Twenty-Nine Palms Enterprises v. Cadmus Construction CA4/1

• Court: California Court of Appeal
• Decided: November 6, 2015
• Docket: D067422
• Status: Unpublished

Opinion

Filed 11/6/15 Twenty-Nine Palms Enterprises v. Cadmus Construction CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

TWENTY-NINE PALMS ENTERPRISES D067422 CORPORATION,

Plaintiff and Respondent, (Super. Ct. No. CIVRS914065 ) v.

CADMUS CONSTRUCTION, INC.,

Defendant and Appellant.

APPEAL from a judgment of the Superior Court of San Bernardino, Janet M.

Frangie, Judge. Reversed and remanded with directions.

Lambert & Rogers and Michael D. Rogers for Defendant and Appellant.

Sheppard, Mullin, Richter & Hampton, Richard M. Freeman and Matthew S.

McConnell for Plaintiff and Respondent.

Cadmus Construction, Inc. (Cadmus) entered into three contracts with Twenty-

Nine Palms Enterprises Corporation (Twenty-Nine Palms), an Indian tribal corporation.

Under these contracts, Cadmus was to perform certain construction services on tribal

land. During the course of Cadmus's performance under the contracts, Twenty-Nine Palms elected to terminate the contracts. Per an arbitration provision found in each

contract, Cadmus demanded arbitration and the parties proceeded to engage in discovery,

heading toward the selected arbitration date.

During the course of conducting discovery, Twenty-Nine Palms learned that

Cadmus was not properly licensed under the Contractors' State License Law (CSLL; Bus.

& Prof. Code,1 § 7000 et seq.) when it started work under the contracts. Twenty-Nine

Palms thus claimed Cadmus had to disgorge the money it had been paid under each of the

contracts. Further, Twenty-Nine Palms argued that because Cadmus was not a properly

licensed contractor, each of three contracts was illegal and void. Therefore, arbitration

could not proceed.

The parties disagreed regarding whether the arbitrator could determine if the

subject contracts were illegal. After discussing the issue, Twenty-Nine Palms and

Cadmus agreed to stay the arbitration and submit the legality of the contracts issue to San

Bernardino Superior Court to avoid wasting additional time and resources in arbitration.

To this end, Twenty-Nine Palms filed a complaint in superior court challenging the

validity of the three contracts while alleging that Cadmus had to disgorge its profits under

section 7031, subdivision (b) because it was not a properly licensed contractor when it

began work under the contracts.

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

2 In response to the complaint, Cadmus filed a motion to compel arbitration, which

the court denied, finding that the parties had stipulated to allow the court to determine

whether Cadmus was properly licensed and if the contracts were illegal. After some

procedural maneuvering by Cadmus, Twenty-Nine Palms successfully moved for

summary judgment. In granting the motion, the superior court concluded that it was

bound by the holding of Twenty-Nine Palms Enterprises Corp. v. Bardos (2012) 210

Cal.App.4th 1435 (Twenty-Nine Palms Enterprises), and thus, Cadmus could not argue

that section 7031 was not applicable. The court ordered Cadmus to disgorge the money

Twenty-Nine Palms had paid it under the contracts and found that those contracts were

illegal. Accordingly, the court determined that the arbitration could not proceed.

Cadmus appeals the judgment, contending that the court erred in refusing to refer

the dispute back to arbitration, section 7031, subdivision (b) was not applicable under the

circumstances here, and a triable issue of material fact exists as to whether it performed

any work while unlicensed. Twenty-Nine Palms responds that the section 7031 issue was

already determined in Twenty-Nine Palms Enterprises, supra, 210 Cal.App.4th 1435 and

Cadmus cannot now argue section 7031 did not apply. In addition, Twenty-Nine Palms

maintains it was undisputed that Cadmus performed and was paid for work prior to being

licensed, and therefore, it had to disgorge the money it was paid. Finally, Twenty-Nine

Palms asserts all three of the contracts were illegal because Cadmus was not properly

licensed when it began work under those contracts.

After receiving briefs in this case, we requested supplemental briefing to address

the issue whether California could regulate the licensing requirements of contractors

3 performing work under a contract with a tribal entity that calls for work to be completed

on tribal land.

After reviewing the supplemental briefs, we determine that California may not

regulate contractors working on tribal land through California law or Public Law 280

(Pub.L. No. 83-280 (Aug. 15, 1953) 67 Stat. 589). Moreover, we conclude that section 4

of Public Law 280 codified at title 28 United States Code section 1360 does not allow

Twenty-Nine Palms to otherwise sue under a California law that does not apply on tribal

land. However, here, the parties to the contracts agreed to be governed by California law.

As such, section 7031, subdivision (b) can apply because the parties consented to its

application in their contracts.

We further determine that the three subject contracts are not illegal because

section 7031 does not apply outside of the contracts themselves. Accordingly, the court

erred in not referring the matter back to arbitration to resolve the remaining disputes. We

therefore reverse the judgment and remand the matter to the superior court with

directions to refer the matter back to arbitration.

FACTUAL AND PROCEDURAL BACKGROUND

Twenty-Nine Palms is a tribal corporation duly chartered under the provisions of

title 25 United States Code section 477 and wholly owned and controlled by the Twenty-

Nine Palms Band of Mission Indians, a federally recognized tribe residing near

Coachella, California. Twenty-Nine Palms owns and operates the Spotlight 29 Casino

(Casino), located at 46-200 Harrison Place, Coachella, California.

4 Cadmus was incorporated on February 8, 2008. Cadmus operated as a general

contractor. Cadmus applied for a California State Contractor's license on March 4, 2008.

It received a contractor's license on April 22, 2008. Paul Bardos is the sole owner,

officer, and director of Cadmus.

On February 5, 2008, Cadmus Construction Corporation submitted a proposal to

Twenty-Nine Palms to take over the recently vacated general contractor job on the

Casino addition project as well as a variety of other pending and yet to be determined

projects. Cadmus thereafter engaged in detailed negotiations with Twenty-Nine Palms

and eventually entered into the following three contracts: (1) a bathroom remodel

contract, entered into on March 10, 2008 (Bathroom Contract); (2) new chiller and

cogeneration plant building shell contract entered into on March 10, 2008 (Chiller

Contract); and the Casino addition project Phase I contract, entered into on April 21,

2008 (Casino Addition Contract) (Bathroom Contract, Chiller Contract, and Casino

Addition Contract collectively referred to as Construction Contracts).

Bardos signed each of the Construction Contracts on behalf of Cadmus as its

president. Article 13.1.1 of the general conditions for all three Construction Contracts

stated that the "Contract shall be governed by the law of the State of California." Each

contract also contained an arbitration provision requiring the parties to arbitrate any

disputes "arising out of or related to" the work to be performed under the Construction

Contracts.

Cadmus performed work under each of the Construction Contracts, and Twenty-

Nine Palms paid Cadmus a total of $1,604,952.32 for its work. Twenty-Nine Palms,

5 however, terminated all three of the Construction Contracts before all work was

completed.

On October 9, 2008, Cadmus filed a demand for arbitration under each of the

Construction Contracts, alleging that Twenty-Nine Palms breached the contracts by

wrongfully terminating the contracts and not paying all money owed. In all, Cadmus

alleged several causes of action, including breach of contract, conspiracy to interfere with

prospective economic advantage, misappropriation of trade secrets, unfair competition,

unfair business practices, accounting, and declaratory relief. Cadmus sought general

damages, treble damages, and punitive damages.

Twenty-Nine Palms answered the arbitration demand on November 10, 2008,

listing 29 affirmative defenses, and seeking relief against Cadmus for, among other

claims, breach of contract, fraud in the inducement, and unfair business practices. At that

time, Twenty-Nine Palms did not challenge Cadmus's right to arbitrate the dispute.

