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1 GILBERT J. PREMO
Attorney at Law, State Bar No. 48503
2 500 Northfield Lane
ELECTRONICALLY
Lincoln, CA 95648-8321
3 Telephone: (415) 974-6664 F I L E D
Fax: (415) 762-5350 Superior Court of California,
County of San Francisco
4 Email: gilbertpremo@gmail.com
09/28/2022
5 Attorney for Plaintiff Clerk of the Court
BY: JEFFREY FLORES
Michael A. Canatella Deputy Clerk
6
7
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 CITY AND COUNTY OF SAN FRANCISCO - UNLIMITED JURISDICTION
CGC-22-602011
10
MICHAEL A. CANATELLA, NO.
11
Plaintiff,
12 COMPLAINT FOR RECOVERY OF:
vs. COMPENSATION PAID TO
13 UNLICENCED CONTRACTOR;
DAVID S. MUDWAY, DAMAGES FOR BREACH OF
14 ROBERT EARL GUILLORY, CONTACT:
REG CONSTRUCTION, aka R E G DAMAGES FOR NEGLIGENCE;
15 CONSTRUCTION; DAMAGES FOR THEFT OF
THE NORTH RIVER INSURANCE COMPANY, PROPERTY;
16 and DOE 1 through DOE 20, inclusive, DAMAGES FOR NEGLIGENT
MISREPRESENTATION; AND
17 Defendants. RESTITUTION FOR UNFAIR
______________________________________/ COMPETITION
18
19 Plaintiff Michael A. Canatella alleges as follows:
20 PARTIES
21 1. Plaintiff Michael A. Canatella is an individual over the age of 18 years.
22 2. Defendant DAVID S. MUDWAY (“MUDWAY”) in an individual over the age of 18 years.
23 MUDWAY is not, and has never been, licensed as a contractor by the California Contractors State
24 Contractors License Board (“CSLB”), as required California Business and Professions Code section 70281
25 to perform any acts as a contractor in this state. Said section 7028 provides that it is unlawful for any
26 person to engage in the business of, or act in the capacity of, a contractor within this state if the person
27
1
28 All undesignated statutory references herein are to the Business & Professions Code.
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 is not licensed in accordance with the provisions of Chapter 9 of Division 3 of the Business & Professions
2 Code.
3 3. Defendant ROBERT EARL GUILLORY (“GUILLORY”) is an individual over the age of 18
4 years, whom Plaintiff is informed and believes and thereon alleges is a resident of the City and County
5 of San Francisco. Plaintiff is informed and believes and thereon alleges that GUILLORY is, and was
6 at all times herein mentioned, licensed as general building contractor by the CSLB, License No. 814511,
7 but only as an individual sole proprietor under the fictitious business name registered with the CSLB of
8 “R E G Construction.” At all such times, GUILLORY reported to the CSLB that he had no employees
9 and no workers compensation insurance. His individual license therefore does not permit, and never
10 permitted, anyone other than him to legally perform acts as a contractor under such license..
11 4. Plaintiff is informed and believes and thereon alleges that defendant REG CONSTRUCTION,
12 also known as “R E G CONSTRUCTION,” (“REGP”) is a de facto partnership or joint venture of
13 defendants MUDWAY and GUILLORY. REGP has never been licensed as a contractor by the CSLB,
14 as required by Section 7028 to perform any acts as a contractor in this state.
15 5. Plaintiff is informed and believes and thereon alleges that defendant “THE NORTH
16 INSURANCE COMPANY,” (“NORTH RIVER”) is, and was at all times herein mentioned, a
17 corporation organized under the laws of the State of New Jersey, and authorized to transact a general
18 surety business in the State of California. Plaintiff is informed and believes and thereon alleges that
19 NORTH RIVER, effective on on or about January 22, 2022, issued Contractor’s Bond 04-CF604855
20 (the “Bond”) under the provisions of sections 7071.6 through 7071.11, binding itself to the State of
21 California in the penal sum of $15,000 for the payment of damages suffered by any person claiming
22 against the Bond as a result of the acts or omissions of “R E G Construction,” which Bond remains in
23 effect. A true copy of the Bond is attached hereto as "EXHIBIT A" and incorporated by reference herein.
24 6. Plaintiff is ignorant of the true names and capacities of those defendants sued herein as DOE
25 1 through DOE 20, inclusive, and therefore sue these defendants by such fictitious names. Plaintiff will
26 seek leave of court to amend this complaint when the true names and capacities of said defendants have
27 been discovered. Plaintiff is informed and believes and thereon allege that all times mentioned herein,
28 and in doing the things herein alleged, each of the defendants, including the named defendants and the
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 DOE defendants, was the partner, agent, employee, surety or alter-ego of the other defendants, and each
2 of them, and in doing the things herein mentioned was acting within the scope of such agency and
3 employment.
4 FIRST CAUSE OF ACTION
5 (Against All Defendants to Recover Compensation Paid to Unlicensed Contractor)
6 7. Plaintiff incorporates by reference as if fully set forth herein the preceding paragraphs of this
7 Complaint.
8 8. As used herein, the term the “REGP Defendants” means defendants MUDWAY, GUILLORY,
9 and REGP.
10 9. Plaintiff’s childhood home is real property in the City and County of San Francisco, State of
11 California at and commonly know as 2969 24th Avenue, State of California. The Property is owned by
12 plaintiff’s father, Richard A. Canatella (“Richard”), in his capacity as Trustee of the Richard A. Canatella
13 Family Trust dated June 1, 1978 (“Owner”). On the property is a single-family residence (the “Home”)
14 which has long been used as the family home of members of the Canatella Family, including most
15 recently and just prior to the repairs to the Home which are the subject of this action, Richard’s wife, and
16 plaintiff’s mother, Zini Canatella.
17 10. In or about early 2022, the Home was in a state of disrepair such that extensive repairs to
18 the Home became necessary, and plaintiff’s mother temporarily moved from the Home to allow such
19 repairs. In or about February, 2022, a friend of plaintiff’s informed him of an advertisement placed in
20 a real estate publication by a (purported) contractor seeking work. Plaintiff telephoned the number given
21 to him in the advertisement, which turned out to be the telephone number of MUDWAY. Plaintiff
22 thereafter, in the period to in or about February, 2022 to and including March 10, 2022, communicated
23 and met with MUDWAY to discuss and negotiate entering into a contract for repairs to made to the
24 Home.
25 11. In the course of the said discussions and negotiations, MUDWAY provided to plaintiff an
26 estimate for repairs to the Home, with a covering letterhead captioned “REG CONSTRUCTION
27 LICENSED, BONDED & INSURED with LICENCE #814511 PARTNERS: Robert Guillory and David
28 Mudway,” A true copy of the said letterhead and estimate and letterhead is attached hereto as "EXHIBIT
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 B" and incorporated by reference herein.
2 12. MUDWAY also presented to plaintiff in the above-said period a copy of the above-said
3 Contractor’s Bond issued in the name of “R E G Construction,” and a plastic contractor’s license card
4 issued by the CSLB in the business name of “R E G Construction”, “License Number 814511.”
5 13. In order to induce plaintiff to enter into a contract for repairs of the Home, and in the above-
6 said period and prior to plaintiff signing any such contract, MUDWAY represented to plaintiff, orally
7 or in writing in presenting to plaintiff the above-said documents and a proposed contract for the repairs
8 to the Home repairs, among other things:
9 a. That “REG Construction” (aka “R E G Construction”, or “REG”) was a partnership of
10 GUILLORY and MUDWAY, and was duly licensed as a contractor by the CSLB;
11 b. That the contractor’s license number of said “REG Construction” was 814511;
12 c. That said “REG Construction” was “licensed, bonded and insured”; and
13 d. That said “REG Construction” had worker’s compensation insurance.
