his drivers. Plaintiff ‘had nothing to do with the supervision of the job.’” (Id. at pp. 562-

563; see also Contractors Dump Truck Service, Inc. v. Gregg Const. Co. (1965) 237

Cal.App.2d 1, 7 [citing and following Rodoni.)

Likewise, Dahl-Beck Elec. Co. v. Rogge (1969) 275 Cal.App.2d 893 held that a

person who sent a backhoe and an operator to the jobsite and who was paid on an hourly

basis (see id. at p. 897) was an employee, rather than a contractor (id. at pp. 900-902),

because the operator’s “work was very much under the control and direction of plaintiff’s

project foreman.” (Id. at p. 900.)

Rodoni and Dahl-Beck (though not Andrew) turned, in part, on the fact that the

asserted contractor was held to be an employee. When all three cases were decided,

former section 7053 of the Business and Professions Code exempted an employee from

the license requirement, as long as “wages [are] his sole compensation.” (Stats. 1949,

ch. 90, § 6, p. 337.) In 1982, this section was amended so as to add two additional

requirements: that the employee “does not customarily engage in an independently

11 established business, and does not have the right to control or discretion as to the manner

of performance so as to determine the final results of the work performed.” (Stats. 1982,

ch. 1427, § 2, p. 5462.)

In light of this amendment, are Andrew, Rodoni, and Dahl-Beck still good law?

Contractors Labor Pool, Inc. v. Westway Contractors, Inc. (1997) 53 Cal.App.4th 152

said yes.

There, the plaintiff was “in the business of furnishing skilled and unskilled

temporary workers to licensed construction contractors.” (Contractors Labor Pool, Inc.

v. Westway Contractors, Inc., supra, 53 Cal.App.4th at p. 156.) It supplied workers to a

subcontractor for a subway project. It was paid based on the number of hours of work

performed; the subcontractor controlled the workers’ activities while they were on the

job. (Id. at pp. 156-157.)

The appellate court held that the plaintiff was not a contractor, because it “only

furnished laborers” and “the full supervision and control of the workers furnished . . . was

the responsibility of . . . the subcontractor who actually performed the construction

services on the public work.” (Contractors Labor Pool, Inc. v. Westway Contractors,

Inc., supra, 53 Cal.App.4th at p. 166.) “The purpose of the licensing law is to protect the

public from incompetence and dishonesty in those who provide building and construction

services. . . . To effect this purpose, the law need apply only to those who actually

perform or supervise the performance of construction services; it need not apply to those

who only supply materials to be used by others or laborers who will be supervised by

12 others. Thus, a person or company in the business of supplying equipment or hiring out

laborers to be supervised by others is not deemed to act in the capacity of a contractor

and is not required to have a license. [Citations.]” (Id. at p. 165, italics added [citing,

inter alia, Rodoni and Contractors Dump Truck].)

The appellate court further held that the 1982 amendment did not affect the result.

It explained that what was critical was that the plaintiff was not a contractor within the

meaning of Business and Professions Code section 7026, regardless of whether it was an

employee within the meaning of Business and Professions Code section 7053.

(Contractors Labor Pool, Inc. v. Westway Contractors, Inc., supra, 53 Cal.App.4th at

pp. 166-167.)

We see no reason to disagree with Contractors Labor Pool. As noted, it is simply

the most recent in a line of cases, all pointing in the same direction. One leading

commentator states, citing only Andrew, that one who “merely furnished equipment and

operators to work under the supervision” of a contractor need not be licensed. (Acret,

Cal. Constr. L. Manual (2019 ed.) § 4:28.)

In 2003, the Legislature amended Business and Professions Code section 7026.1

so as to provide that the term “contractor” includes “[a] temporary labor service agency

that, as the employer, provides employees for the performance of work covered by this

chapter. The provisions of this subdivision shall not apply if there is a properly licensed

contractor who exercises supervision . . . and who is directly responsible for the final

results of the work.” (Bus. & Prof. Code, § 7026.1, subd (c), Stats. 2003, ch. 759, § 1, p.

13 5718.) This effectively codified the result in Contractors Labor Pool. It did not abrogate

Contractors Labor Pool, nor did it undermine the reasoning in Contractors Labor Pool.

Here, Carla Berger testified that RC was in the business of supplying equipment,

with or without an operator, for construction projects. “[RC] is not provided with the

plans and specifications for a project, does not visit a project site, and does not control the

performance of work on a certain project. . . . When RC . . . provides an operator, the

equipment is operated under the supervision, direction, and control of the contractor,

most often the grading subcontractor, who is responsible to assure that the grading work

being performed is in accordance with the plans and specifications . . . .”

In addition, Giovanni Nanci, the owner of B&T, testified that “B&T . . . retained

RC . . . solely to provide operated equipment rental . . . .” “RC . . . served as only a lessor

of equipment and labor for work on the Project.” “RC . . . worked exclusively under the

direction, supervision and control of B&T . . . .”

Luzuriaga claims that her objections to this testimony were erroneously overruled.

She argues that Carla Berger was never at the project site, and therefore her testimony

was not based on personal knowledge. Carla Berger, however, could properly testify to

the nature of the business that RC was in; she also could properly testify to RC’s patterns

and practices, which she did. Absent contrary evidence, the only reasonable inference is

that RC carried out this particular project the same way it carried out others.

Luzuriaga similarly argues that Nanci’s testimony was not based on personal

knowledge. However, he testified that “all Grading Work was being performed under my

14 direction, supervision and control . . . .” In addition, the facts stated were matters of

which, as owner of B&T, he would reasonably have personal knowledge; in the absence

of a contrary showing, this was sufficient. (Weil & Brown, Cal. Practice Guide: Civil

Procedure Before Trial (The Rutter Group 2020) ¶ 10:113, pp. 10-47, 10-48; see, e.g.,

People ex rel. Owen v. Media One Direct, LLC (2013) 213 Cal.App.4th 1480, 1484.)