The parties selected an arbitrator and proceeded to engage in discovery over the

next several months. In addition to written discovery, the parties took numerous

depositions. After proceeding toward arbitration for over a year, Twenty-Nine Palms

believed it had discovered that Cadmus was not properly licensed at all times it

performed work under the Construction Contracts. The parties met and conferred

regarding the status of Cadmus's license and eventually submitted a stipulation to stay the

arbitration (Stipulation). The Stipulation stated in relevant part:

"WHEREAS, the parties remain engaged in substantial ongoing discovery;

6 "WHEREAS, [Twenty-Nine Palms] asserts that recent developments in the case have raised issues regarding the contractor's license of Cadmus and whether Cadmus was properly licensed at all times on the three construction projects at issue;

"WHEREAS, Cadmus disputes [Twenty-Nine Palms's] contentions regarding its contractor's license;

"WHEREAS, the parties are in disagreement as to whether the California Supreme Court's decision in Loving & Evans v. Blick, 33 Ca1.2d 603 (1949) mandates that a California court rather than an arbitrator decide the licensing issue;

"WHEREAS, Cadmus has submitted these new allegations regarding its contractor's license to its insurance carrier;

"WHEREAS, the parties have agreed that [Twenty-Nine Palms] shall submit this dispute to a California court;

"WHEREAS, the parties have agreed that the licensing dispute and Cadmus' insurance claim need to be resolved before the arbitration of this matter in order to potentially avoid wasting substantial time and money;"

On December 10, 2009, 14 months after Cadmus demanded arbitration, the

arbitrator signed the Stipulation. Twenty-Nine Palms filed a complaint in San

Bernardino Superior Court 18 days later. The complaint alleged Cadmus "performed

work on the Construction Contracts prior to receiving a contractor's license on April 22,

2008." The complaint acknowledged that the parties were in the process of arbitrating a

dispute under the Construction Contracts, but that Twenty-Nine Palms believed the

arbitrator could not decide the "licensing issue" "and instead [that issue] needed to be

decided by a Superior Court judge."

Twenty-Nine Palms alleged in the complaint that San Bernardino Superior Court

had jurisdiction to hear the case under section 7031 generally, but references throughout

7 the complaint make it clear it was seeking relief under section 7031, subdivision (b).2

The complaint included four causes of action. The first three were for violations of

section 7031 because Cadmus was not a properly licensed contractor under section 7026

prior to entering into any of the Construction Contracts or beginning to perform work

under those contracts. The final cause of action was for declaratory relief based on the

following controversies, whether (1) Cadmus was licensed by the California State

Contractors' License Board at all times relevant to the Construction Contracts; (2) the

Construction Contracts were illegal based on Cadmus's lack of license; (3) the entire

arbitration was unenforceable because it was based on illegal contracts; (4) Cadmus was

barred from pursuing all of its claims against Twenty-Nine Palms in arbitration; and (5)

Twenty-Nine Palms was entitled to disgorgement from Cadmus.

Instead of answering the complaint, Cadmus filed a motion to compel arbitration.

In its motion, Cadmus did not address the Stipulation in detail, but argued that each of the

Construction Contracts contained an arbitration clause that required any disputes under

those contracts to be arbitrated, including any claim as to the legality of those contracts.

Twenty-Nine Palms opposed the motion, emphasizing that the parties signed the

Stipulation to allow the superior court to resolve the question about whether Cadmus was

properly licensed. Twenty-Nine Palms further asserted that the court must determine if

the Construction Contracts were illegal because Cadmus was not licensed while

2 Section 7031, subdivision (b) states: "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 compensation paid to the unlicensed contractor for performance of any act or contract." 8 performing under the contracts. Twenty-Nine Palms reasoned that if the Construction

Contracts were illegal then an enforceable arbitration provision would not exist and

Cadmus could not seek relief in arbitration.

During oral argument on the motion to compel arbitration, Cadmus's counsel

argued that arbitration was the proper forum for the dispute to be resolved. Twenty-Nine

Palms's counsel emphasized that the issue raised in the complaint was the illegality of the

Constructions Contracts: "And as far as the scope of this particular action, it is purely to

decide a legal issue dealing with the legality of the underlying contract, which if, indeed,

the contract is illegal the entre arbitration is itself unenforceable."

The superior court agreed with Twenty-Nine Palms noting "the plain meaning of

the stipulation is that the parties agreed to have this Court resolve the licensing dispute

and Cadmus' insurance claim before the arbitration in order to avoid wasting substantial

time and money in the arbitration proceeding." The court therefore denied the petition to

compel arbitration.

Cadmus subsequently answered the complaint. The answer included 16

affirmative defenses, including two based on tribal sovereign immunity.

Twenty-Nine Palms then filed a motion for summary judgment. The motion

focused on the claim that Cadmus violated section 7031, subdivision (b) because it was

not properly licensed when it performed work under the Construction Contracts.

Twenty-Nine Palms also maintained that the Construction Contracts were illegal because

Cadmus was not a properly licensed contractor and asked the court to order Cadmus to

disgorge the money Twenty-Nine Palms had paid it.

9 Rather than file an opposition, Cadmus filed for Chapter 11 bankruptcy, and filed

a new lawsuit in federal court against Twenty-Nine Palms. The federal lawsuit sought a

judicial declaration that the San Bernardino Superior Court lacked jurisdiction to hear the

instant matter because Public Law 280 does not permit California to enforce its

contractors' licensing law with respect to construction contracts for improvements on trial

land.

Cadmus subsequently removed the instant matter to bankruptcy court, initiating an

adversary proceeding against Twenty-Nine Palms, asking the bankruptcy court to decide

the Public Law 280 issue. The bankruptcy court ultimately denied Cadmus's request,

remanding the subject adversary proceeding to the San Bernardino Superior Court. The

federal court then dismissed the federal action Cadmus had filed against Twenty-Nine

Palms.

With the matter remanded to the San Bernardino Superior Court, Twenty-Nine

Palms filed an amended notice of its motion for summary judgment. Cadmus opposed

the motion, contending, among other things, that "[b]ecause of [Twenty-Nine Palms's]

tribal sovereignty, the California Contractors' State License Law does not apply to the

contracts and construction at issue here."

At the time of oral argument on the motion for summary judgment, an appeal was

pending regarding the San Bernardino Superior Court's grant of summary judgment in

favor of Twenty-Nine Palms and against Bardos doing business as Cadmus Construction

Co. (the Cadmus Construction Action). The Cadmus Construction Action involved the

10 same general issue of a nonlicensed contractor performing construction on tribal lands.3

In that case, the superior court granted summary judgment in favor of Twenty-Nine

Palms and ordered disgorgement of all money paid by Twenty-Nine Palms to Cadmus

Construction. One of Cadmus Construction's defenses was that tribal sovereign

immunity prevented the application of the CSLL on tribal lands, and thus, Cadmus

Construction was not legally required to have a contractor's license.

During oral argument on the motion for summary judgment in the instant matter,

the superior court questioned whether given the similarity of the parties and issues in the

Cadmus Construction Action, it would be prudent to stay a decision on the summary

judgment motion until the resolution of the Cadmus Construction appeal. The court

ordered the parties to brief whether a stay should be issued.

Cadmus argued against a stay while Twenty-Nine Palms argued in favor of one.

The superior court agreed with Twenty-Nine Palms and ordered that all further

proceedings in the matter would be stayed pending the Court of Appeal's opinion in the

Cadmus Construction Action. The superior court later denied Cadmus's motion for

reconsideration of the order granting a stay.

In late 2012, the Second Division of the Fourth Appellate District issued its

opinion on the appeal following Twenty-Nine Palms's successful motion for summary

judgment in the Cadmus Construction Action. In Twenty-Nine Palms Enterprises, supra,

210 Cal.App.4th 1435, the Second Division affirmed summary judgment in favor of

3 Cadmus Construction was a sole proprietorship, owned by Bardos. Bardos also is the sole owner of Cadmus. 11 Twenty-Nine Palms. (Id. at p. 1437.) The court explained: "Cadmus [Construction] is

asserting the tribe's sovereign immunity to prevent the tribe from pursing an action

against him in state court. Cadmus [Construction] cannot do this -- the sovereign

immunity defense is reserved for the tribe and tribal entities." (Id. at p. 1446.)