14 14. Plaintiff is informed and believes and thereon alleges that the above-said representations
15 made by MUDWAY were false and fraudulent, in that, among other things:
16 a. The claimed partnership of “REG Construction” (aka “R E G Construction”) was never duly
17 licensed as a contractor by the CSLB, and never had , and has never had, any such contractor’s license
18 or contractor’s license number; and could not legally perform any acts as a contractor in this state;
19 b. The contractor's license number used by MUDWAY to induce plaintiff to enter into a repair
20 contract was not the license number of any partnership, but the individual license number of GUILLORY.
21 GUILLORY's individual license could not be legally used by the alleged partnership, or by MUDWAY,
22 to perform any work or acts as a contractor under the proposed contract, in that, among other things:
23 (1) An individual license can not be used by partnership or joint venture unless
24 the partnership or joint venture itself is duly licensed as a contractor, and REGP never
25 was;
26 (2) An individual licensee is only legally permitted to perform acts as a contractor
27 by himself, or through employees supervised by him, or by licensed subcontractors
28 engaged by the individual. Plaintiff is informed and believes and thereon alleges that
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 MUDWAY had no intention to have GUILLORY do or supervise any work under the
2 Contract, or personally engage any licensed subcontractors. Rather MUDWAY intended
3 that only MUDWAY would perform or supervise work under the proposed contract,
4 engage employees, engage subcontractors, and otherwise perform acts as a contractor
5 under such contract. Plaintiff is further informed and believes and thereon alleges that
6 MUDWAY knew that neither REGP, GUILLORY or MUDWAY had any workers
7 compensation insurance, or any intention to obtain any, meaning that no work could
8 legally be done under the contract by other than GUILLORY or licensed subcontractors
9 engaged by GUILLORY.
10 (3) MUDWAY was not licensed as a contractor, and could not legally use
11 GUILLORY's individual license to allow MUDWAY to perform acts as a contractor.
12 c. Plaintiff is informed and believes and thereon alleges that neither REGP or any of the other
13 REGP Defendants had any insurance applicable to their acts or omission in connection with performance
14 of the proposed contract, nor intended to obtain the same, including but not limited to any liability
15 insurance, or any workers compensation insurance (or certificate of consent to self-insurance of workers
16 compensation liability).
17 15. Plaintiff is informed and believes and thereon alleges that MUDWAY intentionally made
18 the above-said false representations, knowing that they were false, with the intention of inducing plaintiff
19 to enter into a contract for repairs to the Home, and obtain payments under such contract, and thereby
20 deprive plaintiff of property or legal rights or otherwise cause injury to plaintiff.
21 16. In reliance upon the representations of MUDWAY, and believing them to be true, on or
22 about March 10, 2022, in the City and County of San Francisco, plaintiff in his own name, acting as an
23 agent of the Owner and for the benefit of the Owner, entered into a written home improvement contract
24 for repairs to the Home. This contract was written and presented to him by MUDWAY and therein
25 identified the contractor to perform the work only as “REG.” A true copy of this contract is attached
26 hereto as "EXHIBIT C" and incorporated by reference herein (the “Contract.”), except that the words
27 “This ceases the/our contract as of July 15, 2022 x David Mudway” were not on the contract at the time
28 of plaintiff’s signature, and are not part of contract.
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 17. At the time of entering into the Contract, plaintiff was ignorant of the falsity of the
2 representations made by MUDWAY. These representations were material, and plaintiff would not have
3 entered into the Contract had he known of the falsity of these representations.
4 18. At the time of entering into the Contract, and based on the representations of MUDWAY,
5 plaintiff understood that the contractor therein referred to as “REG” was a reference to “REG
6 Construction” and/or “R E G Construction,” which plaintiff believed to be partnership of MUDWAY and
7 GUILLORY, and which he believed to be a contractor duly licensed by the CSLB, and that MUDWAY
8 was acting on behalf of such partnership. Plaintiff is informed and believes and thereon alleges that
9 MUDWAY knew that plaintiff so understood. MUDWAY so accepted the Contract, and thus REGP is
10 and was obliged under the Contract notwithstanding that it was not signed by REGP.
11 19. Under Corporations Code section 16201, a partnership is a legal entity distinct from its
12 partners, and under Corporations Code section 16306, all partners are jointly and severally liable for all
13 obligations of the partnership, and all for acts of the other partners. MUDWAY and GUILLORY are thus
14 also individually liable under the Contract in addition to REGP.
15 20. If, however, MUDWAY’s representations that “REG” was a partnership of he and
16 GUILLORY were false, and there is no such entity, and itwas but an alias for MUDWAY or for
17 GUILLORY, plaintiff is informed and believes and thereon alleges that each of MUDWAY and
18 GUILLORY are and would be nevertheless also individually liable for the obligations of the Contract,
19 in that, among other things:
20 a. MUDWAY personally committed the above fraud, and presented, accepted and acted under
21 the Contract, and accepted payments thereunder, and if “REG” is not an entity, MUDWAY acted on
22 behalf of either himself or an undisclosed principal, and is thus liable as a party thereto; and
23 b. Plaintiff is informed and believes that GUILLORY combined and conspired with MUDWAY
24 to allow MUDWAY to use GUILLORY’S license in violation of section 7114,2 and aided and abetted
25 the fraud practiced by MUDWAY and the procuring of the Contract, by, among other things, and without
26
2
27 Section 7114 provides that aiding or abetting an unlicensed person to evade the provisions of this
chapter [Chapter 9] or combining or conspiring with an unlicensed person, or allowing one's license to
28 be used by an unlicensed person, is a cause for disciplinary action.
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 limitation, allowing MUDWAY to use a copy of the Bond sent to GUILLORY in the name of “R E G
2 Construction,” and the plastic CSLB contractor’s license card in the business name of “R E G
3 Construction,” that was issued and sent by the Board only to GUILLORY, individually, each bearing
4 GUILLORY’s license number, thereby permitting MUDWAY to deceive plaintiff that the counter-party
5 to the Contract was duly licensed to perform the Contract, and GUILLORY, as a co-conspirator and aider
6 and abetter of MUDWAY, and/or as an undisclosed principal, is also liable for the Contract and
7 MUDWAY’s acts herein alleged.
8 21. The Contract prepared and presented by MUDWAY was a “home improvement contract”
9 as defined by section 7151.2, in that it was an agreement made by plaintiff on behalf of the Owner of the
10 Home for improvements to the Home with a purported contractor. The said Contract was in gross
11 violation of the requirements applicable to home improvement contracts imposed on contractors under
12 section 7159, in that, among other things:
13 a. It was not captioned “Home Improvement” and did not contain the full name and address of
14 the contractor, or the contractor’s license number (either on the first page, or any other page);
15 b. It did not provide notice of plaintiff’s right to cancel the Contract provided by section 7159,
16 or the address to send a Notice of Cancellation;
17 c. It did not provide a statement that plaintiff was entitled to a completely filled in copy, signed
18 by both the contractor and plaintiff before any work could be started;
19 d. It was not signed by the purported contractor;
20 e. It did not state the total cost of the Contract;
21 f. It did not have a heading “Description of the Project and Description of the Significant
22 Materials to be Used and Equipment to be Installed,” and did not set forth a detailed or complete
23 description of the work to be performed and the significant materials to be used and the equipment to be
24 installed.
25 g. It did not have a statement that: “IT IS AGAINST THE LAW FOR A CONTRACTOR TO
26 COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET
27 DELIVERED. HOWEVER, A CONTRACTOR MAY REQUIRE A DOWN PAYMENT”;
28 h. It did not have a statement that: “THE DOWN PAYMENT MAY NOT EXCEED $ 1,000 OR
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 EXCEED 10% OF THE CONTRACT PRICE, WHICHEVER IS LESS”, and, in fact MUDWAY insisted
2 upon and received a down payment from plaintiff of $6,000.00 upon the signing of the Contract, in
3 violation of the law;
4 i. It did not have a statement that once payment has been made for any portion of the work, the
5 contractor must, prior to any further payment being made, furnish the owner a full and unconditional
6 release for any claim of mechanic’s lien for the portion of the work for which payment has been made.
