Ryan Caudill vs. Ivan Katrenyak

A Stipulation and Appointment of Official Reporter Pro Tempore (CV/E-206) is required to be signed by each party, the private court reporter, and the Judge prior to the hearing, if not using a reporter from the Court’s Approved Official Reporter Pro Tempore list.

Once the form is signed it must be filed with the clerk. If a litigant has been granted a fee waiver

34-2022-00320885-CU-OR-GDS: Ryan Caudill vs. Ivan Katrenyak 06/04/2026 Hearing on Motion for Summary Adjudication of Plaintiff's First Cause of Action for Disgorgement (B&PC §7031) in Department 16D

and requests a court reporter, the party must submit a Request for Court Reporter by a Party with a Fee Waiver (CV/E-211) and it must be filed with the clerk at least 10 days prior to the hearing or at the time the proceeding is scheduled if less than 10 days away. Once approved, the clerk will forward the form to the Court Reporter’s Office and an official reporter will be provided.

Defendant/Cross-Complainant Mikhail Katrenyak’s (“Mikhail”) motion for summary adjudication is ruled upon as follows.

The Court notes that Plaintiffs/Cross-Defendants Ryan Caudill and Tenesha Caudill (“Plaintiffs”) have also moved for summary adjudication. Plaintiffs’ motion is set for hearing concurrently with this motion, but will be addressed in a separate order. The Court’s ruling herein is based only upon the parties’ filings made in connection with Mikhail’s motion.

Factual Background

This action arises from a construction contract dispute. In 2021, Plaintiffs hired defendants to remodel their home in Citrus Heights. Plaintiffs generally allege that defendant Mikhail holds a contractor’s license and operates under the name of Imkat Construction (“IMKAT”) but it was Mikhail’s brother, Ivan Katrenyak (“Ivan”), who personally performed the remodel work and also supervised the subcontractors on Plaintiffs’ project. Plaintiffs allege that Ivan was not a licensed contractor. Plaintiffs further claim that the construction work was not properly done and various defects exist.

The initial complaint, filed in June 2022, asserted several causes of action against Mikhail, Ivan and IMKAT, as well as the issuer of the contractor’s bond, Hartford Insurance. A First Amended Complaint was filed in January 2023 but it was superseded by the operative Second Amended Complaint filed in June 2023. Hartford Insurance has been dismissed from the action.

In the operative Second Amended Complaint, Plaintiffs assert four causes of action: (1) “Disgorgement - B&P Code §7031(B);” (2) “Claim on Contractor’s License Bond;” (3) “Breach of B&P Code §7159;” (4) “Declaratory Judgment;” and (5) “Negligence.”

Defendants Mikhail and IMKAT have filed a cross-complaint against Plaintiffs, alleging causes of action for “Foreclosure of Mechanic’s Lien;” “Breach of Contract;” and “Quantum Meruit.”

On March 26, 2026, the Court approved the parties’ stipulation to advance the hearing on Plaintiffs’ motion so as to hold hearings of the two motions for summary adjudication on this date.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2022-00320885-CU-OR-GDS: Ryan Caudill vs. Ivan Katrenyak 06/04/2026 Hearing on Motion for Summary Adjudication of Plaintiff's First Cause of Action for Disgorgement (B&PC §7031) in Department 16D

Trial is now set for July 20, 2026.

Moving Papers

Defendant Mikhail moves for summary adjudication of Plaintiffs’ first cause of action for disgorgement under Business and Professions Code section 7031. Defendants Ivan and IMKAT are not moving parties with respect to Mikhail’s motion.

Applicable Law

In ruling on a motion for summary judgment/adjudication, the Court engages in a threestep process. First, the issues framed by the pleadings must be identified since the pleadings themselves define the scope of what may be addressed via a motion for summary judgment/adjudication (FPI Development Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381- 382) and the evidence submitted in support of or in opposition to the motion must be addressed to the claims and defenses raised in the pleadings. The Court cannot consider an unpleaded issue in ruling on a motion for summary judgment/adjudication. (Roth v. Rhodes (1994) 25 Cal.App.4th 530, 541.) The papers filed in response to such a motion may not create triable issues beyond the scope of the pleadings, nor are they a substitute for filing amended pleadings. (Tsemetzin v. Coast Federal Savings & Loan Assn. (1997) 57 Cal.App.4th 1334, 1342.)