With the sovereign immunity defense issue ostensibly resolved, the superior court

lifted the stay and proceeded with Twenty-Nine Palms's motion for summary judgment.

Based on Twenty-Nine Palms Enterprises, supra, 210 Cal.App.4th 1435, the court ruled

that Cadmus could no longer argue section 7031 did not apply to the Construction

Contracts and to work performed on tribal land. The court then determined that there

were no material facts in dispute and Cadmus was not properly licensed under California

law during all time it performed work under the Construction Contracts.

The court entered judgment in the instant matter, requiring Cadmus to disgorge

$1,604,952.32 and pay Twenty-Nine Palms over $500,000 in prejudgment interest. The

court also made the following judicial determinations: (1) Cadmus was not a licensed

contractor at all times relevant to its work under the Construction Contracts; (2) Twenty-

Nine Palms is entitled to disgorgement of all monies paid to Cadmus on the Construction

Contracts pursuant to section 7031, subdivision (b); (3) section 7031, subdivision (a) bars

Cadmus from pursuing its claim for compensation against Twenty-Nine Palms in

arbitration; and (4) the Construction Contracts are illegal and therefore Cadmus is

prohibited from continuing with its arbitration against Twenty-Nine Palms.

Cadmus timely appealed. In its opening brief, Cadmus maintains the superior

court erred in not sending the matter back to arbitration when it denied the motion to

12 compel arbitration. It also asserts there exists a disputed issue of material fact as to

whether Cadmus ever performed under the Construction Contracts without a contractor's

license. Finally, Cadmus asserts section 7031 was not applicable to the Construction

Contracts and the work it performed.

In its respondent's brief, Twenty-Nine Palms contends Cadmus waived any right to

appeal the order denying the petition to compel arbitration, and in any event, the

stipulation evidenced the parties' intent that the superior court was to decide the

"licensing issue." Additionally, Twenty-Nine Palms claims Cadmus did not prove that it

was properly licensed at all times it performed under the Construction Contracts.

Twenty-Nine Palms also argues that the holding of Twenty-Nine Palms Enterprises,

supra, 210 Cal.App.4th 1435 defeats Cadmus's position that section 7031 did not apply in

the instant matter.

After reviewing the parties' briefs, this court determined that additional briefing

was needed. As such, we asked the parties to submit letter briefs to address the

following:

"Is Business and Professions Code section 7031 (unlicensed contractor statute) enforceable in a contract between a tribal entity and a nontribal contractor that requires all work done on tribal land? In other words, can California, through Public Law 280 or otherwise, regulate the licensing requirements of contractors performing work under a contract with a tribal entity, which calls for all work to be completed on tribal land? [¶] In answering these questions, please discuss the impact of the following cases on your analysis: Three Affiliated Tribes v. Wold Engineering (1984) 467 U.S. 138; State of Arizona v. Zaman (1997) 946 P.2d 459; California v. Cabazon Band of Mission Indians (1987) 480 U.S. 202. Also, this court is familiar with Twenty-Nine Palms Enterprises Corporation v. Bardos (2012) 210 Cal.App.4th 1435 and urges the parties not to focus on the

13 defense of sovereign immunity to the exclusion of discussing the applicability of the unlicensed contractor statute as a threshold matter."

The parties each filed a supplemental letter brief.

DISCUSSION

I

MOTION TO COMPEL ARBITRATION

Cadmus first challenges the superior court's denial of its motion to compel

arbitration. In considering this argument, it is important that we take into account the

context in which Cadmus brought this motion. The parties had agreed to arbitrate their

disputes under the Construction Contracts. They had been doing so for over a year,

including engaging in extensive discovery, when Twenty-Nine Palms believed it

discovered that Cadmus had not been properly licensed at all times when it performed

work under the Construction Contracts. At that point, the parties disagreed about what

forum was proper to consider the issue of whether Cadmus was properly licensed, and if

the Construction Contracts were illegal. It appears that Twenty-Nine Palms thought the

superior court must make the threshold decision regarding the legality of the contracts

while Cadmus believed the arbitrator should be presented with the issue in the first

instance. Ultimately, the parties entered into the Stipulation and Twenty-Nine Palms

filed an action in superior court to put the issue before the court. As part of its complaint,

Twenty-Nine Palms asked the court to determine whether the Construction Contracts

were illegal and thus unenforceable. Twenty-Nine Palms took the position that if the

14 contracts were illegal, no valid arbitration provision existed and the parties could not

complete the arbitration process they already devoted so much time to.

The court denied Cadmus's motion to compel arbitration on April 12, 2010.

Cadmus filed its notice of appeal on December 31, 2013, well over three years after the

order. Twenty-Nine Palms thus argues that Cadmus waived its right to appeal the order

by failing to timely appeal.

We agree with Twenty-Nine Palms that generally an order denying arbitration is

immediately appealable. (See Burch v. Premier Homes, LLC (2011) 199 Cal.App.4th

730, 733, fn. 2.) However, a denial of a motion to compel arbitration of the arbitrability

of an issue is not an appealable order. (Vivid Video, Inc. v. Playboy Entertainment

Group, Inc. (2007) 147 Cal.App.4th 434, 440-443.) Here, the parties already agreed to

arbitration and had been engaging in that process for well over a year. They agreed to

stay the arbitration to allow the court to determine whether the Construction Contracts

were illegal because Cadmus allegedly did not possess a contractor's license during its

entire performance under the Construction Contracts. In other words, the parties

disagreed about whether an issue was arbitrable not whether the entire dispute was

subject to arbitration.

We are mindful that if the superior court agreed with Twenty-Nine Palms,

ultimately it could determine that the arbitration clauses found in the Construction

Contracts were unenforceable, thus impacting the validity of the stayed arbitration.

However, no such determination had been made at the time Cadmus brought its motion to

compel arbitration. In this sense, Cadmus's motion was premature. Twenty-Nine Palms

15 and Cadmus had just agreed to stay the arbitration and refer the "licensing issue" to the

court because they disagreed regarding whether the arbitrator or the court could

determine the legality of the Construction Contracts. Cadmus filed its motion in response

to Twenty-Nine Palms's complaint and made only a passing reference to the Stipulation

in its moving papers. The court reviewed the Stipulation and concluded "the parties

agreed to have this Court resolve the licensing dispute . . . before the arbitration in order

to avoid wasting substantial time and money in the arbitration proceeding. . . . [¶] The

stipulation executed by the parties clearly states that the parties have agreed to submit the

licensing and illegality dispute . . . to this Court for determination before the arbitration."

Therefore, in denying the motion to compel arbitration, the court did not find that the

dispute could not be arbitrated at all, but instead, that it would decide whether the

Construction Contracts were legal before the parties proceeded with the remainder of the

arbitration. With this context in mind, we determine there was not a final, appealable

order, but instead, the arbitrability of a single issue had been decided. (See Vivid Video,

Inc. v. Playboy Entertainment Group, Inc., supra, 147 Cal.App.4th at pp. 440-443.)

Cadmus did not forfeit its right to challenge the order denying its motion to compel

arbitration. The court did not find that the arbitration could not proceed until it ruled on

Twenty-Nine Palms's motion for summary judgment, over three years later. There is no

dispute that Cadmus timely appealed that judgment. We thus will consider whether the

court erred in not sending this matter back to arbitration within the context of the

judgment following Twenty-Nine Palms's successful motion for summary judgment.