7 In fact, MUDWAY and REGP received many payments for portions of the work, without ever giving
8 plaintiff any release of a claim for mechanics lien.
9 j. It did not state an Approximate Start Date, or a definition of what constitutes substantial
10 commencement of the work, or state any Approximate Completion Date.
11 k. It did not provide a notice that the owner has the right to require the contractor to secure a
12 performance or payment bond.
13 l. It did not provide a blank change order form, or any Note About Extra Work and Change
14 Orders;
15 m. It did not provide, in the Contract or as an attachment to the Contract any of the following
16 required statutory notices:
17 (1) A disclosure as to whether the contract had liability insurance;
18 (2) A disclosure of whether the contract has workers compensation
19 insurance or is exempt (by reason of having no employees);
20 (3) A Mechanic’s Lien Warning;
21 (4) A notice informing plaintiff that he may file complaints with the CSLB
22 and warning against using unlicensed contractors;
23 (5) A Three-Day Right to Cancel Notice:
24 22. After plaintiff signed the Contract, and in the period from and after March 10, 2022 to July
25 12, 2022, when plaintiff discharged the REGP Defendants due to improper workmanship, lack of
26 attention to detail, failure to supervise workers and failure to report to the job site to complete work under
27 the Contract, MUDWAY proceeded to perform repair work on the Home and act as a contractor
28 purportedly pursuant to the Contract or change orders under the Contract, without any valid contractor’s
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 license being in force, in not only personally performing work under the Contract, but in hiring and
2 supervising the work of employees of REGP or MUDWAY, and hiring subcontractors to perform part
3 of the work. Plaintiff is informed and believes and thereon alleges that GUILLORY did not personally
4 do or supervise any work under the Contract, or hire any employees or subcontractors.
5 23. During the performance of the Contract, MUDWAY had workers perform work under the
6 Contract, whom plaintiff is informed and believes and thereon alleges were not licensed subcontractors,
7 but rather employees of MUDWAY or REGP, and indeed plaintiff was billed by MUDWAY and REGP
8 for, and paid for, the time of these workers, However, plaintiff is informed and believes and thereon
9 alleges that none of the REGP Defendants ever had workers compensation insurance in force for these
10 employees, or had secured a certificate of consent to self-insure from the California Director of Industrial
11 Relations.
12 24. Section 7125 requires as a condition to the continued maintenance of a contractor’s license
13 that the licensee have on file a valid Certificate of Workers’ Compensation Insurance or Certification of
14 Self-Insurance in the licensee’s business name, unless the licensee has no employees. California Labor
15 Code section 3700 provides that every employer in the state shall secure payment of workers
16 compensation to employees by being insured by a insurer duly authorized to write workers compensation
17 insurance in the state, or by securing a certificate of consent to self-insure from the California Director
18 of Industrial Relations. The REGP Defendants were thus legally required to obtain or maintain workers
19 compensation insurance for their employees doing work under the Contract, but did not do so.
20 25. Section 7125.2 provides that failure of a licensee to obtain or maintain workers’ compensation
21 insurance coverage, when required shall result in the automatic suspension of the license by operation
22 of law, on the date such coverage is required to be obtained. That date such coverage is required to be
23 obtain is the first day any employee is hired or does any work. MUDWAY caused workers who were not
24 licensed subcontractors and who were employees of the REGP Defendants performing work under the
25 Contract throughout the Contract. Thus, even if GUILLORY’s individual license were ever otherwise
26 valid for any work under the Contractor (which it was not), any such license became automatically
27 suspended by operation of law during the performance of the Contract.
28 26. Section 7031 provides in relevant part, and with exceptions not here applicable, that:
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 "(a) ... no person engaged in the business or acting in the capacity of a contractor, may
bring or maintain any action, or recover in law or equity in any action, in any court of this
2 state for the collection of compensation for the performance of any act or contract where
a license is required by this chapter without alleging that they were a duly licensed
3 contractor at all times during the performance of that act or contract ” (emphasis added).
4 27. There was in the Contract an implied covenant that the work to be performed or supervised
5 by the REGP Defendants would be performed with due care, and in accordance with accepted trade
6 standards for good and workmanlike construction, and all applicable building codes.
7 28. Consistent with the fact that MUDWAY was not a licensed contractor and was not
8 supervised by a licensed contractor, the work MUDWAY performed or supervised was improperly and
9 negligently done and defective, and not in accordance with accepted trade standards for good and
10 workmanlike construction and applicable building codes, and was not in accordance with the Contract,
11 and was in breach of the express and implied covenants of the Contract. These defects in workmanship
12 and performance included, without limitation:
13 a. Replacement windows were not properly sized or shimmed;
14 b. No flashing was installed at front entry stairs to wall connection and post penetration;
15 c. Porch cap and sets were not removed to allow flashing and proper water proofing;
16 d. Side rails of entry stairs were not built high enough to allow safety hand rail installation
17 as the height required by the Building Code;
18 e. Piers for the rear deck, which was part of a change order under the Contract, were not
19 properly footed on a 12 inch minimal footing as required by Code.
20 f. No header beam was installed above the garage as needed to support living space above, and
21 there was no proper shear wall bracing around the opening. Further, only a single wall plate was installed,
22 not a double wall plate as is typical.
23 g. The remodel of the lower bathroom was incomplete and poorly designed, and did not allow
24 space for the shower doors to fully open.
25 h. The tile floor installation in the kitchen was left incomplete, even though plaintiff had pre-
26 paid for it;
27 i. No floor joints were installed that extend inward to support bay window in rear bedroom;
28 j. No kick out flashing installed at recessed new gutters in stucco;
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 k. The main electrical panel was undersized;
2 l. The water line is not properly supported or secure in place at front exterior wall;
3 m. The hearth extension at the fireplace was too small;
4 n. No drain was installed under the utility sink;
5 o. No handrails were installed on upper and lower stairwells.
6 29. In the above said period during which MUDWAY performed or supervised work under the
7 Contract, but did not complete the Contract, MUDWAY requested that certain payments be made to
8 REGP, and other payments be made directly to MUDWAY, and plaintiff paid the following compensation
9 under the Contract to the REG Defendants:
10 a. By checks payable to “REG” or “REG CONSTRUCTION,” the sum of $95,725.00, and
11 b. By checks payable to MUDWAY, the sum of $95,007.34,
12 for a total compensation paid by plaintiff under the Contract or change orders made under the Contract
13 of $190,832.34. Certain of these payments include an advance payment for work that was not yet done
14 and has not yet been done under the Contract.
15 30. As a proximate result of the REGP Defendants above-alleged breaches of the Contract and
16 negligence in performance thereof, plaintiff paid moneys to said defendants for work that was not
17 properly performed as required by the Contract, or in the case of certain advance payments not performed
18 at all, the value of work performed by said defendants was far less than the money paid to said defendants,
19 plaintiff will have to pay others to correct said defendants’ faulty work or work uncompleted by
20 defendants, and has been delayed in completion of necessary repairs to the Home, all to plaintiff’s
21 damage in the sum of at least $60,000.00, or a greater sum according to proof at trial.
22 31. Plaintiff has performed all terms, conditions and covenants on his part required to be
23 performed under the Contract, and in any event would be excused from anything not performed by reason
24 of the above-alleged conduct of the REGP Defendants, and the fact that the Contract is unenforceable
25 against plaintiff, because it is in gross violation of the requirements of Section 7159; and because said
26 defendants were not duly licensed at all times (on indeed any time) during the performance of the
27 Contract, and thus under the provisions of section 7031 said defendant were not and are not legally
28 entitled any compensation whatsoever.
