Preview
1 R. Gregory Amundson (State Bar No. 79710)
ramundson@wshblaw.com
2 Sheila E. Fix (State Bar No. 138613)
sfix@wshblaw.com
3 S. Joanna Dyriam (State Bar No. 320995)
sdyriam@wshblaw.com
4 WOOD, SMITH, HENNING & BERMAN LLP
2815 Townsgate Road, Suite 215
5 Thousand Oaks, California 91361-5827, United States
Phone: (820) 333-4250 ♦ Fax: (820) 333-4249
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Attorneys for Defendants, CLEARVIEW PROPERTY SERVICES, INC. and CHRISTOPHER
7 HULME
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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COUNTY OF SANTA BARBARA, COOK DIVISION
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THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
11
WOOD, SMITH, HENNING & BERMAN LLP
THOMAS KOPITNIK, an individual, Case No. 21CV02266
TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249
12 [Assigned for All Purposes to Judge James F. Rigali, Dept. 2]
2815 TOWNSGATE ROAD, SUITE 215
Plaintiff,
13 DEFENDANTS CLEARVIEW
Attorneys at Law
v. PROPERTY SERVICES, INC. AND
14 CHRISTOPHER HULME'S DEMURRER
CLEARVIEW PROPERTY SERVICES, INC. TO PLAINTIFF'S SECOND AMENDED
15 a California Corporation; CHRISTOPHER COMPLAINT; MEMORANDUM OF
HULME, and individual; and DOES 1 POINTS AND AUTHORITIES; AND
16 THROUGH 10 [PROPOSED] ORDER
17 Defendant. [Filed concurrently with Request for
Judicial Notice and Motion to Strike]
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DATE: January 3, 2023
19 TIME: 8:30 a.m.
DEPT.: 2
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Action Filed: 6/8/21
21 Trial Date: 4/24/23
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TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
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PLEASE TAKE NOTICE that on (DATE) at 8:30 a.m., or soon thereafter as the matter may be
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heard in Department 2 of the above-entitled court, located at 312-C East Cook Street, Santa Maria, CA
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93454, Defendants, CLEARVIEW PROPERTY SERVICES, INC. and CHRISTOPHER HULME
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(hereinafter "Defendants") will and hereby do demur to the First Cause of action for Disgorgement
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pled in Plaintiff, THOMAS KOPITNIK's Second Amended Complaint. The Demurrer is based upon
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DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO
PLAINTIFF'S SECOND AMENDED COMPLAINT
1 the following grounds:
2 DEMURRER TO PLAINTIFF'S FIRST CAUSE OF ACTION
3 1. Defendants demur to the first cause of action for disgorgement under Business and
4 Professions Code Section 7031 on the ground that it is barred by the applicable statute of
5 limitations, as set forth in Code of Civil Procedure section 340(a).
6 WHEREFORE, Defendants respectfully request that their demurrer as to the First Cause of
7 Action be sustained without leave to amend.
8 This Demurrer is based on this Notice of Demurrer and Demurrer, the Memorandum of Points
9 and Authorities filed in support thereof, the Declaration of S. Joanna Dyriam and exhibits in support
10 thereof, the Request for Judicial Notice filed concurrently herewith, the records and file herein,
THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
11 matters of which the Court may take judicial notice, and such other evidence as may be presented
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249
12 prior to or at the hearing on the Demurrer.
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13 DATED: November 28, 2022 WOOD, SMITH, HENNING & BERMAN LLP
Attorneys at Law
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By:
16 R. GREGORY AMUNDSON
SHEILA E. FIX
17 S. JOANNA DYRIAM
Attorneys for Defendants, CLEARVIEW PROPERTY
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SERVICES, INC. and CHRISTOPHER HULME
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DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO
PLAINTIFF'S SECOND AMENDED COMPLAINT
1 MEMORANDUM OF POINTS AND AUTHORITIES
2 I. INTRODUCTION
3 This action arises out of a June 28, 2019 home improvement contract between Plaintiff
4 Thomas Kopitnik ("Plaintiff") and Defendant Clearview Property Services, Inc. ("Clearview"), by and
5 through its President and CEO, Defendant Christopher Hulme ("Hulme"), for landscaping services at
6 Plaintiff's ranch in Buellton, California. The Contract identified Clearview's license number and
7 included a "Statutory Notice" provision titled "Information about the Contractors State License Board
8 (CSLB) which advised Plaintiff that the CSLB licenses and regulates construction contractors, that
9 Plaintiff was to use only licensed contractors, to contact the CSLB for information about the licensed
10 contractor being considered and provided the contact information and mailing address for the CSLB.
THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
11 (See Ex. B to Second Amended Complaint ("SAC"), pg. 1 and ¶28e.) Clearview began its work on
WOOD, SMITH, HENNING & BERMAN LLP
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12 Plaintiff's ranch in July 2019 through October 10, 2020, when Plaintiff ordered Clearview to stop
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13 working on his ranch. (Plaintiff's SAC, ¶¶34, 40.)
Attorneys at Law
14 Plaintiff filed his Complaint on June 8, 2021, which fails to state a cause of action for
15 disgorgement under Business and Professions Code Section 7031 and fails to list disgorgement as a
16 relief in the Prayer. (Request for Judicial Notice ("RJN"), ¶1.) The Complaint also alleges that
17 Clearview was a licensed contractor (License No. 995590) with the Contractors State License Board
18 of the California Department of Consumer Affairs. (Id.)
19 Plaintiff subsequently filed his First Amended Complaint ("FAC") on November 1, 2021,
20 which once again fails to state a cause of action for disgorgement under Business and Professions
21 Code Section 7031 and fails to list disgorgement as a relief in the Prayer. (RJN, ¶2.) Specifically, the
22 FAC alleges the following causes of action: (1) Rescission of Contract; (2) Breach of Contract as to
23 Defendant Clearview; (3) Negligence as to Defendant Clearview; (4) Fraud in the Inducement as to
24 Defendants Clearview and Hulme; (5) Negligent Misrepresentation as to Defendants Clearview and
25 Hulme; and (6) Unfair Business Practices under business & professions code section 17200 et seq. as
26 to Defendants Clearview and Hulme. (Id.) However, with respect to Plaintiff's cause of action for
27 Rescission, Plaintiff did not specifically plead that he was seeking rescission of the contract based on
28 Clearview's alleged failure to have secured a contractor's license prior to commencing work on
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DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO
PLAINTIFF'S SECOND AMENDED COMPLAINT
1 Plaintiff's ranch. (Id.) To the contrary, Plaintiff's FAC alleges, yet again, that Clearview was a
2 licensed contractor prior to entering into the contract with Plaintiff. (Id.)
3 Following the Court's denial of Plaintiff's motion for summary adjudication as to the first cause
4 of action for rescission in the FAC for the very reason stated above, that is, due to Plaintiff's failure to
5 specifically plead that Clearview failed to secure a contractor's license prior to commencing work on
6 Plaintiff's ranch, on or about October 18, 2022, Plaintiff was granted leave to file a Second Amended
7 Complaint ("SAC"). (RJN, ¶¶ 3-5.)
8 On October 27, 2022, Plaintiff filed his SAC, alleging the following causes of action:
9 (1) Disgorgement under business & professions code section 7031; (2) Rescission; (3) Breach of
10 Contract; (4) Negligence; (5) Fraud in the Inducement; (6) Negligent Misrepresentation; and (7)
THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
11 Unfair Business Practices under business & professions code section 17200 et seq. Specifically, the
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12 SAC now pleads Clearview's alleged failure to secure a contractor's license prior to commencing work
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13 on Plaintiff's ranch as grounds for his disgorgement cause of action.
