BILL ANALYSIS
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Mark Leno, Chair A
2009-2010 Regular Session B
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AB 1074 (Conway) 4
As Introduced February 27, 2009
Hearing date: July 14, 2009
Business and Professions Code
AA:br
FRAUD :
CONTRACTOR'S LICENSES
HISTORY
Source: California State License Board
Prior Legislation: SB 1468 (Robbins) - Ch. 815, Stats. 1984
Support: Los Angeles County District Attorney's Office; Painting
and Decorating Contractors of California, Inc.;
California Landscape Contractors Association;
Construction Industry Legislative Council; Golden State
Builders Exchanges; Engineering Contractors'
Association, California Fence Contractors' Association;
Marin Builders' Association; Flasher/Barricade
Association; California Chapter of the American Fence
Contractors' Association; California Chapters of the
National Electrical Contractors Association; California
Legislative Conference of the Plumbing, Heating and
Piping Industry; Air Conditioning Sheet Metal
Association; Air-conditioning & Refrigeration
Contractors Association; Building Industry Credit
Association; one individual
Opposition:None known
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Assembly Floor Vote: Ayes 78 - Noes 0
KEY ISSUE
SHOULD THE EXISTING ALTERNATE FELONY-MISDEMEANOR PENALTY FOR
CONTRACTOR FRAUD BE EXPANDED, AS SPECIFIED?
PURPOSE
The purpose of this bill is to clarify the existing alternate
felony misdemeanor penalty that applies to contractor fraud in a
manner intended to expand its application, as specified.
Current law provides that any person, licensed or unlicensed,
who willfully and intentionally uses, with intent to defraud,
a contractor's license number that does not correspond to the
number on a currently valid contractor's license held by that
person, is punishable by a fine not exceeding $10,000, or by
imprisonment in state prison, or in county jail for not more
than one year, or by both that fine and imprisonment, as
specified. (Business and Professions Code 7027.3 (emphasis
added).)
This bill would change this section to apply its provisions to
delete the phrase, "contractor's license" from the above
sentence.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
California continues to face a severe prison overcrowding
crisis. The Department of Corrections and Rehabilitation (CDCR)
currently has about 170,000 inmates under its jurisdiction. Due
to a lack of traditional housing space available, the department
houses roughly 15,000 inmates in gyms and dayrooms.
California's prison population has increased by 125% (an average
of 4% annually) over the past 20 years, growing from 76,000
inmates to 171,000 inmates, far outpacing the state's population
growth rate for the age cohort with the highest risk of
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incarceration.<1>
In December of 2006 plaintiffs in two federal lawsuits against
CDCR sought a court-ordered limit on the prison population
pursuant to the federal Prison Litigation Reform Act. On
February 9, 2009, the three-judge federal court panel issued a
tentative ruling that included the following conclusions with
respect to overcrowding:
No party contests that California's prisons are
overcrowded, however measured, and whether considered
in comparison to prisons in other states or jails
within this state. There are simply too many
prisoners for the existing capacity. The Governor,
the principal defendant, declared a state of emergency
in 2006 because of the "severe overcrowding" in
California's prisons, which has caused "substantial
risk to the health and safety of the men and women who
work inside these prisons and the inmates housed in
them." . . . A state appellate court upheld the
Governor's proclamation, holding that the evidence
supported the existence of conditions of "extreme
peril to the safety of persons and property."
(citation omitted) The Governor's declaration of the
state of emergency remains in effect to this day.
. . . the evidence is compelling that there is no
relief other than a prisoner release order that will
remedy the unconstitutional prison conditions.
. . .
Although the evidence may be less than perfectly
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<1> "Between 1987 and 2007, California's population of ages 15
through 44 - the age cohort with the highest risk for
incarceration - grew by an average of less than 1% annually,
which is a pace much slower than the growth in prison
admissions." (2009-2010 Budget Analysis Series, Judicial and
Criminal Justice, Legislative Analyst's Office (January 30,
2009).)
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clear, it appears to the Court that in order to
alleviate the constitutional violations California's
inmate population must be reduced to at most 120% to
145% of design capacity, with some institutions or
clinical programs at or below 100%. We caution the
parties, however, that these are not firm figures and
that the Court reserves the right - until its final
ruling - to determine that a higher or lower figure is
appropriate in general or in particular types of
facilities.
. . .
Under the PLRA, any prisoner release order that we
issue will be narrowly drawn, extend no further than
necessary to correct the violation of constitutional
rights, and be the least intrusive means necessary to
correct the violation of those rights. For this
reason, it is our present intention to adopt an order
requiring the State to develop a plan to reduce the
prison population to 120% or 145% of the prison's
design capacity (or somewhere in between) within a
period of two or three years.<2>
The final outcome of the panel's tentative decision, as well as
any appeal that may be in response to the panel's final
decision, is unknown at the time of this writing.
This bill would appear to aggravate the prison overcrowding
crisis outlined above.
COMMENTS
1. Stated Need for This Bill
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<2> Three Judge Court Tentative Ruling, Coleman v.
Schwarzenegger, Plata v. Schwarzenegger, in the United States
District Courts for the Eastern District of California and the
Northern District of California United States District Court
composed of three judges pursuant to Section 2284, Title 28
United States Code (Feb. 9, 2009).
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The author states:
The California State License Board issues licenses to
contractors who meet safety and experience requirements
within their field. This is to insure that all
projects meet all safety and other requirements. All
projects that exceed $500 and are not performed by a
homeowner for their own purpose are required to be
performed by a state licensed contractor.
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Some contractors who do not have a license continue to
do business under another contractor's number or a
completely made-up number. Under current Business and
Professions Code, it is illegal to falsely use an
existing contractor's license number when it legally
belongs to another. However, the issue of a contractor
making-up a number is not mentioned. Home and business
owners are being taken advantage of through this
loophole.
AB 1074 would delete the reference to use of a
"contractor's license number". This would make it
clear that any person who claims to have a contractor's
license number and does not have one issued to them by
the state would be in violation of the law. They would
then be subject to the same punishment as a contractor
would receive for claiming another's license number as
their own.
2. What This Bill Would Do
As explained above, this bill would revise the existing law for
contractor fraud to provide that the willful and intentional use
of a number that does not correspond to the number on a
currently valid contractor's license held by that person is a
wobbler. Current law specifies that the number be a
"contractor's license" number. The Contractors State License
Board explains in part:
. . . CSLB regularly investigate cases wherein
individuals use a number of any unspecified origin, such
as a business license number, as a means to take
advantage of consumers who unwittingly believe that the
number represents a contractor's license. The
application of the felony penalty under B&P Section
7027.3 should not be restricted to those instances where
an actual contractor's license number was used. Rather,
the provisions of the section should be expanded to
include those instances where a non-licensee defrauds a
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consumer by using an arbitrary number to represent a
contractor's license. (some emphasis added.)
3. Double-Referral
This bill was heard in the Senate Committee on Business,
Professions and Economic Development on June 8, 2009, where it
passed 8-0. That Committee's analysis includes the following
background:
The CSLB issues licenses to contractors who meet certain
experience and knowledge requirements within their
practice. There are more than 250,000 licensed
contractors in the state, in 43 different licensing
classifications. In addition to educating consumers
about contractors and construction law, the CSLB
administers examinations to test prospective licensees,
issues licenses, investigates complaints against licensed
and unlicensed contractors, issues citations, takes
disciplinary action to suspend or revoke licenses, and
seeks administrative, criminal, and civil sanctions
against violators. In general, all building projects
that exceed $500 and are not performed by the owner are
required to be performed by a contractor licensed by the
CSLB.
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