Pacifica Tiny Homes v. Marta Guaracha Flinn, et al.

Pacifica Tiny Homes v. Marta Guaracha Flinn, et al. (And Related Cross-Action)

Defendants’ Joint and Several Demurrer to Plaintiff’s First Amended Complaint

Hearing Date: July 31, 2026

The demurrer filed by Defendants Marta Flinn, Alexander Oborsky, and Theresa Oborsky (collectively, “Defendants”) to the First Amended Complaint (“FAC”) of Plaintiff Pacifica Tiny Homes (“Plaintiff” or “PTH”) is SUSTAINED WITHOUT LEAVE TO AMEND. Also, Defendants’ requests for judicial notice (“RJN”) are GRANTED IN PART AND DENIED IN PART. Defendants shall prepare the Proposed Order consistent with this Tentative Ruling.

In light of the Court’s ruling and to discuss next steps, the Case Management Conference (“CMC”) scheduled following the hearing on this motion on July 31, 2026, is MAINTAINED.

Background and the Parties’ Arguments.

Defendants hired Plaintiff for a project involving an accessory dwelling unit (“ADU”) on their property at 1157 Luxton Street in Seaside, California (the “Property”). Plaintiff seeks damages related to that project.

A. Original Complaint.

In the Original Complaint, Plaintiff alleged that Defendants hired it “to serve as a contractor” for the construction project at the Property. [Original Complaint, filed 11/17/25, RJN Exh. 2 at ¶3.] It further alleged that under the parties’ January 25, 2024, Purchase Agreement, which is attached as Exhibit 1, Defendants agreed to “purchase certain materials from PTH to be used in PTH’s construction and installation of” an ADU for the Property. [Id. at ¶ 6 and Exh. 1 at 1.] The Original Complaint stated that Plaintiff “substantially completed” the “construction and installation of the ADU.” On May 30, 2025, Plaintiff’s personnel arrived at the Property “to complete final installation and touch-up items, but were denied access.” [Id. at ¶ 9.] At that time, Defendants allegedly owed $23,900 under the Purchase Agreement and change orders. [Ibid.]

Plaintiff also recorded a mechanic’s lien asserting that money was owed for “labor, services, equipment, and/or materials for a bay cottage style ADU, installation, and ancillary services” for site improvements and related work on the Property. [RJN Exh. 2 at ¶ 32 and Exh. 3 at 3; RJN Exh. 9 at 3.]

B. FAC.

On April 15, 2026, Plaintiff filed the FAC in response to a demurrer and “is intended to correct and clarify facts and circumstances that the undersigned counsel originally plead as a result of mistake.” [FAC at 1, fn. 1.]

Like the Original Complaint, the FAC incorporates the same Purchase Agreement. [FAC at ¶ 6 and Exh. 1.] Plaintiff alleges that “Defendants would purchase certain materials from PTH to be used in PTH’s manufacturing and delivery of” an ADU [ibid.], with final costs totaling $160,090 [id. at Exh. 1, ¶ 8.] The FAC asserts Defendants still owe $23,900 plus late fees, interest, and attorneys’ fees. [Id. at 9 (Prayer for Relief).]

Unlike the Original Complaint, Plaintiff in its FAC removes all references to PTH acting as a contractor or performing installation. [Compare RJN Exh. 2 at ¶¶ 6, 9 with FAC at ¶¶ 6, 8- 9.] Plaintiff alleges instead that the Purchase Agreement “excluded any installation activities,” that it “never intended to and never performed installation,” and that Plaintiff did not receive compensation for any installation-related activity. [FAC at ¶18.]

The FAC alleges that Plaintiff is a factory-built housing manufacturer regulated under the Health and Safety Code and that manufacturers do not need a contractor’s license. [FAC at ¶¶ 11-25.] It asserts that while installation of factory-built housing requires a licensed contractor, Plaintiff performed only manufacture and delivery, thereby qualifying for exemptions under Business and Professions Code sections 7045 and 7052. [Id. at ¶ 23.] The FAC acknowledges the mechanic’s lien and lis pendens, but states both were released. [Id. at 1, fn. 1.]