Attorneys at Law
14 As discussed more fully below, Plaintiff's first cause of action for disgorgement in the SAC is
15 barred by the applicable statute of limitations and Plaintiff cannot allege facts to state a cause of
16 action. Thus, this Demurrer should be sustained without leave to amend.
17 II. STANDARD OF REVIEW
18 A demurrer serves to test the legal sufficiency of a complaint by raising issues of law. Schmidt
19 v. Foundation Health (1995) 35 Cal.App.4th 1702, 1706. A demurrer can be used to challenge defects
20 that appear on the face of the pleading under attack or from matters outside the pleading that are
21 judicially noticeable. Blank v. Kirwan (1985) 39 Cal.3d 311, 318. Although the facts as alleged in the
22 complaint are deemed admitted, the contentions, deductions or conclusions of fact or law are not. Id.
23 The burden is on the plaintiff to demonstrate how the complaint can be amended to state a valid cause
24 of action. Id.
25 Furthermore, a demurrer lies where the Complaint discloses that the plaintiff's claim is barred
26 by the applicable statute of limitations. Saliter v. Pierce Bros. Mortuaries (1978) 81 Cal.App.3d 292,
27 300; see also, Iverson, Yoakum, Papiano & Hatch v. Berwald (1999) 76 Cal.App.4th 990, 995.
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DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO
PLAINTIFF'S SECOND AMENDED COMPLAINT
1 III. PLAINTIFF’S FIRST CAUSE OF ACTION FOR DISGORGEMENT IS BARRED
2 BY THE APPLICABLE STATUTE OF LIMITATIONS
3 A. A One-Year Statute Of Limitations Applies To Disgorgement Claims Under
4 Code Of Civil Procedure Section 340(A)
5 A demurrer lies where the dates alleged in the complaint show clearly and affirmatively that
6 the action is barred by the statute of limitations. Geneva Towers Ltd. Partnership v. City of San
7 Francisco (2003) 29 Cal.4th 769, 781. The statute of limitations bar is grounds for a general
8 demurrer. Williams v. International Longshoremen's & Warehousemen's Union, Local No. 10 (1959)
9 172 Cal.App.2d 84, 87.
10 California law is clear on the statute of limitations for disgorgement actions under Business
THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
11 and Professions Code Section 7031. Section 7031(b) states in pertinent part: "… a person who utilizes
WOOD, SMITH, HENNING & BERMAN LLP
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12 the services of an unlicensed contractor may bring an action in any court … to recover all
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13 compensation paid to the unlicensed contractor for performance of any act or contract." (Bus. & Prof.
Attorneys at Law
14 Code, § 7031(b).) A cause of action for "disgorgement is complete when an unlicensed contractor
15 completes or ceases performance of the act or contract at issue." (See Eisenberg Village etc. v. Suffolk
16 Construction Co. (2020) 53 Cal.App.5th 1201, 1214).
17 California Code of Civil Procedure Section 340(a) provides that a one-year statute of
18 limitations is applicable to “[a]n action upon a statute for a penalty or forfeiture, if the action is given
19 to an individual, or to an individual and the state, except if the statute imposing it prescribes a
20 different limitation." (Emphasis added.) (Code Civ. Proc. § 340(a); see also Eisenberg, supra, at
21 1211.) Thus, Claims for disgorgement of compensation paid to an unlicensed contractor accrue upon
22 completion or cessation of performance of act or contract at issue and are not subject to tolling under
23 delayed discovery rule. (Emphasis added.) ((Id. See also, San Francisco CDC LLC v. Webcor
24 Construction, L.P. (2021) 62 Cal.App.5th 266, 279.)
25 "[T]he disgorgement provided in section 7031(b) is a penalty. It deprives the contractor of any
26 compensation for labor and materials used in the construction while allowing the plaintiff to retain the
27 benefits of that construction. And, because the plaintiff may bring a section 7031(b) disgorgement
28 action regardless of any fault in the construction by the unlicensed contractor, it falls within the
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DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO
PLAINTIFF'S SECOND AMENDED COMPLAINT
1 Supreme Court's definition of a penalty: "a recovery ‘"without reference to the actual damage
2 sustained."’ (Eisenberg, at 1214; see also Clark v. Superior Court (2010) 50 Cal.4th 605, 614.)
3 "The object of restitution is to restore the status quo by returning to the plaintiff funds in which
4 he or she has an ownership interest." (San Francisco CDC LLC, supra, at 279; Clark, supra, at 614.) In
5 contrast, "[d]isgorgement is not intended to “restore the status quo” but rather to penalize the
6 contractor by depriving him or her “of any compensation for labor and materials used in the
7 construction while allowing the plaintiff to retain the benefits of that construction.” (San Francisco
8 CDC LLC, supra, at 279; Eisenberg, supra, at 1212.) Therefore, the one-year statute of limitations
9 under Code of Civil Procedure Section 340(a) applies to disgorgement claims brought under section
10 7031(b). (Eisenberg, at 1212.)
THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
11 Here, as stated above, Plaintiff ordered Clearview to stop working on his ranch on October 10,
WOOD, SMITH, HENNING & BERMAN LLP
TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249
12 2020. (SAC, ¶¶34, 40.) Thus, Plaintiff's cause of action for disgorgement, based on Clearview's
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13 alleged failure to secure a contractor's license prior to commencing work on Plaintiff's ranch, accrued
Attorneys at Law
14 on or about October 10, 2020 and expired on or about October 10, 2021, pursuant to the one-year
15 statute of limitations set forth in California Code of Civil Procedure Section 340(a). Yet, Plaintiff
16 failed to raise a claim for disgorgement until just over two years after this cause of action accrued.
17 B. The Relation Back Doctrine Is Inapplicable Since Plaintiff's Prior Complaints
18 Were Devoid Of Any Allegations And/Or Facts Regarding Clearview's Alleged
19 Improper Licensing Status
20 Defendants anticipate that Plaintiff will claim that since he alleged in his original Complaint
21 that he was informed and believed Clearview was a licensed contractor, that is sufficient notice of an
22 allegation regarding Clearview's improper licensing status such that the relation back doctrine would
23 apply to Plaintiff's new cause of action for disgorgement. (Declaration of S. Joanna Dyriam ("Dyriam
24 Decl."), ¶3, Ex. B.) However, "[j]ust as a plaintiff who changes the essential facts upon which
25 recovery is sought is not entitled to the benefits of the relation-back doctrine, so too a plaintiff who
26 files a complaint containing no operative facts at all cannot subsequently amend the pleading to allege
27 facts and a theory of recovery for the first time and claim the amended complaint should be deemed
28 filed as of the date of the original, wholly defective complaint." Davaloo v. State Farm Ins. Co. (2005)
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DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO
PLAINTIFF'S SECOND AMENDED COMPLAINT
1 135 Cal.App.4th 409, 415.
