Chapter 11
Contractor’s Licensing
Summary:
This is an overview of the California Contractor’s State License Law (Business & Professions Code §§ 7000-7173), discussing requirements, classifications of licenses, licenses necessary for the various areas of the construction industry, unlicensed contractors, and exemptions from the law. The special requirements that apply to joint venture licenses are discussed. In addition, the perpetual problem of licensing joint ventures and other temporary business entities arise frequently, as well as legal cases that illustrate the effects of noncompliance with licensing laws.
§11.1 Overview
The statutory provisions governing the licensing of contractors in California are harsh, unforgiving and can result in the return of all the funds paid to the contractor. The statutes are found in Business and Professions Code §§ 7000-7170. This comprehensive body of law sets forth the requirements for obtaining a construction license, the penalties for performing work without a license, and the various licensing classifications available.
The purpose of the California licensing law is to protect the public from incompetence and dishonesty in those who provide building and construction services168 and to guard the public against unskilled workmanship and deception. The case of Asdourian v. Araj, 38 Cal. 3d 276 (1985) was superseded by revisions to the statute cited below, Business and Professions Code § 7031, which was passed in response to the expansion of the “substantial compliance” doctrine and effectively curbed that doctrine.
The Contractor’s State License Board is the agency responsible for administering the license law and is included within the Department of Consumer Affairs of the State of California. The responsibilities of the Board include reviewing and investigating complaints made against contractors and administering disciplinary action against contractors found to have violated any aspect of the licensing provisions. It is important to observe that expert witnesses who testify at citation hearings are immune from tort liability to the contractor. Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 520.
Under recent legislation, the bond or cash deposit posted with the Contractor‘s License Board rose to $15,000 for the contractor’s bond and $12,500 for the bond of the qualifying individual. from $10,000 on January 1, 2007, and $15,000 or more for those who have had a suspended license, or have been cited for performance of unlicensed work. Also, since 2007, contractor's must have their fingerprints registered as part of the licensing process. See: Sections 869.1, 869.2, 869.3, 869.4 and 869.5 of Division 8 of Title 16 of the California Code of Regulations.
§ 11.2 Who Needs a License?
A contractor (which includes a builder, subcontractor, or specialty contractor) is defined by Business and Professions Code § 7026 as one who either undertakes or conveys the authority to undertake the construction, alteration, repair, improvement, or demolition of any building, road, or other structure.
Anyone engaging in the above activities is required to possess a valid California state contractor’s license. Effective January 1, 2004, Business and Professions Code § 7026.1 was amended to include in the definition of “contractor’’ a temporary labor service agency, as employer, providing employees for construction work covered by the Contractors’ State License Law.
Oftentimes, an individual does not construct, alter or repair an entire structure, but performs only a small fraction of work on a building. California case law indicates that when a small portion of work technically requires a contractor’s license but substantially all of the work does not, failure to obtain a license is not fatal, and the contractor is likely to prevail in its efforts to collect payment.169
On the other hand, the court has found that in some cases a valid license is required to perform only a portion of a project. In one case, an individual who assisted a drywall contractor and framing contractor, and who was to be paid for labor on a square-foot basis and for materials on a cost-reimbursement basis, was required to possess a valid contractor’s license.170
If the individual had worked simply for wages and the materials had been provided by the general contractor, full payment would probably have been compelled by the court. The court also held that a valid contractor’s license was required by an individual who provided a loader and trucks and removed dirt from one site and transported it to another.171 Lastly, the court required a person who furnished topsoil and finished grading a site to possess a valid contractor’s license.172
As you can see, there is a fine line between when a license is required and when a license may not be required. Public agencies and contractors should contact the State License Board to determine whether a license may be required for the particular types of work they plan to undertake.
A major case in this area is Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929. Vallejo Development was a master developer that bought land, built infrastructure improvements, such as grading, storm drainage, sanitary systems, streets, street lighting and other project elements, then sold the lots to merchant developers who were going to build housing tracts. Vallejo performed some of the work after the close of escrow. While Vallejo used licensed contractors and subcontractors to do the work, the Court found Vallejo was acting as a general contractor, but was unlicensed. It therefore could not collect over $40 million worth of work performed over two years.