16 II

MOTION FOR SUMMARY JUDGMENT

We review summary judgment de novo. (Saelzler v. Advanced Group 400 (2001)

25 Cal.4th 763, 767.) Here, the court's path to granting summary judgment involved four

critical findings. First, it interpreted the Stipulation as the parties agreeing that the court

was to decide whether the Construction Contracts were illegal based on Cadmus's status

as a licensed contractor. Next, the court determined that the holding of Twenty-Nine

Palms Enterprises, supra, 210 Cal.App.4th 1435 prohibited Cadmus from arguing section

7031 did not apply to the Construction Contracts and/or the work he performed on tribal

land. Then, it found that there were no disputed material facts and Cadmus was not

properly licensed at all times when it performed work under the Construction Contracts.

Finally, the court determined that the Construction Contracts were illegal and void; thus,

the arbitration could not proceed.

A. Stipulation

During the arbitration, the parties entered into the Stipulation to stay the

arbitration and allow Twenty-Nine Palms to seek a resolution to Cadmus's licensing

issue. The extent of what the Stipulation asked the court to do is contested by the parties.

We interpret a stipulation in accordance with the ordinary rules of contract

interpretation. (Chacon v. Litke (2010) 181 Cal.App.4th 1234, 1252; Sy First Family Ltd.

Partnership v. Cheung (1999) 70 Cal.App.4th 1334, 1341.)

"We interpret a contract so as to give effect to the mutual intention of the

contracting parties at the time the contract was formed. [Citation.] We ascertain that

17 intention solely from the written contract if possible, but also consider the circumstances

under which the contract was made and the matter to which it relates. [Citations.] We

consider the contract as a whole and interpret its language in context so as to give effect

to each provision, rather than interpret contractual language in isolation. [Citation.] We

interpret words in accordance with their ordinary and popular sense, unless the words are

used in a technical sense or a special meaning is given to them by usage. [Citation.] If

contractual language is clear and explicit and does not involve an absurdity, the plain

meaning governs." (Service Employees Internat. Union, Local 99 v. Options—A Child

Care & Human Services Agency (2011) 200 Cal.App.4th 869, 879.)

If contractual language is ambiguous, we may consider a variety of extrinsic aids,

including the purpose of the statute, legislative history, and public policy. (Coalition of

Concerned Communities, Inc. v. City of Los Angeles (2004) 34 Cal.4th 733, 737.)

Cadmus insists that it signed the Stipulation with the limited intent only to allow

the superior court to determine whether the court or the arbitrator could decide the

legality of the Construction Contracts. Put differently, Cadmus asserts that the sole

purpose of the Stipulation was "to get the trial court's blessing to have the arbitrator

decide the illegality issue." We are troubled by Cadmus's interpretation of the Stipulation

on two points.

First, Cadmus does not explain and we struggle to understand how the Stipulation

would play out under Cadmus's suggested interpretation if the court did not rule that the

arbitrator could decide the legality issue. What if the court found that the arbitrator could

not decide this issue? Cadmus's interpretation of the Stipulation does not account for this

18 possibility whatsoever. It merely assumes that the court would decide that the arbitrator

could address the legality issue. If the court ruled that the arbitrator could not decide

whether the Construction Contracts were legal, what does Cadmus believe the Stipulation

empowered the court to do? Cadmus does not answer this question.

Second, we find no support for Cadmus's interpretation of the Stipulation in the

words of the Stipulation itself. In relevant part, the Stipulation states:

"WHEREAS, [Twenty-Nine Palms] asserts that recent developments in the case have raised issues regarding the contractor's license of Cadmus and whether Cadmus was properly licensed at all times on the three construction projects at issue;

"WHEREAS, Cadmus disputes [Twenty-Nine Palms's] contentions regarding its contractor's license;

"WHEREAS, the parties are in disagreement as to whether the California Supreme Court's decision in Loving & Evans v. Blick, 33 Cal.2d 603 (1949) mandates that a California court rather than an arbitrator decide the licensing issue;

"WHEREAS, Cadmus has submitted these new allegations regarding its contractor's license to its insurance carrier;

"WHEREAS, the parties have agreed that [Twenty-Nine Palms] shall submit this dispute to a California court;

"WHEREAS, the parties have agreed that the licensing dispute and Cadmus' insurance claim need to be resolved before the arbitration of this matter in order to potentially avoid wasting substantial time and money;"

The Stipulation makes clear that Twenty-Nine Palms and Cadmus dispute whether

Cadmus was properly licensed while performing work under the Construction Contracts.

Further, the Stipulation explains the parties "are in disagreement" whether Loving &

Evans v. Blick (1949) 33 Cal.2d 603 (Loving & Evans) requires the superior court rather

19 than the arbitrator to decide the licensing issue. The Stipulation details that the parties

agree that the licensing dispute needs to be resolved before arbitration continued so the

parties would not waste time and money arbitrating the matter if the Construction

Contracts were found to be illegal. Accordingly, the Stipulation sets forth how the issues

would be addressed. The arbitration is stayed. Twenty-Nine Palms would file and serve

a complaint "regarding the licensing issue." And, at a case management conference over

four months later, the parties "shall determine whether to reinstate the arbitration or

continue the stay." At the very least, the court would clarify whether the arbitration

should continue. How it was to reach the point is not clearly explained in the

Stipulation.4

Although the Stipulation does not define licensing dispute, it appears from a plain

reading of the Stipulation that "licensing dispute" refers to the dispute between the parties

regarding whether Cadmus was properly licensed. The parties, however, disagreed

whether Loving & Evans, supra, 33 Cal.3d 603 required the court to resolve this issue.

4 Cadmus also claims the trial court erred in sustaining Twenty-Nine Palms objection to the admission of a declaration of Thomas Slovak, former counsel to Cadmus, that was accompanied by over 70 pages of exhibits, which Cadmus filed with its reply in support of its motion to compel arbitration. Cadmus insists the declaration and exhibits only elaborated on a declaration filed in support of its original moving papers. However, Cadmus's actual motion did not mention the Stipulation in any detail whatsoever. Essentially, Cadmus made the strategic decision not to discuss the Stipulation in its motion, despite the fact that the Stipulation stayed the arbitration and allowed Twenty- Nine Palms to submit some dispute, related to the arbitration, to the superior court. Under these circumstances, we do not find the superior court abused its discretion in sustaining Twenty-Nine Palms's objection. The declaration and exhibits were prejudicial when submitted with the reply as they deprived Twenty-Nine Palms of fully and fairly challenging the newly raised arguments. (See San Diego Watercrafts, Inc. v. Wells Fargo Bank (2002) 102 Cal.App.4th 308, 316.) 20 Despite the disagreement, it appears the parties stipulated to allow the court to make

some threshold determination. A closer examination of Loving & Evans better informs

us as to the nature of the disagreement and what the Stipulation asked the superior court

to do.

In Loving & Evans, a contractor, who was unlicensed during the entire relevant

period, petitioned for arbitration seeking compensation. The owner answered, and

alleged the lack of a license as an affirmative defense. The arbitrator ignored the license

issue and awarded the unlicensed contractor his fees. The superior court affirmed the

award and judgment was entered. Our high court reversed, stating " 'a contract made

contrary to the terms of a law designed for the protection of the public and prescribing a

penalty for the violation thereof is illegal and void, and no action may be brought to

enforce such contract' [citations]. . . ." (Loving & Evans, supra, 33 Cal.2d at p. 607.) "It

seems clear that the power of the arbitrator to determine the rights of the parties is

dependent upon the existence of a valid contract under which such rights might arise.

[Citations.] In the absence of a valid contract no such rights can arise and no power can

be conferred upon the arbitrator to determine such nonexistent rights." (Id. at p. 610.) If

the issue of the invalidity of the contract is presented to a court on a petition to confirm

and/or to vacate an arbitration award, "and it appears to the court from the uncontradicted

evidence that the contract is illegal, . . . the court should deny confirmation and should

vacate any award granting relief under the illegal contract upon the ground that the

arbitrator exceeded his powers in making such award." (Ibid.)

