In Twenty-Nine Palms Enterprise Corp. v. Bardos (2012), [No. E051769] the Fourth Dist. Court of Appeals issued its ruling affirming a Judgment against an unlicensed contractor. This was an Indian tribal corporation’s suit against a construction company seeking to recover money paid for constructing a road and parking lot for a casino, on the ground that defendant was unlicensed at the time of the contract. Relevantly, B&P Code Section 7031, subdivision (b), provides that an unlicensed contractor must disgorge all compensation earned under a contract. The Trial Court’s judgment was in favor of the plaintiff owner. The Court of Appeals affirmed, and found that in relation to contractor licensing: 1) an unlicensed sole proprietor contractor could not use the alter ego doctrine to allow it to borrow another company’s license as that would be improper use of an equitable doctrine; and 2) there was no triable issue of fact on the issue of substantial compliance with the contractor’s state license laws. The net result, the owner who paid the unlicensed contractor $751,955.00, now has a judgment to get reimbursed that amount from that unlicensed contractor. This is a stark reminder to all California contractors, make sure your state contractor’s license is valid and in effect while you are performing construction work.
All Rights Reserved © 2012 by Michael L. Mau, Esq. & The Mau Law Firm
In Templo Calvario Spanish Assembly of God v. Gardner Construction Corp. (2011) ([No. F060838. Fifth Dist. Aug. 16, 2011.] the Court of Appeals enforced an arbitration clause from an interesting factual background. This was a contract dispute involving the enforceability of an arbitration provision contained in a construction contract, where the contractor was unlicensed. So the question was whether the contract, and thus arbitration clause in that contract, were automatically void? The trial court had vacated the arbitration award finding that the construction contract with an unlicensed contractor was automatically void. However. the Court of Appeals reversed this decision. The Appellate Court held that under the case precedent of MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, the construction contract was not automatically void just because the contractor was unlicensed. Instead, it confirmed that the Contractors State License Laws still bars suit to collect compensation for unlicensed work.
All Rights Reserved © 2011 by Michael L. Mau, Esq. & The Mau Law Firm