§ 11.3 Requirements for Public Contracts
Two provisions of the Public Contract Code relate to the licensing classification and requirements for bidding on a public project. The first is contained within the administrative provisions and requires all public entities to specify the license classification the selected contractor must possess at the time the public works contract is awarded.173 The public entity must include the required license classification on any plans prepared by the public entity, as well as all invitations to bid.174 This provision applies to only those contractors who have a direct contractual relationship with the public entity and not those who subcontract with the general contractor.175
The second provision relates to contracting by state agencies and requires the contractor to possess a valid contractor’s license if awarded a state contract involving federal funds.176 The state agency must verify that the contractor awarded the project possesses the appropriate classification necessary to perform the work.177
§ 11.4 Which License Is Necessary?
Contained within the statutory provisions governing the licensing of contractors in the State of California are the various classifications assigned to different areas of the construction industry.178
Three main classifications are prescribed by statute: Class A encompasses general engineering contractors,179 Class B refers to general building contractors,180 and Class C refers to all other specialty contractors outside the general building classification,181 such as electrical contractor (C10), plumbing contractor (C36), and swimming pool contractor (C53), to name but a few. The licensing board administers individual examinations for the various classifications, as well as trades or crafts within the classifications. It then qualifies applicants for approval if they are successful on the examinations.182
The Class A general engineering contractor is defined by the Business and Professions Code as one involved with fixed works requiring specialized engineering knowledge and skill, including items such as flood control structures, dams, harbors, shipyards, railroads, highways and streets, and airports.183
The Class B general building contractor is one whose principal business is building a structure for the “support, shelter, and enclosure of persons, animals, chattels or movable property of any kind...”184 In order for the Class B license to be applicable, the construction of the building described above must involve more than two unrelated trades or crafts.185 An individual performing two or fewer trades must possess a valid specialty license, as discussed below.
The Class C specialty contractor is one who performs work requiring specific skills or knowledge in the area of a specialized building trade or craft.186 A specialty contractor may perform specialty work for which it does not possess a license, so long as that work is incidental and supplemental to the work for which the contractor is licensed.
A case illustrating this point involved a plumbing contractor who was permitted to perform fire protection work without a fire protection license owing to the “incidental nature of fire protection work in general.”187 Any business licensed to perform contracting work in the State of California must currently employ at least one individual who meets all the criteria for licensure within the applicable classification.188 This individual is referred to as the Responsible Managing Employee (RME) or Responsible Managing Officer (RMO). Extensions of time to fill a vacant position may be granted in certain circumstances. A business temporarily without an RME or RMO must fill the position with another qualifying individual within ninety days or its license will automatically be suspended.189
Special requirements apply to joint venture licenses. Each member (individual, corporation or partnership) of the joint venture is required to individually possess a valid contractor’s license.190 However, only one member of the joint venture is required to be licensed in the classification in which the joint venture is licensed.191 The loss of any member’s license or the departure of any member from the joint venture will result in the loss of the joint venture’s license.192 Joint ventures may bid on work without a license, but must obtain the applicable license classification prior to being awarded a contract.193
The legislature and the courts have been very active in the enforcement of the rules regarding the duties of qualifying Individuals. An RME or RMO who does not perform their duties under the law can be prosecuted as a misdemeanor subject to fines of $3,000 to $5,000 and imprisonment of up to six months. (Business and Professions Code 7068.1.) The lack of a legitimate qualifier or the use of a sham qualifier can result in the contractor being deemed to be contracting without a license. Jeff Tracy, Inc. v. City of Pico Rivera (2015) 240 Cal.App.4th 510 (typically the issues of supervision and control over the work involve factual questions appropriate for the jury.)
§ 11.5 Unlicensed Contractors
Many people claim to be licensed contractors when, in fact, they are not licensed. The consequence of unlicensed work is generally the lack of any right to payment for work performed. Business and Professions Code § 7031(a) prevents any unlicensed individual from recovery for the performance on any contract for which a valid contractor’s license is required, regardless of the merits of the unlicensed contractor’s claim. In Hydrotech Systems, Ltd. v. Oasis Waterpark, the California Supreme Court concluded that the § 7031 bar against suits by unlicensed contractors applies even when the owner fraudulently and knowingly entices an unlicensed contractor to enter into a contract.194 In that case, an out-of state contractor was barred from suing for fraud. The Court stated, “[R]egardless of the equities, § 7031 bars all actions, however they are characterized, which effectively seek ‘compensation’ for illegal unlicensed contract work.”195 Thus, an unlicensed contractor cannot recover either for the agreed-upon contract price or for the reasonable value of labor and materials.196
The Contractors License Law is both a sword and a shield. In fact, whether the owner knows or does not know the contractor is not licensed is not legally significant. Alatriste v. Cesar's Exterior Designs, Inc. (2010) 183 Cal.App.4th 656.