Next, the Court must determine whether the moving party has met its initial burden of production. A defendant moving for summary judgment or summary adjudication bears the burden of persuasion that one or more elements of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850; Code Civ. Proc. § 437c(p)(2).) A defendant is not required to conclusively negate one or more elements of the plaintiff’s cause of action. (Saelzer v Advanced Group 400 (2001) 25 Cal.4th 763, 780-781).

Rather, to meet its burden, the defendant is only required to show that the plaintiff cannot prove an element of its cause of action, i.e., that the plaintiff does not possess and cannot reasonably obtain evidence necessary to show this element. (Aguilar, supra, at 853-855.) Only when the moving party has met this initial burden does the burden of production shift to the opposing defendant to “set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.” In other words, a party opposing summary judgment/adjudication has no evidentiary burden unless the moving party has first met its initial burden of production. (Binder v.

Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 840; see also Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1151-1152; Thatcher v. Lucky Stores, Inc. (2000) 79 Cal.App.4th 1081, 1085-1086.)

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2022-00320885-CU-OR-GDS: Ryan Caudill vs. Ivan Katrenyak 06/04/2026 Hearing on Motion for Summary Adjudication of Plaintiff's First Cause of Action for Disgorgement (B&PC §7031) in Department 16D

Only where the moving party makes the requisite initial showing does a court need to examine the opposition papers to determine if the latter demonstrate the existence of a triable issue of material fact which precludes summary judgment/adjudication. (Salazar v. Southern Cal. Gas Co. (1997) 54 Cal.App.4th 1370, 1376; Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 840.) The opposing party must present admissible evidence and may not rely upon the allegations or denials of its pleading. (Id.)

As noted above, Code of Civil Procedure §437c, subdivision (p)(1), clarifies that the opposing party must “set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.” Additionally, in ruling on the motion, a court must construe the evidence of the opposing party liberally and that of the moving party strictly, resolving any doubts in the opposing party’s favor. (Miller v. Bechtel Corp. (1983) 33 Cal.3d 868, 874; Cortez v. Vogt (1997) 52 Cal.App.4th 917, 925-926; see also Salazar v.

Southern Cal. Gas Co. (1997) 54 Cal.App.4th 1370, 1376; Brown v. FSR Brokerage, Inc. (1998) 62 Cal.App.4th 766, 773.)

While a summary adjudication motion is treated largely the same as one for summary judgment, there are a few important differences. One of these differences is found in CRC Rule 3.1350(b), which mandates that issues presented for summary adjudication be stated in the notice of motion and repeated verbatim in the separate statement. Another difference is that summary adjudication cannot be granted unless it “completely disposes” of a cause of action, affirmative defense, claim for punitive damages, or question of duty. (Code Civ. Proc., § 437c, subd. (f)(1).)

Requests for Judicial Notice

Defendant Mikhail’s requests for judicial notice of documents previously filed in this case is granted, but only for the limited purposes appropriate for judicial notice. (See, Evid. Code § 451, subd. (a); § 452, subds, (b)-(d); see also, Johnson & Johnson v. Superior Court (2011) 192 Cal.App.4th 757, 768 [court may take judicial notice of the existence of court documents but not the truth of any statements contained therein].; Kilroy v. State of California (2004) 119 Cal.App.4th 140, 145-148; Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1569-70.)

Objections to Evidence

The Court finds no objections to evidence on file.

Discussion

First Cause of Action – Disgorgement pursuant to Bus. & Prof. Code, § 7031, subd. (b).

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2022-00320885-CU-OR-GDS: Ryan Caudill vs. Ivan Katrenyak 06/04/2026 Hearing on Motion for Summary Adjudication of Plaintiff's First Cause of Action for Disgorgement (B&PC §7031) in Department 16D

Under Business and Professions Code section 7031, subdivision (b), a person who hires an unlicensed contractor may bring an action to recover “all compensation paid to the unlicensed contractor for performance of any act or contract.” (Bus. & Prof. Code, § 7031, subd. (b).)

As indicated earlier, the first step of the summary judgment/adjudication analysis is to determine the issues as framed by the pleadings. (FPI Development Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381- 382.) In this regard, Plaintiffs’ first cause of action alleges they are entitled to recover the amounts they paid to Defendants under this statute because neither IMKAT nor Mikhail had workers’ compensation insurance coverage for Ivan or any other employees when remodel work on Plaintiffs’ home was performed. Business and Business and Professions Code section 7125.2 (hereafter, Section 7125.2) provides for the “automatic suspension” by operation of law of the license of a contractor who fails to obtain or maintain workers’ compensation insurance coverage. (Bus. & Prof. Code, § 7125.2; Loranger v. Jones (2010) 184 Cal.App.4th 847, 849.)