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 32. Section 7031 also provides in relevant part, within exceptions not here applicable, that
2 "(b) ... A person who utilizes the services of an unlicensed contractor may bring an action
in any court of competent jurisdiction in this state to recover all compensation paid to the
3 unlicensed contractor for performance of any act or contract.”
4 33. As above alleged, the REGP Defendants were not duly licensed at all times , or indeed at any
5 time, during their performance of the Contract, due to their failure to register or be licensed as a
6 partnership or joint venture, the failure of GUILLORY to perform or supervise any work under the
7 Contract, and the automatic suspension of any license, if any there be, by reason by use of employees in
8 performance of the Contract without obtaining or maintaining required workers compensation insurance.
9 34. On August 22, 2022, plaintiff demanded that the REGP Defendants return to him all
10 compensation paid under the Contract, in the sum of $190,832.34, but said defendants have failed and
11 refused return said compensation, or any part thereof.
12 35. California Code of Civil Procedure §1029.8 provides in relevant part that:
13 "(a) Any unlicensed person who causes injury or damage to another person as a result of
providing goods or performing services for which a license is required ... shall be liable
14 to the injured person for treble the amount of damages assessed in a civil action in any
court having proper jurisdiction. The court may, in itsdiscretion, award all costs and
15 attorney's fees to the injured person if that person prev will ails in the action".
...
16
(d) The additional damages provided for in subdivision (a) shall not exceed ten thousand
17 dollars ($10,000)."
18 36. Plaintiff has, as above alleged, been damaged by the above-alleged actions of the unlicensed
19 REGP Defendants in performing services for which a license is required, in a sum greatly in excess of
20 the maximum additional damages and is therefore entitled to the additional damages of $10,000.00. By
21 reason of said defendants said actions, and said defendants’ failure and refusal to return the compensation
22 paid by plaintiff, or any part thereto, despite his demand, plaintiff has been required to engage an attorney
23 to file and prosecute this action, and incur the costs and fees thereof, and is therefore entitled to an award
24 of all attorney’s fees and costs herein incurred.
25 37. Section 7071.5 provides that a Contractor’s Bond is for the benefit of, among others:
26 “(a) A homeowner contracting for home improvement upon the homeowner's personal family
27 residence damaged as a result of a violation of this chapter [Chapter 9] by the licensee”, and
28 “(c) A person damaged as a result of a willful and deliberate violation of this chapter by the
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 licensee, or by the fraud of the licensee in the execution or performance of a construction contract.”
2 Section 7071.6 provides that for claims brought by beneficiaries specified in subdivision (a) of
3 Section 7071.5, the aggregate liability of the surety is the full amount bond of the bond, and for others
4 the liability is limited to $7,500.
5 38. In the acts and conduct above alleged, the REGP Defendants violated the provisions of
6 Chapter 9 of Division 3 of the Business & Professions Code, and, plaintiff is informed and believes and
7 thereon alleges, did so willfully and deliberately, and were guilty of fraud in the execution or performance
8 of the Contract, including but not limited to in fraudulently inducing plaintiff to enter into, execute and
9 perform the Contract. As above alleged, plaintiff entered in Contract for the home improvement as agent
10 for, and for the benefit of the Owner of the Home. Plaintiff is therefore also entitled to recover from the
11 surety, NORTH RIVER, the entire $15,000.00 penal sum of the Bond.
12 WHEREFORE, plaintiff prays Judgment as hereinafter set forth.
13 SECOND CAUSE OF ACTION
14 (Against all Defendants for Damages for Breach of Contract)
15 39. Plaintiff incorporates by reference, as if fully set forth herein, the preceding paragraphs of
16 this complaint.
17 40. As a proximate result of REGP Defendants above-alleged breaches of the Contract , plaintiff
18 paid moneys to said defendants for work that was not properly performed as required by the Contract,
19 or in the case of certain advance payments not performed at all, the value of work performed by said
20 defendants was far less than the money paid to said defendants, plaintiff will have to pay others to correct
21 said defendants’ faulty work or work uncompleted by defendants, and has been delayed in completion
22 of necessary repairs to the Home, all to plaintiff’s damage in the sum of at least $60,000.00, or a greater
23 sum according to proof at trial.
24 41. By reason said defendants’ status as unlicensed persons, and the said damages to plaintiff
25 thereby caused, plaintiff is also entitled to the additional damages of $10,000.00, and all attorney fees and
26 costs in filing and prosecuting this action, pursuant to the provisions of Code of Civil Procedure §1029.8.
27 42. By reason of the Bond issued by NORTH RIVER, it is also liable for said damages up to
28 the penal sum of $15,000.00.
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Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 WHEREFORE, plaintiff prays Judgment as hereinafter set forth.
2 THIRD CAUSE OF ACTION
3 (Against all Defendants for Damages for Negligence)
4 43. Plaintiff incorporates by reference, as if fully set forth herein, the preceding paragraphs of
5 this complaint.
6 44. As a proximate result of REGP Defendants above-alleged negligence in the performance of
7 the Contract, plaintiff paid moneys to said defendants for work that was not properly performed as
8 required by the Contract, or in the case of certain advance payments not performed at all, the value of
9 work performed by said defendants was far less than the money paid to said defendants, plaintiff will have
10 to pay others to correct said defendants’ faulty work or work uncompleted by defendants, and has been
11 delayed in completion of necessary repairs to the Home, all to plaintiff’s damage in the sum of at least
12 $60,000.00, or a greater sum according to proof at trial.
13 45. By reason said defendants’ status as unlicensed persons, and the said damages to plaintiff
14 thereby caused, plaintiff is also entitled to the additional damages of $10,000.00, and all attorney fees and
15 costs in filing and prosecuting this action, pursuant to the provisions of Code of Civil Procedure §1029.8.
16 46. By reason of the Bond issued by NORTH RIVER, it is also liable for said damages up to
17 the penal sum of $15,000.00.
18 WHEREFORE, plaintiff prays Judgment as hereinafter set forth.
19 FOURTH CAUSE OF ACTION
20 (Against all Defendants for Damages for Fraud)
21 47. Plaintiff incorporates by reference , as if fully set forth herein, the preceding paragraphs of
22 this complaint.
23 48. In the conduct hereinabove alleged, the REGP Defendants were guilty of fraud in inducing
24 plaintiff to enter into the Contract. Plaintiff did not discover the unlicensed status of said defendants and
25 the fraud practiced on him until after plaintiff had already made all the payments to the REGP Defendants
26 hereinabove alleged.
27 49. As a further part of said defendants fraudulent, malicious and oppressive conduct, on or
28 about June 23, 2022, the REGP Defendants caused a Mechanics Lien to be recorded against the Property,
___________________________________ 14
Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc.
1 for a sum of $45,000.00 claimed to be due for the work furnished under the Contract. Said claimed lien
2 was improper, invalid, false and fraudulent, in that, among other things:
3 a. No money was then due or unpaid under the Contract, and the REGP Defendants had at that
4 time been paid more than the value of any work they performed under the Contract;
5 b. The REGP Defendants had at that time not completed work under the Contract, and had not
6 yet been discharged, so that the lien was additionally prematurely filed in violation of Civil Code section
7 8412;
8 c. Because the REGP defendants were not duly licensed at all times, and indeed at any time,
9 during the performance of the Contract, Section 7031 prohibited the REGP Defendants from recovering
10 any compensation under the Contract.