2 Here, neither Plaintiff's original Complaint nor his FAC specifically raises any allegations
3 regarding Clearview's alleged improper licensing status as grounds for rescission of the contract, let
4 alone disgorgement, and they fail to list disgorgement as a relief in the Prayer. (RJN, ¶ ¶ 1-2.) In fact,
5 not only do both the Complaint and the FAC allege that Clearview was a licensed contractor, but it
6 was not until Plaintiff filed a Motion for Summary Adjudication ("MSA") on or about June 14, 2022,
7 more than eight (8) months after the statute of limitations lapsed, that he first raised the issue of
8 disgorgement under Business and Professions Code Section 7031. (RJN, ¶¶ 1-5.) It should be noted
9 that this Court itself denied Plaintiff's MSA on the ground that Plaintiff failed to specifically plead that
10 Clearview failed to secure a contractor's license prior to commencing work on Plaintiff's ranch.
THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
11 ((RJN, ¶¶ 4-5.) Thus, it cannot be disputed that Plaintiff failed to specifically and properly plead facts
WOOD, SMITH, HENNING & BERMAN LLP
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12 regarding Clearview's alleged improper contractor's license prior to the filing of Plaintiff's SAC, over
2815 TOWNSGATE ROAD, SUITE 215
13 two years after his cause of action for disgorgement accrued. Accordingly, since Plaintiff alleged
Attorneys at Law
14 precisely the contrary, that is, that Clearview was licensed, in his Complaint and FAC, the relation
15 back doctrine does not apply.
16 C. The One-Year Statute Of Limitations Is Not Subject To Tolling Under The
17 Delayed Discovery Rule
18 Defendants also anticipate that Plaintiff will attempt to rely on the discovery rule and address
19 that here. Under the "discovery rule," accrual of a qualifying cause of action is postponed until a
20 plaintiff discovers, or has reason to discover, the cause of action, until, that is, the plaintiff at least
21 suspects, or has reason to suspect, a factual basis for its elements. (Eisenberg, at 1213.) The delayed
22 discovery rule is "a judicially recognized exception to the strict operation of the statute of limitations."
23 Saliter, supra, 81 Cal.App.3d at 296. The rule is a "special defense" to the statute of limitations which
24 delays accrual of the statute of limitations until "a plaintiff has a suspicion of wrongdoing, and
25 therefore an incentive to sue . . . ." Rivas v. Safety-Kleen (2002) 98 Cal.App.4th 218, 225.
26 However, more importantly and as stated above, the law is crystal clear that the discovery
27 rule does not apply to claims under provision allowing recovery of all compensation paid to an
28 unlicensed contractor. (Emphasis added.) (Eisenberg, at 1211. See also, San Francisco CDC LLC, at
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DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO
PLAINTIFF'S SECOND AMENDED COMPLAINT
1 279.) A plaintiff's ignorance of a cause of action ordinarily does not delay the running of a statute of
2 limitations. (Eisenberg, at 1213.) "Where a party is aware of facts which would make a reasonably
3 prudent person suspicious, the means of knowledge are the equivalent of knowledge." Helfer v.
4 Hubert (1962) 208 Cal.App.2d 22, 31 (citing Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412).
5 Further, "as the means of knowledge are equivalent to knowledge, if it appears that the plaintiff had
6 notice or information of circumstances which would put him on an inquiry which, if followed,
7 would lead to knowledge, or that the facts were presumptively within his knowledge, he will be
8 deemed to have had actual knowledge of these facts[.]" (Emphasis added.) Price v. Mason-
9 McDuffie Co. (1942) 50 Cal.App.2d 320, 324 (quoting Lady Washington C. Co. v. Wood (1896) 113
10 Cal. 482, 487). Furthermore, Civil Code section 19 provides that "[e]very person who has actual
THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
11 notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, has
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12 constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he might have
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13 learned such fact."
Attorneys at Law
14 In Eisenberg, the Plaintiff asserted a section 7031(b) claim for disgorgement against the
15 defendant five years after the defendant completed construction of the Plaintiff's assisted living
16 facility. (Eisenberg, at 1203.) The trial court granted the defendant's motion for summary adjudication
17 of the claim, finding that Code of Civil Procedure section 340, subdivision (a), the one-year statute of
18 limitations applicable to penalties or forfeitures, applied and that the Plaintiff knew or easily could
19 have discovered the facts giving rise to the claim more than one year before it filed its claim. Id. On
20 appeal by the Plaintiff, the appellate Court affirmed that the discovery rule does not apply to the one-
21 year statute of limitations to disgorgement claims, finding that the Plaintiff had entered into a contract
22 with the defendant which provided the defendant's California contractor's license number, and
23 included a provision entitled "Contractor's License" which stated that "contractors are required by law
24 to be licensed and are regulated by the Contractors’ State License Board (the Board or CSLB), which
25 has jurisdiction to investigate complaints" … and that "any questions regarding a contractor may be
26 referred to the registrar of the CSLB, and provided the mailing address for doing so," and thus,
27 Plaintiff had a duty to investigate whether the contractor was properly licensed. (Id., at 1203-1214.)
28 Similarly, in the instant matter, the Contract between Plaintiff and Clearview identified
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DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO
PLAINTIFF'S SECOND AMENDED COMPLAINT
1 Clearview's license number and included a "Statutory Notice" provision titled "Information about the
2 Contractors State License Board (CSLB) which advised Plaintiff that the CSLB licenses and regulates
3 construction contractors, that Plaintiff was to use only licensed contractors, to contact the CSLB for
4 information about the licensed contractor being considered and provided the contact information,
5 website and mailing address for the CSLB. (See Ex. B to SAC, pg. 1 and ¶28e.) Thus, Plaintiff had
6 notice that he was to only use a licensed contractor for his landscaping project at his ranch and had
7 every opportunity to contact the CSLB to investigate whether Clearview was properly licensed to
8 perform the landscaping work prior to his signing of the contract and/or before Clearview began its
9 work at Plaintiff's ranch.
10 Furthermore, Plaintiff had free access to up-to-date licensing information relating to Clearview
THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
11 maintained by the CSLB on the CSLB's website, which is public record, and which Plaintiff could
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12 have easily looked up to verify Clearview's licensing status prior to the commencement of Clearview's
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13 work, which Plaintiff failed to do. Plaintiff knew or easily could have discovered the facts giving rise
Attorneys at Law
14 to his disgorgement claim well more than one year before he filed the claim. Therefore, Plaintiff
15 cannot now avail himself of this rule because he did have notice or information of circumstances
16 which should have put him on an inquiry regarding Clearview's licensing status at the outset.
17 Simply put, Plaintiff is barred by the statute of limitations because he had sufficient facts to put
18 him on notice of Clearview's alleged improper licensing status prior to his signing of his Contract with
19 Clearview, and undoubtedly, prior to the expiration of the applicable one-year statute of limitations on
20 his disgorgement claim.
21 IV. LEAVE TO AMEND SHOULD BE DENIED
22 The law regarding leave to amend upon Demurrer is well settled that "[i]f there is a reasonable
23 possibility that the defect in a complaint can be cured by amendment, it is an abuse of discretion to
24 sustain a demurrer without leave to amend. The burden is on the plaintiff, however, to demonstrate
25 the manner in which the complaint might be amended." Assn. Community Organizations for Reform
26 Now v. State of California (1995) 41 Cal.App.4th 298 (quoting Hendy v. Losse (1991) 54 Cal.3d 723).
27 Hence, the corollary is also true, that where the complaint shows upon its face that there is no
28 reasonable possibility to cure the defect, the Court should deny leave to amend.
