MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc

In MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, a steel contractor was not licensed at the time the contract was made, but did obtain a license about two weeks after performance began and most of its performance occurred while it was licensed. (MW Erectors, supra, 36 Cal.4th at p. 420.) The intermediate appellate court read subdivision (a) to allow the steel contractor to recover for work done after it had obtained a license, but the Supreme Court concluded the actual language of subdivision (a) requires licensing at all times during performance and the Legislature did not intend to allow any recovery without licensure at all times during performance. (36 Cal.4th at pp. 424-430.) There were no judicial admissions in the MW Erectors case for the court to confront. There was a judicial estoppel argument, based on the idea that in related litigation against the owner of the project, a specialty metal contractor had "implicitly" represented to the owner (and the owner's general contractor) that MW was fully licensed, and was thus able to obtain a settlement from the owner for amounts which necessarily were attributable to MW's work. MW claimed the specialty metal contractor was thus estopped to assert nonlicensure in a case where MW was suing it. (MW Erectors, supra, 36 Cal.4th at pp. 421-422.) The MW Erectors court noted that neither the cross-complaint filed by the specialty metal contractor against the owner and its general contractor, nor its mechanic's lien, contained any mention of the steel contractor's work. However, in any event, said the high court, the steel contractor could not "invoke judicial estoppel for the simplest of reasons," namely, subdivision (a) expressly precludes any action in law or equity. (MW Erectors, supra, 36 Cal.4th at p. 423.) In that regard, the MW Erectors court quoted Hydrotech for the proposition that the "bar of section 7031(a) applies 'regardless of the equities.'" (MW Erectors, supra, 36 Cal.4th at p. 423, quoting Hydrotech, supra, 52 Cal.3d at p. 997.) Thus the MW Erectors court concluded, citing subdivision (a), that acceptance of MW's judicial estoppel argument would mean that MW could "recover compensation for work that required a license, even if MW was not licensed 'at all times' during the performance of that work. ( 7031(a).)" (MW Erectors, supra, 36 Cal.4th at p. 423.) However, after emphasizing that subdivision (a) would be applied regardless of its harsh consequences and even if it means one party obtains an unjust windfall (MW Erectors, supra, 36 Cal.4th at p. 424), the court ended its judicial estoppel discussion with a passage that took a somewhat wider-angle view of the judicial estoppel issue. We quote the entirety of the passage in the margin,but two aspects of it stand out. One is the qualification that "Nothing we say here is intended to authorize or condone abusive manipulation of the courts"--and we emphasize the words "abusive manipulation." (MW Erectors, at p. 424.) The other is that such abuse can be avoided by normal discovery and investigation--in that case, by the owner and its general contractor. (See ibid.)