11 50. By reason of the fraud practiced on plaintiff, and the fraudulent inducement of plaintiff to
12 enter into the Contract, plaintiff paid moneys to said defendants for work that was not properly performed
13 as required by the Contract, or in the case of certain advance payments not performed at all, the value of
14 work performed by said defendants was far less than the money paid to said defendants, plaintiff will have
15 to pay others to correct said defendants’ faulty work or work uncompleted by defendants, and has been
16
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1 GILBERT J. PREMO Attorney at Law, State Bar No. 48503 2 500 Northfield Lane ELECTRONICALLY Lincoln, CA 95648-8321 3 Telephone: (415) 974-6664 F I L E D Fax: (415) 762-5350 Superior Court of California, County of San Francisco 4 Email: gilbertpremo@gmail.com 09/28/2022 5 Attorney for Plaintiff Clerk of the Court BY: JEFFREY FLORES Michael A. Canatella Deputy Clerk 6 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 CITY AND COUNTY OF SAN FRANCISCO - UNLIMITED JURISDICTION CGC-22-602011 10 MICHAEL A. CANATELLA, NO. 11 Plaintiff, 12 COMPLAINT FOR RECOVERY OF: vs. COMPENSATION PAID TO 13 UNLICENCED CONTRACTOR; DAVID S. MUDWAY, DAMAGES FOR BREACH OF 14 ROBERT EARL GUILLORY, CONTACT: REG CONSTRUCTION, aka R E G DAMAGES FOR NEGLIGENCE; 15 CONSTRUCTION; DAMAGES FOR THEFT OF THE NORTH RIVER INSURANCE COMPANY, PROPERTY; 16 and DOE 1 through DOE 20, inclusive, DAMAGES FOR NEGLIGENT MISREPRESENTATION; AND 17 Defendants. RESTITUTION FOR UNFAIR ______________________________________/ COMPETITION 18 19 Plaintiff Michael A. Canatella alleges as follows: 20 PARTIES 21 1. Plaintiff Michael A. Canatella is an individual over the age of 18 years. 22 2. Defendant DAVID S. MUDWAY (“MUDWAY”) in an individual over the age of 18 years. 23 MUDWAY is not, and has never been, licensed as a contractor by the California Contractors State 24 Contractors License Board (“CSLB”), as required California Business and Professions Code section 70281 25 to perform any acts as a contractor in this state. Said section 7028 provides that it is unlawful for any 26 person to engage in the business of, or act in the capacity of, a contractor within this state if the person 27 1 28 All undesignated statutory references herein are to the Business & Professions Code. ___________________________________ 1 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 is not licensed in accordance with the provisions of Chapter 9 of Division 3 of the Business & Professions 2 Code. 3 3. Defendant ROBERT EARL GUILLORY (“GUILLORY”) is an individual over the age of 18 4 years, whom Plaintiff is informed and believes and thereon alleges is a resident of the City and County 5 of San Francisco. Plaintiff is informed and believes and thereon alleges that GUILLORY is, and was 6 at all times herein mentioned, licensed as general building contractor by the CSLB, License No. 814511, 7 but only as an individual sole proprietor under the fictitious business name registered with the CSLB of 8 “R E G Construction.” At all such times, GUILLORY reported to the CSLB that he had no employees 9 and no workers compensation insurance. His individual license therefore does not permit, and never 10 permitted, anyone other than him to legally perform acts as a contractor under such license.. 11 4. Plaintiff is informed and believes and thereon alleges that defendant REG CONSTRUCTION, 12 also known as “R E G CONSTRUCTION,” (“REGP”) is a de facto partnership or joint venture of 13 defendants MUDWAY and GUILLORY. REGP has never been licensed as a contractor by the CSLB, 14 as required by Section 7028 to perform any acts as a contractor in this state. 15 5. Plaintiff is informed and believes and thereon alleges that defendant “THE NORTH 16 INSURANCE COMPANY,” (“NORTH RIVER”) is, and was at all times herein mentioned, a 17 corporation organized under the laws of the State of New Jersey, and authorized to transact a general 18 surety business in the State of California. Plaintiff is informed and believes and thereon alleges that 19 NORTH RIVER, effective on on or about January 22, 2022, issued Contractor’s Bond 04-CF604855 20 (the “Bond”) under the provisions of sections 7071.6 through 7071.11, binding itself to the State of 21 California in the penal sum of $15,000 for the payment of damages suffered by any person claiming 22 against the Bond as a result of the acts or omissions of “R E G Construction,” which Bond remains in 23 effect. A true copy of the Bond is attached hereto as "EXHIBIT A" and incorporated by reference herein. 24 6. Plaintiff is ignorant of the true names and capacities of those defendants sued herein as DOE 25 1 through DOE 20, inclusive, and therefore sue these defendants by such fictitious names. Plaintiff will 26 seek leave of court to amend this complaint when the true names and capacities of said defendants have 27 been discovered. Plaintiff is informed and believes and thereon allege that all times mentioned herein, 28 and in doing the things herein alleged, each of the defendants, including the named defendants and the ___________________________________ 2 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 DOE defendants, was the partner, agent, employee, surety or alter-ego of the other defendants, and each 2 of them, and in doing the things herein mentioned was acting within the scope of such agency and 3 employment. 4 FIRST CAUSE OF ACTION 5 (Against All Defendants to Recover Compensation Paid to Unlicensed Contractor) 6 7. Plaintiff incorporates by reference as if fully set forth herein the preceding paragraphs of this 7 Complaint. 8 8. As used herein, the term the “REGP Defendants” means defendants MUDWAY, GUILLORY, 9 and REGP. 10 9. Plaintiff’s childhood home is real property in the City and County of San Francisco, State of 11 California at and commonly know as 2969 24th Avenue, State of California. The Property is owned by 12 plaintiff’s father, Richard A. Canatella (“Richard”), in his capacity as Trustee of the Richard A. Canatella 13 Family Trust dated June 1, 1978 (“Owner”). On the property is a single-family residence (the “Home”) 14 which has long been used as the family home of members of the Canatella Family, including most 15 recently and just prior to the repairs to the Home which are the subject of this action, Richard’s wife, and 16 plaintiff’s mother, Zini Canatella. 17 10. In or about early 2022, the Home was in a state of disrepair such that extensive repairs to 18 the Home became necessary, and plaintiff’s mother temporarily moved from the Home to allow such 19 repairs. In or about February, 2022, a friend of plaintiff’s informed him of an advertisement placed in 20 a real estate publication by a (purported) contractor seeking work. Plaintiff telephoned the number given 21 to him in the advertisement, which turned out to be the telephone number of MUDWAY. Plaintiff 22 thereafter, in the period to in or about February, 2022 to and including March 10, 2022, communicated 23 and met with MUDWAY to discuss and negotiate entering into a contract for repairs to made to the 24 Home. 25 11. In the course of the said discussions and negotiations, MUDWAY provided to plaintiff an 26 estimate for repairs to the Home, with a covering letterhead captioned “REG CONSTRUCTION 27 LICENSED, BONDED & INSURED with LICENCE #814511 PARTNERS: Robert Guillory and David 28 Mudway,” A true copy of the said letterhead and estimate and letterhead is attached hereto as "EXHIBIT ___________________________________ 3 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 B" and incorporated by reference herein. 2 12. MUDWAY also presented to plaintiff in the above-said period a copy of the above-said 3 Contractor’s Bond issued in the name of “R E G Construction,” and a plastic contractor’s license card 4 issued by the CSLB in the business name of “R E G Construction”, “License Number 814511.” 5 13. In order to induce plaintiff to enter into a contract for repairs of the Home, and in the above- 6 said period and prior to plaintiff signing any such contract, MUDWAY represented to plaintiff, orally 7 or in writing in presenting to plaintiff the above-said documents and a proposed contract for the repairs 8 to the Home repairs, among other things: 9 a. That “REG Construction” (aka “R E G Construction”, or “REG”) was a partnership of 10 GUILLORY and MUDWAY, and was duly licensed as a contractor by the CSLB; 11 b. That the contractor’s license number of said “REG Construction” was 814511; 12 c. That said “REG Construction” was “licensed, bonded and insured”; and 13 d. That said “REG Construction” had worker’s compensation insurance. 14 14. Plaintiff is informed and believes and thereon alleges that the above-said representations 15 made by MUDWAY were false and fraudulent, in that, among other things: 16 a. The claimed partnership of “REG Construction” (aka “R E G Construction”) was never duly 17 licensed as a contractor by the CSLB, and never had , and has never had, any such contractor’s license 18 or contractor’s license number; and could not legally perform any acts as a contractor in this state; 19 b. The contractor's license number used by MUDWAY to induce plaintiff to enter into a repair 20 contract was not the license number of any partnership, but the individual license number of GUILLORY. 