Second District, Division 8 Finds Fee Fixing Award Was a Nullity or Was Mooted by Unlicensed Contractor Determination.
Our category “Cases: Unlicensed Contractor” surveys decisions holding that attorney’s fees are not awardable to prevailing unlicensed contractors under Civil Code section 1717. The next case we discuss follows the result reached in those prior decisions, determining that the lack of licensure can cause the contractor to not only lose compensation but also lose fees awarded for pursuing the unpaid compensation.
In a procedurally gnarly case, the Second District, Division 8—in WSS Industrial Construction, Inc. v. Great West Contractors, Inc., Case No. B194913 (2d Dist., Div. 8 Jan. 6, 2008) (unpublished)—dealt with a plaintiff subcontractor suing to recover unpaid compensation of $91,494.38 from defendant contractor, with a fees clause contained in the operative contract between the two parties. Contractor also filed a cross-complaint. A jury entered a verdict in favor of subcontractor for $190,012.62 for breach of contract (with no explanation for the higher amount). The judgment also provided that sub was the prevailing party for purposes of fees/costs and that contractor recovered nothing under its cross-complaint. Contractor appealed from this judgment. However, during the pendency of the first appeal, the trial court then issued a revised judgment by which bond defendants were found liable on a different count and sub was awarded $9,340.39 in costs and $165,601.25 in fees as against contractor. Contractor appealed this one, too.
Before deciding about what would happen to the fee award, the Second District issued an opinion in the first appeal, determining that sub was barred from recovery because it was an unlicensed contractor and the substantial compliance exception did not apply. (See 162 Cal.App.4th at pp. 593, 596.)
The appellate panel in WSS II (the fee award appeal) vacated the fee award. Or, as we have descriptively noted in the past, the fees/costs went POOF![1]
The WSS II court first determined that the revised judgment was a nullity. The trial court had made substantial modifications to the prior judgment which was on appeal, such that the trial court had no jurisdiction to enter such a revised judgment.
However, it also considered the merits given that a trial court does have jurisdiction to consider postjudgment an attorney’s fees award. (Bankes v. Lucas, 9 Cal.App.4th 365, 368 (1992).) After noting that the trial court should have issued a separate order setting the amount of the fees or should have amended the first judgment nunc pro tunc to include that amount, the appellate panel still determined that reversal of the fee award would be required because sub was no longer the prevailing party. (Allen v. Smith, 94 Cal.App.4th 1270, 1284 (2002).) Finally, nothing supported the proposition that fees were awarded based on any finding that contractor lost on the its cross-complaint, even though it may well be that sub was still disqualified from fee entitlement based on its unlicensed status.
POOF! Unlicensed contractors beware—you will have trouble sustaining fee awards based on the lack of licensure.
BLOG UNDERVIEW—Nunc pro tunc is one of those Latin phrases that still gets frequent usage in the legal profession. It means “now for then” – a phrase applied to acts allowed to be done after the time when they should be done, but with retroactive effect. (Black’s Law Dictionary (rev. 4th ed. 1968) p. 1218.)
[1] M&M debated whether “POOF” should be added to our list of case categories, but decided that the category, which would encompass too many attorney’s fees cases, lacked analytical precision.
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