Defendant Had Fraudulently Induced Plaintiff To Enter Into Contract With Defendant’s Associates For Home Renovation Work.
Bus. & Prof. Code § 7160 allows for an award of reasonable attorney’s fees, in addition to penalties and damages, to “[a]ny person who is induced to contract for a work of improvement, including but not limited to a home improvement, in reliance on false or fraudulent representations or false statements knowingly made . . . by the contractor or solicitor,” and provided the basis for a Code Civ. Proc. § 1032 fee award of $2,114,434 and costs of $104,498 in plaintiff’s favor in Moore v. Teed, Case No. A153523 (1st Dist., Div. 1 April 24, 2020) (published).
Here, the real estate agent defendant sold homebuyer plaintiff a $4.8 million fixer-upper in the historic Pacific Heights neighborhood of San Francisco by fraudulently convincing plaintiff that needed renovations could be completed for only $900,000.00. Defendant did so by promoting himself as having “over 25 years of experience as a building contractor,” “an extensive background in historic restorations,” “a deep understanding of quality construction,” and by taking plaintiff to tour several homes defendant had renovated – thereby leading plaintiff to believe that defendant was a general contractor and could accomplish the quality, cost-effective renovations he recommended.
As a result, plaintiff entered into contract with defendant’s associates, and renovations began with defendant’s recommended foundation work. However, after plaintiff learned that the completed foundation work had to be demolished and rebuilt due to faulty construction, and that the remaining renovations could not be completed for the amount promised by defendant, plaintiff sued.
After a jury awarded plaintiff both out-of-pocket and benefit of the bargain damages based on findings of fraudulent representation, but ruled in favor of defendant on plaintiff’s breach of contract claim, plaintiff successfully moved for an award of fees and costs under Code Civ. Proc. § 1032 – pursuant to the jury’s special verdict finding that defendant had violated Bus. & Prof. Code § 7160 of the Contractors’ State License Law.
On appeal, defendant challenged the fees award by arguing that fees were not awardable under § 7160 as no contract existed between himself and plaintiff for renovation work, that the jury instruction explaining § 7160 omitted the word “solicitor” such that the jury could only apply the fee provision to one “contracted” with plaintiff, and that the trial court’s instruction defining “contractor” under Bus. & Prof. Code § 7026 was confusing and incomprehensible – leading to an inconsistent verdict that could not be sustained as evidenced by the jury’s finding in defendant’s favor on the breach of contract claim, but in plaintiff’s favor as to violations of § 7160 where no contract existed.
However, the 1/1 DCA disagreed with all of defendant’s contentions – finding no contract between the parties necessary to award attorney fees against defendant as defendant had fraudulently induced plaintiff to enter into contract for renovations with defendant’s associates, and that “[s]ection 7160 does not exempt noncontracting parties from liability for attorney fees for fraudulent inducement of a home improvement contract.” As to omission of the word “solicitor” from the § 7160 instruction, the 1/1 DCA declined to apply such a narrow interpretation. In addressing defendant’s claim regarding the definition of “contractor,” the 1/1 DCA observed that the trial court’s instruction was tailored to conform to the circumstances of the case and required no clarification. In contrast, they found defendant’s rejected proposed special instruction misstated § 7026’s definition of “contractor” by omitting that one can be deemed a contractor if he or she “offers to undertake” or “purports to have the capacity to undertake” renovations “by or through others.” The jury’s finding, supported by clear and ample evidence, that defendant was a “contractor” as defined by § 7026 supported its finding that he was in violation of § 7160 and, thereby, liable for attorney fees.
Finally, the 1/1 DCA found plaintiff also entitled to fees incurred on appeal – based on the award under § 7160 – and remanded back to the trial court for determination of the award. “A statute providing for an attorney fee award to the prevailing party in litigation ordinarily also authorizes an award of fees incurred on appeal even if it does not expressly so state.” (Garcia v. Bellflower Unified School Dist. Governing Bd. 220 Cal.App.4th 1058, 1067 (2013).)