ELECTRONICALLY FILED Superior Court of taliforia, Timothy S. Blackford (Bar No. 190900) ‘Gounty of San Diego BEHMER & BLACKFORD LLP 10/05,2023 at 01:01 01 Pa 12526 High Bluff Drive, Suite 300 Clerk of the Superior Court San Diego, CA 92130 By Givistopher Metayer,Deputy Clee Tel: 858-792-3420 Fax: 858-792-3422 Attomeys for Plaintiffs Patisserie Melanie, LLC, Melanie Dunn, and Axel Schwarz, SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN DIEGO - CENTRAL DIVISION PATISSERIE MELANIE, LLC, a CASE NO. 37-2023-00049250-CU-60-C7L California limited liability company; MELANIE DUNN, an individual; and COMPLAINT FOR: AXEL SCHWARZ, an individual (1) VIOLATION OF CA BUS. & PROF. Plaintiffs, CODE § 7031 v (2) BREACH OF ORAL CONTRACT SMITH & MOSER, INC., a California (3) FRAUD corporation; WILLIAM CODY SMITH, Il, an individual; CAROLYN JEAN MOSER, | (4) NEGLIGENCE an individual; and Does 1-10, > JURY TRIAL DEMANDED 2GLIGENCE PER SE Defendants, ‘COMPLAINT10 ul 12 13, 14 15 16 7 18 20 21 22 23 24 25 26 27 28 THE PARTIES 1. Plaintiff Patisserie Melanie, LLC (“Patisserie Melanie”) is a California limited liability company with its principal place of business at 3750 30" Street, San Diego, CA 92104. 2. Plaintiff Melanie Dunn (“Dunn”) is an individual who resides in San Diego, California and is an owner of Patisserie Melanie. 3. Plaintiff Axel Schwarz (“Schwarz”) is an individual who resides in San Diego, California and is an owner of Patisserie Melanie. Patisserie Melanie, Dunn and Schwarz are collectively referred to as Plaintiffs. Defendants 4, Plaintiffs are informed and believe that Defendant Smith & Moser, Inc. (“Smith & Moser”) is a California corporation with its principal place of business in San Diego, California. Plaintiffs are further informed and believe that Smith & Moser knowingly operated without a valid contractor's license since April 2021 5. Plaintiffs are informed and believe that Defendant William Codey Smith, TT ‘Smith”) is an individual that currently resides in San Diego, California. Plaintiffs are further informed and believe that Smith knowingly owned and operated a construction business without a valid contractor's license since April 2021 6. Plaintiffs are informed and believe that Defendant Carolyn Jean Moser (“Moser”) is an individual that currently resides in San Diego, California. Plaintiffs are further informed and believe that Moser knowingly owned and operated a construction business without a valid contractor’s license since April 2021 Doe Defendants 7. Plaintiffs are not aware of the true names and identities of the fictitiously named (Doe) defendants. Plaintiffs are informed and believe, and on that basis allege, that each Doe defendant was responsible in some manner for the acts alleged herein, and/or is a necessary party who will be named when his/herits true identity is discovered so that the Court may grant Mt ‘COMPLAINT|10 ul 12 13, 14 15 16 7 18 20 21 22 23 24 25 26 27 28 complete relief to Plaintiffs. All defendants, including Doe defendants, are collectively referred to herein as “Defendants.” Agency, Aiding and Abetting, and Conspiracy 8. Each of the Defendants named in this Complaint were at all times mentioned herein the co-conspirator, director, officer, agent, contractor, consultant or employee of, or predecessor or successor to one or more of the other Defendants, and in doing the things hereinafter alleged was acting within the course and scope of such conspiracy, agency or employment, and with the permission or consent of one or more of the other Defendants, such that each Defendant is liable for the acts and omissions of every other Defendant, unless otherwise indicated. 9. As members of the conspiracies alleged more fully below, each of the Defendants participated and acted with or in furtherance of said conspiracy, or aided and assisted in carrying out the purposes of the conspiracy, and have performed acts and made statements in furtherance of the conspiracy and other violations of California law. 10. Fach Defendant acted individually and in alignment with the other Defendants with full knowledge of their respective wrongful conduct, As such, Defendants conspired together, building upon each other's wrongdoing, in order to accomplish the acts outlined in this Complaint. 