C. The Parties’ Arguments.

Defendants argue that Plaintiff acted as a contractor under the broad definition of Business and Professions Code1 section 7026 because the Purchase Agreement attached to the Original Complaint and FAC includes foundation work, structural and civil engineering, utilities, solar, craning, and related services, all of which require a contractor’s license. Defendants note that Plaintiff is not licensed, as confirmed by the records of the Contractors State License Board (“CSLB”). They assert the FAC is an improper sham pleading that omits—and contradicts— Plaintiff’s original admissions of performing installation.

They further rely on the mechanic’s lien as additional evidence that Plaintiff performed installation and site-improvement work. Defendants argue that section 7031 creates an absolute bar to recovery and that exemptions under sections 7045 and 7052 do not apply because the ADU became a fixture and Plaintiff contracted for work involving site improvements. They assert the FAC cannot be amended to cure these defects.

In opposition, Plaintiff argues the FAC is not a sham pleading but a clarification correcting the imprecise use of the word “installation.” Plaintiff asserts the Purchase Agreement governs and does not require PTH to perform installation. Plaintiff maintains its role was limited

1 Hereinafter, and unless otherwise noted, all statutory references are to the Business and Professions Code. 2

to manufacturing and delivering the ADU, a scope of work that does not require a contractor’s license under the Factory-Built Housing Law. Plaintiff further asserts exemptions under sections 7045 and 7052 because it furnished finished products and did not perform installation or create fixtures. Plaintiff contends the mechanic’s lien was mistakenly recorded based on a misunderstanding of its rights as a materials supplier.

Legal Standard.

A demurrer for sufficiency assesses whether the complaint properly states a cause of action. [Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747; Code Civ. Proc. § 430.10, subd. (e).] When courts evaluate demurrers, they interpret the allegations broadly and in context. [Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.] In a demurrer, defects must be visible on the face of the pleading or by proper judicial notice. [Code Civ. Proc. § 430.30, subd. (a).] A demurrer examines only the pleadings, not the evidence, counsel’s arguments, or external facts. [SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905; Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.]

Defendants’ RJN.

The Court GRANTS Defendants’ request for judicial notice of (1)the recorded Mechanic’s Lien and the Notice of Withdrawal of Mechanic’s Lien [RJN Exhs. 3-4], (2) the Original Complaint [RJN Exh. 2], and (3) records of the CSLB showing no license for Plaintiff [RJN Exh. 1]. [Evid. Code § 452, subd. (d); Pioneer Construction, Inc. v. Global Investment Corp. (2011) 202 Cal.App.4th 161, 165, n. 5.] Defendants’ supplemental request for judicial notice of the Mechanics Lien at issue in this case [RJN Exh. 9] is GRANTED, but the request as it pertains to contractor-license classifications posted on CSLB’s website [RJN Exhs. 5-8] is DENIED as irrelevant.

Discussion.

The FAC’s allegations, interpreted through the attached Purchase Agreement, fail to state facts sufficient to constitute any cause of action. As “a matter of law, allegations in a complaint must yield to contrary allegations contained in exhibits to a complaint.” [Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 946.]

Section 7031, subdivision (a), allows only a licensed contractor to bring an action to collect compensation due. Here, Plaintiff bears the burden to prove licensure because it is seeking such compensation from Defendants. [Ahdout v. Hekmatjah (2013) 213 Cal.App.4th 21, 31.] Plaintiff fails to do so. First, undisputed CSLB records show Plaintiff is not a licensed contractor. [RJN Exh. 1.] Plaintiff makes no contrary showing in its opposition. Second, the Purchase Agreement attached to the FAC includes installation-related activities requiring a contractor’s license under sections 7026 and 7031. [FAC at ¶ 6 and Exh. 1 at 1; see also, e.g., Cal.

Code Regs., tit. 16, § 832.08 (regulation regarding concrete “contractors”) and Health & Saf. Code § 19974 (definition of “installation” of factory-built housing, which includes the process of affixing factory-built housing to land, a foundation, footings, or an existing building); compare Walker v. Thornsberry (1979) 97 Cal.App.3d 842, 848 (“The contract between Super

Secur and defendant did not require Super Secur to undertake the installation of concrete foundation, rough plumbing, or installation of plumbing fixtures, stalls, wood roofing, and painting upon which to place the prefabricated restroom. Super Secur employees merely assembled the pieces and bolted the structure to the foundation. Their contribution of labor to the finished restroom was at most minor and incidental.”).]