However, § 7031 allows the courts to determine there has been substantial compliance under this section if the unlicensed contractor can prove he or she was properly licensed just prior to performance under the contract at issue and was unaware he or she did not possess a valid license when the work was performed. One California case that demonstrates the uncertainty associated with § 7031(d) involved a question of whether a corporate contractor’s president, who was personally licensed, was the RMO of the corporation, thereby making the corporation licensed under the substantial performance test.197 Generally substantial performance is defined as conformance with all the substantive aspects of the statute, giving the consumers essentially the same degree of protection as if the contractor had been fully licensed.
The lack of licensing throughout the project can lead to harsh results. In MW Erectors, Inc. v Niederhauser Ornamental & Metal Works Co. (2005) 36 Cal.4th 412, the Supreme Court ruled that a contractor could not recover compensation for individual acts performed while the contractor was licensed (rejecting the argument that obtaining a license after the project commenced was sufficient to collect payment for work performed after the license was issued).
The steel erection contractor in WSS Industrial Construction, Inc. v. Great West Contractors, Inc. (2008) 162 Cal.App.4th 581 got its contractor's license four days after submitting their third invoice for shop drawings, anchor bolts, and related pre-construction goods and services. The court found that the contractor was not licensed during the bidding or performance of the work, even though the subcontract was not signed until after the license was in place.
In an unusual case, a restaurant design and supply service was found to be an unlicensed contractor, ineligible to be paid for its work or equipment. Banis Restaurant Design, Inc. v. Serrano (2005) 134 Cal.App.4th 1035. The Banis enterprise was paid $16,000 for design services but went on to provide more than $1.7 million in labor, materials, equipment and services for the project. The Court evaluated all these factors, but was particularly focused upon the contract, which set forth a fixed price for the plaintiff to exclusively provide all goods, services and labor for the project, as well as a mechanics lien where the Plaintiff described the materials and equipment it provided and installed as "fixtures," thus making the exception for merely providing removable equipment and appliances not applicable.
In a case that is almost a mirror opposite, the Owner asserted a general denial of the material allegations of the contractor’s claim, thus invoking the requirement that the contractor prove licensure. The Owner did not bring up the issue of licensure, or lack thereof, until mid-trial. The owner was granted its motion for judgment notwithstanding the verdict, as the contractor had not provided a certified copy of its license status. Generally, a mere general denial is sufficient to put the license issue into play. Advantec Group, Inc. v. Edwin’s Plumbing Co., Inc. (2007) 153 Cal.App.4th 621. However, In this case, the homeowner's cross-complaint alleged In two places that the contractor was licensed and the homeowner had made a formal demand against the contractor's bonding company. These allegations indicated the homeowner did not intend to question the license status. (Or at least, was not allowed to sandbag the contractor’s attorney at trial).
A few exceptions to strict compliance with § 7031 have been allowed by federal courts, as well as by California courts. In one California case the court concluded that an unlicensed contractor may be able to apply an unpaid contract balance as a setoff in a lawsuit brought by an owner.198
While many have argued that a contractor who gets a license or corrects a license problem during the course of the project should get a partial recovery, the Courts have answered in the negative. Alatriste v. Cesar's Exterior Designs, lnc. 183 Cal.App.4th 656. The prohibition against an unlicensed individual recovering contract or claims sums also applies to a party that obtains an assignment of the claim through factoring the receivable or purchasing the claim. In Construction Financial v. Perlite Plastering Co.,199 the trial court dismissed a subcontractor’s action for breach of contract and related causes of action against two construction companies and an insurer on the grounds that the subcontractor did not show substantial compliance with the Contractors’ State License Law. The Court of Appeal affirmed, holding that substantial evidence supported the trial court’s dismissal of the action. The trial court’s finding that the subcontractor’s negligence caused it not to have a valid license was enough to support the judgment, since the 1991 version of Business and Professions Code § 7031, subd. (d) (applicable to this action since it was effective on December 20, 1993), exempted from licensure requirements only those contractors whose unlicensed status was the result of circumstances beyond their control. Furthermore, although the defendant general contractor was aware of the plaintiff’s licensure status, and the plaintiff relied upon the defendant’s advice in connection with its license, Business and Professions Code § 7031 applied.