11, Defendants are individually sued as principals, participants, aiders and abettors, and co-conspirators in the wrongful conduct complained of and the liability of each arises from the fact that each has engaged in all or part of the improper acts, plans, schemes, conspiracies, or transactions complained of herein, JURISDICTION AND VENUE 12. Jurisdiction and venue are appropriate in this Court because the acts of Defendants were directed to, and damages and other harm were incurred in, this county. Jurisdiction and venue are also appropriate because the contract at issue was performed and damages were incurred in this county. The damages and other harm suffered are well in excess of the $25,000 jurisdiction requirements for an unlimited civil action, 2. ‘COMPLAINT|10 ul 12 13, 14 15 16 7 18 20 21 22 23 24 25 26 27 28 GENERAL ALLEGATIONS 13. Plaintiffs hired Defendants to perform construction work for a new business called Patisserie Melanie. What started as a dream project quickly became a nightmare as Defendants were unlicensed, incompetent, unprofessional, and unable to perform the construction work required. After many months of delays, excuses, and substandard workmanship, Plaintiffs terminated the contract with Defendants and hired a new, competent contractor to finish the job. 14. In July 2020, Schwarz reached out to Smith’s attorney, asking for an official contract. She asked what his role would be, and after conversations with Smith, he said he would be our project manager. Smith failed to tell Plaintiffs was that his entire support staff (helpers in the field plus office manager) had left him, 15, After six months of design, and another six months waiting for permits during the pandemic backlog, Smith started work for Plaintiffs in early 2021. Smith told Plaintiffs they could build things out for $200,000, saying Plaintiffs wouldn't get everything they wanted, but it could be done. Smith also said it would only take a few months to complete the whole project. 16. The project got off to a relatively good start. Smith appeared to be on-site working hard on a regular basis. At this time, the main issue with Smith was a lack of paperwork. Plaintiffs repeatedly asked him for a formal contract and invoices. He provided neither, though he would tell Plaintiffs what he needed money for and Plaintiffs gave him checks. Plaintiffs were not comfortable with this arrangement. 17. Work was slow, especially as Plaintiffs waited for Smith’s plumber friend, Luke. Smith assured Plaintiffs Luke was the best. Smith also said that he'd looked elsewhere for plumbers, and people were telling him to it would be months and months before they would be available. Luke had a full-time job, but kept promising he would come nights and weekends to do and Plaintiffs believed him. the initial plumbing work. Smith blamed the pandemic for the delays, 18. As expenses mounted, Plaintiffs realized Smith's project estimates were nowhere close to accurate, With the help of Dunn's father, Plaintiffs were able to get a loan of $180,000 for needed large equipment. At this point, Plaintiffs had already given Smith tens of thousands of dollars, and the project was nowhere near completion. In the summer of 2021, ‘COMPLAINT|10 ul 12 13, 14 15 16 7 18 20 21 22 23 24 25 26 27 28 ‘Schwarz told Smith that Plaintiffs needed to have a budget and timeline conversation. Not only was Smith way over his original timeline and budget, Plaintiffs had also been paying rent for a year. Schwarz made Smith sit down and talk, while Schwarz had his computer out and made a spreadsheet. Through a rambling conversation, Smith stated that it would take another $260,000 or so, and we would be done in two months. 19. Despite having a full-time job as a teacher, a young daughter at home, and a potential second career as a novelist, Schwarz would come before school, after school and on weekends to keep the project moving. Though Schwarz had no experience or training in the trades, he was excavating trenches, jackhammering walls and concrete, hanging drywall, and helping to build walls. Periodically Schwarz would come in and clean up after Smith, organizing his tools and clearing enough space for people to work. Schwarz would even do office work for him, submitting for construction changes to the city and ordering products so he wouldn't have to. 20. Plaintiffs were suffering stress and severe economic hardship as a result of the delays and increased costs. Smith continued to tell Plaintiffs we would be open soon, and there was just enough progress being made that Plaintiffs believed him, Plaintiffs felt like they were being held hostage, in a constant state of suspended animation, hemorrhaging money with no recourse but to continue to have faith in Smith. Plaintiffs relied on Smith to give them the correct information. 