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DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO
PLAINTIFF'S SECOND AMENDED COMPLAINT
1 Plaintiff cannot cure the defect in his SAC as his claim for disgorgement is barred by the
2 applicable statute of limitations. As such, leave to amend should be denied.
3 V. CONCLUSION
4 Based on the foregoing, Defendants respectfully request that the Court sustain this Demurrer
5 as to Plaintiff's First Cause of Action for Disgorgement in the SAC, without leave to amend.
6 DATED: November 28, 2022 WOOD, SMITH, HENNING & BERMAN LLP
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By:
9 R. GREGORY AMUNDSON
SHEILA E. FIX
10 S. JOANNA DYRIAM
THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
Attorneys for Defendants, CLEARVIEW PROPERTY
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WOOD, SMITH, HENNING & BERMAN LLP
SERVICES, INC. and CHRISTOPHER HULME
TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249
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PLAINTIFF'S SECOND AMENDED COMPLAINT
1 DECLARATION OF S. JOANNA DYRIAM
2 I, S. Joanna Dyriam, declare and state under penalty of perjury as follows:
3 1. I am an associate at the law firm of Wood, Smith, Henning & Berman, LLP, attorneys
4 for Defendants, CLEARVIEW PROPERTY SERVICES, INC. and CHRISTOPHER HULME
5 ("Defendants"). I am an attorney at law duly admitted to practice before the courts of the State of
6 California. This Declaration is based upon my personal knowledge, except as to those matters stated
7 on information and belief and, as to those matters, I believe them to be true. If called upon as a
8 witness, I would and could competently testify as to the facts set forth herein.
9 2. On November 15, 2022, my office emailed a meet and confer correspondence to
10 Plaintiff's counsel asserting Defendants' legal grounds for objecting to Plaintiff's first cause of action
THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
11 for disgorgement and Defendants' contemplated demurrer and motion to strike this cause of action and
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12 its associated prayer for relief, and invited Plaintiff's counsel to discuss these issues, pursuant to the
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13 requirements of California Code of Civil Procedure §§ 430.41 and 435.5. Attached hereto as Exhibit
Attorneys at Law
14 "A" is a true and correct copy of this meet and confer correspondence.
15 3. On November 21, 2022, Plaintiff's counsel, Mr. Jason Anderson, emailed my office a
16 written response to Defendants' meet and confer correspondence providing his position with respect to
17 Defendants' arguments pertaining to the first cause of action for disgorgement pled against
18 Defendants. Attached hereto as Exhibit "B" is a true and correct copy of this response.
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PLAINTIFF'S SECOND AMENDED COMPLAINT
1 4. I am informed by Mr. R. Gregory Amundson of my office and based upon that
2 information believe that, after evaluating Mr. Anderson's response, on November 23, 2022, Mr.
3 Amundson left a voicemail for Mr. Anderson to discuss the issues raised in Defendants' November
4 15, 2022 meet and confer correspondence, however, Mr. Amundson did not hear back from Mr.
5 Anderson.
6 I declare under penalty of perjury under the laws of the State of California that the foregoing is
7 true and correct.
8 Executed November 28, 2022 at Thousand Oaks, California.
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10 S. Joanna Dyriam
THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES
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26881839.1:05819-0110 -10- Case No. 21CV02266
DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO
PLAINTIFF'S SECOND AMENDED COMPLAINT
EXHIBIT A
S. Joanna Dyriam
2815 Townsgate Road • Suite 215 • Thousand Oaks, CA • 91361-5827 direct dial (820) 333-4206
tel (820) 333-4250 • fax (820) 333-4249 • wshblaw.com email sdyriam@wshblaw.com
refer to 05819-0110
November 15, 2022
VIA ELECTRONIC MAIL ONLY
Jason H. Anderson
Andrew Mason
Stradling Yocca Carlson & Rauth, APC
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660-6422
janderson@stradlinglaw.com
amason@stradlinglaw.com
KMilanowski@stradlinglaw.com
kkirkpatrick@stradlinglaw.com
Re: Kopitnik v. Clearview Property Services, Inc., et al.
Our Clients: Clearview Property Services, Inc.; and
Christopher Hulme
Case No.: 21CV02266
Dear Counsel:
Please allow this correspondence to serve as our good faith attempt to meet and confer
with you regarding the First Cause of Action for Disgorgement pursuant to Business and
Professions Code Section 7031 in your client, Plaintiff Dr. Kopitnik's Second Amended
Complaint, prior to filing a Demurrer and Motion to Strike, as required by Code of Civil
Procedure §§ 430.41 and 435.5.
While Business and Professions Code Section 7031(b) provides for a disgorgement
action against an unlicensed contractor, California Code of Civil Procedure Section
340(a) provides that a one-year statute of limitations is applicable to “[a]n action upon
a statute for a penalty or forfeiture, if the action is given to an individual, or to an
individual and the state, except if the statute imposing it prescribes a different limitation."
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WOOD • SMITH • HENNING • BERMAN
Jason H. Anderson
Andrew Mason
Stradling Yocca Carlson & Rauth, APC
Our File No.: 05819-0110
November 15, 2022
Page 2
Thus, claims for disgorgement of compensation paid to an unlicensed contractor accrue
upon completion or cessation of performance of act or contract at issue and are not
subject to tolling under delayed discovery rule. (Id. See also, San Francisco CDC LLC v.
Webcor Construction, L.P. (2021) 62 Cal.App.5th 266, 279.)
"[T]he disgorgement provided in section 7031(b) is a penalty. It deprives the contractor
of any compensation for labor and materials used in the construction while allowing the
plaintiff to retain the benefits of that construction. And, because the plaintiff may bring a
section 7031(b) disgorgement action regardless of any fault in the construction by the
unlicensed contractor, it falls within the Supreme Court's definition of a penalty: "a
recovery ‘"without reference to the actual damage sustained."’ (Eisenberg Village etc. v.
Suffolk Construction Co. (2020) 53 Cal.App.5th 1201, 1214; see also Clark v. Superior
Court (2010) 50 Cal.4th 605, 614.) Therefore, the one-year statute of limitations under
Code of Civil Procedure Section 340(a) applies to disgorgement claims brought under
section 7031(b). (Eisenberg, at 1212.)
As you are aware, Plaintiff ordered Clearview to stop its work at his ranch on or about
October 13, 2020. Thus, Plaintiff's cause of action for disgorgement accrued on or about
October 13, 2020 and expired on or about October 13, 2021. Yet, Plaintiff alleges a
disgorgement cause of action for the first time in his Second Amended Complaint filed
on October 26, 2022, more than one year after the applicable statute of limitations
lapsed. Thus, Plaintiff has failed to bring a timely cause of action for disgorgement
against our clients.
