Developments of Interest

New Cases of Interest - May 14, 2010

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05/14/2010

Alatriste v. Cesar’s Exterior Designs, Inc. (2010) 183 Cal.App.4th 656.  This is another in a series of cases which holds that an unlicensed contractor cannot recover from a client for whom the unlicensed contractor does work, on almost any theory.  In this case the contractor did not have a landscaping contractor’s license when it began the landscaping work for the client, and it had never before been licensed.  The contractor though did obtain a license during the course of the project.  The client brought an action to recover payments that were made during the time frame when the contractor was unlicensed even though the client knew of the unlicensed status at the time the parties entered into their agreement.

The contractor raised defenses of estoppel, unclean hands, fraud and unjust enrichment.  Both the trial court and the Court of Appeal held that the client was entitled to prevail, and that the contractor could not raise the equitable defenses because of the absolute rule allowing for reimbursement of amounts paid to an unlicensed contractor, even if the party seeking such reimbursement knew that the contractor was unlicensed.

Garcia v. World Savings, FSB (2010) 183 Cal.App.4th 1031.  In this case the borrowers brought suit against a lender on a number of theories including wrongful foreclosure, breach of contract, promissory estoppel and unfair business practices.  The borrowers had purchased a residential property using money borrowed from the defendant lender.  Thereafter, they failed to make payments on the loan and the defendant sent a notice of default and initiated foreclosure proceedings.  Foreclosure proceedings were postponed after a mortgage broker on plaintiff’s behalf obtained a conditional loan approval from another lender.  A second extension was thereafter requested to which the lender responded that it would provide a one day extension and “see where [they] were at after that.”  The lender’s representative also said though that the property wouldn’t go to sale as long as the new loan would close within a week of the scheduled sale date.

The day before the sale the loan broker called several times and left messages indicating that the new loan would not close for another week.  None of these calls were responded to.  The property was foreclosed on the following day.  Unaware, however, of the foreclosure sale, the plaintiff borrowers went forward with the refinancing of their other property from which they were receiving the funds to pay off the original lender.  Those funds were provided approximately one week after the foreclosure sale had taken place.  Plaintiff learned at that time there had been a foreclosure and the lender’s representative purportedly indicated that this had been a “mistake.”

While plaintiff’s other theories were dismissed, plaintiff was held to have stated a valid claim for promissory estoppel and the court indicated the matter could proceed to trial on that basis.

 

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