BILL NUMBER: SB 263 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Monning
(Principal coauthor: Assembly Member Achadjian)
FEBRUARY 13, 2013
An act to amend Sections 7028, 7031, and 7114 of, to add Section
7026.4 to, and to repeal and add Section 7118 of, the Business and
Professions Code, relating to contractors.
LEGISLATIVE COUNSEL'S DIGEST
SB 263, as introduced, Monning. Contractors: unlicensed activity.
The Contractors' State License Law provides for the licensure and
regulation of contractors by the Contractors' State License Board
within the Department of Consumer Affairs. The law prohibits a person
engaged in the business or acting in the capacity of a contractor
from bringing an action for collection of compensation for the
performance of an act or contract for which a contractor's license is
required without alleging that he or she was a duly licensed
contractor at all times during the performance of that act or
contract.
This bill, instead, would prohibit a person engaged in the
business or acting in the capacity of a contractor from bringing an
action for collection of compensation for the performance of an act
or contract for which a contractor's license is required without
alleging that he or she was duly licensed during the performance of
that act or contract for which the person is seeking compensation.
The bill would define "duly licensed" for purposes of these
provisions, and would make other conforming changes.
The Contractors' State License Law makes it a misdemeanor for a
person to engage in the business or act in the capacity of a
contractor without having a license, unless the person is
particularly exempted.
This bill, instead, would provide that, unless exempted, it is a
misdemeanor for a person to engage in the business or act in the
capacity of a contractor if the person either has never been licensed
pursuant to the Contractors' State License Law, or the person was a
licensee, but performed acts covered by the law under a license that
was inactive, expired, revoked, or under suspension for any reason.
By changing the definition of a crime, the bill would impose a
state-mandated local program.
The Contractors' State License Law provides that entering into a
contract with a contractor while the contractor is not licensed
constitutes a cause for disciplinary action. That law also provides
that aiding or abetting an unlicensed person to evade the law, or
engaging in specified acts with an unlicensed person with the intent
to evade the law, constitutes a cause for disciplinary action.
This bill, instead, would provide that entering into a contract
with any person that is performed during a period in which that
person's license was inactive, expired, revoked, or under suspension
is a cause for discipline if the purpose of the contract is for that
person to perform an act subject to licensure under the law. The bill
also would define "unlicensed person" for purposes of these
provisions.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 7026.4 is added to the Business and Professions
Code, to read:
7026.4. (a) A person shall be deemed "duly licensed" or "duly
licensed to act in the capacity of a contractor" for purposes of this
chapter if both of the following conditions are met:
(1) The act was performed under a board-issued license during a
period in which the license was not inactive, expired, revoked, or
under suspension for any reason.
(2) The act falls within a license classification in which the
licensee was authorized to engage, or is incidental and supplemental
as provided under Section 7059, and defined in Section 831 of
Division 8 of Title 16 of the California Code of Regulations.
(b) Any person that does not meet the conditions specified in
paragraphs (1) and (2) of subdivision (a) shall be deemed unlicensed,
except as otherwise provided in this chapter.
SEC. 2. Section 7028 of the Business and Professions Code is
amended to read:
7028. (a) It Unless exempted from this
chapter, it is a misdemeanor for a person to engage in the
business or act in the capacity of a contractor within this state
without having a license therefor, unless the person is
particularly exempted from the provisions of this chapter.
under either of the following conditions:
(1) The person has never been licensed in accordance with this
chapter.
(2) The person was a licensee, as defined in Section 7096, but
performed acts covered by this chapter under a license that was
inactive, expired, revoked, or under suspension for any reason.
(b) A first conviction for the offense described in this section
is punishable by a fine not exceeding five thousand dollars ($5,000)
or by imprisonment in a county jail not exceeding six months, or by
both that fine and imprisonment.
(c) If a person has been previously convicted of the offense
described in this section, unless the provisions of subdivision (d)
are applicable, the court shall impose a fine of 20 percent of the
contract price, or 20 percent of the aggregate payments made to, or
at the direction of, the unlicensed contractor
person , or five thousand dollars ($5,000), whichever is
greater, and, unless the sentence prescribed in subdivision (d) is
imposed, the person shall be confined in a county jail for not less
than 90 days, except in an unusual case where the interests of
justice would be served by imposition of a lesser sentence or a fine.
If the court imposes only a fine or a jail sentence of less than 90
days for second or subsequent convictions under this section, the
court shall state the reasons for its sentencing choice on the
record.
(d) A third or subsequent conviction for the offense described in
this section is punishable by a fine of not less than five thousand
dollars ($5,000) nor more than the greater amount of ten thousand
dollars ($10,000) or 20 percent of the contract price, or 20 percent
of the aggregate payments made to, or at the direction of, the
unlicensed contractor person , and by
imprisonment in a county jail for not more than one year or less than
90 days. The penalty provided by this subdivision is cumulative to
the penalties available under all other laws of this state.
