Reule Sun Corporation v. Valles, Docket No. 31,192 (N.M. 11/23/2009)
| Decision Date | 23 November 2009 |
| Docket Number | Docket No. 31,192. |
| Parties | REULE SUN CORPORATION, Plaintiff-Respondent, v. JOE L. VALLES and JOANNE S. VALLES, husband and wife, Defendants-Petitioners. |
| Court | Supreme Court of New Mexico |
Cadigan & Park Law Firm, P.C. Michael J. Cadigan Lawrence M. Marcus Albuquerque, NM, for Petitioners.
Robert D. Gorman, P.A. Robert D. Gorman Albuquerque, NM,
Cheryl Thompson. Albuquerque, NM, for Respondent.
Julie Ann Meade Santa Fe, NM, for Amicus Curiae New Mexico Regulation & Licensing Department.
{1} Joe and Joanne Valles entered into a contract with a licensed contractor, Reule Sun Corporation (Reule) to apply stucco on their home. Reule hired an unlicensed subcontractor, Perez Plastering (Perez), to complete the project. Valleses were dissatisfied with both the initial stuccoing and re-stuccoing efforts and did not pay Reule. Reule filed a complaint alleging breach of contract and filed a lien against Valleses' property. The district court found in favor of Reule, foreclosed the lien on Valleses' property, and awarded damages to Reule. Valleses appealed and the Court of Appeals upheld the district court's decision. Reule Sun Corp. v. Valles, 2008-NMCA-115, ¶ ¶ 1, 31, 144 N.M. 736, 191 P.3d 1197. We initially denied Valleses' petition for writ of certiorari, but after motions for reconsideration and to file an amicus brief were granted, we granted the petition. We reverse.
{2} Valleses entered into a contract with Reule for the application of stucco to their home for the price of $11,350.51. Reule hired Claudio Perez, an unlicensed contractor doing business as Perez Plastering, to complete the project. Reule did not pay Perez a salary, but instead paid him on a contract-to-contract basis. Perez had his own state tax identification number and paid his own taxes. Reule did not consider Perez an employee for tax purposes.
{3} Valleses were dissatisfied with the stucco job and Reule agreed to apply another layer of stucco for an additional charge of $888.83, bringing the contract price to $12,239.34. After the second application was completed, Valleses were still dissatisfied with the results and they indicated that they did not want Reule to enter their property to remedy any mistakes or to finish the clean-up procedures. Valleses never paid Reule the balance due on the contract after an initial down payment of $1,000. Reule filed a claim of lien against Valleses' property, followed by a complaint for breach of contract and to foreclose claim of lien. Valleses answered the complaint and asserted various counterclaims.
{4} Following a bench trial, the district court found that Perez performed the contract "under the complete direction and control of [Reule]" and that the "subject of [the] lawsuit [did] not involve a claim for compensation by an unlicensed contractor in violation of NMSA 1978, § 60-13-30." The court also concluded that Reule had substantially performed its obligation under the contract and concluded that the protective purposes of the Construction Industries Licensing Act (CILA), NMSA 1978, §§ 60-13-1 to -59 (1967, as amended prior to 2003) were met. The district court found in favor of Reule, foreclosed the lien on Valleses' property, and awarded Reule damages, including prejudgment interest, attorney fees, and costs. Valleses appealed.
{5} In affirming the district court's judgment, the Court of Appeals applied the common law control test and held that Perez was Reule's employee and not a subcontractor. Reule Sun Corp., 2008-NMCA-115, ¶¶ 11, 31. Then, relying on Mascareñas v. Jaramillo, 111 N.M. 410, 412, 806 P.2d 59, 61 (1991) and Latta v. Harvey, 67 N.M. 72, 75-76, 352 P.2d 649, 650-51 (1960) for the proposition that "an employee is not a contractor and is therefore not required to obtain a contractor's license[,]" the Court concluded that it "need not reach the question of whether a duly licensed contractor may recover for work performed by an unlicensed subcontractor." Reule Sun Corp., 2008-NMCA-115, ¶ 11.