21. By January of 2022, Plaintiffs had had enough. Schwarz asked Smith to meet him at his house away from cafe, so he wouldn't be distracted. At that point Plaintiffs had paid Defendants over $271,000, with another $19,200 going to a tile contractor. Schwarz asked Smith for documentation of everything he had spent Plaintiffs money on to date, as well as a firm budget and timeline for the remainder of the project. Smith said he was willing to open his bank account and have Schwarz. look at it, but he didn't know how to log in. Smith admitted to Schwarz, that he used his business account for all his business and personal expenses. Plaintiffs had been his sole clients for a year (according to him), which meant he was spending Plaintiffs’ money on himself and his family. Mt ‘COMPLAINT|10 ul 12 13, 14 15 16 7 18 20 21 22 23 24 25 26 27 28 22. Schwarz asked Smith how much had been spent on personal expenses, and how much had been spent on the project. More importantly, Plaintiffs wanted receipts for everything to date. Schwarz told Smith he wouldn't give him another penny, and Plaintiffs wouldn't move forward with the project, until Smith provided that information, Smith initially came back with the figures of around $160,000 spent on our project so far, with about $113,00 going to him. ‘Smith also said it would take another $160,000 before the business could open, and would take a couple months. 23. None of the alleged expenses came with any proof. At one point, Smith presented Schwarz with a piece of paper with three numbers written in pencil, a simple subtraction problem. Smith claimed this was proof he had only earned about $34,000 on the project to date. Again, there was no supporting documentation for any of this. 24. Plaintiffs were livid and Smith knew it. As a way to appease Plaintiffs, Smith made Plaintiffs the following additional promise: Smith would work for free until they were finished with the buildout. All subcontractors would be paid directly by Plaintiffs, and Smith would negotiate with them so they only charged time and materials. Plaintiffs believed Smith's promises and representations and continued the project with him. 25. Fora short period of time things looked promising, but they soon fell into a similar pattern, There would be periods of work and periods where nothing was done, Some of the subcontractors Smith hired were competent, and continued to work for Plaintiffs until the end of the project. Others, though, were problematic. Smith kept trying to find people to work for less, claiming it was a way to save us money. But, this meant people were doing work as side jobs, after their regular jobs or on weekends. This made progress very slow. Smith’s tile contractor kept coming and going, taking long breaks to visit family in Hawaii or work other jobs. Smith’s electrician would disappear for long stretches. When he returned, he would only do a little work (an hour here or there, putting in a couple outlets, for example) before leaving and not returning for another long period of time. 26. In or about the middle of 2022, Smith finally admitted he lost his contractor's license, even though he really lost it a couple months after starting work for Plaintiffs. Smith s- ‘COMPLAINT|10 ul 12 13, 14 15 16 7 18 20 21 22 23 24 25 26 27 28 assured Plaintiffs it was caused by a mistake at the EDD, and that it would be quickly resolved. ‘Smith said that because he wasn’t getting paid, it wouldn't be illegal to keep him on, 27. In or about July 2022, Plaintiffs suffered the loss of a family member. Smith took full advantage of this situation to get more money from Plaintiffs. Right before Plaintiffs left for Hawaii to be with family, Smith told Schwarz he needed an emergency check for the men pouring concrete. Despite reservations, Schwarz provided the money because the men had already completed the pour. Smith did this again at the end of August, when Plaintiffs were flying to Hawaii for the funeral. Smith asked for an emergency check to pay for the concrete guys, who were finishing their work. Again, Plaintiffs believed him, 28. Finally, things came to a head in early October 2022. One of the subcontractors, a man who's worked with Smith over the years, came to the jobsite several times in one week to complete work. He asked Smith to do a couple simple tasks, like find a sink and clear off the subtops. Smith couldn’t complete the tasks. Smith had also apparently injured himself a couple times off-site that week. Schwarz’s best friend from college was also on-site one week installing the security system. He said Smith was hardly ever there. At this point, Plaintiffs knew they had to make a change. 