Executive Landscape Corp. v. San Vicente Country Villas IV Ass'n

[498]Opinion

WIENER, J. Plaintiff Executive Landscape Corporation (Executive) appeals the judgment of dismissal entered after defendants’ (collectively, San Vicente) demurrer was sustained without leave to amend. The basis of the court’s ruling was that Executive failed to possess the license required under Business and Professions Code section 70311 at the time it entered into a written contract with San Vicente for the management and maintenance of the common areas of San Vicente’s condominium complex. We reverse.

Section 7031 provides a contractor cannot bring or maintain an action to recover for work performed unless he alleges and proves he was duly licensed at all times during performance. In denying recovery to unlicensed contractors courts have rationalized the harsh impact on some competent, but unlicensed, persons by deferring to the legislative determination that deterrence outweighs the cumulative effect of the penalty suffered by the contractor and the unjust enrichment obtained by the property owner. (Lewis & Queen v. N. M. Ball Sons (1957) 48 Cal.2d 141, 151 [308 P.2d 713].) Although unlicensed plaintiffs may obtain some relief from the blanket application of section 7031 through the judicially declared doctrine of substantial compliance (see Latipac, Inc. v. Superior Court (1966) 64 Cal.2d 278 [49 Cal.Rptr. 676, 411 P.2d 564]), the general rule remains essentially unmodified, resulting in favorable and even windfall decisions for those persons against whom unlicensed contractors have sought recovery.

Our research of the reported decisions on whether section 7031 bars recovery indicates the determination of liability or nonliability is almost always made in a factual context either through trial or by summary judgment.2 The case before us is thus procedurally different from most, reaching [499]us by appeal from the judgment entered following defendants’ successful demurrer. We are therefore governed by the following well established rules.

We must accept as true all facts pleaded in the complaint. (Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 170 [164 Cal.Rptr. 839, 610 P.2d 1330, 9 A.L.R.4th 314].) “We ignore allegations of conclusion of law, and where the allegations in the body of the complaint are contrary to documents incorporated by reference in it, we treat the documents as controlling over their characterization in the pleading.” (Hollister Park Inv. Co. v. Goleta County Water Dist. (1978) 82 Cal.App.3d 290, 292 [147 Cal.Rptr. 91].) The demurrer tests the pleading alone and not the evidence or other extrinsic matters which do not appear on the face of the pleading or cannot be properly inferred from the factual allegations of the complaint. (Childs v. State of California (1983) 144 Cal.App.3d 155 [192 Cal.Rptr. 526]; Ramsden v. Western Union (1977) 71 Cal.App.3d 873, 879 [138 Cal.Rptr. 426]; see Code Civ. Proc., § 430.30; 3 Witkin, Cal. Procedure (2d ed. 1971) Pleading, § 797, p. 2410.) This principle means that if the pleading sufficiently states a cause of action the demurrer cannot be granted on the basis of a showing of extrinsic matters by inference from attached exhibits, affidavits or otherwise except those matters which are subject to judicial notice. (See Childs v. State of California, supra, 144 Cal.App.3d 155; Ramsden v. Western Union, supra, 71 Cal.App.3d at p. 879; see also 3 Witkin, Cal. Procedure, supra, at p. 2410.)