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WOOD • SMITH • HENNING • BERMAN
Jason H. Anderson
Andrew Mason
Stradling Yocca Carlson & Rauth, APC
Our File No.: 05819-0110
November 15, 2022
Page 3
Based on the above, we plan to file a Demurrer to the Second Amended Complaint as
to the First Cause of Action for Disgorgement pursuant to Business and Professions
Code Section 7031, along with a Motion to Strike the Prayer for Relief for disgorgement
of all compensation paid to Clearview. We would prefer not to seek court intervention,
however. Thus, please advise our office of whether you would dismiss this cause of
action. Please contact us should you wish to discuss our clients' proposed Demurrer
Preview
1 R. Gregory Amundson (State Bar No. 79710) ramundson@wshblaw.com 2 Sheila E. Fix (State Bar No. 138613) sfix@wshblaw.com 3 S. Joanna Dyriam (State Bar No. 320995) sdyriam@wshblaw.com 4 WOOD, SMITH, HENNING & BERMAN LLP 2815 Townsgate Road, Suite 215 5 Thousand Oaks, California 91361-5827, United States Phone: (820) 333-4250 ♦ Fax: (820) 333-4249 6 Attorneys for Defendants, CLEARVIEW PROPERTY SERVICES, INC. and CHRISTOPHER 7 HULME 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF SANTA BARBARA, COOK DIVISION 10 THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES 11 WOOD, SMITH, HENNING & BERMAN LLP THOMAS KOPITNIK, an individual, Case No. 21CV02266 TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 [Assigned for All Purposes to Judge James F. Rigali, Dept. 2] 2815 TOWNSGATE ROAD, SUITE 215 Plaintiff, 13 DEFENDANTS CLEARVIEW Attorneys at Law v. PROPERTY SERVICES, INC. AND 14 CHRISTOPHER HULME'S DEMURRER CLEARVIEW PROPERTY SERVICES, INC. TO PLAINTIFF'S SECOND AMENDED 15 a California Corporation; CHRISTOPHER COMPLAINT; MEMORANDUM OF HULME, and individual; and DOES 1 POINTS AND AUTHORITIES; AND 16 THROUGH 10 [PROPOSED] ORDER 17 Defendant. [Filed concurrently with Request for Judicial Notice and Motion to Strike] 18 DATE: January 3, 2023 19 TIME: 8:30 a.m. DEPT.: 2 20 Action Filed: 6/8/21 21 Trial Date: 4/24/23 22 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: 23 PLEASE TAKE NOTICE that on (DATE) at 8:30 a.m., or soon thereafter as the matter may be 24 heard in Department 2 of the above-entitled court, located at 312-C East Cook Street, Santa Maria, CA 25 93454, Defendants, CLEARVIEW PROPERTY SERVICES, INC. and CHRISTOPHER HULME 26 (hereinafter "Defendants") will and hereby do demur to the First Cause of action for Disgorgement 27 pled in Plaintiff, THOMAS KOPITNIK's Second Amended Complaint. The Demurrer is based upon 28 26881839.1:05819-0110 -1- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT 1 the following grounds: 2 DEMURRER TO PLAINTIFF'S FIRST CAUSE OF ACTION 3 1. Defendants demur to the first cause of action for disgorgement under Business and 4 Professions Code Section 7031 on the ground that it is barred by the applicable statute of 5 limitations, as set forth in Code of Civil Procedure section 340(a). 6 WHEREFORE, Defendants respectfully request that their demurrer as to the First Cause of 7 Action be sustained without leave to amend. 8 This Demurrer is based on this Notice of Demurrer and Demurrer, the Memorandum of Points 9 and Authorities filed in support thereof, the Declaration of S. Joanna Dyriam and exhibits in support 10 thereof, the Request for Judicial Notice filed concurrently herewith, the records and file herein, THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES 11 matters of which the Court may take judicial notice, and such other evidence as may be presented WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 prior to or at the hearing on the Demurrer. 2815 TOWNSGATE ROAD, SUITE 215 13 DATED: November 28, 2022 WOOD, SMITH, HENNING & BERMAN LLP Attorneys at Law 14 15 By: 16 R. GREGORY AMUNDSON SHEILA E. FIX 17 S. JOANNA DYRIAM Attorneys for Defendants, CLEARVIEW PROPERTY 18 SERVICES, INC. and CHRISTOPHER HULME 19 20 21 22 23 24 25 26 27 28 26881839.1:05819-0110 -2- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT 1 MEMORANDUM OF POINTS AND AUTHORITIES 2 I. INTRODUCTION 3 This action arises out of a June 28, 2019 home improvement contract between Plaintiff 4 Thomas Kopitnik ("Plaintiff") and Defendant Clearview Property Services, Inc. ("Clearview"), by and 5 through its President and CEO, Defendant Christopher Hulme ("Hulme"), for landscaping services at 6 Plaintiff's ranch in Buellton, California. The Contract identified Clearview's license number and 7 included a "Statutory Notice" provision titled "Information about the Contractors State License Board 8 (CSLB) which advised Plaintiff that the CSLB licenses and regulates construction contractors, that 9 Plaintiff was to use only licensed contractors, to contact the CSLB for information about the licensed 10 contractor being considered and provided the contact information and mailing address for the CSLB. THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES 11 (See Ex. B to Second Amended Complaint ("SAC"), pg. 1 and ¶28e.) Clearview began its work on WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 Plaintiff's ranch in July 2019 through October 10, 2020, when Plaintiff ordered Clearview to stop 2815 TOWNSGATE ROAD, SUITE 215 13 working on his ranch. (Plaintiff's SAC, ¶¶34, 40.) Attorneys at Law 14 Plaintiff filed his Complaint on June 8, 2021, which fails to state a cause of action for 15 disgorgement under Business and Professions Code Section 7031 and fails to list disgorgement as a 16 relief in the Prayer. (Request for Judicial Notice ("RJN"), ¶1.) The Complaint also alleges that 17 Clearview was a licensed contractor (License No. 995590) with the Contractors State License Board 18 of the California Department of Consumer Affairs. (Id.) 19 Plaintiff subsequently filed his First Amended Complaint ("FAC") on November 1, 2021, 20 which once again fails to state a cause of action for disgorgement under Business and Professions 21 Code Section 7031 and fails to list disgorgement as a relief in the Prayer. (RJN, ¶2.) Specifically, the 22 FAC alleges the following causes of action: (1) Rescission of Contract; (2) Breach of Contract as to 23 Defendant Clearview; (3) Negligence as to Defendant Clearview; (4) Fraud in the Inducement as to 24 Defendants Clearview and Hulme; (5) Negligent Misrepresentation as to Defendants Clearview and 25 Hulme; and (6) Unfair Business Practices under business & professions code section 17200 et seq. as 26 to Defendants Clearview and Hulme. (Id.) However, with respect to Plaintiff's cause of action for 27 Rescission, Plaintiff did not specifically plead that he was seeking rescission of the contract based on 28 Clearview's alleged failure to have secured a contractor's license prior to commencing work on 26881839.1:05819-0110 -1- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT 1 Plaintiff's ranch. (Id.) To the contrary, Plaintiff's FAC alleges, yet again, that Clearview was a 2 licensed contractor prior to entering into the contract with Plaintiff. (Id.) 3 Following the Court's denial of Plaintiff's motion for summary adjudication as to the first cause 4 of action for rescission in the FAC for the very reason stated above, that is, due to Plaintiff's failure to 5 specifically plead that Clearview failed to secure a contractor's license prior to commencing work on 6 Plaintiff's ranch, on or about October 18, 2022, Plaintiff was granted leave to file a Second Amended 7 Complaint ("SAC"). (RJN, ¶¶ 3-5.) 