A licensed contractor can have their license suspended or revoked for various reasons. One is the lack of adequate worker's Compensation Insurance. Under Business and Professional Code § 7125.2, the contractor’s license is automatically suspended by operation of law for failure to procure or maintain insurance. It is automatically suspended upon the earlier of when the coverage lapses or is to be obtained. In Wright v. Issak (2007) 149 Cal.App.4th 1116, the home improvement contractor was denied recovery for unpaid work due to a statutory automatic suspension of license — based on contractor’s failure to obtain workers compensation insurance. This bar occurred despite the fact the license board had not taken formal action to suspend the license. The lapse in workers’ compensation insurance was sufficient to deem the contractor’s license invalid for the purposes of payment.
In Pac. Custom Pools, Inc. v. Turner Constr. Co. (2000) 79 Cal.App.4th 1254, plaintiff was denied recovery where it had notice of the license suspension, failed to timely renew the license after notice of expiration, and when it did attempt to renew, sent a check that was dishonored. The Court in Pacific Custom Pools, supra, acknowledged that revisions to Business and Professional Code § 7031, passed by the California legislature, had the effect of severely limiting the application of the substantial compliance doctrine to unlicensed contractors. Thus, this case had the effect of overruling prior cases that had given the courts greater leeway in the application of the substantial compliance doctrine. There are limited circumstances where substantial compliance may still apply after a lapse in worker's compensation coverage, as discussed in Icf Kaiser Eng’rs. v. Superior Court (1999) 75 Cal.App.4th 226.
A major trap for small contractors (or subcontractors) who try to employ day laborers, site workers or supervision as “independent contactors.” In general, those workers will not qualify as independent contractors under the new law. If they don’t meet the test, they are deemed employees and the hiring contractor has now employed multiple individuals who do not have worker's compensation insurance. And the contractor is now subject to license suspension, non-payment and disgorgement.
Further, failing to have workers’ compensation coverage is a criminal offense. Section 3700.5 of the California Labor Code makes it a misdemeanor punishable by either a fine of not less than $10,000 or imprisonment in the county jail for up to one year, or both. Additionally, the state issues penalties of up to $100,000 against illegally uninsured employers. Additionally, if an injured worker files a workers’ compensation claim that goes before the Workers’ Compensation Appeals Board and a judge finds the employer had not secured insurance as required by law, when the dispute is resolved the uninsured employer may be assessed a penalty of $10,000 per employee on the payroll at the time of injury if the worker’s case was found to be compensable, or $2,000 per employee on the payroll at the time of injury if the worker’s case was non-compensable, up to a maximum of $100,000. Labor Code § 3722(d) and (f). Contractors and subcontractors should be aware that workers’ compensation benefits are only the exclusive remedy for injuries suffered on the job when you are properly insured. If you are illegally uninsured and an employee gets sick or hurt because of work, that employee can file a civil action against you in addition to filing a workers’ compensation claim.
While construction subcontractors themselves are exempt from the very stringent “ABC” test under the recently decided case law and the new AB5 law, scheduled to go into effect January 1, 2020, they and their workers are nevertheless subject to the so called older Supreme Court decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 test (the most significant factor is whether the hiring firm has control or the right to control the worker both as to the work done and the manner and means in which it is performed.) which lists a variety of factors such as other clients and independent control of their business. They must also satisfy the following criteria:
· The subcontract is in writing
· The subcontractor is licensed by the Contractors State License Board
· The work is within the scope of that license
· The subcontractor has all required business licenses or business tax registration.
· The subcontractor maintains a business location separate from the business or work location of the contractor
· The subcontractor has authority to hire and to fire other persons to provide or to assist in providing the services
· The subcontractor assumes financial responsibility for errors or omissions in labor or services by having insurance, legally authorized indemnity obligations, performance bonds, or warranties for the labor or services provided
· The subcontractor is customarily engaged in an independently established business of the same nature as that involved in the work performed.
· The subcontractor has the right to control how the work is performed, and
· The subcontractor’s IC status is bona fide and not a subterfuge to avoid employee status.
Further, the issue of substantial compliance with the licensing law has been held a question for the judge, not the jury in Judicial Council of California v. Jacobs Facilities, Inc. (2015) 239 Cal.App.4th 882. It is also not the province of an arbitrator, since the license law licensure as the licensing laws reflect an “explicit finding of public policy.” Ahdout v. Hekmatjah (2013) 213 Cal.App.4th 21.
