Baker v. Dolphin
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IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE SCOTT BAKER, an individual dba PRO-TECH AC, ) ) ) Plaintiff/Appellant, ) ) v. ) ) DOLPHIN BEACH RENTAL & ) MANAGEMENT, LLC, an Arizona ) limited liability company; JERRY ) LITTLE, an individual, ) ) Defendants/Appellees. ) ___________________________________) No. 1 CA-CV 08-0743 DEPARTMENT D O P I N I O N DIVISION ONE FILED: 06-15-2010 PHILIP G. URRY,CLERK BY: GH Appeal from the Superior Court in Maricopa County Cause No. CV 2008-008321 The Honorable Joseph B. Heilman REVERSED AND REMANDED Harper Law PLC By Kevin R. Harper Attorneys for Plaintiff-Appellant Phoenix Hoopes & Adams, PLC By John R. Hoopes Patricia A. Alexander Attorneys for Defendants/Appellees Chandler G E M M I L L, Judge ¶1 Appellant Scott Baker alleges that he entered into a contract with Appellees Dolphin Beach Rental & Management, an Arizona corporation, and Jerry Little, its agent and an Arizona resident (collectively Dolphin ) to perform repair and maintenance work on buildings in Mexico. Baker sued Dolphin in superior court in Arizona, alleging breach of contract. Dolphin moved to dismiss on the basis that Baker did not have an Arizona contractor s Statutes license ( A.R.S. ) and was section precluded 32-1153 by (2008) Arizona from action in state court for breach of contract. granted the motion to dismiss. § 32-1153 does not apply to Revised bringing an The trial court Because we conclude that A.R.S. contracting work in Mexico, we reverse and remand for further proceedings. FACTS AND PROCEDURAL HISTORY1 ¶2 Dolphin is authorized to conduct business in Arizona and Sonora, Mexico. Dolphin s business includes renting and managing beachfront condominiums in Puerto Peñasco for various owners. Arizona resident Baker, doing business as Pro-Tech AC, approached Dolphin in 2007 about performing monthly preventative maintenance on air-conditioning properties in Mexico. units at Dolphin s rental All relevant discussions between Baker and Dolphin occurred in Arizona, where Baker was not a licensed contractor. 1 In reviewing motions to dismiss pursuant to Arizona Rule of Civil Procedure 12(b)(6), we accept well-pled factual allegations in the complaint as true and resolve any conflicting inferences in favor of the non-moving party. Southwestern Paint & Varnish Co. v. Arizona Dept. of Envtl. Quality, 191 Ariz. 40, 41, 951 P.2d 1232, 1233 (App. 1997), aff d in part, 194 Ariz. 22, 976 P.2d 872 (1999). 2 ¶3 In August 2007, Baker and Dolphin entered into a written contract for the repair, service, and maintenance of air-conditioning Mexico.2 units located on Dolphin s properties in From August 2007 through January 2008, Baker worked in accord with his perception of his contractual obligations. continued to be unlicensed under Arizona law. Baker periodically for his services but, in He Dolphin paid January 2008, Dolphin notified Baker that it no longer required his services. ¶4 In 2008, Baker filed a complaint in superior court in Arizona alleging Dolphin (1) breached the service contract; (2) breached the covenant of good faith and fair dealing; (3) was unjustly enriched; services; and intentionally (5) misrepresentations detriment. (4) to made or fraudulently intentional Baker, who relied or upon induced negligent them to his Dolphin filed an Arizona Rule of Civil Procedure 12(b)(6) motion to dismiss all counts, which Baker opposed. The trial court granted the motion based on Plaintiff s failure to satisfy A.R.S. § 32-1153. ¶5 denied. Baker He now filed a appeals. motion We 2 for have reconsideration jurisdiction that pursuant was to Baker s complaint alleges a valid contract was formed but Dolphin s motion to dismiss alleges no contract was agreed upon or executed. The record on appeal does not contain a signed contract, but we assume all well-plead facts alleged in Baker s complaint are true when reviewing the granting of the motion to dismiss. 