Next, Luzuriaga picks away at Cuellar’s testimony to the effect that his work was

supervised by B&T. Cuellar’s testimony was not particularly relevant to whether RC

was entitled to summary judgment. Unlike RC, Cuellar had a contractor’s license.

Accordingly, he was not named as a defendant in the first (unlawful business practices)

or the second (unlicensed contractor) causes of action; the only cause of action against

him was the third, for negligence.

Finally, Luzuriaga complains that the declarations lack detail. For example, Nanci

did not specifically say that he was ever at the project site,3 did not say when or how RC

was supervised, and did not produce any supporting documentary evidence. Moreover,

Ronald Berger, who actually did the work, did not submit a declaration. Nevertheless,

“evidentiary objections based on lack of foundation . . . and conclusory and speculative

testimony are traditionally left to the sound discretion of the trial court.” (Alexander v.

Scripps Memorial Hospital La Jolla (2018) 23 Cal.App.5th 206, 226.) We cannot say the

3 Luzuriaga also affirmatively asserts, “Nanci . . . w[as] never at the Project site.” There is no evidence of this. While he did not specifically testify that he was at the project site, he did testify, “I was responsible for assuring that elevations and surveys were correct, and that rough and fine grading work was performed in a fashion that the work would be accepted by inspectors . . . .”

15 trial court abused its discretion here. Luzuriaga’s palladium against overly general (or

even false) declarations was to take the declarants’ depositions. It does not appear that

she did; the evidence in connection with the summary judgment motions is singularly

devoid of any deposition testimony. Thus, the declarations stand unimpeached.

Luzuriaga did not raise a triable issue of fact as to whether RC needed a

contractor’s license. She argues that there was a triable issue of fact as to whether RC

was an equipment “lessor,” because (1) it did not own either of the skip loaders that were

used in July and December 2013, and (2) it did not transfer possession of the skip loaders

to B&T. RC characterized itself, however, not only as a “lessor,” but also as a “broker,”

“provid[er],” or “supplier” of equipment. Under Contractors Labor Pool, what is crucial

is not under which of these particular categories RC falls, but whether RC was under the

supervision, direction, and control of a contractor or subcontractor. The evidence showed

that it was.

Luzuriaga points out that, in July 2013, when B&T was supervising RC, B&T

itself was unlicensed. She argues that, because RC was not supervised by a licensed

contractor, it must be treated as an unlicensed contractor.

Johnson v. Silver (1958) 161 Cal.App.2d Supp. 853, while not precisely on point,

is contrary to this contention. There, Silver hired Shirey to do construction work. Shirey,

in turn, hired Johnson and Hough to haul away dirt. Shirey, Johnson, and Hough were all

unlicensed. Johnson and Hough sued Silver for payment. (Id. at p. 854.)

16 The appellate court upheld the trial court’s finding that Johnson and Hough were

Shirey’s employees, rather than subcontractors, and therefore were not required to be

licensed. (Johnson v. Silver, supra, 161 Cal.App.2d Supp. at pp. 854-855.) It further

held that Johnson and Hough could recover, even though Shirey was unlicensed. (Id. at

p. 856.) It explained that Johnson and Hough were not themselves unlicensed

contractors, and “‘[t]he courts will not impose penalties for noncompliance in addition to

those that are provided expressly or by necessary implication.’ [Citation.]” (Ibid.)

Here, if RC were an individual employee of B&T, it would not have to be

licensed, regardless of whether B&T was properly licensed. We see no reason for a

different result just because RC was not an employee. Admittedly, this fact takes it

outside the safe harbor afforded to an employee under Business and Professions Code

section 7053. Contractors Labor Pool, however, carved out a parallel safe harbor for a

non-employee provider and operator of equipment. A berth in that safe harbor does

require that the equipment operator must work under the supervision of a contractor, but

Contractors Labor Pool did not require that that contractor be licensed. Rather, it

explained, the purpose of the Contractors State License Law is adequately served by

requiring the contractor to be licensed (even though every law can and will be broken

sometimes). Like a non-employee equipment operator, an employee must work under the

supervision of an employer. (See Bus. & Prof. Code, § 7053.) If the employee of an

unlicensed contractor does not have to be licensed, then neither does an equipment

operator supervised by an unlicensed contractor.

17 We therefore conclude that on this record, as a matter of law, RC was not a

contractor and was not required to be licensed.

V

A DUTY OF CARE FOR THE PURPOSE OF NEGLIGENCE

Luzuriaga contends that the trial court erred by ruling that RC and Cuellar did not

owe her a duty of care.

A. General Legal Background.

“Duty is indeed the cornerstone of every negligence claim. In California, the

general rule governing duty is codified in Civil Code section 1714, subdivision (a):

‘Everyone is responsible . . . for an injury occasioned to another by his or her want of

ordinary care or skill in the management of his or her property or person . . . .’” (T.H. v.

Novartis Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 163.) “Whether a party has a duty

of care in a particular case is a question of law for the court, which we review

independently on appeal. [Citation.]” (Ibid.)

“‘[T]he same wrongful act may constitute both a breach of contract and an

invasion of an interest protected by the law of torts.’ [Citation.]” (Erlich v. Menezes

(1999) 21 Cal.4th 543, 551.) “‘[A] contractual obligation may create a legal duty and the

breach of that duty may support an action in tort.’” (Ibid.)