21 Thus, Loving & Evans, supra, 33 Cal.2d 603, "permitted judicial review of an

arbitrator's ruling where a party claimed the entire contract or transaction was illegal."

(Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 32.) Based on our review of the record,

it appears that the parties disagreed when the legality determination should be made.

Cadmus apparently believed the matter could first go to arbitration and then the superior

court could independently review the alleged illegality of the Construction Contracts.

Twenty-Nine Palms, however, wanted the issue decided prior to completing the

arbitration to avoid wasting time and resources. We agree with Twenty-Nine Palms that

the parties asked the court to determine the legality of the Construction Contracts prior to

proceeding with the actual arbitration. To this end, the superior court could be required

to determine whether Cadmus was properly licensed to decide the legality issue if

Cadmus's status as an unlicensed contractor would make the Construction Contracts

illegal in their entirety.

This interpretation is further supported by the arguments Twenty-Nine's Palms

made to the superior court. For example, during oral argument on Cadmus's motion to

compel arbitration, Twenty-Nine Palms's counsel explained the purpose of the subject

complaint:

"And as far as the scope of this particular action, it is purely to decide a legal issue dealing with the legality of the underlying contract, which if, indeed, the contract is illegal the entire arbitration itself is unenforceable. [¶] Both sides are in complete agreement that the legality of this contract and whether Cadmus, Inc., was properly licensed must be decided by this Court. And sending us back to arbitration to go through hundreds of thousands of dollars of time and money on an arbitration that both sides admit will wind up back here on this exact issue that has to be heard de novo, that will

22 potentially render the entire arbitration null and void, makes absolutely no sense."

The limited scope of Twenty-Nine Palms's complaint was discussed at a

subsequent status conference. When the court set a case management conference after

Twenty-Nine Palms's motion for summary judgment was to be heard, Cadmus's attorney

expressed his concerns about the timing of the upcoming hearings: "I do have a problem

with that. This case has a long history of arbitration before coming to this Court. [¶] It

comes to this Court by way of a stipulation for this Court to decide one distinct issue, the

legality of three subject contracts. [¶] If the Court decides in our favor, it will go back to

arbitration, and it's where we believe the MSJ is more properly heard. If we don't prevail,

then perhaps we go to the MSJ."

After Twenty-Nine Palms's counsel agreed that the dispute had been voluntarily

submitted to arbitration, he echoed opposing counsel's view of the limited nature of the

subject complaint: "Your Honor, this issue has already come up. Defendant brought a

motion to compel the case back to arbitration and we briefed and you heard this issue and

found that pursuant to the stipulation, this case was going forward because the point of

the case and the point of the MSJ is to figure out whether these three contracts are legal

or not. That's precisely what the motion for summary judgment is going to find."

Here, we agree with the superior court that the Stipulation evidences that the

parties wanted the superior court to determine the legality of the Construction Contracts.

Because it was Twenty-Nine Palms's position that if Cadmus was not properly licensed

the entire time it performed work under the Construction Contracts, those contracts were

23 illegal and void, the Stipulation also could require the court to resolve whether Cadmus

was properly licensed.

B. Application of the CSLL

In opposing Twenty-Nine Palms's motion for summary judgment, Cadmus argued

that the CSLL did not apply to the Construction Contracts because of Twenty-Nine

Palms's sovereign immunity. The superior court determined that this argument was

defeated by the holding of Twenty-Nine Palms Enterprises, supra, 210 Cal.App.4th 1435.

Here, Cadmus maintains that in Twenty-Nine Palms Enterprises, the issue of whether the

CSLL applied "was not presented clearly and the case turned on an issue that was not

really in dispute in the trial court." Twenty-Nine Palms counters that it is clear that

Cadmus cannot use Twenty-Nine Palms's sovereign immunity as a shield against its

lawsuit. As we indicated in our request for supplemental briefing, we do not believe

Twenty-Nine Palms's sovereign immunity is the ultimate determining factor here.

Instead, an initial question must be answered: Can California regulate the licensing

requirements of contractors performing work under a contract with a tribal entity for

work to be completed on tribal land. We respectfully conclude Twenty-Nine Palms

Enterprises does not adequately answer the question presented here.

In Twenty-Nine Palms Enterprises, supra, 210 Cal.App.4th 1435, Twenty-Nine

Palms entered into a contract with Cadmus Construction to construct a temporary access

road and parking lot for the Casino. (Id. at p. 1438.) Cadmus Construction performed

the work on the tribe's land. Twenty-Nine Palms paid Cadmus Construction in full under

the contract around May 2007. However, Cadmus Construction did not receive its

24 contractor's license until October 2007. Twenty-Nine Palms brought suit to have Cadmus

Construction disgorge what it was paid. (Ibid.)

Twenty-Nine Palms brought a motion for summary judgment, arguing the

undisputed evidence reflected that Cadmus Construction was not licensed when it

performed its work at the Casino, and therefore, Cadmus Construction should be required

to disgorge what it was paid under the contract. (Twenty-Nine Palms Enterprises, supra,

210 Cal.App.4th at p. 1438.) Among other arguments, Cadmus Construction maintained

that California's civil regulatory laws do not apply on tribal lands. It reasoned that the

superior court lacked jurisdiction to decide the issue if section 7031 was a civil regulatory

statute as opposed to a criminal statute. (Twenty-Nine Palms Enterprises, supra, at

p. 1441.)

Division Two of this court succinctly rejected Cadmus Construction's argument:

"Cadmus [Construction] asserts the unlicensed contractor statute (§ 7031) is not

enforceable in a contract made with a tribal entity for work done on tribal land. We

disagree because Cadmus [Construction] cannot assert [Twenty-Nine Palms's] sovereign

immunity." (Twenty-Nine Palms Enterprises, supra, 210 Cal.App.4th at p. 1445.)

Relying on Three Affiliated Tribes v. Wold Engineering (1984) 467 U.S. 138

(Three Tribes I) and State of Arizona v. Zaman (1997) 190 Ariz. 208 (Zaman), Division

Two concluded "that the sovereign immunity defense is reserved for the tribe and its

entities. Thus, if a tribe or a tribal entity seeks to sue a nontribal entity in state court, then

the nontribal entity cannot assert sovereign immunity as a defense." (Twenty-Nine Palms

25 Enterprises, supra, 210 Cal.App.4th at p. 1446.) The court went on to explain why

Cadmus Construction could not assert sovereign immunity:

"Since the sovereign immunity defense is only available to the tribe and the tribal entities, the defense was not available to Cadmus [Construction]—a nontribal entity. Thus, Cadmus [Construction] cannot rely on the defense theory that section 7031 was not enforceable in a contract made with a tribal entity for work done on tribal land, because that defense relies on principles of sovereign immunity. For example, in [Cadmus Construction's] opening brief, it argues, '[I]t is also well established that building and zoning codes are not operative on Tribal property because of sovereignty interference. . . .' Cadmus further argues, 'The interference with Indian sovereignty of licensing requirements is illustrated in this case: Had Cadmus been forced to obtain a new license prior to commencing work, [then] the Tribe would have had to choose between selecting another contractor or delaying the start of construction. . . .' Cadmus is asserting the tribe's sovereign immunity to prevent the tribe from pursuing an action against him in state court. Cadmus cannot do this—the sovereign immunity defense is reserved for the tribe and tribal entities." (Ibid.)

Division Two also was not impressed with Cadmus Construction's implicit

argument that section 7031 was not applicable on tribal land. The court emphasized:

"It appears Cadmus [Construction] is asserting the following theory: Section 7031 simply was not the law in the jurisdiction where the contract performance took place. The problem with this argument is that it relies on principles of sovereign immunity. Cadmus [Construction] is arguing a particular state law does not apply on tribal lands— Cadmus [Construction] does not have the authority to assert this defense, only the tribe or its entities may assert such a defense. Cadmus [Construction] cannot raise tribal immunity simply because the contract was performed on tribal land— the defense of sovereign immunity is personal to the tribe and its entities. [Citations.] Accordingly, we find Cadmus [Construction's] argument to be unpersuasive." (Twenty-Nine Palms Enterprises, supra, 210 Cal.App.4th at p. 1446.)

