BILL ANALYSIS
AB 678
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CONCURRENCE IN SENATE AMENDMENTS
AB 678 (Papan)
As Amended July 3, 2001
Majority vote
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|ASSEMBLY: |69-2 |(May 14, 2001) |SENATE: |23-10|(July 20, |
| | | | | |2001) |
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Original Committee Reference: JUD.
SUMMARY : Seeks to authorize 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.
The Senate amendments delete language providing that, in the
above situation, a person may not recover compensation paid if
the person knew that the contractor was unlicensed prior to
making any payments to the contractor.
EXISTING LAW :
1)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.
2)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 and provides that contracting
without a license shall be a misdemeanor.
AS PASSED BY THE ASSEMBLY , this bill provided that a person
using the services of an unlicensed contractor may not recover
compensation paid if the person knew that the contractor was
unlicensed prior to making any payments to the contractor.
FISCAL EFFECT : None
COMMENTS : This bill, sponsored by Judge Quentin Kopp, would
specifically allow an individual who had used the services of an
unlicensed contractor to bring an action to recover all
compensation already paid to the unlicensed contractor for
AB 678
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performance of any act or contract. In commenting on the need
for this bill, the author states:
Our state's policy since 1939 reflects in Section 7031 of
the Business and Professions Code the intent of the
Legislature that the public be protected from unqualified
contractors. Since 1939, a contractor must be licensed by
the state in order to recover the value of services
rendered with or without a written contract. Licensing
requirements provide minimal assurance that all persons
furnishing construction services in our state possess the
requisite skill and character, understand pertinent local
laws and codes, and know the rudiments of administering a
contracting business. The Legislature had determined that
the importance of deterring unlicensed persons from
engaging in the building or contracting business outweighs
any harshness to an unlicensed party who provides services
and then cannot collect compensation.
According to the sponsor, this bill is intended to address the
recent case of Cooper v. Westbrook Torrey Hills, LP (2000) 81
Cal. App. 4th 1294, in which the court, in an unpublished
portion of the opinion, referred to the Business and Professions
Code, Section 7031(a) 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 bill is intended to
clearly state that those using the services of unlicensed
contractors are entitled to bring an action for recovery of
compensation paid.
Amendments taken in the Senate remove language which provided
that a person using the services of an unlicensed contractor may
not recover compensation paid if the person knew that the
contractor was unlicensed prior to making any payments to the
contractor. The Senate deleted this language in order to more
strongly encourage contractors to become licensed.
Analysis Prepared by : Saskia Kim / JUD. / (916) 319-2334
AB 678
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FN: 0002130