RC and Cuellar do not dispute that their allegedly negligent performance of their

contracts would be a tort. (See Erlich v. Menezes, supra, 21 Cal.4th at pp. 550-554.) To

put it another way, they are not arguing that B&T could not recover from them on a

18 negligence theory. They do argue, however, that Luzuriaga cannot recover from them on

a negligence theory, because they were not in privity of contract with her.

“California formerly followed the traditional view that no tort cause of action

arises from negligent breach of a contractual duty in the absence of privity of contract

between the plaintiff and defendant. [Citations.]” (6 Witkin, Summary of Cal. Law (11th

ed. 2020) Torts, § 1327, p. 622.)

In Biakanja v. Irving (1958) 49 Cal.2d 647, however, the Supreme Court broke

with this view and held that, under some circumstances, a contracting party may be liable

to a third party for its negligent performance of a contract. (Id. at pp. 649-650.) It stated:

“The determination whether in a specific case the defendant will be held liable to a third

person not in privity is a matter of policy and involves the balancing of various factors,

among which are [1] the extent to which the transaction was intended to affect the

plaintiff, [2] the foreseeability of harm to him, [3] the degree of certainty that the plaintiff

suffered injury, [4] the closeness of the connection between the defendant’s conduct and

the injury suffered, [5] the moral blame attached to the defendant’s conduct, and [6] the

policy of preventing future harm. [Citations.]” (Id. at p. 650.)4

In Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, the Supreme Court applied

the Biakanja factors in deciding whether an accountant who certifies a corporation’s

4 “The Biakanja considerations are similar to, but not identical with, the policy considerations set forth in Rowland v. Christian (1968) 69 Cal.2d 108 . . . that bear on the recognition of a duty of care among persons not parties to a business or financial transaction.” (QDOS, Inc. v. Signature Financial, LLC (2017) 17 Cal.App.5th 990, 999.)

19 financial statement has a duty to investors in the corporation. It recognized that

“economic injury to lenders, investors, and others who may read and rely on audit reports

is certainly ‘foreseeable.’” (Id. at p. 398.) However, after extensively reviewing the

policy issues bearing on accountant liability (id. at pp. 384-396), it stated, “we will not

treat the mere presence of a foreseeable risk of injury to third persons as sufficient,

standing alone, to impose liability for negligent conduct. We must consider other

pertinent factors.” (Id. at p. 399.)

In the case before it, it found three such factors determinative. First, liability out

of proportion to fault: The client has substantial control over the auditing process, and

the accountant’s fault is secondary to the client’s. (Bily v. Arthur Young & Co., supra, 3

Cal.4th at pp. 399-402.) Second, the possibility of private ordering (id. at pp. 402-403):

“[T]he third party in an audit negligence case . . . can ‘privately order’ the risk of

inaccurate financial reporting by contractual arrangements with the client. [Citation.]”

(Id. at p. 403.) “This kind of self-reliance promotes sound investment and credit

practices and discourages the careless use of monetary resources.” (Ibid.) Third, adverse

societal effects (id. at pp. 404-405): “[W]e doubt whether audits can be done in ways that

would yield significantly greater accuracy without disadvantages. [Citation.]” (Id. at

p. 404.) “[T]he economic result of unlimited negligence liability could just as easily be

an increase in the cost and decrease in the availability of audits and audit reports with no

compensating improvement in overall audit quality. [Citations.]” (Id. at pp. 404-405.)

20 The court therefore held that “an auditor’s liability for general negligence in the

conduct of an audit of its client financial statements is confined to the client . . . .” (Bily

v. Arthur Young & Co., supra, 3 Cal.4th at p. 406.) However, it also held that a “narrow

class of persons” (ibid), namely “specifically intended beneficiaries of the audit report

who are known to the auditor and for whose benefit it renders the audit report,” (id. at

p. 407), can recover on a theory of negligent misrepresentation. (Id. at pp. 407-412.)

Luzuriaga argues that it is established that a subcontractor owes a duty to the

property owner, and therefore the trial court erred by even considering the Biakanja

factors. Not so. “The liability of a contractor or subcontractor must be determined by

applying th[e] general [Biakanja] test rather than by arbitrarily placing them in a separate

category subject to a special rule. [Citation.]” (Stewart v. Cox (1961) 55 Cal.2d 857,

863.)

B. Key Cases in the Construction Context.

There are three leading cases applying the Biakanja factors to the question of

whether, in the construction context, an entity not in privity of contract with the owner

nevertheless owes the owner a duty of care.

1. Stewart v. Cox.

In Stewart v. Cox, supra, 55 Cal.2d 857, the Supreme Court held that a

subcontractor that negligently applied gunite during the construction of a swimming pool

did owe the owner a duty of care. (Id. at pp. 861-863.) It stated: “Here it was obvious

that the pool for which [the subcontractor] provided the gunite work was intended for the

21 plaintiffs and that property damage to them — and possibly to some of their neighbors —

was foreseeable in the event the work was so negligently done as to permit water to

escape. It is clear that the transaction between [the contractor] and [the subcontractor]

was intended to specially affect plaintiffs. There is no doubt that plaintiffs suffered

serious damage, and the court found, supported by ample evidence, that the injury was

caused by [the subcontractor’s] negligence. Under all the circumstances [the

subcontractor] should not be exempted from liability if negligence on his part was the

proximate cause of the damage to plaintiffs.” (Id. at p. 863; see also Stonegate

Homeowners Assn. v. Staben (2006) 144 Cal.App.4th 740, 748 [“‘The owner ordinarily

has a cause of action against the subcontractor arising from the subcontractor’s defective

work, even though there is no privity of contract between the owner and the

subcontractor.’”]; 9 Miller & Starr, Cal. Real Estate (4th ed. 2015) § 33:25, p. 33-144

[same].)