29, Plaintiffs hired a new contractor, Thomas Jeffrey of Deep Blue Construction. ‘Smith met with the new contractor. Schwarz told Smith they needed him to help consult, and that ‘Schwarz would pay him for that work, Smith was upset, saying he only wanted to help us, and that he had been working nights and weekends trying to get the project across the finish line. 30. The next day, Schwarz cleaned the site for sixteen hours. Schwarz took everything out that he could. He swept and vacuumed the floors, wiped down every surface with Clorox wipes, then scrubbed the floors and wiped them on his hands and knees. Schwarz hauled out the trash, which included nearly a dozen empty Modelo cans, 31. Plaintiffs are informed and believe that Smith had a drinking and other problems, Numerous people (subcontractors, inspectors) informed Plaintiffs they had witnessed ‘Smith passed out in the comer of the café. They had seen him drinking or smelled alcohol on Mt ‘COMPLAINT|10 ul 12 13, 14 15 16 7 18 20 21 22 23 24 25 26 27 28 him. Smith shared with Schwarz once that he was having marital problems, so there may have been a time when Smith wasn’t living at home. 32. Moreover, the quality of Smith's work was terrible. The new contractor documented every flaw, cut comer, missed inspection and more. Though Smith said he was paying subcontractors to do a good bit of the work, Plaintiffs are informed and believe that he was trying to do most of the work himself. Plaintiffs are further informed and believe that Smith hired some of the local homeless population to do jobs 33. Plaintiffs are further informed and believe that Smith failed to competently supervise the work of other subcontractors such as the tile subcontractor and the electrician. It took a team of three electricians from the new contractor several weeks (and close to $80,000) to complete everything Smith’s electrician had not yet done, or had done incorrectly 34. Plaintiffs are informed and believe Smith failed to pay subcontractors with the money he took from Plaintiffs. 35, Defendants lied to Plaintiffs and stole substantial sums of money from. Plaintiffs 36. All of this has caused extensive damages to Plaintiffs, including but not limited to severe emotional distress, FIRST CAUSE OF ACTION Violation of Business and Professions Code § 7031 — Against All Defendants 37. Plaintiffs incorporate by reference the allegations of Paragraphs 1 through 36, as if stated here in full 38. Defendants were operating as a general contractor without a valid business license. 39. Plaintiffs utilized the services of Defendants during the time that Defendants were unlicensed, 40. Asa result, Plaintiffs are entitled to disgorgement and recovery of all compensation paid to Defendants for the performance of any act or contract during the time Defendants were unlicensed pursuant to California Business and Professions Code § 7031 7 ‘COMPLAINT|10 ul 12 13, 14 15 16 7 18 20 21 22 23 24 25 26 27 28 SECOND CAUSE OF ACTION Breach of Oral Contract — Against All Defendants Al. Plaintiffs incorporate by reference the allegations of Paragraphs | through 40, as if stated here in full. 42. Plaintiffs and Defendants entered into an oral contract for construction services to build out the space for the establishment of Patisserie Melanie. Plaintiffs agreed to engage Defendants based, in part, on Defendants estimates for the cost of the project and the completion date. 43. Defendants breached the oral contract by doing the acts alleged herein, which includes but is not limited to, mismanagement, cost overruns, project delays, incompetent construction services, incomplete construction services, inadequate workmanship, failure to pay subcontractors, and theft of funds paid by Plaintiff for the project which Defendants used for their personal use. Defendants’ performance under the contract was so bad that Plaintiffs terminated the contract and hired a new contractor to complete the work. 44, Plaintiffs fully performed any obligations owed to Defendants except as to those obligations Plaintiffs were prevented or excused from performing, 45. Defendants’ breach of the contract has caused harm to Plaintiffs in an amount to be proven at trial but believed to be in excess of several hundred thousand dollars. THIRD CAUSE OF ACTION Fraud — Against All Defendants 46. Plaintiffs incorporate by reference the allegations of Paragraphs 1 through 45, as if stated here in full 47. Asset forth