Ted R. Gropman, Pepper Hamilton LLP, Partner
Pacific Caisson & Shoring, Inc. v. Bernards Brothers Inc., 236 Cal. App. 4th 1246 (Cal. Ct. App. 2015)
In California, a contractor must be licensed by the Contractors State License Board (Board) in order to lawfully perform construction operations. The Board issues three types of licenses: an “A,” or general engineering license; a “B,” or general building license; and a series of “C” specialty licenses for trade contractors (e.g., concrete, electrical, glass and glazing, structural steel, drywall, tile, etc.). California Business & Professions Code (B&P) §§ 7056–7058. In order to qualify for a license, a contractor must provide a responsible managing officer (RMO) or a responsible managing employee as its qualifier. B&P § 7068.
The consequences of contracting without the proper license can be severe. An unlicensed contractor may not sue to recover for the value of its work. B&P § 7031(a). Even more damaging, an owner can seek disgorgement of all monies paid to a contractor, even if there was nothing wrong with the contractor’s construction of the project. B&P § 7031(b); Alatriste v. Cesar’s Exterior Designs, Inc., 183 Cal. App. 4th 656 (Cal. Ct. App. 2010). As the California Supreme Court has observed, B&P § 7031 “represents a legislative determination that the importance of deterring unlicensed persons from engaging in the contracting business outweighs any harshness between the parties, and that such deterrence can best be realized by denying violators the right to maintain any action for compensation in the courts of this state.” MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., 36 Cal. 4th 412, 423; 115 P.3d 41 (Cal. 2005). Continue reading “Noncompliance with the California Contractor’s License Law Brings Severe Consequences”