2. Weseloh Family Ltd. Partnership v. K.L. Wessel Construction Co.,

Inc.

Our trial court found no duty mainly because it relied on Weseloh Family Ltd.

Partnership v. K.L. Wessel Construction Co., Inc. (2004) 125 Cal.App.4th 152. We

therefore discuss that case in some detail.

In Weseloh, property owners hired a general contractor, who in turn hired a

retaining wall subcontractor, who in turn hired engineers to design and inspect the

retaining walls. (Weseloh Family Ltd. Partnership v. K.L. Wessel Construction Co., Inc.,

22 supra, 125 Cal.App.4th at pp. 159-160.) A portion of the retaining walls failed (id. at

p. 160), and litigation ensued. The trial court granted summary judgment for the

engineers, ruling that they did not owe a duty to the owners. (Id. at p. 161.)

The appellate court held that the owners failed to show that, under the Biakanja

factors, the engineers had a duty of care. (Weseloh Family Ltd. Partnership v. K.L.

Wessel Construction Co., Inc., supra, 125 Cal.App.4th at pp. 166-173.)

First, it noted that the engineers contracted only with the wall subcontractor, and

there was no third-party beneficiary clause in that contract. It concluded that the

engineers’ work was “primarily” to benefit the subcontractor. (Weseloh Family Ltd.

Partnership v. K.L. Wessel Construction Co., Inc., supra, 125 Cal.App.4th at p. 167.)

Second, it conceded that “it is generally foreseeable a design defect could result in

the failure of a retaining wall.” (Weseloh Family Ltd. Partnership v. K.L. Wessel

Construction Co., Inc., supra, 125 Cal.App.4th at p. 168.) It concluded, however, that

“[the owners] failed to produce evidence showing how and the extent to which their

damages were caused by the asserted design defects. This is a significant fact in light of

the absence of evidence showing [the engineers’] design was followed without

alteration.” (Ibid.) It stated that, due to “the insufficiency of the evidence on causation in

this case, we give the factor of foreseeability limited weight.” (Ibid.)

Third, again because it found insufficient evidence of causation, it found that there

was no close connection between the engineers’ conduct and the owners’ injury.

23 (Weseloh Family Ltd. Partnership v. K.L. Wessel Construction Co., Inc., supra, 125

Cal.App.4th at pp. 168-169.)

Fourth, it found no evidence of moral blame; it noted that “[the owners’] opening

brief does not even argue the trial court should have concluded [the engineers’] conduct

implicated moral blame.” (Weseloh Family Ltd. Partnership v. K.L. Wessel Construction

Co., Inc., supra, 125 Cal.App.4th at pp. 168-169.)

Fifth, regarding the policy of preventing future harm, Weseloh found “no evidence

supporting an argument that greater care in design engineering would result from

expanded liability.” (Weseloh Family Ltd. Partnership v. K.L. Wessel Construction Co.,

Inc., supra, 125 Cal.App.4th at p. 170.) It added that the owners “are not without [a]

remedy,” because they could sue the general contractor, who could sue the subcontractor,

who could sue the engineers. (Ibid.)

The court also considered the three additional factors set forth in Bily. It was

concerned about liability out of proportion to fault, because the engineers had been paid

$2,200, whereas the owners were claiming $6,000,000 in damages. (Weseloh Family Ltd.

Partnership v. K.L. Wessel Construction Co., Inc., supra, 125 Cal.App.4th at pp. 171-

172.) It found a possibility of private ordering, because the owners could have

“negotiat[ed] a clause naming them the intended beneficiaries in contracts related to the

project and expressly providing for the right to pursue claims directly against

subcontractors” and “could have required they be named as additional insureds on all

insurance policies covering the risks of defective workmanship of subcontractors.” (Id. at

24 p. 172.) Finally, it concluded that “there is no evidence supporting a policy ‘to favor the

alleged tortfeasor over the alleged victim as an effective distributor of loss.’ [Citation.]”

(Ibid.)

3. Beacon Residential Community Assn. v. Skidmore, Owings & Merrill

LLP.

The third leading case is Beacon Residential Community Assn. v. Skidmore,

Owings & Merrill LLP (2014) 59 Cal.4th 568. There, the Supreme Court held that two

architectural firms that designed homes did owe a duty of care to a homeowner’s

association, as representative of the subsequent purchasers of those homes. (Id. at p.

571.) It explained: “(1) Defendants’ work was intended to benefit the homeowners

living in the residential units that defendants designed and helped to construct. (2) It was

foreseeable that these homeowners would be among the limited class of persons harmed

by the negligently designed units. (3) Plaintiff’s members have suffered injury; the

design defects have made their homes unsafe and uninhabitable during certain periods.

(4) In light of the nature and extent of defendants’ role as the sole architects on the

Project, there is a close connection between defendants’ conduct and the injury suffered.

(5) Because of defendants’ unique and well-compensated role in the Project as well as

their awareness that future homeowners would rely on their specialized expertise in

designing safe and habitable homes, significant moral blame attaches to defendants’

conduct. (6) The policy of preventing future harm to homeowners reliant on architects’

specialized skills supports recognition of a duty of care.” (Id. at p. 586.)

25 The court distinguished Bily on three grounds: “(1) the closeness of the

connection between defendants’ conduct and plaintiff’s injury; (2) the limited and wholly

evident class of persons and transactions that defendants’ conduct was intended to affect;

and (3) the absence of private ordering options that would more efficiently protect

homeowners from design defects and their resulting harms.” (Beacon Residential

Community Assn. v. Skidmore, Owings & Merrill LLP, supra, 59 Cal.4th at p. 581.)

