DB Construction Law Update—Licensing Developments

Construction Law  

September 2011

Contractor licensing problems can bring projects to a halt. Successful compliance involves a firm understanding of the technical, and often bureaucratic, requirements of the California Contractors State License Board (“CSLB”). We have previously addressed some of the many problems that license-compliance issues can cause. (See March 2008 and July 2011 Construction Law Updates). Contractors of all types that fail to satisfy licensing requirements—even if the violation is minor—face potential discipline by the CSLB, prohibition on recovery of payment for work performed, and disgorgement of payments received for completed work.

California licensing laws are among the most severe in the country, and those laws have resulted in some very harsh results. There is speculation that California may be headed for a trend where the Legislature and courts begin to soften the harshness of licensing laws and two recent cases suggest that such a trend may be just beginning to develop.

Specialty Licenses may be encompassed in General Licenses.

The recent 2011 case of Pacific Caisson & Shoring, Inc. v. Bernards Bros., Inc., held that when a subcontract requires that a grading subcontractor hold a C-12 (Earthwork and Paving) specialty license, the subcontractor’s failure to obtain a C-12 license does not necessarily bar the subcontractor from recovering payment for work performed where the subcontractor holds a General Engineering “A” license. In certain circumstances, a C-12 specialty license is subsumed into a General Engineering “A” license rendering the C-12 license superfluous.

A contractor licensed as a sole owner is not required to separately license his “dba.”

Another recent 2011 decision, Ball v. Steadfast-BLK, determined that when a properly licensed individual, licensed as a “sole owner,” does business under a fictitious business name, that fictitious business name is not required to be separately licensed.  Since a “dba” is not a distinct legal entity, it is not among the categories of individuals or entities defined by licensing law to whom a license may be issued.

While these cases could be the beginning of a trend that some believe is long overdue, the trend is just emerging. Many harsh results still can occur. Under present law, even the most technical of licensing violations can result in devastating consequences for unsuspecting contractors. Accordingly, contractors should always approach licensing and CSLB requirements with the utmost care and attention to detail.

© 2011 All rights reserved. Please note that the information contained herein is not intended to provide specific legal advice. You should consult with an attorney and not rely on any information contained herein regarding your specific situation.