Checking the Status of your Contractor License During Contract Work is a Necessity: The Expanded “Substantial Compliance” under B&P 7031 is Here
June 05, 2017 —
Ivo G. Daniele – Newmeyer & Dillion LLP News AlertIt is paramount that a contractor diligently maintains its license prior to and during the performance of any contract work. Failure to do so could result in barring a contractor from receiving payment and/or disgorgement of profits received under the construction contract.
California Business and Professions Code section 7031 is part of the Contractors State License Law (Business & Prof. section 700 et seq.), and is both feared and loathed by all contractors performing work in the state of California. This draconian statute is known as the “Shield” and was enacted over 70 years ago for the singular purpose to bar all actions by contractors seeking compensation for unlicensed contract work – even precluding a contractor from enforcing his or her mechanic’s lien rights. However, a contractor could potentially avoid the harshness of B&P 7031 by establishing that he or she had substantially complied with the appropriate licensing requirements.
SUBSTANTIAL COMPLIANCE WITH LICENSE REQUIREMENTS PRIOR TO 2017 AMENDMENT
The substantial compliance exception is found in section B&P 7031(e), which authorizes the court to determine that there has been substantial compliance with licensure requirements, if the contractor has shown at an evidentiary hearing that he or she engaged in the unlicensed work had:
- Been duly licensed as a contractor in this state prior to the performance of the act or contract;
- Acted reasonably and in good faith to maintain the license;
- Did not know or reasonably should not have known that he or she was not licensed when he or she performed the work; and
- Acted promptly and in good faith to reinstate the license once it learned the license had lapsed.
Although not impossible, satisfying all four requirements of the exception was challenging for the contractor, specifically, requirement # (3) – the lack of knowledge that he or she was unlicensed during performance of work.
SUBSTANTIAL COMPLIANCE POST 2017
Fortunately, Governor Brown heard the collective cry for relief and signed Assembly Bill 1793 (“AB 1793”) into law. The new bill revises the criteria for the court to determine if a contractor is in substantial compliance with the licensing requirements by deleting requirement # (3) in its entirety and modestly amending requirement # (4) to require the contractor to act promptly and in good faith to remedy the failure to comply with the licensure requirements upon learning of the failure.
As a result, the substantial compliance exception under B&P 7031(e) reads as follows:
(e) The judicial doctrine of substantial compliance shall not apply under this section where the person who engaged in the business or acted in the capacity of a contractor has never been a duly licensed contractor in this state. However, notwithstanding subdivision (b) of Section 143, the court may determine that there has been substantial compliance with licensure requirements under this section if it is shown at an evidentiary hearing that the person who engaged in the business or acted in the capacity of a contractor
(1) had been duly licensed as a contractor in this state prior to the performance of the act or contract, (2) acted reasonably and in good faith to maintain proper licensure, and (3) acted promptly and in good faith to remedy the failure to comply with the licensure requirements upon learning of the failure.
This new legislation has tempered the burden of proof born by the contractor in establishing substantial compliance, although be it minor in its modification, the fact of the matter remains the same – be diligent in maintaining your license during all phases of contract work.
Ivo Daniele is a seasoned associate in the Walnut Creek office focusing his practice on commercial transactions and business and construction litigation. For questions regarding California Business and Professions Code section 7031, please feel free to contact Ivo Daniele at (925) 988-3222 or ivo.daniele@ndlf.com.
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Is Everybody Single? More Than Half the U.S. Now, Up From 37% in '76
September 10, 2014 —
Rich Miller – BloombergSingle Americans make up more than half of the adult population for the first time since the government began compiling such statistics in 1976.
Some 124.6 million Americans were single in August, 50.2 percent of those who were 16 years or older, according to data used by the Bureau of Labor Statistics in its monthly job-market report. That percentage had been hovering just below 50 percent since about the beginning of 2013 before edging above it in July and August. In 1976, it was 37.4 percent and has been trending upward since.
In a report to clients entitled “Selfies,” economist Edward Yardeni flagged the increase in the proportion of singles to more than 50 percent, calling it “remarkable.” The president of Yardeni Research Inc. in New York said the rise has “implications for our economy, society and politics.”
Singles, particularly younger ones, are more likely to rent than to own their dwellings. Never-married young singles are less likely to have children and previously married older ones, many of whom have adult children, are unlikely to have young kids, Yardeni wrote. That will influence how much money they spend and what they buy.
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Rich Miller, BloombergMr. Miller may be contacted at
rmiller28@bloomberg.net
Eleventh Circuit Vacates District Court Decision Finding No Duty to Defend Faulty Workmanship Claims
November 02, 2020 —
Tred R. Eyerly - Insurance Law HawaiiThe Eleventh Circuit vacated the district court's grant of summary judgment to the insurer finding there was no duty to defend. Southern-Owners Ins. Co. v. Mac Contractors of Florida, LLC, 2020 U.S. App. LEXIS 23918 (11th Cir. July 29, 2020).