8 On October 27, 2022, Plaintiff filed his SAC, alleging the following causes of action: 9 (1) Disgorgement under business & professions code section 7031; (2) Rescission; (3) Breach of 10 Contract; (4) Negligence; (5) Fraud in the Inducement; (6) Negligent Misrepresentation; and (7) THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES 11 Unfair Business Practices under business & professions code section 17200 et seq. Specifically, the WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 SAC now pleads Clearview's alleged failure to secure a contractor's license prior to commencing work 2815 TOWNSGATE ROAD, SUITE 215 13 on Plaintiff's ranch as grounds for his disgorgement cause of action. Attorneys at Law 14 As discussed more fully below, Plaintiff's first cause of action for disgorgement in the SAC is 15 barred by the applicable statute of limitations and Plaintiff cannot allege facts to state a cause of 16 action. Thus, this Demurrer should be sustained without leave to amend. 17 II. STANDARD OF REVIEW 18 A demurrer serves to test the legal sufficiency of a complaint by raising issues of law. Schmidt 19 v. Foundation Health (1995) 35 Cal.App.4th 1702, 1706. A demurrer can be used to challenge defects 20 that appear on the face of the pleading under attack or from matters outside the pleading that are 21 judicially noticeable. Blank v. Kirwan (1985) 39 Cal.3d 311, 318. Although the facts as alleged in the 22 complaint are deemed admitted, the contentions, deductions or conclusions of fact or law are not. Id. 23 The burden is on the plaintiff to demonstrate how the complaint can be amended to state a valid cause 24 of action. Id. 25 Furthermore, a demurrer lies where the Complaint discloses that the plaintiff's claim is barred 26 by the applicable statute of limitations. Saliter v. Pierce Bros. Mortuaries (1978) 81 Cal.App.3d 292, 27 300; see also, Iverson, Yoakum, Papiano & Hatch v. Berwald (1999) 76 Cal.App.4th 990, 995. 28 /// 26881839.1:05819-0110 -2- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT 1 III. PLAINTIFF’S FIRST CAUSE OF ACTION FOR DISGORGEMENT IS BARRED 2 BY THE APPLICABLE STATUTE OF LIMITATIONS 3 A. A One-Year Statute Of Limitations Applies To Disgorgement Claims Under 4 Code Of Civil Procedure Section 340(A) 5 A demurrer lies where the dates alleged in the complaint show clearly and affirmatively that 6 the action is barred by the statute of limitations. Geneva Towers Ltd. Partnership v. City of San 7 Francisco (2003) 29 Cal.4th 769, 781. The statute of limitations bar is grounds for a general 8 demurrer. Williams v. International Longshoremen's & Warehousemen's Union, Local No. 10 (1959) 9 172 Cal.App.2d 84, 87. 10 California law is clear on the statute of limitations for disgorgement actions under Business THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES 11 and Professions Code Section 7031. Section 7031(b) states in pertinent part: "… a person who utilizes WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 the services of an unlicensed contractor may bring an action in any court … to recover all 2815 TOWNSGATE ROAD, SUITE 215 13 compensation paid to the unlicensed contractor for performance of any act or contract." (Bus. & Prof. Attorneys at Law 14 Code, § 7031(b).) A cause of action for "disgorgement is complete when an unlicensed contractor 15 completes or ceases performance of the act or contract at issue." (See Eisenberg Village etc. v. Suffolk 16 Construction Co. (2020) 53 Cal.App.5th 1201, 1214). 17 California Code of Civil Procedure Section 340(a) provides that a one-year statute of 18 limitations is applicable to “[a]n action upon a statute for a penalty or forfeiture, if the action is given 19 to an individual, or to an individual and the state, except if the statute imposing it prescribes a 20 different limitation." (Emphasis added.) (Code Civ. Proc. § 340(a); see also Eisenberg, supra, at 21 1211.) Thus, Claims for disgorgement of compensation paid to an unlicensed contractor accrue upon 22 completion or cessation of performance of act or contract at issue and are not subject to tolling under 23 delayed discovery rule. (Emphasis added.) ((Id. See also, San Francisco CDC LLC v. Webcor 24 Construction, L.P. (2021) 62 Cal.App.5th 266, 279.) 25 "[T]he disgorgement provided in section 7031(b) is a penalty. It deprives the contractor of any 26 compensation for labor and materials used in the construction while allowing the plaintiff to retain the 27 benefits of that construction. And, because the plaintiff may bring a section 7031(b) disgorgement 28 action regardless of any fault in the construction by the unlicensed contractor, it falls within the 26881839.1:05819-0110 -3- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT 1 Supreme Court's definition of a penalty: "a recovery ‘"without reference to the actual damage 2 sustained."’ (Eisenberg, at 1214; see also Clark v. Superior Court (2010) 50 Cal.4th 605, 614.) 3 "The object of restitution is to restore the status quo by returning to the plaintiff funds in which 4 he or she has an ownership interest." (San Francisco CDC LLC, supra, at 279; Clark, supra, at 614.) In 5 contrast, "[d]isgorgement is not intended to “restore the status quo” but rather to penalize the 6 contractor by depriving him or her “of any compensation for labor and materials used in the 7 construction while allowing the plaintiff to retain the benefits of that construction.” (San Francisco 8 CDC LLC, supra, at 279; Eisenberg, supra, at 1212.) Therefore, the one-year statute of limitations 9 under Code of Civil Procedure Section 340(a) applies to disgorgement claims brought under section 10 7031(b). (Eisenberg, at 1212.) THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES 11 Here, as stated above, Plaintiff ordered Clearview to stop working on his ranch on October 10, WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 2020. (SAC, ¶¶34, 40.) Thus, Plaintiff's cause of action for disgorgement, based on Clearview's 2815 TOWNSGATE ROAD, SUITE 215 13 alleged failure to secure a contractor's license prior to commencing work on Plaintiff's ranch, accrued Attorneys at Law 14 on or about October 10, 2020 and expired on or about October 10, 2021, pursuant to the one-year 15 statute of limitations set forth in California Code of Civil Procedure Section 340(a). Yet, Plaintiff 16 failed to raise a claim for disgorgement until just over two years after this cause of action accrued. 17 B. The Relation Back Doctrine Is Inapplicable Since Plaintiff's Prior Complaints 18 Were Devoid Of Any Allegations And/Or Facts Regarding Clearview's Alleged 19 Improper Licensing Status 20 Defendants anticipate that Plaintiff will claim that since he alleged in his original Complaint 21 that he was informed and believed Clearview was a licensed contractor, that is sufficient notice of an 22 allegation regarding Clearview's improper licensing status such that the relation back doctrine would 23 apply to Plaintiff's new cause of action for disgorgement. (Declaration of S. Joanna Dyriam ("Dyriam 24 Decl."), ¶3, Ex. B.) However, "[j]ust as a plaintiff who changes the essential facts upon which 25 recovery is sought is not entitled to the benefits of the relation-back doctrine, so too a plaintiff who 26 files a complaint containing no operative facts at all cannot subsequently amend the pleading to allege 27 facts and a theory of recovery for the first time and claim the amended complaint should be deemed 28 filed as of the date of the original, wholly defective complaint." Davaloo v. State Farm Ins. Co. (2005) 26881839.1:05819-0110 -4- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT 1 135 Cal.App.4th 409, 415. 