BILL ANALYSIS
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|Hearing Date:June 25, 2001 |Bill No:AB |
| |678 |
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SENATE COMMITTEE ON BUSINESS AND PROFESSIONS
Senator Liz Figueroa, Chair
Bill No: AB 678Author:Papan
As Amended:May 1, 2001 Fiscal:Yes
SUBJECT: Unlicensed contractors.
SUMMARY: Allows individuals who use the services of an
unlicensed contractor to bring an action to recover all
compensation paid to the unlicensed contractor for
performance of any act or contract.
Existing law:
1)Requires anyone who contracts to do construction work to
be licensed by the Contractors' State License Board if
the total price of the job is $500 or more.
2)Provides that contracting without a license shall be a
misdemeanor.
3)Prohibits unlicensed contractors from bringing an action
to collect compensation for the performance of any act or
contract.
This bill:
1)Authorizes persons who use the services of an unlicensed
contractor to bring an action to recover all compensation
paid to the unlicensed contractor for performance of any
act or contract.
2)Specifies that this authorization is not applicable when
the person who used the services of an unlicensed
contractor knew that the contractor was unlicensed prior
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to the time that any payments are made.
FISCAL EFFECT: None
COMMENTS:
1.Purpose. According to the sponsor, Judge Quentin Kopp,
this bill is intended to further encourage unlicensed
contractors to become licensed by specifically
authorizing an individual who has used the services of an
unlicensed contractor to bring an action to recover all
compensation already paid to the unlicensed contractor
for performance of any act or contract. The sponsor
believes that permitting recovery of compensation paid to
the unlicensed contractor would strengthen the law "in a
way which criminal sanctions and enforcement do not seem
to do."
2.Background. In a recent case, Cooper v. Westbrook
Torrey Hills, LP (2000) 81 Cal. App. 4th 1294, the court
referenced Business and Professions Code Section 7031(a)
as prohibiting an unlicensed contractor from recovering
fees, but not requiring any refund of compensation
already paid to the contractor.
Cooper relied on Culbertson v. Cizek (1964) 225 Cal. App.
2d 451, 473, in which the court permitted the unlicensed
contractor to offset "as a defense against sums due the
plaintiffs any amounts that would otherwise be due Cizek
under his contract." This measure is intended to clearly
state that those using the services of unlicensed
contractors are entitled to bring an action for recovery
of compensation paid.
3.Arguments in Support. The sponsor asserts that the
Legislature has intended that the public be protected
from unqualified contractors by requiring that all
contractors be licensed. In order to ensure that this
requirement is met, current law specifically prohibits
unlicensed contractors from bringing an action to collect
compensation for the performance of any act or contract,
regardless of the merits of the cause of action brought
by the unlicensed individual. This bill is, according to
the sponsor, "not only consistent with the historical
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policy of our state but strengthens that policy
substantially."
4.Requested Amendments. The Committee has been contacted
to raise a concern that this "well-intentioned" bill
could cause problems for the legitimate contractors in
California. The concern deals with the issue of
incidental/supplemental work. Due to the late timing of
this concern, this issue is being discussed with the
author and sponsor and should be addressed in committee.
SUPPORT AND OPPOSITION:
Support: Judge Quentin L. Kopp (sponsor)
California Landscape Contractors Association
Construction Industry Legislative Council
Support with Amendments:
American Fence Contractors' Association,
California Chapter
California Fence Contractors' Association
Engineering Contractors' Association
Flasher/Barricade Association
Opposition: None on file
Consultant:Robin Hartley