3 Article 6, Section 9, of the Arizona Constitution and A.R.S. section 12-120.21(A)(1) (2003). ANALYSIS ¶6 license Baker does argues not that preclude lack him of from an Arizona maintaining contractor s the instant lawsuit because the maintenance and repair work at issue was conducted in Mexico.3 We must determine whether, on this record, A.R.S. § 32-1153 applies to prevent Baker from suing Dolphin. We apply a de novo standard when reviewing issues of statutory interpretation and application. See Special Fund Div. v. Indus. Comm'n, ___ Ariz. ___, ___, ¶ 7, 226 P.3d 398, 400 (App. 2010); New Sun Bus. Park, LLC v. Yuma County, 221 Ariz. 43, 45, ¶ 4, 209 P.3d 179, 181 (App. 2009). ¶7 The statute relied upon by Dolphin and by the trial court in granting Dolphin s motion to dismiss is A.R.S. § 321153: No contractor as defined in § 32-1101 shall act as agent or commence or maintain any action in any court of the state for collection of compensation for the performance of any act for which a license is required by this chapter without alleging and proving that the contracting party whose contract gives rise to the claim was a duly licensed contractor when the contract sued 3 Baker also argues he should have been granted leave to amend his complaint to cure any pleading defect. In light of our resolution of this appeal, we do not reach this additional argument. 4 upon was entered into and when the alleged cause of action arose. (Emphasis added.) ¶8 If the statutes regulating contracting and requiring licensure are contractor as applicable defined to in Baker, § then 32-1101 he was acting he provided when as a air conditioning repair and maintenance services on the buildings managed by Dolphin. includes any The applicable definition of a contractor person who for compensation undertakes to [c]onstruct, alter, repair, add to, subtract from, [or] improve . . . any [p]rovide building, mechanical A.R.S. or structure or improvements. ¶9 Arizona. prevent § 32-1101(A)(3)(a) structural service (2008), for any or such A.R.S. § 32-1101(A)(3)(c). Baker s work, however, was performed in Mexico, not As Baker unlicensed points out, contractors A.R.S. from § suing 32-1153 in applies state court to in Arizona to recover compensation for the performance of any act for which a license is required by this chapter. (Emphasis added.) ¶10 Baker is not suing Dolphin to recover damages for any construction work performed or to be performed in Arizona. All the work performed by Baker for Dolphin occurred in Mexico and the alleged breach of contract pertains to work contemplated in Mexico. On this record and based on the language of A.R.S. § 5 32-1153, we conclude that this statute does not apply to prevent Baker from suing Dolphin in our state courts. Baker did not need an Arizona contractor s license to perform contracting work in Mexico. Arizona We reach this conclusion even though Dolphin is an corporation, Baker is an Arizona resident, and the negotiations for the alleged contract occurred in Arizona. ¶11 The police power of a state to regulate occupations and require licenses is generally limited to activities carried on within the state. See Conderback, Inc. v. Standard Oil Co. of California, 239 Cal. App. 2d 664, 676-77, 48 Cal. Rptr. 901, 910 (Cal. Ct. App. 1966) (explaining, in regard to California s contractor licensing statutes, that the exercise of this regulatory power is necessarily limited to activities carried on within the territorial limits of such state ). See also 53 C.J.S. Licenses § 9 (2009) ( The power of the state to require a license or impose a license tax on occupations or privileges is necessarily limited to subjects within its jurisdiction. ). ¶12 virtually In Conderback, the California Court of Appeal resolved the same issue we address facts and very similar statutes. herein, under analogous Conderback, Inc. and Standard Oil Company were both California corporations. Cal. App. 2d at 668, 48 Cal. Rptr. at 904. Conderback, 239 They negotiated a contract in California for the construction by Conderback of a structure for Standard Oil at the World s Fair held in 1962 in 6 Seattle, Washington. Id. at 669, 48 Cal. Rptr. at Conderback was not a licensed contractor in California. 675, 48 Cal. Rptr. at 909. California state court 905. Id. at When Conderback sued Standard Oil in for damages for breach of contract arising out of the work in Washington, Standard Oil asserted that the statute4 California prevented the suit. analogous to A.R.S. § Id. at 676, 48 Cal. Rptr. at 910. 