“First, unlike the secondary role played by the auditor in the financial reporting

process, defendants’ primary role in the design of the Project bears a ‘“close connection”’

to the injury alleged by plaintiff. [Citation.]” (Beacon Residential Community Assn. v.

Skidmore, Owings & Merrill LLP, supra, 59 Cal.4th at p. 581.) “An architect providing

professional design services to a developer does not operate in a ‘client-controlled

environment’ comparable to the relationship between an auditor and its client.

[Citation.]” (Id. at p. 582.) The court also stressed that “defendants played a lead role

not only in designing the Project but also in implementing the Project design.” (Id. at

p. 583.)

“Second, recognizing that an architect who is a principal provider of professional

design services on a residential building project owes a duty of care to future

homeowners does not raise the prospect of ‘“liability in an indeterminate amount for an

indeterminate time to an indeterminate class.”’ [Citation.]” (Beacon Residential

Community Assn. v. Skidmore, Owings & Merrill LLP, supra, 59 Cal.4th at p. 583.) It

declined to rely on the fact that the homeowners were not third-party beneficiaries of the

26 architects’ contracts, stating, “we have never held that third party beneficiary status is a

prerequisite to alleging negligence.” (Id. at p. 584.)

“Third, the prospect of private ordering as an alternative to negligence liability is

far less compelling . . . than in Bily.” (Beacon Residential Community Assn. v. Skidmore,

Owings & Merrill LLP, supra, 59 Cal.4th at p. 584.) An ordinary homeowner has no

construction expertise and cannot negotiate “‘meaningful protective changes in the

conveyancing documents prepared by the builder vendor . . . .’” (Id. at pp. 584-585.)

The court found it “questionable” that allowing the homeowner to sue the developer “will

consistently provide adequate redress” and noted that “the chief interest of prospective

homeowners is to avoid purchasing a defective home, not only to have adequate redress

after the fact.” (Id. at p. 585.)

Last but not least, the Supreme Court also distinguished Weseloh, on two grounds.

In Weseloh, the engineers had had the “limited role” of assisting the wall subcontractor

with its calculations, but in Beacon, the architects “were the sole entities providing

architectural services to the Project.” (Beacon Residential Community Assn. v. Skidmore,

Owings & Merrill LLP, supra, 59 Cal.4th at pp. 586-587.) Also, in Weseloh, there was

insufficient evidence of causation, but in Beacon, there was “no similar causation

problem . . . .” (Beacon, supra, at p. 587.)

C. Forfeiture.

Preliminarily, RC contends that Luzuriaga forfeited any contention that the

Biakanja factors weigh in her favor by failing to raise it below.

27 In its motion for summary judgment, RC and Cuellar argued that, based on the

application of the Biakanja factors, they did not owe Luzuriaga a duty of care. In

opposition, Luzuriaga did not address each of the Biakanja factors separately. However

she did argue that cases such as Stewart had applied the Biakanja factors in the

construction context and had held, as a result, that a subcontractor owes the owner a duty

of care.

Thus, there was no forfeiture. Ultimately, the trial court declined to follow

Stewart, because it had already ruled (for licensing purposes) that RC and Cuellar were

not subcontractors. Instead, it accepted RC and Cuellar’s argument. It is therefore

appropriate for Luzuriaga to argue — albeit in more detail than she did below — that the

Biakanja factors, as applied in cases such as Stewart, support a duty here.

RC also argues, more specifically, that Luzuriaga did not argue below that (1)

Weseloh is not controlling, or (2) Beacon is controlling. We are not aware of any law

that a litigant cannot cite a new case on appeal or cannot assert a new distinction of an old

case. In fact, such fine-tuned approaches to the case law are probably more common on

appeal than not.

D. Synthesis and Analysis.

We proceed to apply the Biakanja factors here in light of Stewart, Weseloh, and

Beacon.

(1) The extent to which the transaction was intended to affect the plaintiff: As in

Weseloh, there was no third-party beneficiary clause in the relevant contracts, but under

28 Beacon, this is not determinative. It has been said that “[t]he owner is . . . an intended

beneficiary of the subcontractor’s contract with the general contractor. . . .” (Sanchez v.

Swinerton & Walberg Co. (1996) 47 Cal.App.4th 1461, 1469.) It would seem that the

owner is equally an intended beneficiary of a subcontractor’s contract with an equipment

operator or lessor.

As in Stewart, it was obvious that the grading work was ultimately intended to

benefit the owner, and that if it were done negligently, the owner would be damaged.

Cuellar testified that he did not know who the owner was, but he could hardly claim he

did not know there was an owner.

The trial court distinguished Stewart on the ground that RC and Cuellar were not

subcontractors. In part VI, ante, we agreed that they were not subcontractors within the

meaning of the Contractors State License Law. For present purposes, however, the

question is not whether they were subcontractors as thus defined, but rather whether they

are more analogous to the subcontractor in Stewart, on one hand, or to the engineers in

Weseloh, on the other hand.

Beacon indicated that the controlling distinction between the two is whether the

project participant had a limited role or contributed to the project as a whole. Here, RC

and Cuellar contributed only to the grading; moreover, each of them did only part, not all,

of the grading. Thus, the transaction was primarily intended to benefit B&T, rather than

Luzuriaga.

29 (2) The foreseeability of harm to the plaintiff: As in Stewart and Beacon, it was

obvious that negligent performance by the defendants would cause damages to the

property owner. Weseloh discounted this factor, because in that case, there was no

evidence that the plaintiff’s damages were actually caused by the defendants’ negligent

performance. Here, by contrast, there was uncontradicted evidence of causation.

Bily held, however, that “the mere presence of a foreseeable risk of injury to third

persons [is not] sufficient, standing alone, to impose liability for negligent conduct.”