2 Here, neither Plaintiff's original Complaint nor his FAC specifically raises any allegations 3 regarding Clearview's alleged improper licensing status as grounds for rescission of the contract, let 4 alone disgorgement, and they fail to list disgorgement as a relief in the Prayer. (RJN, ¶ ¶ 1-2.) In fact, 5 not only do both the Complaint and the FAC allege that Clearview was a licensed contractor, but it 6 was not until Plaintiff filed a Motion for Summary Adjudication ("MSA") on or about June 14, 2022, 7 more than eight (8) months after the statute of limitations lapsed, that he first raised the issue of 8 disgorgement under Business and Professions Code Section 7031. (RJN, ¶¶ 1-5.) It should be noted 9 that this Court itself denied Plaintiff's MSA on the ground that Plaintiff failed to specifically plead that 10 Clearview failed to secure a contractor's license prior to commencing work on Plaintiff's ranch. THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES 11 ((RJN, ¶¶ 4-5.) Thus, it cannot be disputed that Plaintiff failed to specifically and properly plead facts WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 regarding Clearview's alleged improper contractor's license prior to the filing of Plaintiff's SAC, over 2815 TOWNSGATE ROAD, SUITE 215 13 two years after his cause of action for disgorgement accrued. Accordingly, since Plaintiff alleged Attorneys at Law 14 precisely the contrary, that is, that Clearview was licensed, in his Complaint and FAC, the relation 15 back doctrine does not apply. 16 C. The One-Year Statute Of Limitations Is Not Subject To Tolling Under The 17 Delayed Discovery Rule 18 Defendants also anticipate that Plaintiff will attempt to rely on the discovery rule and address 19 that here. Under the "discovery rule," accrual of a qualifying cause of action is postponed until a 20 plaintiff discovers, or has reason to discover, the cause of action, until, that is, the plaintiff at least 21 suspects, or has reason to suspect, a factual basis for its elements. (Eisenberg, at 1213.) The delayed 22 discovery rule is "a judicially recognized exception to the strict operation of the statute of limitations." 23 Saliter, supra, 81 Cal.App.3d at 296. The rule is a "special defense" to the statute of limitations which 24 delays accrual of the statute of limitations until "a plaintiff has a suspicion of wrongdoing, and 25 therefore an incentive to sue . . . ." Rivas v. Safety-Kleen (2002) 98 Cal.App.4th 218, 225. 26 However, more importantly and as stated above, the law is crystal clear that the discovery 27 rule does not apply to claims under provision allowing recovery of all compensation paid to an 28 unlicensed contractor. (Emphasis added.) (Eisenberg, at 1211. See also, San Francisco CDC LLC, at 26881839.1:05819-0110 -5- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT 1 279.) A plaintiff's ignorance of a cause of action ordinarily does not delay the running of a statute of 2 limitations. (Eisenberg, at 1213.) "Where a party is aware of facts which would make a reasonably 3 prudent person suspicious, the means of knowledge are the equivalent of knowledge." Helfer v. 4 Hubert (1962) 208 Cal.App.2d 22, 31 (citing Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412). 5 Further, "as the means of knowledge are equivalent to knowledge, if it appears that the plaintiff had 6 notice or information of circumstances which would put him on an inquiry which, if followed, 7 would lead to knowledge, or that the facts were presumptively within his knowledge, he will be 8 deemed to have had actual knowledge of these facts[.]" (Emphasis added.) Price v. Mason- 9 McDuffie Co. (1942) 50 Cal.App.2d 320, 324 (quoting Lady Washington C. Co. v. Wood (1896) 113 10 Cal. 482, 487). Furthermore, Civil Code section 19 provides that "[e]very person who has actual THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES 11 notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, has WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he might have 2815 TOWNSGATE ROAD, SUITE 215 13 learned such fact." Attorneys at Law 14 In Eisenberg, the Plaintiff asserted a section 7031(b) claim for disgorgement against the 15 defendant five years after the defendant completed construction of the Plaintiff's assisted living 16 facility. (Eisenberg, at 1203.) The trial court granted the defendant's motion for summary adjudication 17 of the claim, finding that Code of Civil Procedure section 340, subdivision (a), the one-year statute of 18 limitations applicable to penalties or forfeitures, applied and that the Plaintiff knew or easily could 19 have discovered the facts giving rise to the claim more than one year before it filed its claim. Id. On 20 appeal by the Plaintiff, the appellate Court affirmed that the discovery rule does not apply to the one- 21 year statute of limitations to disgorgement claims, finding that the Plaintiff had entered into a contract 22 with the defendant which provided the defendant's California contractor's license number, and 23 included a provision entitled "Contractor's License" which stated that "contractors are required by law 24 to be licensed and are regulated by the Contractors’ State License Board (the Board or CSLB), which 25 has jurisdiction to investigate complaints" … and that "any questions regarding a contractor may be 26 referred to the registrar of the CSLB, and provided the mailing address for doing so," and thus, 27 Plaintiff had a duty to investigate whether the contractor was properly licensed. (Id., at 1203-1214.) 28 Similarly, in the instant matter, the Contract between Plaintiff and Clearview identified 26881839.1:05819-0110 -6- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT 1 Clearview's license number and included a "Statutory Notice" provision titled "Information about the 2 Contractors State License Board (CSLB) which advised Plaintiff that the CSLB licenses and regulates 3 construction contractors, that Plaintiff was to use only licensed contractors, to contact the CSLB for 4 information about the licensed contractor being considered and provided the contact information, 5 website and mailing address for the CSLB. (See Ex. B to SAC, pg. 1 and ¶28e.) Thus, Plaintiff had 6 notice that he was to only use a licensed contractor for his landscaping project at his ranch and had 7 every opportunity to contact the CSLB to investigate whether Clearview was properly licensed to 8 perform the landscaping work prior to his signing of the contract and/or before Clearview began its 9 work at Plaintiff's ranch. 10 Furthermore, Plaintiff had free access to up-to-date licensing information relating to Clearview THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES 11 maintained by the CSLB on the CSLB's website, which is public record, and which Plaintiff could WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 have easily looked up to verify Clearview's licensing status prior to the commencement of Clearview's 2815 TOWNSGATE ROAD, SUITE 215 13 work, which Plaintiff failed to do. Plaintiff knew or easily could have discovered the facts giving rise Attorneys at Law 14 to his disgorgement claim well more than one year before he filed the claim. Therefore, Plaintiff 15 cannot now avail himself of this rule because he did have notice or information of circumstances 16 which should have put him on an inquiry regarding Clearview's licensing status at the outset. 17 Simply put, Plaintiff is barred by the statute of limitations because he had sufficient facts to put 18 him on notice of Clearview's alleged improper licensing status prior to his signing of his Contract with 19 Clearview, and undoubtedly, prior to the expiration of the applicable one-year statute of limitations on 20 his disgorgement claim. 21 IV. LEAVE TO AMEND SHOULD BE DENIED 22 The law regarding leave to amend upon Demurrer is well settled that "[i]f there is a reasonable 23 possibility that the defect in a complaint can be cured by amendment, it is an abuse of discretion to 24 sustain a demurrer without leave to amend. The burden is on the plaintiff, however, to demonstrate 25 the manner in which the complaint might be amended." Assn. Community Organizations for Reform 26 Now v. State of California (1995) 41 Cal.App.4th 298 (quoting Hendy v. Losse (1991) 54 Cal.3d 723). 27 Hence, the corollary is also true, that where the complaint shows upon its face that there is no 28 reasonable possibility to cure the defect, the Court should deny leave to amend. 