32-1153 Standard Oil argued Conderback could not bring or maintain [any] action since it was acting in the capacity of California without being duly licensed. a contractor in Id. at 675, 48 Cal. Rptr. at 909. ¶13 The Conderback court held that when a person offers, undertakes or contracts in [California] to construct or demolish a building, project or other improvement located outside of California, such person does not thereby become one engaged in the business or acting in the capacity of a contractor within [California] so as to be subject to the Contractors License 4 The California statute provided that [n]o person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action in any court of this State for the collection of compensation for the performance of any act or contract for which a license is required by this chapter without alleging and proving that he was a duly licensed contractor at all times during the performance of such act or contract. Conderback, 239 Cal. App. 2d at 677, 48 Cal. Rptr. at 910 (quoting Cal. Bus. & Prof. Code § 7031). Since the Conderback decision in 1966, section 7031 has been amended. See Cal. Bus. & Prof. Code § 7031 (2004). The amendments, however, are immaterial to the issue presented in Conderback. 7 Law. Id. at 679, 48 Cal. Rptr. at 912. See also Mechanical Wholesale Corp. v. Fuji Bank, Ltd., 42 Cal. App. 4th 1647, 1653 n.6, 50 Cal. Rptr. 2d 466, 469 n.6 (reiterating the Conderback holding). (Cal. Ct. App. 1996) Nor does the mere fact that, as here, such person's principal place of business is in California necessarily compel a different conclusion. Conderback, 239 Cal. App. 2d at 679, 48 Cal. Rptr. at 912. The court further explained: [I]t was not the purpose of the Legislature in enacting the Contractors License Law to bring within its ambit a person who, not otherwise engaged in the contracting business in California, merely enters into negotiations or contracts [in California] for a construction work or project in another state [or] foreign country. Id. at 679, 48 Cal. Rptr. at 911. ¶14 We agree with the reasoning of Conderback and reach the same result here. We acknowledge the legislature s strong interest in protecting the public from unlicensed contractors, which is evidenced by the onerous requirements for licensure. Town of Gilbert v. Downie, 218 Ariz. 466, 471, ¶ 23, 189 P.3d 393, 398 (2008). But A.R.S. § 32-1153 does not apply to Baker s action against Dolphin because Baker is suing for compensation arising from work in Mexico for which he is not required to be licensed in Arizona. ¶15 Further support for our decision is provided by Kenyon 8 v. Karber Constr. Co., 144 Ariz. 576, 698 P.2d 1295 (App. 1985). Karber, a general contractor, had contracted with the Navajo Housing Authority Reservation. to build several structures Id. at 577, 698 P.2d at 1296. on the Navajo Kenyon entered into a subcontract with Karber for stucco work but did not have an Arizona contractor s license. Id. superior money court subcontract, the to recover trial court based on A.R.S. § 32-1153. When Kenyon sued Karber in allegedly granted Id. Karber due summary on the judgment We reversed, concluding that Kenyon did not need a contractor s license to perform work on the Navajo Reservation and § 32-1153 did not preclude Kenyon s action against Karber. Although the reasoning Id. at 577-78, 698 P.2d at 1296-97. of Kenyon is based in part on the doctrine of preemption a doctrine not applicable here the principle emerges from that case that a contractor that does not need an Arizona license to do particular construction work may not be precluded from suing in state court for compensation and damages arising from the work. Here, Baker does not need an Arizona contractor s license for work in Mexico; accordingly, the statute does not bar him from bringing suit related to that work. CONCLUSION ¶16 For these reasons, we conclude that Baker is not precluded by A.R.S. § 32-1153 from suing Dolphin in state court. 9 We therefore reverse the judgment entered in favor of Dolphin and remand for further proceedings. ___/s/___________________________ JOHN C. GEMMILL, Presiding Judge CONCURRING: ___/s/___________________________ JON W. THOMPSON, Judge ___/s/___________________________ PATRICK IRVINE, Judge 10
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