26 Division Two's reasoning is clear that it could not consider whether the CSLL

applied on tribal land because only the tribe could raise this defense. Therefore, Division

Two did not analyze whether California can regulate contractors who are engaging in

construction work wholly on tribal land as a starting point. According to the court, it

could not reach this issue because such an argument relied on the defense of tribal

sovereign immunity. We respectfully disagree with this portion of Twenty-Nine Palms

Enterprises, supra, 210 Cal.App.4th 1435, and therefore, asked the parties to submit

supplemental briefs to address this issue. Of particular importance in this case, we

wanted the parties to explain how Twenty-Nine Palms could sue under a California

statute in state court if that statute did not apply on tribal lands.

Not surprisingly, the parties reached different conclusions. Relying primarily on

California v. Cabazon Band of Mission Indians (1987) 480 U.S. 202 (Cabazon), Cadmus

maintains that Public Law 280 does not grant a California superior court the "power to

hear this case." Cadmus argues that the CSLL is regulatory in nature and the holding of

Cabazon prohibits California from enforcing a regulatory statute (like § 7031) to

construction work performed on tribal lands. (See Cabazon, supra, 480 U.S. at p. 209

["[I]f the state law generally permits the conduct at issue, subject to regulation, it must be

classified as civil/regulatory and [Public Law] 280 does not authorize its enforcement on

an Indian reservation."].)

In addition, Cadmus insists a California superior court lacks "inherent jurisdiction"

to hear the instant matter. In support of its position, Cadmus argues Three Tribes I,

supra, 467 U.S. 138 and the follow up case Three Affiliated Tribes v. Wold Engineering

27 (1986) 476 U.S. 877 (Three Tribes II), when read together, support its position that the

superior court here lacked jurisdiction. In Three Tribes I, the Supreme Court held that

federal law did not preclude North Dakota from exercising civil adjudicative jurisdiction

over the claims of an Indian tribe suing a nonmember. (Three Tribes I, supra, at p. 150.)

However, in Three Tribes II, supra, 476 U.S. 877, the Supreme Court concluded that

North Dakota's attempt to condition access to its courts on the tribe's waiver of its

sovereign immunity and its agreement to the application of state law to all suits to which

it was a party was preempted by Public Law 280. (Three Tribes II, supra, at p. 887.) The

court noted that although Public Law 280 was designed to extend the jurisdiction of the

states over tribal lands and there is a strong federal interest in ensuring that all citizens

have access to the courts, the North Dakota conditions constituted "a potentially severe

intrusion on the Indian's ability to govern themselves according to their own laws in order

to regain their access to the state courts." (Three Tribes II, supra, at p. 889.) Cadmus

reads these two cases as not permitting California to force Twenty-Nine Palms to use the

CSLL in the instant lawsuit. This argument misses the mark. Twenty-Nine Palms does

not contend that California is forcing it to sue under the CSLL. Instead, Twenty-Nine

Palms elected to bring suit under a portion of the CSLL (§ 7031) and argued that the

Construction Contracts were illegal and void in their entirety because Cadmus was not

properly licensed by the State of California. As such, contrary to the facts of Three

Tribes I and Three Tribes II, here the superior court did not compel Twenty-Nine Palms

to give up any of its sovereignty to bring suit or only allow it to bring suit under a

specific state law.

28 The majority of Cadmus's supplemental brief is spent contending the superior

court lacked jurisdiction to hear the instant matter. In other words, Cadmus insists that

Twenty-Nine Palms could not sue it in a California superior court. Cadmus has not

offered any authority to support its position. Indeed, one of the cases on which Cadmus

relies undercuts its position. In Three Tribes I, the United States Supreme Court

concluded the situation of an Indian suing a non-Indian in state court is "very different"

from a non-Indian suing an Indian in state court for events occurring on tribal land. The

United States Supreme Court explained, "As a general matter, tribal self-government is

not impeded when a State allows an Indian to enter its courts on equal terms with other

persons to seek relief against a non-Indian concerning a claim arising in Indian country."

(Three Tribes I, supra, 467 U.S. at pp. 148-149.)

Further, although we explicitly asked the parties to address Zaman, supra, 190

Ariz. 208, Cadmus omitted any discussion of that case. In Zaman, a mother, who was a

member of the Navajo tribe, brought an action in Arizona state court against her child's

father, who was not a member of an Indian tribe. (Id. at p. 209.) The mother sought to

have the father adjudged the child's father and ordered to pay child support. (Ibid.) The

father argued the trial court lacked jurisdiction. The trial court found in favor of the

mother, but the intermediate appellate court reversed. The intermediate court held, the

trial court "lacked subject matter jurisdiction because 'state action [would] infring[e] on

the right of reservation Indians to make their own laws and be ruled by them.' " (Ibid.)

The Arizona Supreme Court vacated the intermediate appellate court's decision.

(Zaman, supra, 190 Ariz. at p. 213.) The court reasoned, "[The father], a non-Indian,

29 seeks to use a protection afforded Indians to defeat the claim of an Indian who chooses

the state forum. This attempt to clothe oneself in the immunity afforded another has

already been rejected by the Supreme Court." (Id. at p. 210.) Thus, the holding of

Zaman contradicts Cadmus's position that the superior court did not have jurisdiction to

hear the instant matter.

Simply put, Three Tribes I, supra, 467 U.S. 138 and Zaman, supra, 190 Ariz. 208

do not stand for the proposition that Twenty-Nine Palms could not bring suit in a

California superior court for a dispute that arose out of three construction contracts

requiring work to be done on tribal lands. To the contrary, these two cases support

Twenty-Nine Palms's position that the superior court had jurisdiction to hear the instant

matter. We agree. We find nothing in any of the cases cited by Cadmus in its

supplemental brief that would prohibit Twenty-Nine Palms from filing its complaint in

superior court.

That said, the question remains whether the CSLL applies to a contractor entering

into a contract with an Indian tribe to perform work on tribal lands. The holding of

Cabazon, supra, 480 U.S. 202, implies that it does not.

The issue in Cabazon was whether the State of California could apply its gaming

regulations to tribal bingo and card games. (Cabazon, supra, 480 U.S. at p. 205.) The

state regulations did not prohibit such games, but restricted them to charitable

organizations and imposed limitations on the amount of prizes that could be awarded and

restricted the use of profits to charitable purposes. (Ibid.) Recognizing that "Indian

tribes retain 'attributes of sovereignty over both their members and their territory,' " the

30 court first held that Congress had not allowed the state to assume jurisdiction over

gaming activities under Public Law 280 because the state's regulations relating to these

forms of gaming were civil and regulatory in nature and not criminal and prohibitory.

(Cabazon, supra, at pp. 207-208.) Because California allowed a substantial amount of

gambling activity and even promoted gambling through its state lottery, the court

concluded, "California regulates rather than prohibits gambling in general and bingo in

particular." (Id. at p. 211.) As such, the holding in Cabazon implies that California law,

under Public Law 280, could apply to activities on tribal land to the extent the law was

"prohibitory," but did not generally apply to the extent that it was "regulatory."

(Cabazon, supra, at pp. 207-210.)

Here, Cadmus argues that the CSLL is regulatory in nature. Twenty-Nine Palms

maintains the civil or criminal distinction is not relevant in this matter, and therefore,

does not address it. However, the California Supreme Court already answered this

question: "The CSLL is a regulatory statute." (MW Erectors, Inc. v. Niederhauser

Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 436 (MW Erectors).)