21 GUILLORY's individual license could not be legally used by the alleged partnership, or by MUDWAY, 22 to perform any work or acts as a contractor under the proposed contract, in that, among other things: 23 (1) An individual license can not be used by partnership or joint venture unless 24 the partnership or joint venture itself is duly licensed as a contractor, and REGP never 25 was; 26 (2) An individual licensee is only legally permitted to perform acts as a contractor 27 by himself, or through employees supervised by him, or by licensed subcontractors 28 engaged by the individual. Plaintiff is informed and believes and thereon alleges that ___________________________________ 4 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 MUDWAY had no intention to have GUILLORY do or supervise any work under the 2 Contract, or personally engage any licensed subcontractors. Rather MUDWAY intended 3 that only MUDWAY would perform or supervise work under the proposed contract, 4 engage employees, engage subcontractors, and otherwise perform acts as a contractor 5 under such contract. Plaintiff is further informed and believes and thereon alleges that 6 MUDWAY knew that neither REGP, GUILLORY or MUDWAY had any workers 7 compensation insurance, or any intention to obtain any, meaning that no work could 8 legally be done under the contract by other than GUILLORY or licensed subcontractors 9 engaged by GUILLORY. 10 (3) MUDWAY was not licensed as a contractor, and could not legally use 11 GUILLORY's individual license to allow MUDWAY to perform acts as a contractor. 12 c. Plaintiff is informed and believes and thereon alleges that neither REGP or any of the other 13 REGP Defendants had any insurance applicable to their acts or omission in connection with performance 14 of the proposed contract, nor intended to obtain the same, including but not limited to any liability 15 insurance, or any workers compensation insurance (or certificate of consent to self-insurance of workers 16 compensation liability). 17 15. Plaintiff is informed and believes and thereon alleges that MUDWAY intentionally made 18 the above-said false representations, knowing that they were false, with the intention of inducing plaintiff 19 to enter into a contract for repairs to the Home, and obtain payments under such contract, and thereby 20 deprive plaintiff of property or legal rights or otherwise cause injury to plaintiff. 21 16. In reliance upon the representations of MUDWAY, and believing them to be true, on or 22 about March 10, 2022, in the City and County of San Francisco, plaintiff in his own name, acting as an 23 agent of the Owner and for the benefit of the Owner, entered into a written home improvement contract 24 for repairs to the Home. This contract was written and presented to him by MUDWAY and therein 25 identified the contractor to perform the work only as “REG.” A true copy of this contract is attached 26 hereto as "EXHIBIT C" and incorporated by reference herein (the “Contract.”), except that the words 27 “This ceases the/our contract as of July 15, 2022 x David Mudway” were not on the contract at the time 28 of plaintiff’s signature, and are not part of contract. ___________________________________ 5 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 17. At the time of entering into the Contract, plaintiff was ignorant of the falsity of the 2 representations made by MUDWAY. These representations were material, and plaintiff would not have 3 entered into the Contract had he known of the falsity of these representations. 4 18. At the time of entering into the Contract, and based on the representations of MUDWAY, 5 plaintiff understood that the contractor therein referred to as “REG” was a reference to “REG 6 Construction” and/or “R E G Construction,” which plaintiff believed to be partnership of MUDWAY and 7 GUILLORY, and which he believed to be a contractor duly licensed by the CSLB, and that MUDWAY 8 was acting on behalf of such partnership. Plaintiff is informed and believes and thereon alleges that 9 MUDWAY knew that plaintiff so understood. MUDWAY so accepted the Contract, and thus REGP is 10 and was obliged under the Contract notwithstanding that it was not signed by REGP. 11 19. Under Corporations Code section 16201, a partnership is a legal entity distinct from its 12 partners, and under Corporations Code section 16306, all partners are jointly and severally liable for all 13 obligations of the partnership, and all for acts of the other partners. MUDWAY and GUILLORY are thus 14 also individually liable under the Contract in addition to REGP. 15 20. If, however, MUDWAY’s representations that “REG” was a partnership of he and 16 GUILLORY were false, and there is no such entity, and itwas but an alias for MUDWAY or for 17 GUILLORY, plaintiff is informed and believes and thereon alleges that each of MUDWAY and 18 GUILLORY are and would be nevertheless also individually liable for the obligations of the Contract, 19 in that, among other things: 20 a. MUDWAY personally committed the above fraud, and presented, accepted and acted under 21 the Contract, and accepted payments thereunder, and if “REG” is not an entity, MUDWAY acted on 22 behalf of either himself or an undisclosed principal, and is thus liable as a party thereto; and 23 b. Plaintiff is informed and believes that GUILLORY combined and conspired with MUDWAY 24 to allow MUDWAY to use GUILLORY’S license in violation of section 7114,2 and aided and abetted 25 the fraud practiced by MUDWAY and the procuring of the Contract, by, among other things, and without 26 2 27 Section 7114 provides that aiding or abetting an unlicensed person to evade the provisions of this chapter [Chapter 9] or combining or conspiring with an unlicensed person, or allowing one's license to 28 be used by an unlicensed person, is a cause for disciplinary action. ___________________________________ 6 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 limitation, allowing MUDWAY to use a copy of the Bond sent to GUILLORY in the name of “R E G 2 Construction,” and the plastic CSLB contractor’s license card in the business name of “R E G 3 Construction,” that was issued and sent by the Board only to GUILLORY, individually, each bearing 4 GUILLORY’s license number, thereby permitting MUDWAY to deceive plaintiff that the counter-party 5 to the Contract was duly licensed to perform the Contract, and GUILLORY, as a co-conspirator and aider 6 and abetter of MUDWAY, and/or as an undisclosed principal, is also liable for the Contract and 7 MUDWAY’s acts herein alleged. 8 21. The Contract prepared and presented by MUDWAY was a “home improvement contract” 9 as defined by section 7151.2, in that it was an agreement made by plaintiff on behalf of the Owner of the 10 Home for improvements to the Home with a purported contractor. The said Contract was in gross 11 violation of the requirements applicable to home improvement contracts imposed on contractors under 12 section 7159, in that, among other things: 13 a. It was not captioned “Home Improvement” and did not contain the full name and address of 14 the contractor, or the contractor’s license number (either on the first page, or any other page); 15 b. It did not provide notice of plaintiff’s right to cancel the Contract provided by section 7159, 16 or the address to send a Notice of Cancellation; 17 c. It did not provide a statement that plaintiff was entitled to a completely filled in copy, signed 18 by both the contractor and plaintiff before any work could be started; 19 d. It was not signed by the purported contractor; 20 e. It did not state the total cost of the Contract; 21 f. It did not have a heading “Description of the Project and Description of the Significant 22 Materials to be Used and Equipment to be Installed,” and did not set forth a detailed or complete 23 description of the work to be performed and the significant materials to be used and the equipment to be 24 installed. 