Kim v. Twa Constr., Inc.

• Decision Date: 13 May 2022
• Docket Number: H045900
• Citation: 294 Cal.Rptr.3d 140,78 Cal. App. 5th 808
• Parties: Sally KIM et al., Cross-complainants, Cross-defendants and Respondents, v. TWA CONSTRUCTION, INC., Cross-defendant, Cross-complainant and Appellant; Keith Tai Wong, Appellant.
• Court: California Court of Appeals

78 Cal.App.5th 808

294 Cal.Rptr.3d 140

Sally KIM et al., Cross-complainants, Cross-defendants and Respondents,

v.TWA CONSTRUCTION, INC., Cross-defendant, Cross-complainant and Appellant;

Keith Tai Wong, Appellant.

H045900

Court of Appeal, Sixth District, California.

Filed May 13, 2022

Counsel for Cross-defendant, Cross-complainant and Appellant and for Appellant: James J. Der, Jr., Milpitas.

Counsel for Cross-complainants, Cross-defendants and Respondents: Anna DiBenedetto, Santa Cruz, William Lapcevic, DiBenedetto Lapcevic & Draa, LLP

Danner, J.

This appeal involves a dispute between a married couple (respondentsSally Kim and Dai Truong, collectively respondents) and their former general contractor, appellantTWA Construction, Inc.(TWA) and TWA's owner, appellantKeith Tai Wong(Wong), whom they hired to construct a home on a wooded lot.¹During the early stages of the construction project, a subcontractor hired by Wong for tree trimming services damaged a large eucalyptus tree that was partly owned by Kim and Truong's neighbor.

The neighbor brought suit against Kim and Truong for damage to her property resulting from the work on the eucalyptus tree, which precipitated the litigation that eventually resulted in this appeal.²After the neighbor filed suit, Kim and Truong filed a cross-complaint against TWA for comparative negligence, breach of contract, express contractual indemnity, equitable indemnity, and other claims.TWA in turn filed a cross-complaint against Kim and Truong alleging breach of contract and other claims.The complaint and cross-complaints proceeded to trial before a single jury.

During trial, Kim, Truong, and TWA settled the suit with the neighbor, which is not at issue in this appeal.The suits involving respondents' and TWA's cross-complaints continued before the jury.TWA presented no evidence at trial that the subcontractor who worked on the eucalyptus tree was licensed to perform tree trimming work.Relevant to this appeal, the jury returned special verdicts finding TWA was 100 percent at fault for the neighbor's damages and that Kim had paid TWA $10,000 for the tree trimming services performed by TWA's subcontractor.The trial court entered judgment in favor of Kim for $10,000 on Kim's cross-complaint and also in favor of Kim and Truong on their cross-claims against TWA.

On appeal, TWA contends the judgment must be reversed because the trial court erred in its interpretation of the relevant licensing statute, Business and Professions Code section 7031.³In addition, Wong asserts the trial court misinterpreted the construction agreement, and substantial evidence does not support the jury finding that Kim paid TWA $10,000 for tree trimming.For the reasons set out below, we affirm the judgment.

I.FACTS AND PROCEDURAL BACKGROUND

A.Factual Background⁴

Kim purchased real property located in a wooded area of Los Gatos (property).⁵Kim and Truong planned to build a home and a bridge on the property.As part of the project, they sought to remove some trees, including a large eucalyptus tree (the eucalyptus).⁶The eucalyptus straddled the property line between their property and the property of their neighbor, Joan Todd.Kim and Truong did not at first understand that the eucalyptus was partially on Todd's property and that they needed her permission to remove it.They assumed they could remove the eucalyptus because they had received permits from the county to do so.

In February 2015, Truong and Kim first met with Wong to discuss hiring TWA as the general contractor to build their home.Wong was TWA's owner, an experienced contractor, and served as Kim and Truong's only point of contact with TWA during the events at issue here.TWA held a Class A (general engineering) and Class B (general building) license during all relevant times.Truong recalled showing Wong the eucalyptus in February 2015 and telling him they wanted it removed.

Wong and Kim executed a written construction agreement dated September 28, 2015(construction agreement).⁷The construction agreement included provisions fixing the contract price at approximately $1.6 million, detailing the scope of work (including site work, bridge work, and the house and retaining walls), stating that all work would be performed by licensed individuals, indemnifying Kim from and against, inter alia, claims and damages arising from any negligence of TWA or its employees or subcontractors in performing work under the construction agreement, and addressing attorney and expert fees.Although the parties dispute whether tree removal was encompassed within the construction agreement or addressed in a separate agreement, it is undisputed that Wong agreed as part of the overall project to remove the eucalyptus.