The next step is to determine whether Mikhail has satisfied his initial burden as moving party. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850; Code Civ. Proc. § 437c(p)(2).) In this regard, Mikhail offers in support of his motion the following asserted undisputed material facts. Plaintiffs hired IMKAT to remodel their house on May 6, 2021. (Def. UMF 1.) Plaintiffs subpoenaed IMKAT’s State Fund records and its Contractors State License Board (CSLB) records. (Def. UMF 2.) IMKAT’s worker’s compensation insurance lapsed on May 21, 2021. (Def.

UMF 3.) CSLB did not issue a notice to IMKAT that its workers compensation insurance lapsed and/or prescribing further action to cure. (Def. UMF 4.) IMKAT procured a verified certificate of licensure from the CSLB showing its license was always active and never suspended. (Def. UMF 5.) Finally, Mikail offers evidence that “Mikhail and Ivan swore under oath that they didn’t intend anything nefarious by allowing IMKAT’s workers compensation insurance to lapse; they swear they didn’t think they needed workers compensation insurance for a job where every trade was subcontracted out and only immediate family (all brothers) were on site, were all officers of a second construction company (IMKAT Construction Corp.), whose license application was submitted before the Caudills’ project, and pending for the duration of the project, but was only approved after the Caudills’ project completed.” (Def.

UMF 6.)

Mikhail argues that the CSLB never provided notice to IMKAT that its license was subject to suspension under Section 7125.2 and never posted any suspension to IMKAT’s contractor’s license record. Mikhail contends that in the absence of these measures by the CSLB, IMKAT’s license was never actually suspended, and Plaintiffs

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2022-00320885-CU-OR-GDS: Ryan Caudill vs. Ivan Katrenyak 06/04/2026 Hearing on Motion for Summary Adjudication of Plaintiff's First Cause of Action for Disgorgement (B&PC §7031) in Department 16D

are not entitled to the disgorgement remedy authorized by Business and Professions Code section 7031 against unlicensed contractors.

In light of Plaintiff’s allegations, as well as Mikhail’s asserted UMFs and arguments, the Court finds that assessment of whether Mikhail has satisfied his initial burden requires the resolution of a question of law: Was IMKAT/Mikhail’s contractor’s license instantaneously suspended upon the cancellation of its worker’s compensation insurance coverage, or was the CSLB required to notify IMKAT/Mikhail of the pending suspension of its license in order for the “automatic suspension” under Section 7125.2 to take effect?

To address this question, the Court begins with the language of Section 7125.2. The relevant provisions of that section state:

The failure of a licensee to obtain or maintain workers' compensation insurance coverage, if required under this chapter, shall result in the automatic suspension of the license by operation of law in accordance with the provisions of this section, but this suspension shall not affect, alter, or limit the status of the licensee as an employer for purposes of Section 3716 of the Labor Code.

(a) The license suspension imposed by this section is effective upon the earlier of either of the following: (1) On the date that the relevant workers' compensation insurance coverage lapses. (2) On the date that workers' compensation coverage is required to be obtained.

(b) A licensee who is subject to suspension under paragraph (1) of subdivision (a) shall be provided a notice by the registrar that includes all of the following: (1) The reason for the license suspension and the effective date. (2) A statement informing the licensee that a pending suspension will be posted to the license record for not more than 45 days prior to the posting of any license suspension periods required under this article. (3) The procedures required to reinstate the license.

(Bus. & Prof. Code, § 7125.2, subds. (a), (b).)

Language in the opening paragraph of Section 7125.2 states that the license suspension is to be “automatic” and shall occur “by operation of law,” which if

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2022-00320885-CU-OR-GDS: Ryan Caudill vs. Ivan Katrenyak 06/04/2026 Hearing on Motion for Summary Adjudication of Plaintiff's First Cause of Action for Disgorgement (B&PC §7031) in Department 16D

considered alone, would permit the argument that no action by CSLB is necessary to suspend a contractor’s license once workers’ compensation insurance coverage lapses. (Id. at § 7125.2, subd. (a)(1).) However, the “automatic suspension of the license by operation of law” is specifically modified by the phrase, “in accordance with the provisions of this section,” which includes the notice requirements set forth in subdivision (b). (Id. at § 7125.2.)