(Bily v. Arthur Young & Co., supra, 3 Cal.4th at p. 399.)

(3) The degree of certainty that the plaintiff suffered injury: Once again, as in

Stewart and Beacon, and unlike in Weseloh, there was ample evidence of causation. And

Luzuriaga is the main injured party. This is not a situation, as in Bily, in which there is

some large and nebulous class of potential plaintiffs. The general contractor and B&T

might have some cause of action against RC and Cuellar, but only because Luzuriaga has

a cause of action against all of them.

(4) The closeness of the connection between the defendant’s conduct and the

injury suffered: In one sense, the connection was close; RC and Cuellar did the grading,

and the grading was defective. In a more important sense, however, it was not close.

Nanci testified that it was B&T’s duty to see to it that the grading work was done in

accordance with the plans and specifications, and moreover that this was B&T’s duty

“exclusively” — i.e., to the exclusion of RC and Cuellar. For this reason, he did not

show RC or Cuellar the plans and specifications. As he owned B&T, which was a

30 (usually) licensed grading contractor, he was qualified to testify as an expert. And his

testimony on this point was uncontradicted. Cuellar testified that he did exactly what the

B&T foreman told him to do.

Indeed, it is hard to see how RC and Cuellar were allegedly negligent. To the

extent that they supplied equipment, they were not; there is no allegation that the

equipment was defective, that it was not appropriate for the task, or that it somehow

caused the grading to deviate from the plans and specifications.5 To the extent that they

operated equipment, they did so under B&T’s supervision; according to Nanci, this was

consistent with the standard of care in the industry. However, it is possible that some of

the deviations from the plans and specifications were obvious. In any event, RC and

Cuellar did not move for summary judgment on the ground that they were not negligent;

it is possible that, had they done so, Luzuriaga could and would have introduced

additional evidence.

We therefore assume that RC and Cuellar were negligent. Even if so, B&T had

the closest connection to Luzuriaga’s alleged injury; RC and Cuellar were one step

removed, and, on this record, only tangentially responsible for it, at best.

5 RC contends that a holding that it has a duty “would have a devastating effect on business establishments, such as Home Depot, Loews [sic], United Rentals, etc., who rent equipment and cannot control its proper use or application in the field, in the event claimed deficiencies in construction are caused by the lessee of such equipment.” However, because Luzuriaga seeks to hold RC and Cuellar liable as equipment operators, not as equipment suppliers, this concern is misplaced.

31 (5) The moral blame attached to the defendant’s conduct: Stewart did not

specifically discuss moral blame; either it felt that negligence is morally blameworthy per

se or that the absence of moral blame did not outweigh the other factors. Weseloh found

no moral blame; that finding, however, may have been influenced by the fact that it also

found no causation. Beacon found that the defendants’ negligent performance of their

“unique and well-compensated role in the Project as well as their awareness that future

homeowners would rely on their specialized expertise in designing safe and habitable

homes” gave rise to “significant moral blame.” (Beacon Residential Community Assn. v.

Skidmore, Owings & Merrill LLP, supra, 59 Cal.4th at p. 586.)

Here, unlike in Beacon, RC and Cuellar did not provide specialized expertise and

were not particularly well-compensated. As discussed above, it was B&T that was

supposed to provide the specialized expertise. This means that B&T took primary moral

blame for any negligent grading; RC and Cuellar had only secondary moral blame or no

moral blame at all, depending on how you look at it. In this situation — where there was

a more blameworthy joint tortfeasor — the moral blame factor militates against a duty.

(K.G. v. S.B. (2020) 46 Cal.App.5th 625, 628-629, 633 [father who provided financial

support to his son, who used the money to buy drugs that killed his girlfriend, had no

moral blame]); State Ready Mix, Inc. v. Moffatt & Nichol (2015) 232 Cal.App.4th 1227,

1230-1231, 1233-1234 [design engineer who gratuitously reviewed concrete mix

designed and prepared by concrete supplier had no moral blame].)

32 Luzuriaga argues that RC is morally blameworthy because it performed unlicensed

grading work. As we held in part IV, ante, however, it was not required to be licensed.

Luzuriaga also argues that Cuellar is morally blameworthy because he was a

licensed contractor, and a licensed contractor is subject to discipline for “[a] willful

departure from or disregard of plans or specifications in any material respect, which is

prejudicial to another . . . .” (Bus. & Prof. Code, § 7109, subd. (b).) However, as we

held with respect to RC in part IV, ante, Cuellar was not doing work that required a

contractor’s license.6 In any event, the violation of such a regulatory statute is not

inherently morally blameworthy.

(6) The policy of preventing future harm: As a general rule, it would seem that

the more project participants who have a duty of care, the more future harm is prevented.

Weseloh found no evidence “that greater care . . . would result from expanded liability”

(Weseloh Family Ltd. Partnership v. K.L. Wessel Construction Co., Inc., supra, 125

Cal.App.4th at p. 170); however, the presumption that it would, unless proven otherwise,

is fundamental to the law of negligence.

The law of negligence, however, is not the only body of law involved here.

Luzuriaga also had the option of suing for breach of contract. As discussed above, it

6 The Contractors State License Board can take disciplinary action against a licensed contractor, even if it was not acting in that capacity by virtue of one of the exemptions to the licensing requirement set forth in Business and Professions Code section 7044 [owner-builder], 7045 [non-fixtures], 7046 [personal property], or 7048 [project under $500]. (Bus. & Prof. Code, § 7090.) By negative implication, it cannot take disciplinary action against a licensed contractor that was not acting in that capacity for some other reason.

33 would seem that she is a third-party beneficiary of the contracts with RC and Cuellar.