Mac Contractors entered into a contract with homeowners to serve as general contractor for the construction of a custom residence. Problems arose during construction and Mac eventually led the job site before completing the project. The home owners sued, alleging that Mac and its subcontractors had left the residence "replete with construction defects." Damages were sought for having to repair and remediate all defective work performed by Mac.
Mac tendered under its CGL policy to its insurer, Southern-Owners. A defense was granted, but later withdrawn when Southern-Owners filed suit seeking a declaration that it owed no duty to defend or indemnify Mac. On cross-motions for summary judgment, the district court found in favor of Southern-Owners based on the exclusion for "Damage to Your Work." The Eleventh Circuit vacated on appeal, concluding that the underlying complaint could fairly be construed to allege damages that fell outside of the exclusion.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
ACS Obtains Overwhelming Jury Trial Victory for General Contractor Client
March 28, 2022 —
Scott R. Sleight - Ahlers Cressman & Sleight PLLCACS is pleased to share news of our recent $19.2 million victory for a general contractor client after a lengthy virtual jury trial involving the Nexus condominium project in downtown Seattle. On Tuesday March 22, 2022, ACS obtained a jury verdict awarding significant damages to our general contractor client and denying nearly all damages claimed against our client by the project owner. The 28-day jury trial commenced via Zoom on January 24 and involved testimony from more than two dozen witnesses on more than 185 discrete change issues and subcontractor pass-through claims as well as counterclaims from the owner for liquidated damages and other damages. Amazingly, after only two days of deliberating the jury reached a verdict resolving all claims overwhelmingly in favor of our general contractor client.
Our client was awarded $19.5 million on its claims totaling $20.6 million and largely defeated the owner’s counterclaims of $4.3 million, with the jury awarding only $318,000 to the owner. This results in a net judgment of $19.2 million in favor of our client. The ACS team, along with the client, worked incredibly hard on this case. The team includes lawyers Scott Sleight, Saki Yamada, Kristina Southwell, Cam Sheldon and paralegals Christina Granquist, Cydney Fermstad, Auzree Hightower, Amy Capell, Samina Helsley and Bernadette Bresee.
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Scott R. Sleight, Ahlers Cressman & Sleight PLLCMr. Sleight may be contacted at
scott.sleight@acslawyers.com
More thoughts on Virginia Mechanic’s Liens
January 28, 2019 —
Christopher G. Hill - Construction Law MusingsAs we settled yet another construction case on the courthouse steps today, I began to think about what I should post to begin 2009. Of course, given the construction industry slowdown that is predicted, and the trend at construction projects around the Commonwealth of Virginia that looks to me as if payments will be harder to come by from Owners less willing, for financial reasons, to work with contractors, mechanic’s liens will be more useful, and necessary, now than ever.
Virginia mechanic’s liens are unusually strong because your memorandum of lien takes priority over all prior liens on the property that you have improved (including from the bank that is financing the project) except in very limited circumstances. What this means is that, should you properly file and sue to enforce your lien, you get to foreclose and have first crack at any money. By contrast, a judgment lien takes priority only over liens filed after the lien is recorded.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Injured Construction Worker Settles for Five Hundred Thousand
October 28, 2011 —
CDJ STAFFAn upstate New York man who was injured when an unsecured truss fell off the railings of a scissor lift has settled for $500,000. As the accident happened at the building site for a casino for the Seneca Nation, attorneys for the construction firm had argued that New York labor laws were inapplicable as the injury happened on Seneca Nation land. The state appeals court ruled that as none of the parties involved were Native Americans, it was not internal to the affairs of the Seneca Nation.
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Witt Named to 2017 Super Lawyers
March 29, 2017 —
Jesse Howard Witt - The Witt Law FirmThe Witt Law Firm is proud to announce that Super Lawyers has recognized lawyer Jesse Howard Witt as Top Rated Construction Litigation Attorney in Boulder Colorado.
Super Lawyers is a rating service of outstanding lawyers who have attained a high-degree of peer recognition and professional achievement. Super Lawyers selects attorneys using a patented multiphase selection process. Peer nominations and evaluations are combined with independent research. Each candidate is evaluated on 12 indicators of peer recognition and professional achievement. Selections are made on an annual, state-by-state basis.
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Jesse Howard Witt, Acerbic Witt
Mr. Witt may be contacted at www.witt.law
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As Single-Family Homes Get Larger, Lots Get Smaller
September 03, 2014 —
Beverley BevenFlorez-CDJ STAFFThe National Association of Home Builders’ (NAHB) Eye on Housing demonstrated that though the “single-family homes have been generally getting larger,” the average lot size has decreased over the years.
For instance, from 1992-1995, “[t]he median lot size of a new single-family detached home sold was an even 10,000 square feet.” However, by 2004, lot size had decreased to 8,833 square feet. It bounced up to 9,000 and then came down again. In 2013, median lot size was 8,720 square feet.
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