Practice Pointer: Perhaps the most important thing a lawyer, contractor, or owner can do in reviewing a contract is assuring themselves that the entity listed on the contract (and to whom payment is issued) is EXACTLY the same as the entity name listed on the CSLB website as the licensed entity. A license can easily be checked by visiting: https://www.cslb.ca.gov/OnlineServices/CheckLicenseII/CheckLicense.aspx
If not, the contracting party is subject to being accused of being an unlicensed contractor subject to non-payment and disgorgement. Handyman Connection of Sacramento, Inc. v. Sands (2004) 123 Cal.App.4th 867 (where the licensed individual went through several court proceedings to reach a decision that the name he used was in substantial compliance with the license law). Use of letterhead with nicknames or abbreviated names of the contractor can also lead to erroneous party names on contracts and notices.
It is also extremely dangerous to move a license from one entity to another during the course of a project. Even if the first entity is the contracting party, the owner may raise the unlicensed issue at any time. It is the contractor’s job to prove they are properly licensed, not the owner’s job to prove the contractor is unlicensed.
In one case, obviously a close call, a contractor contracted as a sole proprietor and then incorporated his practice. The courts accepted his argument that he or the successor corporation was licensed during the entire job. E. J. Franks Construction, Inc. v. Sahota (2014) 226 Cal.App.4th 1123.
In one private arbitration, the Arbitrator ruled that where the unlicensed corporation was the original contracting party, a later transfer of the sole owner’s license the corporation was insufficient to cure the fact the corporate was unlicensed at the time of contracting and for the vast majority of the work.
In limited circumstances, a company found to be an unlicensed contractor might be able to recover for those goods and services that do not require a contractor’s license. Phoenix Mechanical Pipeline, Inc. v. Space Exploration Technologies Corp. (2017) 12 Cal.App.5th 842.
§ 11.6 Exemptions from the License Law
Numerous exemptions from the Contractors’ State License Law exist.200 One exemption is for minor or inconsequential projects for which labor and materials do not amount to more than $500 in the aggregate.201 This exemption also applies to materials suppliers.202 However, a fine line is drawn when applying this particular exemption.
In one case, California courts stated a license was required of a prefabricated-pool installer whose work required significant excavation and other work.203 In another case, a license was not required of a prefabricated-restroom manufacturer whose employees assemble components and bolt the unit to a foundation.204
Another important exemption applies to “owner/builders.” This exemption typically applies when the owner performs the work on his or her own property or uses his or her own employees to do the work.205
There has been considerable litigation regarding projects built on federal or tribal lands. On federal projects, there is a strong policy of federal pre-emption of state and local contractor license statutes and regulations, as such local laws would interfere with federal authority and jurisdiction. E.g., Technica LLC ex rel. United States v. Carolina Cas. Ins. Co. (9th Cir. 2014) 749 F.3d 1149 (Even though a subcontractor was not licensed under California law, pursuant to Business and Professions Code § 7031(a), it was not precluded from pursuing its Miller Act, 40 U.S.C.S. §§ 3131-3134, claim for payments due under a subcontract; [2]-Remedies under the Miller Act could not have been conditioned by state law.)
However, with regard to projects built on sovereign tribal land, the Courts have held that a contractor’s license is still required for the protection of public safety. Twenty-Nine Palms Enterprises Corp. v. Bardos (2012) 210 Cal.App.4th 1435.
Lastly, an exemption applies to architects and engineers performing solely within their professional capacities.206
§ 11.7 Sanctions
One area of perpetual problems is the licensing of joint ventures and other temporary business entities and relationships. In general, a lack of licensing compliance will result in nonpayment, as well as other calamities.
For example, in Ranchwood Communities Limited Partnership v. Jim Beat Construction Co.,207 the homeowner’s associations of two separate condominium projects brought construction defect actions against the developers who administered the projects as unlicensed general contractors. The defendants cross-complained against numerous subcontractors on the projects for equitable and implied contractual indemnity, contribution, negligence and certain contract-based theories. The trial court granted summary judgments for the subcontractors and dismissed the cross-complaints, finding them barred by Business and Professions Code § 7031 (barring actions brought by unlicensed contractors for compensation for work performed).
The court of appeal reversed the summary judgments and remanded the case for further proceedings because, in their capacity as developers, the defendants were not subject to a bar to their pursuit of recovery on tort theories of indemnity and contribution by reason of their lack of contractors’ licenses.
The Court held that the defendants did not show substantial compliance with the licensing statute or exemption from licensing requirements because they were owner/builders within the meaning of Business and Professions Code § 7044. Neither the fact that an owner/lender of one of the contractors obtained a license for the last year of the seven-year construction period nor the contractors’ hiring of licensed subcontractors or a licensed general contractor as manager raised triable issues to show substantial compliance.