(e) A person who violates this section is subject to the penalties
prescribed in subdivision (d) if the person was named on a license
that was previously revoked and, either in fact or under law, was
held responsible for any act or omission resulting in the revocation.
(f) If the unlicensed person engaging in the business
of or acting in the capacity of an unlicensed
a contractor has agreed to furnish materials and labor on an
hourly basis, "the contract price" for the purposes of this section
means the aggregate sum of the cost of materials and labor furnished
and the cost of completing the work to be performed.
(g) Notwithstanding any other provision of law,
an indictment for any violation of this section by the
an unlicensed contractor
person shall be found , or an information or
complaint filed , within four years from the date of the
contract proposal, contract, completion, or abandonment of the work,
whichever occurs last.
(h) For any conviction under this section, a person who utilized
the services of the unlicensed contractor
person is a victim of crime and is eligible, pursuant to
subdivision (f) of Section 1202.4 of the Penal Code, for restitution
for economic losses, regardless of whether that person
he or she had knowledge that the
contractor person was unlicensed.
SEC. 3. Section 7031 of the Business and Professions Code is
amended to read:
7031. (a) Except as provided in subdivision (e), no
a person engaged in the business or acting in
the capacity of a contractor, may shall not
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 for which 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 for which the person is
seeking compensation , 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.
(b) Except as provided in subdivision (e), a person who utilizes
the services of an unlicensed contractor
person, as described in subdivision (b) of Section 7026.4, may
bring an action in any court of competent jurisdiction in this state
to recover all compensation paid to the unlicensed
contractor person for performance of
any act or contract that occurred during the period or periods
in which the person was unlicensed .
(c) A security interest taken to secure any payment for the
performance of any act or contract for which a license is required by
this chapter is unenforceable if the person performing the act or
contract was not a duly licensed contractor
at all times during the performance of the act or
contract for which the person is seeking compensation .
(d) If licensure or proper licensure is controverted, then proof
of licensure pursuant to this section shall be made by production of
a verified certificate of licensure from the Contractors' State
License Board which establishes that the individual or entity
bringing the action was duly licensed in the proper classification of
contractors at all times during the performance
of any act or contract covered by the action. Nothing in this
subdivision shall require any person or entity controverting
licensure or proper licensure to produce a verified certificate. When
licensure or proper licensure is controverted, the burden of proof
to establish licensure or proper licensure shall be on the licensee.
(e) The judicial doctrine of substantial compliance shall not
apply under this section where if 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 and
subdivision (b) of Section 7026.4 , 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, (3)
did not know or reasonably should not have known that he or she was
not duly licensed when performance of the act or contract commenced,
and (4) acted promptly and in good faith to reinstate his or her
license upon learning it was invalid.
(f) The exceptions to the prohibition against the application of
the judicial doctrine of substantial compliance found in subdivision
(e) shall apply to all contracts entered into on or after January 1,
1992, and to all actions or arbitrations arising therefrom, except
that the amendments to subdivisions (e) and (f) enacted during the
1994 portion of the 1993-94 Regular Session of the Legislature shall
not apply to either of the following:
(1) Any legal action or arbitration commenced prior to January 1,
1995, regardless of the date on which the parties entered into the
contract.
(2) Any legal action or arbitration commenced on or after January
1, 1995, if the legal action or arbitration was commenced prior to
January 1, 1995, and was subsequently dismissed.
SEC. 4. Section 7114 of the Business and Professions Code is
amended to read:
7114. (a) All of the following shall constitute a cause for
disciplinary action pursuant to this chapter: Aiding
(1) Aiding or abetting an
unlicensed person to evade the provisions of this chapter or
combining .
(2) Combining or conspiring with
an unlicensed person, or allowing with the
intent to evade the provisions of this chapter.
(3) Allowing one's license to be
used by an unlicensed person, or acting with
the intent to evade the provisions of this chapter.
(4) Acting as agent or
, partner or ,
associate, or otherwise, of an unlicensed person with the intent to
evade the provisions of this chapter constitutes a cause for
disciplinary action .
(b) A licensee who is found by the registrar to have violated
subdivision (a) shall is subject , in
accordance with the provisions of this article,
be subject to the registrar's authority
pursuant to Section 7099 to order payment of a specified
sum to an injured party, including, but not limited to, payment for
any injury resulting from the acts of the unlicensed person.
(c) For the purposes of this section, the term "unlicensed person"
shall apply only to a person that has never been licensed in
accordance with this chapter, or has performed acts covered by this
chapter under a license that was inactive, expired, revoked, or under
suspension for any reason.
SEC. 5. Section 7118 of the Business and Professions Code is
repealed.
7118. Entering into a contract with a contractor while such
contractor is not licensed as provided in this chapter constitutes a
cause for disciplinary action.
SEC. 6. Section 7118 is added to the Business and Professions
Code, to read:
7118. It is a cause for discipline for any licensee to enter into
a contract with any person that is not in compliance with paragraph
(1) of subdivision (a) of Section 7026.4, if the purpose of the
contract is for that person to perform an act that is subject to
licensure under this chapter.
SEC. 7. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.