25 g. It did not have a statement that: “IT IS AGAINST THE LAW FOR A CONTRACTOR TO 26 COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET 27 DELIVERED. HOWEVER, A CONTRACTOR MAY REQUIRE A DOWN PAYMENT”; 28 h. It did not have a statement that: “THE DOWN PAYMENT MAY NOT EXCEED $ 1,000 OR ___________________________________ 7 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 EXCEED 10% OF THE CONTRACT PRICE, WHICHEVER IS LESS”, and, in fact MUDWAY insisted 2 upon and received a down payment from plaintiff of $6,000.00 upon the signing of the Contract, in 3 violation of the law; 4 i. It did not have a statement that once payment has been made for any portion of the work, the 5 contractor must, prior to any further payment being made, furnish the owner a full and unconditional 6 release for any claim of mechanic’s lien for the portion of the work for which payment has been made. 7 In fact, MUDWAY and REGP received many payments for portions of the work, without ever giving 8 plaintiff any release of a claim for mechanics lien. 9 j. It did not state an Approximate Start Date, or a definition of what constitutes substantial 10 commencement of the work, or state any Approximate Completion Date. 11 k. It did not provide a notice that the owner has the right to require the contractor to secure a 12 performance or payment bond. 13 l. It did not provide a blank change order form, or any Note About Extra Work and Change 14 Orders; 15 m. It did not provide, in the Contract or as an attachment to the Contract any of the following 16 required statutory notices: 17 (1) A disclosure as to whether the contract had liability insurance; 18 (2) A disclosure of whether the contract has workers compensation 19 insurance or is exempt (by reason of having no employees); 20 (3) A Mechanic’s Lien Warning; 21 (4) A notice informing plaintiff that he may file complaints with the CSLB 22 and warning against using unlicensed contractors; 23 (5) A Three-Day Right to Cancel Notice: 24 22. After plaintiff signed the Contract, and in the period from and after March 10, 2022 to July 25 12, 2022, when plaintiff discharged the REGP Defendants due to improper workmanship, lack of 26 attention to detail, failure to supervise workers and failure to report to the job site to complete work under 27 the Contract, MUDWAY proceeded to perform repair work on the Home and act as a contractor 28 purportedly pursuant to the Contract or change orders under the Contract, without any valid contractor’s ___________________________________ 8 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 license being in force, in not only personally performing work under the Contract, but in hiring and 2 supervising the work of employees of REGP or MUDWAY, and hiring subcontractors to perform part 3 of the work. Plaintiff is informed and believes and thereon alleges that GUILLORY did not personally 4 do or supervise any work under the Contract, or hire any employees or subcontractors. 5 23. During the performance of the Contract, MUDWAY had workers perform work under the 6 Contract, whom plaintiff is informed and believes and thereon alleges were not licensed subcontractors, 7 but rather employees of MUDWAY or REGP, and indeed plaintiff was billed by MUDWAY and REGP 8 for, and paid for, the time of these workers, However, plaintiff is informed and believes and thereon 9 alleges that none of the REGP Defendants ever had workers compensation insurance in force for these 10 employees, or had secured a certificate of consent to self-insure from the California Director of Industrial 11 Relations. 12 24. Section 7125 requires as a condition to the continued maintenance of a contractor’s license 13 that the licensee have on file a valid Certificate of Workers’ Compensation Insurance or Certification of 14 Self-Insurance in the licensee’s business name, unless the licensee has no employees. California Labor 15 Code section 3700 provides that every employer in the state shall secure payment of workers 16 compensation to employees by being insured by a insurer duly authorized to write workers compensation 17 insurance in the state, or by securing a certificate of consent to self-insure from the California Director 18 of Industrial Relations. The REGP Defendants were thus legally required to obtain or maintain workers 19 compensation insurance for their employees doing work under the Contract, but did not do so. 20 25. Section 7125.2 provides that failure of a licensee to obtain or maintain workers’ compensation 21 insurance coverage, when required shall result in the automatic suspension of the license by operation 22 of law, on the date such coverage is required to be obtained. That date such coverage is required to be 23 obtain is the first day any employee is hired or does any work. MUDWAY caused workers who were not 24 licensed subcontractors and who were employees of the REGP Defendants performing work under the 25 Contract throughout the Contract. Thus, even if GUILLORY’s individual license were ever otherwise 26 valid for any work under the Contractor (which it was not), any such license became automatically 27 suspended by operation of law during the performance of the Contract. 28 26. Section 7031 provides in relevant part, and with exceptions not here applicable, that: ___________________________________ 9 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 "(a) ... no person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action, or recover in law or equity in any action, in any court of this 2 state for the collection of compensation for the performance of any act or contract where a license is required by this chapter without alleging that they were a duly licensed 3 contractor at all times during the performance of that act or contract ” (emphasis added). 4 27. There was in the Contract an implied covenant that the work to be performed or supervised 5 by the REGP Defendants would be performed with due care, and in accordance with accepted trade 6 standards for good and workmanlike construction, and all applicable building codes. 7 28. Consistent with the fact that MUDWAY was not a licensed contractor and was not 8 supervised by a licensed contractor, the work MUDWAY performed or supervised was improperly and 9 negligently done and defective, and not in accordance with accepted trade standards for good and 10 workmanlike construction and applicable building codes, and was not in accordance with the Contract, 11 and was in breach of the express and implied covenants of the Contract. These defects in workmanship 12 and performance included, without limitation: 13 a. Replacement windows were not properly sized or shimmed; 14 b. No flashing was installed at front entry stairs to wall connection and post penetration; 15 c. Porch cap and sets were not removed to allow flashing and proper water proofing; 16 d. Side rails of entry stairs were not built high enough to allow safety hand rail installation 17 as the height required by the Building Code; 18 e. Piers for the rear deck, which was part of a change order under the Contract, were not 19 properly footed on a 12 inch minimal footing as required by Code. 20 f. No header beam was installed above the garage as needed to support living space above, and 21 there was no proper shear wall bracing around the opening. Further, only a single wall plate was installed, 22 not a double wall plate as is typical. 23 g. The remodel of the lower bathroom was incomplete and poorly designed, and did not allow 24 space for the shower doors to fully open. 25 h. The tile floor installation in the kitchen was left incomplete, even though plaintiff had pre- 26 paid for it; 27 i. No floor joints were installed that extend inward to support bay window in rear bedroom; 28 j. No kick out flashing installed at recessed new gutters in stucco; ___________________________________ 10 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 k. The main electrical panel was undersized; 2 l. The water line is not properly supported or secure in place at front exterior wall; 3 m. The hearth extension at the fireplace was too small; 4 n. No drain was installed under the utility sink; 5 o. No handrails were installed on upper and lower stairwells. 6 29. In the above said period during which MUDWAY performed or supervised work under the 7 Contract, but did not complete the Contract, MUDWAY requested that certain payments be made to 8 REGP, and other payments be made directly to MUDWAY, and plaintiff paid the following compensation 9 under the Contract to the REG Defendants: 10 a. By checks payable to “REG” or “REG CONSTRUCTION,” the sum of $95,725.00, and 11 b. By checks payable to MUDWAY, the sum of $95,007.34, 12 for a total compensation paid by plaintiff under the Contract or change orders made under the Contract 13 of $190,832.34. Certain of these payments include an advance payment for work that was not yet done 14 and has not yet been done under the Contract. 15 30. As a proximate result of the REGP Defendants above-alleged breaches of the Contract and 16 negligence in performance thereof, plaintiff paid moneys to said defendants for work that was not 17 properly performed as required by the Contract, or in the case of certain advance payments not performed 18 at all, the value of work performed by said defendants was far less than the money paid to said defendants, 19 plaintiff will have to pay others to correct said defendants’ faulty work or work uncompleted by 20 defendants, and has been delayed in completion of necessary repairs to the Home, all to plaintiff’s 21 damage in the sum of at least $60,000.00, or a greater sum according to proof at trial. 22 31. Plaintiff has performed all terms, conditions and covenants on his part required to be 23 performed under the Contract, and in any event would be excused from anything not performed by reason 24 of the above-alleged conduct of the REGP Defendants, and the fact that the Contract is unenforceable 25 against plaintiff, because it is in gross violation of the requirements of Section 7159; and because said 26 defendants were not duly licensed at all times (on indeed any time) during the performance of the 27 Contract, and thus under the provisions of section 7031 said defendant were not and are not legally 28 entitled any compensation whatsoever. ___________________________________ 11 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 32. Section 7031 also provides in relevant part, within exceptions not here applicable, that 2 "(b) ... A person who utilizes the services of an unlicensed contractor may bring an action in any court of competent jurisdiction in this state to recover all compensation paid to the 3 unlicensed contractor for performance of any act or contract.” 