But even if she is not, she could sue B&T, which most likely would just turn around and

sue RC and Cuellar. It does not appear that holding RC and Cuellar liable directly to

Luzuriaga for negligence is necessary to further the policy of preventing future harm.

So far, then, the Biakanja factors are something of a mixed bag. Numerically, four

of the factors weigh in favor of a duty, and only two weigh against (one of which the

Supreme Court has told us is not determinative). Of course, we are to evaluate them

qualitatively, not just quantitatively; alas, the case law does not clearly lay out how we

are to go about doing so.

We therefore turn to the three additional Bily factors.

(1) Liability out of proportion to fault: Bily held that this factor applied in the

case before it, because the accountant’s fault was secondary to the client’s. (Bily v.

Arthur Young & Co., supra, 3 Cal.4th at pp. 399-402.) Here, as discussed above, it is

hard to see how RC and Cuellar were negligent at all, but even if they were, their fault

was secondary to B&T’s.

(2) The prospect of private ordering: As Weseloh held, an owner can protect itself

by contractually requiring every project participant to be liable to the owner for failing to

follow the plans and specifications. Here, however, the contract was an AIA form. It

provided that the contractor and any subcontractor were to be bound by the plans and

specifications; a sub-subcontractor, however, was to be bound only “[w]here

34 appropriate.” It seems unlikely that Luzuriaga could have negotiated a change to this

language. We conclude that this factor does not particularly favor either side.

(3) Adverse societal effects: According to Nanci, the custom in the industry is

that the grading subcontractor is responsible for compliance with the plans and

specifications; a provider of operated equipment is not. The AIA form contract is

consistent with this testimony; it gives a contractor the option not to require a

subcontractor to be bound by the plans and specifications, where appropriate. Luzuriaga

does not point to any adverse societal effects resulting from this custom.

If we were to hold that RC and Cuellar had a duty to Luzuriaga, the likely result

would be greater risk and — assuming insurance for this risk is even available — higher

insurance premiums for small construction businesses. The supply of their services

would go down and the price for those services would go up. In the absence of any

apparent problems resulting from the existing custom, we see no justification for this.

In sum, then, the Biakanja factors, when combined with the Bily factors, point to

the conclusion that RC and Cuellar had no duty of care toward Luzuriaga. The key facts

that favor Luzuriaga are that she was undoubtedly damaged, and that she is the main

member of a small class of foreseeable plaintiffs. The key fact that favors RC and

Cuellar is that, under the contract documents and under the custom in the industry, they

had only a limited role in the project, and it was not their responsibility to ensure that the

grading conformed to the plans and specifications. The latter fact plays into many of the

Biakanja and Bily factors and strongly influences our evaluation of them.

35 We therefore conclude that the trial court correctly held that RC and Cuellar did

not owe Luzuriaga a duty of care.

VI

RC’S ENTITLEMENT TO CLAIM A MECHANIC’S LIEN

In connection with her first (unlawful business practices) cause of action,

Luzuriaga contends that RC was not entitled to claim a mechanic’s lien.

Civil Code section 8400 provides: “A person that provides work authorized for a

work of improvement, including, but not limited to, the following persons, has a lien right

under this chapter:

“(a) Direct contractor.

“(b) Subcontractor.

“(c) Material supplier.

“(d) Equipment lessor.

“(e) Laborer.

“(f) Design professional.” (Italics added.)

Luzuriaga argues that RC was not an “[e]quipment lessor” or a “[l]aborer.” More

generally, she also argues that RC did not actually “provide[] work for [the] work of

improvement” (Civ. Code, § 8400), because it merely acted as a middleman for the labor

and equipment of others (i.e., Ronald Berger, L. Moreno, and Cuellar).

On this cause of action, the trial court denied Luzuriaga’s motion for summary

adjudication — and granted RC’s cross-motion for summary adjudication — for two

36 alternative reasons: (1) because Luzuriaga had not pleaded this theory; and (2) because

RC was entitled to claim a mechanic’s lien.

Luzuriaga contends that she did adequately plead this theory. Her first cause of

action was almost entirely taken up by allegations that RC was an unlicensed contractor.

However, one paragraph additionally alleged that: “RC[’s] claim of lien includes

equipment, work, service, and/or materials that were not performed or provided to the

Project by RC . . . .”

The commonsense meaning of this is that RC demanded payment for something

that it never actually did. Evidently that is how RC and the trial court read it.

Luzuriaga is now arguing that, even though RC actually did something, it was not

qualified to claim a mechanic’s lien because what it did was not “work” and was not done

on a “work of improvement.” Once you know that, it is possible to look back at the

crucial paragraph, to realize that it is ambiguous, and to see how it could be read as

asserting this argument.

Nevertheless, it was insufficient to raise this theory for purposes of summary

judgment. A complaint must contain “[a] statement of the facts constituting the cause of

action, in ordinary and concise language.” (Code Civ. Proc., § 425.10, subd. (a)(1).)

“This fact-pleading requirement obligates the plaintiff to allege ultimate facts that ‘as a

whole apprise[] the adversary of the factual basis of the claim. [Citations.]’ [Citation.]”

(Medical Marijuana, Inc. v. ProjectCBD.com (2020) 46 Cal.App.5th 869, 886.) “The

requirement to specifically plead facts in a complaint is to apprise the defendant of the

37 circumstances upon which plaintiff relies and to prevent defendant from being taken by

surprise.” (Frisvold v. Leahy (1936) 15 Cal.App.2d 752, 756.)

Here, Luzuriaga’s construction of her own allegation was not its ordinary

meaning. Significantly absent was the essential fact that RC was acting only as a broker

or middleman. Indeed, the same cause of action alleged, to the contrary, that “RC . . .

performed unlicensed contractor’s work on the Project . . . .” (Capitalization altered.)

