Monday, July 25, 2005

Supreme Court Slams Contractors

By Bruce Rudman

Full Screen Version

Fourteen years ago, the Supreme Court issued a ruling that held that an out of state contractor who was fraudulently lulled to California to perform work on a project, and who was allegedly promised that they would be paid despite their lack of a California contractor’s license, could not collect. That decision set a bright line rule that unlicensed contractors could not collect despite the harsh realities of how they came to get that job. The reasoning was to protect the public.

Fourteen years later, the California Supreme Court has issued a ruling that is extremely harsh to the licensed contractor who becomes unlicensed during the performance without a valid statutory excuse. This decision is contrary to most practitioner’s opinions and beliefs on the license issue, and does nothing to protect the public.

Business and Professions Code section 7031(a) provides: “Except as provided in subdivision (e), no person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action, or recover in law or equity in any action, in any court of this state for the collection of compensation for the performance of any act or contract where a license is required by this chapter without alleging that he or she was a duly licensed contractor at all times during the performance of that act or contract, regardless of the merits of the cause of action brought by the person, except that this prohibition shall not apply to contractors who are each individually licensed under this chapter but who fail to comply with Section 7029.”

Continued...