Nevertheless, Twenty-Nine Palms contends Cabazon, supra, 480 U.S. 202 is not

instructive here because California is not seeking to enforce any of its laws against

Twenty-Nine Palms. Instead, it is Twenty-Nine Palms bringing suit under California law

in a California superior court against a non-Indian. Nonetheless, this scenario begs the

question: If the CSLL does not apply on tribal lands in general, can a tribe seek to

enforce a portion of the CSLL in state court? Twenty-Nine Palms answers this question

in the affirmative for two separate reasons.

31 First, Twenty-Nine Palms maintains that it can bring suit in state court under the

CSLL pursuant to section 4 of Public Law 280. Section 4 states:

"Each of the States listed in the following table have jurisdiction over civil causes of action between Indians or to which Indians are parties which arise in the areas of Indian country listed opposite the name of the State to the same extent that such State has jurisdiction over other civil causes of action, and those civil causes of action, and those civil laws of such State that are of general application to private persons or private property shall have the same force and effect within such Indian country as they have elsewhere within the State." (28 U.S.C. § 1360, subd. (a).)

Twenty-Nine Palms contends that the statute's reference to "civil laws . . . of

general application to private persons or private property" confirms that California laws

(including the CSLL) apply to private legal disputes, like the one here, between a tribe

and a non-Indian arising on tribal land. However, except for quoting section 4 of Public

Law 280 directly, Twenty-Nine Palms offers no authority to support its position. This is

especially troublesome when it is clear that California cannot regulate contractors

operating on tribal lands. (See Cabazon, supra, 480 U.S at pp. 207-210.) In other words,

we are concerned whether section 4 could somehow make a California law regulating

licensing of contractors that California could not enforce on tribal land applicable when a

tribal entity brings suit in California court against a non-Indian.

Our independent research indicates that case law interpreting section 4 of Public

Law 280 is sparse. Yet, the United States Supreme Court did address this issue in regard

to an Indian resident of an Indian reservation who brought a declaratory judgment that the

State of Minnesota and Itasca County could not impose a property tax on his mobile

home located on land held in trust for members of his tribe. (See Bryan v. Itasca Cty.,

32 Minnesota (1976) 426 U.S. 373, 375 (Bryan).) In determining that section 4 of Public

Law 280 did not provide Congressional consent to allow the county or state to levy a

property tax upon the petitioner's mobile home, the Supreme Court reviewed the

legislative history of Public Law 280. In doing so, the court noted: "The primary concern

of Congress in enacting [Public Law] 280 that emerges from its sparse legislative history

was the problem of lawlessness on certain Indian reservations, and the absence of

adequate tribal institutions for law enforcement." (Bryan, supra, at p. 379.) The court

also stated there was a "virtual absence of expression of congressional policy or intent

respecting [section] 4's grant of civil jurisdiction to the States." (Byran, supra, at p. 381.)

In addition, the court observed "the total absence of mention or discussion regarding a

congressional intent to confer upon the States an authority to tax Indians or Indian

property on reservations." (Ibid.)

The Supreme Court concluded that section 4, subsection (a) was "primarily

intended to redress the lack of adequate Indian forums for resolving private legal disputes

between reservation Indians, and between Indians and other private citizens, by

permitting the courts of the States to decide such disputes[.]" (Bryan, supra, 426 U.S. at

p. 383.) The court, however, clarified the type of disputes to which it was referring:

" 'A fair reading of these two clauses suggests that Congress never intended "civil laws" to mean the entire array of state noncriminal laws, but rather that Congress intended "civil laws" to mean those laws which have to do with private rights and status. Therefore, "civil laws . . . of general application to private persons or private property" would include the laws of contract, tort, marriage, divorce, insanity, descent, etc., but would not include laws declaring or implementing the states' sovereign powers, such as the power to tax, grant franchises, etc. These are not within the fair meaning of

33 "private" laws.' " (Id. at p. 384, fn. 10, quoting Israel & Smithson, Indian Taxation, Tribal Sovereignty and Economic Development (1973) 49 N.D.L.Rev. 267, 296, n. 8.)

We read Bryan, supra, 426 U.S. 373 as supporting the principle that section 4,

subdivision (a) of Public Law 280 does not confer general regulatory control over tribal

lands. (See Bryan, supra, at p. 384.) Twenty-Nine Palms has provided no contrary

authority. Therefore, we conclude that Public Law 280 does not allow California to

regulate contractor licensing on tribal land and section 4, subdivision (a) does not

somehow allow a tribal entity to sue under the CSLL. (See Bryan, supra, at p. 384;

People ex rel. Dept. of Transportation v. Naegele Outdoor Advertising Co. (1985) 38

Cal.3d 509, 521 (Naegele) [holding Public Law 280 did not authorize the state to restrict

outdoor advertising insofar as it applied to tribal land].)5

In addition to contending that section 4 allows it to bring suit for a violation of

section 7031, Twenty-Palms asserts the parties here explicitly agreed to be governed by

California law. Thus, Twenty-Nine Palms argues the parties consented to a choice of law

provision that provided that California law would apply to each of the Construction

Contracts. Cadmus does not address this point.

5 We acknowledge that both Bryan, supra, 426 U.S. 373 and Naegele, supra, 38 Cal.3d 509 concern a state trying to enforce its regulatory law on a tribe operating on tribal land. Here, a tribal entity is suing under a California statute that otherwise does not apply on tribal lands. Although this is a different scenario than what is presented in Bryan and Naegele, we find no basis under Public Law 280 that would allow the tribe to sue in California court under a law that does not apply on tribal lands. Of course, a tribe can create its own contractor licensing laws or adopt laws that mirror the CSLL. In those circumstances, the tribe could sue in superior court to enforce its laws. However, in the instant matter, Twenty-Nine Palms admits that no tribal contractor licensing laws exist. 34 We agree with Twenty-Nine Palms. Each of the Construction Contracts contains a

choice of law provision that provides that the contract is governed by California law. We

find no impediment in general to a tribal entity entering into a contract with a non-Indian

that requires work to be done entirely on tribal lands and agreeing that the contract is

governed by California law. (See Smith v. Hopland Band of Pomo Indians (2002) 95

Cal.App.4th 1, 10-11.) It is through this choice of law contractual provision that section

7031 applies to the Construction Contracts.

C. Judgment

Although we determine that the CSLL, including section 7031, applies to the

Construction Contracts, we do not automatically affirm the judgment below. Instead, we

must evaluate the judgment in consideration of what the Stipulation asked the superior

court to do: decide the licensing dispute within the context of determining if the

Construction Contracts were legal under Loving & Evans, supra, 33 Cal.2d 603. This

issue is critical to our ultimate analysis because the parties had contracted to go to

arbitration, had been participating in the arbitration process (including taking discovery)

for over a year, and stayed the arbitration because the parties disagreed whether the

arbitrator instead of the court could address the legality of the Construction Contracts.

In granting summary judgment, the superior court, following Twenty-Nine Palms

Enterprises, supra, 210 Cal.App.4th 1435, ruled that Cadmus could not take the position

that section 7031 did not apply. The court therefore found that section 7031 did apply

and Cadmus was not a licensed contractor at all times when it performed work under the

Construction Contracts. Accordingly, the court ordered judgment in favor of Twenty-

35 Nine Palms on all causes of action and, under the first three causes of action, ordered

Cadmus to disgorge what it was paid under Construction Contracts. In regard to the

fourth cause of action for declaratory relief, the court reached the following judicial

determinations: (1) Cadmus was not a licensed contractor at all times relevant to its work

under the Construction Contracts; (2) Twenty-Nine Palms is entitled to disgorgement of

all monies paid to Cadmus on the Construction Contracts under section 7031, subdivision

(b); (3) Cadmus is barred from pursing its claim for compensation against Twenty-Nine

Palms in the arbitration under section 7031, subdivision (a); and (4) the Construction

Contracts are illegal and therefore Cadmus is barred from continuing with the arbitration.