{6} We granted Valleses' petition for writ of certiorari, which raised three issues: (1) whether the Court of Appeals erred when it applied the common law employee exception to the licensing requirements of the CILA; (2) whether the Court of Appeals erred when it failed to review the application of the facts under a de novo standard of review; and (3) whether an unlicensed business entity can be an "employee" of a licensed entity. We hold that an individual who qualifies as a "contractor" under the CILA's definition is required to have a contractor's license when performing the specified acts described in the CILA, regardless of whether such an individual can be classified as an employee of a licensed contractor. Because we hold that Reule is precluded from maintaining an action for recovery of compensation for the work completed by Perez, we do not need to address the remaining two issues.
{7} We are asked to determine if the Court of Appeals erred when it applied a common law employee exception to the CILA's licensing requirements. This analysis is one of statutory construction, which we review de novo. Bishop v. Evangelical Good Samaritan Soc'y, 2009-NMSC-036, ¶ 8, 146 N.M. 473, 212 P.3d 361.
{8} Reule argues that Valleses failed to preserve the issue regarding the application of the common law control test to determine if a contractor is exempted from the CILA's licensing requirements because they did not raise the issue in district court. Reule also argues that if application of the common law control test was an error, this Court should nonetheless refrain from reviewing the issue because the Valleses invited such error when they argued for its application below. We disagree with both contentions.
{9} "To preserve a question for review it must appear that a ruling or decision by the district court was fairly invoked . . . ." Rule 12-216(A) NMRA; see also Chrysler Credit Corp. v. Beagles Chrysler-Plymouth, 83 N.M. 272, 273, 491 P.2d 160, 161 (1971) ().
{10} In the district court, Valleses did not argue that the Section 60-13-3(D)(13) exception was the exclusive exception to the CILA's licensing requirement for employees, nor did they argue that classifying Perez as an employee via the common law control test was inappropriate. Valleses were not required to raise either issue at the district court level. Until the district court and the Court of Appeals employed the common law control test to determine that Perez was an employee and thus exempt from the CILA's licensing requirements, neither question now raised by Valleses was then at issue. Rather, Valleses were only required to argue that the wage-earner exception was inapplicable to exclude Perez from the CILA licensing requirements and the record indicates that they had done so.
{11} The testimony solicited at trial regarding the nature of the work relationship between Reule and Perez was primarily relevant to the question of whether Perez was a wage earner. For instance, Perez testified that he was paid by contract and not by salary and Reule testified that Perez paid his own taxes and was not an employee for tax purposes. Additionally, in their proposed findings of fact, Valleses asserted that (1) Perez was not Reule's employee at the time he entered into the contract; (2) he did not receive a salary from Reule, but instead was paid on a contract-to-contract basis; and (3) he provided Reule with his own federal and state tax identification numbers and was doing business as Perez Plaster. Finally, Valleses specifically referenced the Section 60-13-3(D)(13) exception to the CILA's definition of "contractor" in their proposed conclusions of law. Thus, Valleses adequately preserved the issue of whether the Section 60-13-3(D)(13) wage-earner exception applied to Perez.
{12} We also hold that Valleses did not invite error when they referenced and included the common law control test in their arguments in district court. We have held that "to invite error and to subsequently complain about that very error would subvert the orderly and equitable administration of justice." State v. Collins, 2007-NMCA-106, ¶ 27, 142 N.M. 419, 166 P.3d 480 (internal quotation marks and citation omitted). A review of the record, however, indicates that Valleses' argument regarding the control test was an alternative argument to their primary contention that Reule was barred from bringing an action for recovery under Section 60-13-30(A). For instance, we find significant the sequence in which Valleses presented their proposed conclusions of law to the district court. Valleses first referred to the CILA in their proposed conclusions of law by including its purpose and specifically citing several of its subsections. They included the licensing and certification requirements, as well as the remedy afforded to a consumer who is a party to a construction contract with an unlicensed contractor of Subsections 60-13-1.1(A) and (C). Valleses also specifically included Section 60-13-30(A)'s bar on recovery for unlicensed contractors, the CILA's definition of "contractor," the wage-earner exception, Section 60-13-3(D)(13), case law that stands for the proposition that contractors are prohibited from transferring a license or certificate of qualification to another, and the penalties that may be incurred if a contractor allows a contractor's license to be used by an unlicensed person. Finally, Valleses proposed that the court conclude that "[t]he work performed by Perez is required to be licensed" and that "[Reule] violated the Act by permitting Perez . . . to work under [Reule's] license to perform the Contract."
{13} Valleses only mentioned...
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