Contrary to Plaintiff’s belief, the exemptions under sections 7045 and 7052 do not apply. The work was not limited to providing unfinished products, nor was Plaintiff solely furnishing materials. [FAC at ¶ 6 and Exh. 1 at 1.] Indeed, Plaintiff recorded a Mechanic’s Lien asserting labor, services, equipment, materials, installation, and site improvements, which is consistent with contractor activity under section 7026. [RJN Exh. 9 at 3; see Vallejo Development, 24 Cal.App.4th at 939 (Section 7031 applies to situations where a Mechanics Lien was recorded).]

Plaintiff in its opposition addresses the now-released Mechanic’s Lien: “[PTH] believed that it had the legal right to a mechanic’s lien as a material or product supplier – which was ultimately procedurally incorrect.” [Opp. At 6:27-18.] Plaintiff then tries to distinguish based upon the fact that the Mechanic’s Lien is not attached to the FAC – but footnote 1 of the FAC references its existence, which the Court took judicial notice of, and that “[c]oncurrently with the filing of this amended pleading, Plaintiff is releasing the mechanic’s lien and lis pendens that were previously recorded.” [FAC at 1, fn. 1.]

As in Banis Restaurant Design, Inc. v. Serrano (2005) 134 Cal.App.4th 1035, 1044-1045, Plaintiff cannot contradict prior allegations or the content of the Purchase Agreement and Mechanics Lien:

As we have already noted, it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff meets its burden of demonstrating a reasonable possibility that the defect can be cured by amendment. ... However, when a complaint contains allegations that are fatal to a cause of action, a plaintiff cannot avoid those defects simply by filing an amended complaint that omits the problematic facts or pleads facts inconsistent with those alleged earlier. ... Absent an explanation for the inconsistency, a court will read the original defect into the amended complaint, rendering it vulnerable to demurrer again. ... Facts appearing in exhibits attached to a complaint will also be accepted as true and will be given precedence over any contrary allegations in the pleadings.

The reasoning in Banis equally applies here. “Installation” means the “assembly of factory-built housing on site and the process of affixing factory-built housing to land, a foundation, footings or an existing building.” [Health & Saf. Code § 19974.] “Site” is the “entire tract, subdivision or parcel of land on which factory-built housing is installed.” [Health & Saf. Code § 19977.] The FAC’s attempt to recharacterize the scope of work is insufficient to avoid section 7031’s bar. Plaintiff’s proffered explanation—that references to “installation” were merely “imprecise”—is not persuasive given the scope of work listed in the written Purchase Agreement and the express statements in the Mechanic’s Lien claiming compensation for “installation” and site-improvement services.

Plaintiff does not request leave to amend. Even if it had, the amendment would be futile because the Purchase Agreement, Mechanic’s Lien, and the allegations in the Original Complaint conclusively establish that Plaintiff acted as a contractor without a license. Under Banis, Plaintiff cannot amend around these fatal defects.

Conclusion.

The demurrer is SUSTAINED WITHOUT LEAVE TO AMEND. Defendants’ judicial notice requests are GRANTED IN PART AND DENIED IN PART. Defendants shall prepare the Proposed Order consistent with this Tentative Ruling.

Also, PARTIES TO APPEAR at the July 31, 2026, CMC.

NOTE RE TENTATIVE RULING

This tentative ruling becomes the court’s order, and no hearing shall be held unless one of the parties contests it by following Rule 3.1308 of the California Rules of Court and Monterey County Local Rule 7.9. Those parties wishing to present an oral argument must notify all other parties and the Court no later than 4:00 p.m. on the court day before the hearing; otherwise, NO ORAL ARGUMENT WILL BE PERMITTED, AND THE TENTATIVE RULING WILL BECOME THE ORDER OF THE COURT AND THE HEARING VACATED. You must notify the court by email or by calling the Calendar Department at 831-647-5800, extension 3040, before 4:00 p.m. on the court day before the hearing.

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