Although the court did not explain why it found the Construction Contracts illegal,

it appears it did so based on Twenty-Nine Palms's argument that the contracts would be

illegal under Loving & Evans, supra, 33 Cal.2d 603. The court in that case found that

"the contract upon which the award was based was illegal and void because of

respondents' failure to comply with the licensing requirements." (Id. at p. 614.) There,

the subject contractor did not hold a contractor's license "either at the time of the making

of the contract or at any time while the work was in progress." (Ibid.) Yet, to find the

Construction Contracts illegal under Loving & Evans, the court had to first conclude that

section 7031 applied to the contracts.

Here, the superior court followed Twenty-Nine Palms Enterprises, supra, 210

Cal.App.4th 1435. Indeed, it had no choice but to do so. (Auto Equity Sales, Inc. v.

Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 455.). In Twenty-Nine

Palms Enterprises, Division Two determined that Cadmus Construction was prohibited

36 from arguing that section 7031 did not apply because it must invoke the tribe's sovereign

immunity to do so. (See Twenty-Nine Palms Enterprises, supra, at pp. 1446-1447.) As

we discuss in detail above, we respectfully disagree with Division Two and conclude that

California could not regulate contractor licensing on tribal land. Moreover, we find

nothing in section 4 of Public Law 280 that would allow Twenty-Nine Palms to assert a

claim arising out of a dispute on tribal land under a California regulation that does not

otherwise apply. As such, Twenty-Nine Palms could not use section 7031, as a law of

general application, to argue that the Construction Contracts were illegal.

Nevertheless, even in the absence of the CSLL applying on tribal land, we agree

with Twenty-Nine Palms that the parties here assented to applying California law to the

Construction Contracts. Yet, the source of the CSLL in this instance is the contracts

themselves. Therefore, if the court found them illegal then California law would no

longer govern. Put differently, if the Construction Contracts are the source of the CSLL,

including section 7031, subdivision (b), applying to the instant dispute, the CSLL would

no longer apply if its source was found to be illegal and void.

Further, we are skeptical that the Construction Contracts are illegal regardless of

how the CSLL applies. We are not persuaded that the holding of Loving & Evans, supra,

33 Cal.2d 603 mandates a court to find a contract entered into by an unlicensed contractor

illegal and void. Indeed, our high court explicitly stated this is not the rule: "[T]he CSLL

does not automatically void all contracts entered by unlicensed contractors."

(MW Erectors, supra, 36 Cal.4th at p. 440.) Thus, merely because Cadmus may not have

been licensed at the time it entered into the Construction Contracts did not make those

37 contracts illegal without any further analysis. Moreover, because the contracts would not

necessarily be illegal simply because Cadmus was not licensed at the time it entered into

them, we see no impediment to proceeding with the arbitration and allowing Twenty-

Nine Palms to raise a defense under section 7031 at the arbitration. (See Templo

Calvario Spanish Assembly of God v. Gardner Construction Corp. (2011) 198

Cal.App.4th 509, 519-521 (Templo).)

In light of MW Erectors, supra, 36 Cal.4th 412, within the context of a question

regarding the legality of a contract entered into by an unlicensed contractor, Loving &

Evans, supra, 33 Cal.2d 603, at best, stands for the proposition that a contract entered

into by an unlicensed contractor that never became licensed at any time during its

performance under the contract could be illegal and void. Here, Twenty-Nine Palms does

not argue that Cadmus was never licensed when it performed work under the

Construction Contracts, but instead, Twenty-Nine Palms contends Cadmus started

working prior to being properly licensed. This fact distinguishes the instant action from

the facts of Loving & Evans where the court noted the subject contractor did not hold a

contractor's license "either at the time of the making of the contract or at any time while

the work was in progress." (Id. at p. 614.)

Accordingly, independent of considering whether section 7031 applied here, under

the record before us, we do not read Loving & Evans as supporting the superior court's

finding that the Construction Contracts were illegal.

Having determined that the superior court erred in its judicial determination that

the Construction Contracts were illegal and that Cadmus was barred from pursuing its

38 claims in arbitration, we next evaluate what impact, if any, this error has on the remainder

of the judgment. To do so, we again return to the Stipulation and consider the unique

procedural nature of this case.

The parties were engaged in arbitration to resolve their disputes under the

Construction Contracts. No one challenged that arbitration was the appropriate dispute

resolution forum. However, when Twenty-Nine Palms discovered that Cadmus may not

have been licensed during all times it performed work under the Construction Contracts,

it believed that the subject contracts were then illegal and there would be no enforceable

arbitration provision. The parties agreed that the superior court would ultimately have

final say regarding the legality of the Construction Contracts, but they disagreed when

this should occur. Cadmus argued that the arbitration should go forward and after the

arbitrator rendered his decision, the superior court could then address whether the

contracts were illegal. Twenty-Nine Palms countered that it would be a waste of money

and time if the parties completed arbitration only to have a superior court declare the

Construction Contracts illegal and then vacate any arbitration award. To resolve this

impasse, the parties signed the Stipulation and submitted the illegality issue to the

superior court, which, presumably, would have to resolve whether Cadmus was properly

licensed to ultimately answer the illegality question.

We conclude that the court erred in finding the Construction Contracts illegal

under the CSLL. Because the contracts were legal, the arbitration provisions remained

enforceable, and the arbitration could proceed. At that point, the superior court should

have referred the matter back to the arbitrator to resolve the dispute. It did not need to

39 determine whether Cadmus was properly licensed at all times because the Construction

Contracts were legal. Therefore, the arbitrator could have made a determination if

Cadmus was properly licensed under California law as required by the Construction

Contracts.6 (See Templo, supra, 198 Cal.App.4th at pp. 519-521.)

Because we determine that this matter should be referred to the arbitrator, we do

not reach Cadmus's additional contention that a triable issue of material fact exists as to

whether it was properly licensed at the relevant times under the Construction Contracts.

6 At oral argument, in response to questioning by this court, Twenty-Nine Palms insisted that it did not matter whether the Construction Contracts were illegal. Because the superior court found that Cadmus was not properly licensed, Twenty-Nine Palms now claims that such a finding mandates we affirm the judgment regardless of whether the Construction Contracts were legal. It is well established that we need not consider claims raised for the first time at oral argument. (See Animal Protection & Rescue League v. City of San Diego (2015) 237 Cal.App.4th 99, 107, fn. 5.) Moreover, this position is contrary to Twenty-Nine Palms's many representations to the superior court that the purpose of its complaint was for the court to determine the legality of the Construction Contracts. Indeed, it made the same argument here, asserting the contracts were illegal, and thus, void under Loving & Evans, supra, 33 Cal.2d 603. And we also are not impressed by Twenty-Nine Palms's new argument raised at oral argument that the superior court, not the arbitrator, must determine whether a contractor is properly licensed under the CSLL. Twenty-Nine Palms has not offered this argument previously and did not provide any authority to support this position. Our independent research uncovered a case in which the Court of Appeal determined that a court may conduct a de novo view of an arbitration award if that award violated an explicit legislative expression of public policy. (See Ahdout v. Hekmatjah (2013) 213 Cal.App.4th 21, 38 ["We conclude that section 7031 constitutes an 'explicit legislative expression of public policy,' that if not enforced by the arbitrator, constitutes grounds for judicial review."].) However, Ahdout does not stand for the proposition that an arbitrator cannot decide the licensing issue during arbitration. It merely offers another scenario in which a court could review an arbitration award independently.

40 DISPOSITION

The judgment is reversed and remanded back to the superior court. The superior

court is ordered to enter an order denying Twenty-Nine Palms's motion for summary

judgment, finding the Construction Contracts legal, and referring the matter back to

arbitration. The parties are to bear their own costs on appeal.

HUFFMAN, Acting P. J.

WE CONCUR:

NARES, J.

McDONALD, J.