Garret Murai | California Construction Law Blog
Looking outside as of late it seems like the glorious, sun-drenched days of Summer are just a nostalgic memory of days long gone. So, to bring back some of those warm-weather memories, I have a swimming pool case for you. Although, like most of the things we write about here on the California Construction Law Blog it’s not all fun-in-the-sun.
The Lee Case
In Lee v. Cardiff, 94 Cal.App.5th 398 (2023), Homeowner Dianne Lee entered into a construction contact with contractor David Brian Cardiff doing business as Advantage Pools Bay Area for a swimming pool and landscaping project totaling $231,500. It must have been quite a pool.
As these things sometimes go, a dispute arose and Cardiff left the job before its was finished. Lee later sued alleging breach of contract, negligent construction and violation of the Contractor State License Law.
Following a court trial, the court issued a 21-page statement of decision in which the judge largely rejected Lee’s claims but found that Cardiff had violated the Contractor State License Law by hiring workers who were not licensed and treating them as independent contractors rather than employees for workers’ compensation insurance purposes.
We’ve talked before about Business and Professions Code section 7031, which provides for both claim preclusion as well as disgorgement, in the event a contractor performs work requiring a license but is not properly licensed. One such violation whereby a contractor can be deemed not properly licensed is where a contractor fails to maintain workers’ compensation insurance. And so it was here.
The judge ordered that Cardiff disgorge the sum of $238,470 which had been paid by Lee. Ouch. In addition, the judge awarded contract and tort damages of $236,634, for a grand total of $475,104. Double ouch.
Following the trial, Lee filed a motion seeking to recover her attorneys’ fees. Although the construction contract did not include an attorneys’ fee provision, Lee sought attorneys’ fees under Code of Civil Procedure section 1029.8 and Business and Professions Code section 7168. Section 2029.8 provides, among other things, for an award of attorneys’ fees against an unlicensed person who causes injury or damage to another person. Section 7168 provides for an award of attorneys’ fees for claims arising out of a contract for swimming pool construction.
The judge, however, declined to award attorney’s fees to Lee finding that an award of attorneys’ fees under Code of Civil Procedure section 1029.8 is discretionary and that Cardiff did not knowingly violate the Contractor State License Law. The judge also declined to award attorneys’ fees under Business and Professions Code section 7168 finding that because Lee was “unsuccessful on the vast majority of [her] swimming pool claims” there was no prevailing party.
Lee appealed.
The Appeal
On appeal, Lee argued that while an award of attorneys’ fees under Code of Civil Procedure section 1029.8 may have been discretionary, an award under Business and Professions Code section 7168 was not, and that she was the prevailing party as a matter of law.
Business and Professions Code section 7168 provides:
In any action between a person contracting for construction of a swimming pool and a swimming pool contractor arising out of a contract for swimming pool construction, the court shall award reasonable attorney’s fees to the prevailing party.
The 1st District Court of Appeal explained that Business and Professions Code section 7168 was intended to protect the public “from fly-by-night contractors – independent from the builders of the residential house associated with the property – who abandon pool work after obtaining a substantial down payment or who finish the work in a substandard manner,” and further, that the legislative committee analysis of the bill prior to it becoming law “show[ed] concern over the fact that consumer complaints to the Contractors State License Board about swimming pool construction were proportionately higher than for other types of construction.”
However, explained the Court of Appeal, Business and Professions Code section 7168 only applies to disputes concerning swimming pools, and the trial court found that while Lee’s contract “did involve the construction of a swimming pool, it also involved a great deal of other construction” which “included a pavilion, outdoor kitchen, pavers, patio tiles, walkways, landscaping, seating walls, a floating counter, electrical systems, a spa, and many other things.” “None of these non-swimming pool projects,” said the trial court, “can reasonably be categorized as part of ‘a contract for swimming pool construction,’” and as a result, Lee “cannot be entitled to an award of attorneys’ fees for any work related to those projects.” The old side-step.
And because Lee had not challenged any of the trial court’s factual findings, those factual findings supported the trial court’s denial of attorneys’ fees under Business and Professions Code section 7168, held the Court of Appeal:
As we have observed, Lee has not challenged any of the trial court’s factual findings. Rather, she maintains the court erred as a matter of law by confining the applicability of section 7168 to her claims pertaining to the construction of the swimming pool and basing its “prevailing party” determination on the degree to which Lee succeeded, or failed to succeed, on those claims. She asserts, in a nutshell, that because both the swimming pool construction and nonswimming pool construction projects were set forth in a single contract with Cardiff (who held licenses for swimming pool construction, landscaping, and concrete work), her claims all “arose” from a swimming pool construction contract and section 7168 therefore applies to all the contracted-for work. The trial court rejected this assertion. So do we.
As we have chronicled, the fee provision at issue was enacted as part of a statutory scheme pertaining specifically, and exclusively, to swimming pool construction contracts, and the Legislature’s plainly expressed purpose was to provide additional recompense to the prevailing party in a dispute over the construction of a swimming pool. The language of this statutory fee provision has never been altered, even when it was brought within the auspices of article 10 of chapter 9 of division 3 of the Business and Professions Code. Moreover, a review of the entirety of the statutory provisions within this article reveals they include two other statutory fee provisions applicable to two other specific contexts.
In short, the Legislature knows how to provide for statutory fees when it chooses to do so. And, indeed, with respect to the statutes set forth in article 10, it has done so in three specific contexts. The Legislature could have, of course, made any of these fee statutes more expansive. But it did not. . . . Nor is it appropriate for us to undertake this legislative task.
Conclusion
Well, that was a bit of a splash of cold water for the homeowner. The lesson to be learned here is that while a statute (or contract for that matter) may have a provision awarding attorneys’ fee to a “prevailing party,” the courts have wide discretion in determining whether a party is a prevailing party, or not.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.