4 33. As above alleged, the REGP Defendants were not duly licensed at all times , or indeed at any 5 time, during their performance of the Contract, due to their failure to register or be licensed as a 6 partnership or joint venture, the failure of GUILLORY to perform or supervise any work under the 7 Contract, and the automatic suspension of any license, if any there be, by reason by use of employees in 8 performance of the Contract without obtaining or maintaining required workers compensation insurance. 9 34. On August 22, 2022, plaintiff demanded that the REGP Defendants return to him all 10 compensation paid under the Contract, in the sum of $190,832.34, but said defendants have failed and 11 refused return said compensation, or any part thereof. 12 35. California Code of Civil Procedure §1029.8 provides in relevant part that: 13 "(a) Any unlicensed person who causes injury or damage to another person as a result of providing goods or performing services for which a license is required ... shall be liable 14 to the injured person for treble the amount of damages assessed in a civil action in any court having proper jurisdiction. The court may, in itsdiscretion, award all costs and 15 attorney's fees to the injured person if that person prev will ails in the action". ... 16 (d) The additional damages provided for in subdivision (a) shall not exceed ten thousand 17 dollars ($10,000)." 18 36. Plaintiff has, as above alleged, been damaged by the above-alleged actions of the unlicensed 19 REGP Defendants in performing services for which a license is required, in a sum greatly in excess of 20 the maximum additional damages and is therefore entitled to the additional damages of $10,000.00. By 21 reason of said defendants said actions, and said defendants’ failure and refusal to return the compensation 22 paid by plaintiff, or any part thereto, despite his demand, plaintiff has been required to engage an attorney 23 to file and prosecute this action, and incur the costs and fees thereof, and is therefore entitled to an award 24 of all attorney’s fees and costs herein incurred. 25 37. Section 7071.5 provides that a Contractor’s Bond is for the benefit of, among others: 26 “(a) A homeowner contracting for home improvement upon the homeowner's personal family 27 residence damaged as a result of a violation of this chapter [Chapter 9] by the licensee”, and 28 “(c) A person damaged as a result of a willful and deliberate violation of this chapter by the ___________________________________ 12 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 licensee, or by the fraud of the licensee in the execution or performance of a construction contract.” 2 Section 7071.6 provides that for claims brought by beneficiaries specified in subdivision (a) of 3 Section 7071.5, the aggregate liability of the surety is the full amount bond of the bond, and for others 4 the liability is limited to $7,500. 5 38. In the acts and conduct above alleged, the REGP Defendants violated the provisions of 6 Chapter 9 of Division 3 of the Business & Professions Code, and, plaintiff is informed and believes and 7 thereon alleges, did so willfully and deliberately, and were guilty of fraud in the execution or performance 8 of the Contract, including but not limited to in fraudulently inducing plaintiff to enter into, execute and 9 perform the Contract. As above alleged, plaintiff entered in Contract for the home improvement as agent 10 for, and for the benefit of the Owner of the Home. Plaintiff is therefore also entitled to recover from the 11 surety, NORTH RIVER, the entire $15,000.00 penal sum of the Bond. 12 WHEREFORE, plaintiff prays Judgment as hereinafter set forth. 13 SECOND CAUSE OF ACTION 14 (Against all Defendants for Damages for Breach of Contract) 15 39. Plaintiff incorporates by reference, as if fully set forth herein, the preceding paragraphs of 16 this complaint. 17 40. As a proximate result of REGP Defendants above-alleged breaches of the Contract , plaintiff 18 paid moneys to said defendants for work that was not properly performed as required by the Contract, 19 or in the case of certain advance payments not performed at all, the value of work performed by said 20 defendants was far less than the money paid to said defendants, plaintiff will have to pay others to correct 21 said defendants’ faulty work or work uncompleted by defendants, and has been delayed in completion 22 of necessary repairs to the Home, all to plaintiff’s damage in the sum of at least $60,000.00, or a greater 23 sum according to proof at trial. 24 41. By reason said defendants’ status as unlicensed persons, and the said damages to plaintiff 25 thereby caused, plaintiff is also entitled to the additional damages of $10,000.00, and all attorney fees and 26 costs in filing and prosecuting this action, pursuant to the provisions of Code of Civil Procedure §1029.8. 27 42. By reason of the Bond issued by NORTH RIVER, it is also liable for said damages up to 28 the penal sum of $15,000.00. ___________________________________ 13 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 WHEREFORE, plaintiff prays Judgment as hereinafter set forth. 2 THIRD CAUSE OF ACTION 3 (Against all Defendants for Damages for Negligence) 4 43. Plaintiff incorporates by reference, as if fully set forth herein, the preceding paragraphs of 5 this complaint. 6 44. As a proximate result of REGP Defendants above-alleged negligence in the performance of 7 the Contract, plaintiff paid moneys to said defendants for work that was not properly performed as 8 required by the Contract, or in the case of certain advance payments not performed at all, the value of 9 work performed by said defendants was far less than the money paid to said defendants, plaintiff will have 10 to pay others to correct said defendants’ faulty work or work uncompleted by defendants, and has been 11 delayed in completion of necessary repairs to the Home, all to plaintiff’s damage in the sum of at least 12 $60,000.00, or a greater sum according to proof at trial. 13 45. By reason said defendants’ status as unlicensed persons, and the said damages to plaintiff 14 thereby caused, plaintiff is also entitled to the additional damages of $10,000.00, and all attorney fees and 15 costs in filing and prosecuting this action, pursuant to the provisions of Code of Civil Procedure §1029.8. 16 46. By reason of the Bond issued by NORTH RIVER, it is also liable for said damages up to 17 the penal sum of $15,000.00. 18 WHEREFORE, plaintiff prays Judgment as hereinafter set forth. 19 FOURTH CAUSE OF ACTION 20 (Against all Defendants for Damages for Fraud) 21 47. Plaintiff incorporates by reference , as if fully set forth herein, the preceding paragraphs of 22 this complaint. 23 48. In the conduct hereinabove alleged, the REGP Defendants were guilty of fraud in inducing 24 plaintiff to enter into the Contract. Plaintiff did not discover the unlicensed status of said defendants and 25 the fraud practiced on him until after plaintiff had already made all the payments to the REGP Defendants 26 hereinabove alleged. 27 49. As a further part of said defendants fraudulent, malicious and oppressive conduct, on or 28 about June 23, 2022, the REGP Defendants caused a Mechanics Lien to be recorded against the Property, ___________________________________ 14 Complaint for Recovery of Compensation Paid to Unlicensed Contractor, etc. 1 for a sum of $45,000.00 claimed to be due for the work furnished under the Contract. Said claimed lien 2 was improper, invalid, false and fraudulent, in that, among other things: 3 a. No money was then due or unpaid under the Contract, and the REGP Defendants had at that 4 time been paid more than the value of any work they performed under the Contract; 5 b. The REGP Defendants had at that time not completed work under the Contract, and had not 6 yet been discharged, so that the lien was additionally prematurely filed in violation of Civil Code section 7 8412; 8 c. Because the REGP defendants were not duly licensed at all times, and indeed at any time, 9 during the performance of the Contract, Section 7031 prohibited the REGP Defendants from recovering 10 any compensation under the Contract. 11 50. By reason of the fraud practiced on plaintiff, and the fraudulent inducement of plaintiff to 12 enter into the Contract, plaintiff paid moneys to said defendants for work that was not properly performed 13 as required by the Contract, or in the case of certain advance payments not performed at all, the value of 14 work performed by said defendants was far less than the money paid to said defendants, plaintiff will have 15 to pay others to correct said defendants’ faulty work or work uncompleted by defendants, and has been 16