To perform the tree work, Wong hired an individual named Marvin Hoffman, whom Wong did not previously know and had located on the Web site "Craig's List."⁸Wong testified that he had paid Hoffman $400 by check and $16,000 in cash, although he did not have proof of the cash payments.When he hired Hoffman for the project, Wong had not verified Hoffman's licensure status and could not recall whether he asked Hoffman about it.Wong believed Hoffman was a professional tree trimmer because Hoffman had a truck, trailer, and a large saw.

On September 28, 2015, the same day Wong executed the construction agreement, Hoffman began removing the eucalyptus.Wong was present at the site that day but did not assist in the tree work.Before Hoffman and his crew had finished removing the tree, Todd (the neighbor) told Hoffman's workers to stop.Todd also contacted the police.Work on the eucalyptus tree ceased.

Following this incident, Truong and Kim continued for a period of time to use TWA as their general contractor.Ultimately, however, the only work TWA did on the property was related to erosion control (performed by Wong himself) and on the trees (performed by Hoffman).

In April 2016, Truong and Kim terminated the contract with Wong, informing him they could not secure a construction loan using TWA as the contractor.Truong and Kim eventually hired another contractor to complete the project.Kim paid TWA $16,000 for its work on the project.

B.Procedural Background

In October 2016, Todd (the neighbor) brought suit against Truong and Kim for negligence, trespass, and other claims related to the work on the eucalyptus tree.Todd later amended her complaint to add TWA as a defendant.

Kim and Truong filed a cross-complaint against TWA for comparative negligence, breach of contract, express contractual indemnity, equitable indemnity, and other claims.Their operative cross-complaint alleged, inter alia, that TWA was required to indemnify them for the amount of any judgment or settlement they might be compelled to pay in the lawsuit with Todd.The cross-complaint included a claim that TWA was expressly required to indemnify Kim under the terms of the written construction agreement.

TWA then filed a cross-complaint against Kim and Truong.TWA's operative cross-complaint alleged breach of contract based on the written construction agreement and sought damages, including lost profits.⁹TWA also asserted an indemnification claim for Todd's lawsuit against TWA.

Prior to trial, Kim and Truong filed a motion in limine addressing the licensure status of Hoffman, the tree subcontractor.Kim and Truong requested that the trial court require TWA to make an offer of proof as to Hoffman's licensure status.Kim and Truong argued that TWA had chosen to hire an unlicensed contractor to remove the eucalyptus, even though the state contractor's license board required a specialty tree service license for that type of tree work (a "C-61/D-49 Tree Service Specialty license").They asserted that, pursuant to section 7031, TWA had the burden of establishing proper licensure for the person it had hired for the tree work.The motion asserted that unless TWA could prove the subcontractor it hired for the tree work had the requisite license, TWA was barred from recovering from Kim and Truong any money paid or owed to the unlicensed subcontractor.Kim and Truong contended TWA had the burden of proving the subcontractor's licensure status with a verified certificate from the Contractors' State License Board.TWA opposed the motion.

The trial court heard argument on the motion in limine.Kim and Truong reiterated that they sought an offer of proof from TWA as to whether Hoffman had a valid contractor's license.Kim and Truong clarified that the issue of licensure was related to their breach of contract cross-claim against TWA in that they contended that TWA should disgorge the $10,000 they had paid for tree work since it had been performed by an unlicensed subcontractor.TWA's counsel asserted that the issue also pertained to TWA's breach of contract claim against Kim because TWA was entitled to recover payment for all its work performed on the project.The trial court inquired of TWA's counsel whether Hoffman was employed by TWA.TWA responded that it did not contend that Hoffman was a TWA employee.TWA did not suggest it had any evidence that Hoffman had been licensed or make any offer of proof on the subject.

The trial court granted Kim and Truong's motion.It found that section 7031 applied here where "suing general contractor seeks compensation for services of a purported unlicensed subcontractor under a subcontract between the general and subcontractor."The trial court ruled that section 7031 barred TWA from "collecting compensation for services performed by the subcontractor for the tree trimming if, in fact, the subcontractor was unlicensed at the relevant time."The ruling in effect allowed Kim and Truong to claim the money paid for the unlicensed contractor should be disgorged and disallowed TWA from presenting a claim for money owed for the tree removal work performed by an unlicensed subcontractor.The ruling did not explicitly bar any party from bringing evidence at trial as to...