While Luzuriaga would have been allowed to plead inconsistent allegations, she never

actually did plead the entirely inconsistent allegation that RC acted only as a middleman

for work performed by others. As a result, the crucial paragraph did not reasonably

apprise RC of Luzuriaga’s present contention.

“‘The pleadings define the issues to be considered on a motion for summary

judgment.’ [Citation.]” (Lowe v. California League of Prof. Baseball (1997) 56

Cal.App.4th 112, 122.) “Summary judgment cannot be granted on a ground not raised by

the pleadings. [Citation.] Conversely, summary judgment cannot be denied on a ground

not raised by the pleadings. [Citations.]” (Bostrom v. County of San Bernardino (1995)

35 Cal.App.4th 1654, 1663, italics omitted.)

Finally, Luzuriaga quotes Lewis & Queen v. N. M. Ball Sons (1957) 48 Cal.2d 141

to the effect that: “Whatever the state of the pleadings, when the evidence shows that the

plaintiff in substance seeks to enforce an illegal contract or recover compensation for an

illegal act, the court has both the power and duty to ascertain the true facts in order that it

may not unwittingly lend its assistance to the consummation or encouragement of what

38 public policy forbids. [Citations.]” (Id. at pp. 147-148.) This quotation (if it applies in

the context of summary judgment at all) might apply to Luzuriaga’s theory that RC was

an unlicensed contractor (see ibid.), but it does not apply to her theory that RC was not

entitled to claim a mechanic’s lien. Even if RC was claiming a mechanic’s lien when it

was not entitled to do so, it was nevertheless owed the money; it was not seeking “to

enforce an illegal contract” nor to “recover compensation for an illegal act.”

We therefore conclude that Luzuriaga forfeited this theory for purposes of

summary judgment.

VII

DENIAL OF LEAVE TO AMEND

Anticipating our holding that she did not adequately plead her theory that RC was

not entitled to claim a mechanic’s lien (see part VI, ante), Luzuriaga contends that the

trial court erred by denying her leave to amend so as to allege this theory.

A. Additional Factual and Procedural Background.

In opposition to Luzuriaga’s motion for summary adjudication, RC argued that she

had not pleaded this theory. Thus, in her reply memorandum, in a single sentence,

Luzuriaga requested leave to amend, “if needed.” Even though she had not requested

oral argument, she appeared on the date set for hearing and reiterated her request for

39 leave to amend.7 The trial court responded, “I think you’re going to have to file a motion

. . . .”

About two and a half months later, Luzuriaga filed a motion for leave to file a

third amended complaint. The trial court denied that motion.

B. Discussion.

As already discussed (see part VI, ante), the pleadings define the issues to be

considered on a motion for summary judgment. At that stage of the proceedings,

Luzuriaga could not amend her complaint without leave of court. (Code Civ. Proc.,

§ 472.) And she could not obtain leave of court without a noticed motion, which had to

include a copy of the proposed amended complaint. (Code Civ. Proc., §§ 473, subd.

(a)(1), 1005, subd. (a)(13); Cal. Rules of Court, rule 3.1324(a).)

Cases do state that a request for leave to amend may be made at or before the

hearing on a motion for summary judgment (e.g., Laabs v. City of Victorville (2008) 163

Cal.App.4th 1242, 1257), but this cannot be read as excusing the requirement of a duly

noticed motion. What Luzuriaga should have done was to file a motion for leave to

amend, together with a motion (or ex parte application) for a continuance of the hearing

on the pending summary judgment/summary adjudication motions, to allow her motion

for leave to amend to be heard first. Her request for leave to amend in her reply memo

7 Luzuriaga characterizes the hearing as a trial setting conference. A trial setting conference had been set for the same date, but the trial court continued it. Thus, it was solely a hearing on the motion for summary judgment.

40 was ineffective. Her oral request at the hearing (even if we were to view that hearing as a

trial setting conference) was likewise ineffective.

There is a split of opinion as to whether a motion for leave to amend can be filed

after a motion for summary judgment has been granted but before judgment has been

entered. (See Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621,

648, fn. 24; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter

Group 2020) ¶ 10:52.6 at p. 10-27, and cases cited.) We therefore assume, without

deciding, that the trial court still had the authority to grant the motion for leave to amend,

provided Luzuriaga showed good cause.

Even if so, she has not shown that the trial court erred by denying her motion.

“The denial of leave to amend is reviewed under an abuse of discretion standard.

[Citation.]” (Centex Homes v. St. Paul Fire & Marine Ins. Co. (2015) 237 Cal.App.4th

23, 28.) In opposition to the motion for leave to amend, RC argued, among other things,

that Luzuriaga had failed to show that she filed the motion promptly after learning the

underlying facts.

“The law is . . . clear that even if a good amendment is proposed in proper form,

unwarranted delay in presenting it may — of itself — be a valid reason for denial. . . .

[T]he denial may rest upon the element of lack of diligence in offering the amendment

after knowledge of the facts, or the effect of the delay on the adverse party. [Citations.]”

(Roemer v. Retail Credit Co. (1975) 44 Cal.App.3d 926, 939-940.) Luzuriaga does not

even argue that she demonstrated diligence. Thus, she has forfeited this argument. In

41 any event, she admitted in her motion that she had known since January 2017 that RC

claimed to be acting as a broker. Discovery was complete by March 2018. RC’s status

as a broker was the major premise of her motion for summary adjudication, filed in June

2018. We therefore sustain the denial.

VIII

DISPOSITION

The judgment is affirmed. RC (including Ronald and Carla Berger) and Cuellar

are awarded costs on appeal against Luzuriaga.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS RAMIREZ P. J.

We concur:

MILLER J.

MENETREZ J.