Furthermore, although Business and Professions Code § 7044 was amended in 1989 (following completion of the above projects), the legislature’s intent was to clarify existing law.208 Hence, the statute was properly applied retroactively to exclude these contractors from the statute’s owner/builder exemption. The court further held that the contract-based claims (for express indemnity, breach of contract and warranties, and declaratory relief ) were barred by the licensing requirements of Business and Professions Code § 7031.
The tort-based cross-claims (for equitable indemnity, implied contractual and total indemnity and contribution) were not barred by Business and Professions Code § 7031, since the primary relief sought was not compensation for work performed but rather equitable indemnification for the damages for which the defendants were strictly liable as developers of defective construction projects. Similarly, negligence claims against the subcontractors were outside the scope of the contractual claims, and thus were not barred by the licensing requirements. However under Code of Civil Procedure § 877, subd. (a), to the extent that any subcontractors paid negligence damages to the homeowners, the developer/contractor would be entitled to appropriate credit.
It should be noted that a subsequent decision was heavily critical of the Ranchwood case, supra. See White v. Cridlebaugh (2009) 178 Cal.App.4th 506, 521-522 (concluding that cases permitting an unlicensed contractor to assert a setoff based on a contract for building services, notwithstanding that the contract is otherwise unenforceable due to the absence of a license should not be extended to reimbursement claims under section 7031(b)).
There are also criminal sanctions for unlicensed contracting, as stated above. However, in one case, the a California appellate court found that a contractor charged with a criminal restitution order not subject to civil disgorgement in the restitution order. However, the aggrieved homeowner many seek disgorgement in a separate civil action. Walker v. Appellate Division of the Superior Court (2017) 14 Cal.App.5th 651, 658.
§11.8 New Electrician Certification Requirements
The State of California has created certification programs for electricians. These are widely enforced on public works projects. These requirements are set forth in Labor Code §§ 108-108.5 and California Code of Regulations Title 8 §§ 290 -296.4.
§ 11.9 Practice Pointers
California’s Contractors State License Laws, although at times cumbersome, are intended to preserve the quality of workmanship. Every owner is entitled to contracting with one who possesses superior knowledge in an area of construction. It is interesting that many large industrial states, such as New Jersey, have such a relaxed attitude toward the licensing of contractors. In that light, sophisticated owners base their hiring decisions on the experience, skill and references of the proposing contractor. The real lesson is that the mere possession of a contractor’s license does not guarantee competency in the specific project to be undertaken. This is an important point for consideration later, when the bidding process (Chapter 12) and bid protests are described.
Ultimately, the contracting public agency and contracting community are responsible for ensuring that buildings and other structures conform to the required standards within the industry such that the soundness, safety and code compliance of structures in the community are not compromised.
It is also crucial for the trial lawyer and contractor to recognize that proof of licensure is required to recover at trial. If the contractor does not present proof of license under the specific requirements of Business and Professions Code § 7031 (d), there is a real threat of the case being dismissed. Advantec Group, Inc. v. Edwin's Plumbing Co. Inc. (2007) 153 Cal.App.4th 621; Womack v. Lovell (2015) 237 Cal.App.4th 772.
The contractor must also prove they have the right type of license. Business and Professions Code § 7031(b) provides that a person who utilizes the services of an unlicensed contractor may bring an action to “recover all compensation paid to the unlicensed contractor for performance of any act or contract” (emphasis added), and “all” means “all,” so “[S]ection 7031, subdivision (b) does not allow apportionment as a matter of law.” Jeff Tracy, Inc. v. City of Pico Rivera (2015) 240 Cal.App.4th 510, 521 (contractor argued that because it held a Class C-27 landscaping contractor’s license, that any disgorgement should be apportioned between work which required a Class A license (for which disgorgement would be proper) and work which could be performed with a Class C-27 license (for which disgorgement would not be proper)).
In Pacific Caisson and Shoring, Inc. v. Bernards Bros., Inc. (2011) 193 Cal.App.4th 246, the Court also made clear that a contractor is obligated to report to the CSLB any unsatisfied judgment. While Pacific Caisson was decided under an older version of Business and Professions Code § 7071.17, the current version of Section 7071.17(b) makes it clear that “all licensees shall notify the register in writing of any unsatisfied final judgment imposed on the licensee. If the licensee fails to notify the registrar in writing within 90 days, the license shall be automatically suspended on the date the registrar is informed, or is made aware of the unsatisfied final judgment.”