As set forth above, under subdivision (b) of Section 7125.2, a licensee who is subject to suspension for a lapse in workers’ compensation insurance coverage “shall be provided a notice by the registrar [of the CSLB] that includes [t]he reason for the license suspension and the effective date [as well as a] statement informing the licensee that a pending suspension will be posted to the license” for no more than 45 days prior the posting of any license suspension periods. (Bus. & Prof. Code, § 7125.2, subd. (b).)

The Court finds that the provisions of subdivision (b) indicate that an “automatic suspension” resulting from a lapse of workers’ compensation insurance coverage is not effective until the CSLB provides the notice required by that subdivision and actually suspends the license. Indeed, to construe Section 7125.2 otherwise would be inconsistent with its specific language in subdivision (b), which not only requires CSLB to give notice to the licensee but provides that the notice contain language explaining that a “pending suspension will be posted to the license record for not more than 45 days prior to the posting of any license suspension periods required under this article.” (Bus. & Prof.

Code, § 7125.2, subds. (a), (b) [emphasis added].) Furthermore, this is the interpretation adopted by the reviewing courts, which draw a distinction between a suspension resulting from the failure to obtain any workers’ compensation coverage at all and suspension following a lapse of coverage:

Under the language of section 7125.2, a contractor whose license is subject to suspension for allowing his or her workers' compensation insurance to lapse is entitled to notice prior to the suspension of his or her license; but a contractor whose license is subject to suspension for failing to obtain workers' compensation insurance is subject to automatic suspension without notice.

(Loranger v. Jones, supra, 184 Cal.App.4th at p. 856, citing Wright v. Issak (2007) 149 Cal.App.4th 1116, 1122 [italics in original; underline added].) This construction is also supported by American Building Innovation LP v. Balfour Beatty Construction, LLC, where the court described the suspension process following cancellation of a contractor’s worker’s compensation insurance as follows: “The Board gave [contractor] notice of the license suspension on January 29 and informed [contractor] that its contractor’s license would be suspended if [contractor] failed to submit a valid insurance

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2022-00320885-CU-OR-GDS: Ryan Caudill vs. Ivan Katrenyak 06/04/2026 Hearing on Motion for Summary Adjudication of Plaintiff's First Cause of Action for Disgorgement (B&PC §7031) in Department 16D

certificate or exemption of certificate within 45 days.” (American Building Innovation LP v. Balfour Beatty Construction, LLC (2024) 104 Cal.App.5th 954, 960, italics added.)

Therefore, in the absence of notice from the CSLB pursuant to Section 7125.2, subdivision (b), the lapse or cancellation of a licensed contractor’s worker’s compensation insurance coverage does not in and of itself effect suspension of the contractor’s license.

Mikhail argues that the absence of notice by the CSLB pursuant to Section 7125.2, subdivision (b), is a complete defense to the cause of action for disgorgement under Section 7031. Mikhail presents evidence that while the SCIF notified IMKAT of the cancellation of its worker’s compensation insurance coverage, the CSLB registrar never sent notice pursuant to Section 7125.2, subdivision (b), of any suspension of the contractor’s license. (Def. UMF 4.) Mikhail presents a verified certificate of licensure from the CSLB indicating that for the relevant time period, IMKAT’s contractor’s license was active and never suspended. (Def.

UMF 5, citing Def. RJN Exh. VII [CSLB Certification of Records].) The license record indicates an unrelated suspension from April 30, 2024 to May 6, 2024, but no other actions with regard to the license since its issuance. (Ibid.) Mikhail argues that this verified certificate of licensure from the CSLB establishes IMKAT’s valid licensure for purposes of Section 7031. As Mikhail notes, Section 7031, subdivision (d), provides:

If licensure or proper licensure is controverted, then proof of licensure pursuant to this section shall be made by production of a verified certificate of licensure from the Contractors State License Board which establishes that the individual or entity bringing the action was duly licensed in the proper classification of contractors at all times during the performance of any act or contract covered by the action.

(Bus. & Prof. Code, § 7031, subd. (d).) A certificate of licensure creates “a rebuttable presumption of licensure.” (American Building Innovation LP v. Balfour Beatty Construction, LLC, supra, 104 Cal.App.5th at p. 964.)