herein, Defendants made multiple promises to Plaintiffs regarding: (1) Defendants ability to complete the project, (2) the amount of time it would take to complete the project, (3) the amount of money it would take to complete the project and (4) that money was needed and would be used for the project. Defendants made these promises without any intention of performing them. Mt ‘COMPLAINT|10 ul 12 13, 14 15 16 7 18 20 21 22 23 24 25 26 27 28 48. Defendants’ promises were made with the intent to defraud and to induce Plaintiffs to rely on them. Specifically, Defendants promises were made with the intent to induce Plaintiffs into hiring Defendants for the project and to induce Plaintiffs to continue using Defendants for the Project even after the multiple problems arose as alleged herein. 49. Plaintiffs justifiably relied on Defendants’ promises and such reliance was reasonable. 50. Defendants’ fraud has caused harm to Plaintiffs in an amount to be proven at trial but believed to be in excess of several hundred thousand dollars. 51. Defendants’ fraud also caused Plaintiffs to suffer serious emotional distress as, alleged herein. 52. Defendants acted with reckless, willful or callous disregard for Plaintiffs’ rights and with malice, fraud or oppression toward Plaintiffs, thereby entitling Plaintiffs to an award of punitive damages in accordance with proof at trial FOURTH CAUSE OF ACTION Negligence — Against All Defendants 53. Plaintiffs incorporate by reference the allegations of Paragraphs | through 52, as if stated here in full 54, Defendants had a duty to Plaintiffs to perform properly licensed construction services in a reasonable, competent, and timely manner. 55. Asalleged herein, Defendants breached these duties by, among other things, mismanagement, cost overruns, project delays, incompetent construction services, incomplete construction services, inadequate workmanship, failure to pay subcontractors, and theft of funds paid by Plaintiff for the project which Defendants used for their personal use. 56. Defendants’ conduct was a proximate cause of Plaintiff’ damages and injuries, which serious emotional distress as alleged herein, 57. Defendants’ negligence was a substantial factor in causing Plaintiffs" harm. ait alt ‘COMPLAINT|10 ul 12 13, 14 15 16 7 18 20 21 22 23 24 25 26 27 28 58. Defendants acted with reckless, willful or callous distegard for Plaintiffs’ rights and with malice, fraud or oppression toward Plaintiffs, thereby entitling Plaintiffs to an award of punitive damages in accordance with proof at trial FIFTH CAUSE OF ACTIO! Negligence Per Se— Against All Defendants 59. Plaintiffs incorporate by reference the allegations of Paragraphs | through 58, as if stated here in full. 60. Defendants owed Plaintiffs a duty to comply with statutory and regulatory provisions that apply to contractors and the construction industry, including but not limited to the licensing requirements in the California Business & Professions Code. 61. Defendants violated these laws by, among other things, performing construction. and contractor services without a valid license. 62. Defendants’ violations of these laws were a direct and proximate cause of Plaintiffs’ injuries and damages 63. Defendants’ violations of these laws were a substantial factor in bringing about Plaintiffs’ harm. 64, Defendants’ violations of these law were not excused, 65. Defendants acted with reckless, willful or callous disregard for Plaintiffs’ rights and with malice, fraud or oppression toward Plaintiffs, thereby entitling Plaintiffs to an award of punitive damages in accordance with proof at trial PRAYER FOR RELIEF WHEREFORE, Plaintiffs pray for relief as follows: 1. For disgorgement of all monies paid to an unlicensed contractor in an amount to be proven at trial; 2. Forall compensatory damages in an amount to be proven at trial; 3. Forall consequential and incidental damages in an amount to be proven at trial; 4. For pte-judgment interest on all such damages at the maximum rate allowed by law from the time Plaintiffs incurred the loss, costs and damages; -10- ‘COMPLAINT|10 ul 12 13, 14 15 16 7 18 20 21 22 23 24 25 26 27 28 5. For punitive damages according to proof at trial; 6. For costs and attomeys’ fees; 7. Forsuch other and further relief as this Court may deem proper JURY TRIAL DEMANDED Plaintiffs demand a jury trial on all issues triable by a jury. Dated: October 5, 2023 BEHMER & BLACKFORD LLP Fe Ci] TIMOTHY S. BL Attorneys for Plaintiffs Patisserie Melanie, LLC, Melanie Dunn, and Axel Schwarz “lle ‘COMPLAINT|