26881839.1:05819-0110 -7- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT 1 Plaintiff cannot cure the defect in his SAC as his claim for disgorgement is barred by the 2 applicable statute of limitations. As such, leave to amend should be denied. 3 V. CONCLUSION 4 Based on the foregoing, Defendants respectfully request that the Court sustain this Demurrer 5 as to Plaintiff's First Cause of Action for Disgorgement in the SAC, without leave to amend. 6 DATED: November 28, 2022 WOOD, SMITH, HENNING & BERMAN LLP 7 8 By: 9 R. GREGORY AMUNDSON SHEILA E. FIX 10 S. JOANNA DYRIAM THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES Attorneys for Defendants, CLEARVIEW PROPERTY 11 WOOD, SMITH, HENNING & BERMAN LLP SERVICES, INC. and CHRISTOPHER HULME TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 2815 TOWNSGATE ROAD, SUITE 215 13 Attorneys at Law 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26881839.1:05819-0110 -8- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT 1 DECLARATION OF S. JOANNA DYRIAM 2 I, S. Joanna Dyriam, declare and state under penalty of perjury as follows: 3 1. I am an associate at the law firm of Wood, Smith, Henning & Berman, LLP, attorneys 4 for Defendants, CLEARVIEW PROPERTY SERVICES, INC. and CHRISTOPHER HULME 5 ("Defendants"). I am an attorney at law duly admitted to practice before the courts of the State of 6 California. This Declaration is based upon my personal knowledge, except as to those matters stated 7 on information and belief and, as to those matters, I believe them to be true. If called upon as a 8 witness, I would and could competently testify as to the facts set forth herein. 9 2. On November 15, 2022, my office emailed a meet and confer correspondence to 10 Plaintiff's counsel asserting Defendants' legal grounds for objecting to Plaintiff's first cause of action THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES 11 for disgorgement and Defendants' contemplated demurrer and motion to strike this cause of action and WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 its associated prayer for relief, and invited Plaintiff's counsel to discuss these issues, pursuant to the 2815 TOWNSGATE ROAD, SUITE 215 13 requirements of California Code of Civil Procedure §§ 430.41 and 435.5. Attached hereto as Exhibit Attorneys at Law 14 "A" is a true and correct copy of this meet and confer correspondence. 15 3. On November 21, 2022, Plaintiff's counsel, Mr. Jason Anderson, emailed my office a 16 written response to Defendants' meet and confer correspondence providing his position with respect to 17 Defendants' arguments pertaining to the first cause of action for disgorgement pled against 18 Defendants. Attached hereto as Exhibit "B" is a true and correct copy of this response. 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 26881839.1:05819-0110 -9- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT 1 4. I am informed by Mr. R. Gregory Amundson of my office and based upon that 2 information believe that, after evaluating Mr. Anderson's response, on November 23, 2022, Mr. 3 Amundson left a voicemail for Mr. Anderson to discuss the issues raised in Defendants' November 4 15, 2022 meet and confer correspondence, however, Mr. Amundson did not hear back from Mr. 5 Anderson. 6 I declare under penalty of perjury under the laws of the State of California that the foregoing is 7 true and correct. 8 Executed November 28, 2022 at Thousand Oaks, California. 9 10 S. Joanna Dyriam THOUSAND OAKS, CALIFORNIA 91361-5827, UNITED STATES 11 WOOD, SMITH, HENNING & BERMAN LLP TELEPHONE (820) 333-4250 ♦ FAX (820) 333-4249 12 2815 TOWNSGATE ROAD, SUITE 215 13 Attorneys at Law 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26881839.1:05819-0110 -10- Case No. 21CV02266 DEFENDANTS CLEARVIEW PROPERTY SERVICES, INC. AND CHRISTOPHER HULME'S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT EXHIBIT A S. Joanna Dyriam 2815 Townsgate Road • Suite 215 • Thousand Oaks, CA • 91361-5827 direct dial (820) 333-4206 tel (820) 333-4250 • fax (820) 333-4249 • wshblaw.com email sdyriam@wshblaw.com refer to 05819-0110 November 15, 2022 VIA ELECTRONIC MAIL ONLY Jason H. Anderson Andrew Mason Stradling Yocca Carlson & Rauth, APC 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660-6422 janderson@stradlinglaw.com amason@stradlinglaw.com KMilanowski@stradlinglaw.com kkirkpatrick@stradlinglaw.com Re: Kopitnik v. Clearview Property Services, Inc., et al. Our Clients: Clearview Property Services, Inc.; and Christopher Hulme Case No.: 21CV02266 Dear Counsel: Please allow this correspondence to serve as our good faith attempt to meet and confer with you regarding the First Cause of Action for Disgorgement pursuant to Business and Professions Code Section 7031 in your client, Plaintiff Dr. Kopitnik's Second Amended Complaint, prior to filing a Demurrer and Motion to Strike, as required by Code of Civil Procedure §§ 430.41 and 435.5. While Business and Professions Code Section 7031(b) provides for a disgorgement action against an unlicensed contractor, California Code of Civil Procedure Section 340(a) provides that a one-year statute of limitations is applicable to “[a]n action upon a statute for a penalty or forfeiture, if the action is given to an individual, or to an individual and the state, except if the statute imposing it prescribes a different limitation." /// WOOD • SMITH • HENNING • BERMAN Jason H. Anderson Andrew Mason Stradling Yocca Carlson & Rauth, APC Our File No.: 05819-0110 November 15, 2022 Page 2 Thus, claims for disgorgement of compensation paid to an unlicensed contractor accrue upon completion or cessation of performance of act or contract at issue and are not subject to tolling under delayed discovery rule. (Id. See also, San Francisco CDC LLC v. Webcor Construction, L.P. (2021) 62 Cal.App.5th 266, 279.) "[T]he disgorgement provided in section 7031(b) is a penalty. It deprives the contractor of any compensation for labor and materials used in the construction while allowing the plaintiff to retain the benefits of that construction. And, because the plaintiff may bring a section 7031(b) disgorgement action regardless of any fault in the construction by the unlicensed contractor, it falls within the Supreme Court's definition of a penalty: "a recovery ‘"without reference to the actual damage sustained."’ (Eisenberg Village etc. v. Suffolk Construction Co. (2020) 53 Cal.App.5th 1201, 1214; see also Clark v. Superior Court (2010) 50 Cal.4th 605, 614.) Therefore, the one-year statute of limitations under Code of Civil Procedure Section 340(a) applies to disgorgement claims brought under section 7031(b). (Eisenberg, at 1212.) As you are aware, Plaintiff ordered Clearview to stop its work at his ranch on or about October 13, 2020. Thus, Plaintiff's cause of action for disgorgement accrued on or about October 13, 2020 and expired on or about October 13, 2021. Yet, Plaintiff alleges a disgorgement cause of action for the first time in his Second Amended Complaint filed on October 26, 2022, more than one year after the applicable statute of limitations lapsed. Thus, Plaintiff has failed to bring a timely cause of action for disgorgement against our clients. /// /// /// /// /// /// /// /// WOOD • SMITH • HENNING • BERMAN Jason H. Anderson Andrew Mason Stradling Yocca Carlson & Rauth, APC Our File No.: 05819-0110 November 15, 2022 Page 3 Based on the above, we plan to file a Demurrer to the Second Amended Complaint as to the First Cause of Action for Disgorgement pursuant to Business and Professions Code Section 7031, along with a Motion to Strike the Prayer for Relief for disgorgement of all compensation paid to Clearview. We would prefer not to seek court intervention, however. Thus, please advise our office of whether you would dismiss this cause of action. Please contact us should you wish to discuss our clients' proposed Demurrer