Therefore, given the Court’s interpretation of Section 7125.2, the relevant case law, as well as Mikhail’s asserted UMFs and legal argument, the Court finds that Mikhail has satisfied his initial burden for summary adjudication of the first cause of action.

Given that Mikhail has satisfied his initial burden, the Court next examines Plaintiffs’ opposition papers to determine if they have satisfied their burden to demonstrate the existence of a triable issue of material fact which precludes summary adjudication. (Salazar v. Southern Cal. Gas Co. (1997) 54 Cal.App.4th 1370, 1376; Binder v. Aetna

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2022-00320885-CU-OR-GDS: Ryan Caudill vs. Ivan Katrenyak 06/04/2026 Hearing on Motion for Summary Adjudication of Plaintiff's First Cause of Action for Disgorgement (B&PC §7031) in Department 16D

Life Ins. Co. (1999) 75 Cal.App.4th 832, 840.)

In opposition, Plaintiffs correctly note that the presumption of licensure created by the verified certificate from the CSLB is subject to attack “by going behind the face of license and proving it is in fact a ‘sham’.” (American Building Innovation LP v. Balfour Beatty Construction, LLC, supra, 104 Cal.App.5th at p. 964, quotation, citations, omitted.) Plaintiffs argue that the cancellation of IMKAT’s worker’s compensation insurance coverage caused the suspension of IMKAT’s contractor’s license as a matter of law, thus demonstrating that IMKAT was in fact unlicensed. (Plfs.

Resp. to Defs. UMF 5.) As discussed above, however, where a contractor’s license is subject to suspension for lapse of worker’s compensation insurance coverage, the CSLB must provide the notice required in Section 7125.2, subdivision (b), prior to the suspension of the license. (Bus. & Prof. Code, § 7125.2, subd. (b); Loranger v. Jones, supra, 184 Cal.App.4th at p. 856.) Thus, Plaintiffs’ legal argument is insufficient to defeat Mikhail’s motion.

As to Mikhail’s asserted UMFs, the Court finds that Plaintiffs have failed to raise any triable issue of material fact. The Court notes that aside from relying upon its legal argument, Plaintiffs attempt to “dispute” Mikhail’s UMF 4, which, again, provides that CSLB did not issue a notice to IMKAT that its workers compensation insurance lapsed and/or prescribing further action to cure. However, the basis for Plaintiffs’ purported “dispute” is that merely “[t]he State Compensation Insurance Fund issued a ‘Notice of Cancellation’ to IMKAT.” (Plfs.

Resp. to Def. UMF 4.) The Court finds that Plaintiffs’ assertion and supporting evidence do not raise a triable issue of material fact regarding the absence of CSLB’s notice to IMKAT. In sum, Plaintiffs have presented no evidence to rebut Mikhail’s showing that no such notice was provided by the CSLB and that IMKAT’s license was never actually suspended by the CSLB. Similarly, Plaintiffs provide no evidence that the CSLB took any action to suspend IMKAT’s contractor’s license following the insurance cancellation. (Plfs.

Resp. to Def. UMF 5.)

Because Plaintiffs have failed to demonstrate the existence of a triable issue of material fact as to Mikhail’s status as a licensed contractor during the relevant time period, Mikhail is entitled to summary adjudication as to the first cause of action.

The Court notes that this determination does not resolve the first cause of action as asserted against Ivan. The instant motion is made on behalf of Mikhail only, and the Court makes no rulings with regard to the disgorgement claim against Ivan. Also, the Court notes that Plaintiffs separately allege that Ivan “did not have a valid California Contractor’s license during the remodel on the Property and instead illegally ‘rented’ Mikhail’s license.” (2nd Am. Compl. ¶ 17.)

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2022-00320885-CU-OR-GDS: Ryan Caudill vs. Ivan Katrenyak 06/04/2026 Hearing on Motion for Summary Adjudication of Plaintiff's First Cause of Action for Disgorgement (B&PC §7031) in Department 16D

Mikhail’s motion for summary adjudication of Plaintiffs’ first cause of action will be granted.

Disposition

Defendant Mikhail Katrenyak’s Motion for Summary Adjudication as to Plaintiff’s First Cause of Action is granted.

Defendant shall prepare a formal order consistent with this ruling, submit it to the opposing party for approval as to form, and thereafter submit it to the Court for signature in accordance with California Rules of Court, rule 3.1312.