BILL NUMBER: AB 1920	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Bill Berryhill

                        FEBRUARY 22, 2012

   An act to amend Section 7031 of the Business and Professions Code,
relating to contractors.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1920, as introduced, Bill Berryhill. Contractors: compensation.

   Existing law, the Contractors' State License Law, provides for the
licensing and regulation of contractors in the state by the
Contractors' State License Board. Existing law prohibits a person
acting in the capacity of a contractor from bringing an action to
collect compensation for work performed as a contractor without
alleging that he or she was a licensed contractor at the time the
work was performed, except as specified. Existing law also authorizes
a person who utilizes the services of an unlicensed contractor to
bring an action in court to recover moneys paid to the unlicensed
contractor for the performance of any act or contract.
   The bill would authorize a person acting in the capacity of a
contractor without a license to bring or maintain an action for
recovery of compensation for any act or contract if the person had
previously been licensed as a contractor in this state within 180
days of commencement of the work and the board has retroactively
reinstated the contractor's license from the date the work commenced
through the date of completion. The bill would prohibit an action for
recovery of compensation against a contractor that satisfies these
conditions. The bill would authorize a licensed contractor who
performs work outside the scope of his or her license to bring or
maintain an action to recover compensation for the portion of the
work that was performed within the scope of his or her license if the
value of the unlicensed work does not exceed 20% of the contract
price. The bill would limit the liability of a contractor performing
work outside the scope of his or her license to the value of the
unlicensed work if it does not exceed 20% of the contract price.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 7031 of the Business and Professions Code is
amended to read:
   7031.  (a)  (1)    Except as provided in
subdivision (e), no person engaged in the business or acting in the
capacity of a contractor, may 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 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, 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.

   (2) This subdivision shall not apply if the person who engaged in
the business or acted in the capacity of a contractor (A) had been
previously licensed as a contractor in this state in the appropriate
classification for the work contracted or performed within the
180-day period immediately preceding commencement of the work, and
(B) the board has acted to retroactively reinstate the license from
the date work commenced through the date of completion.  
   (3) If a contractor holding a valid license contracted for, or
performed a portion of, any work outside of his or her license
classification and the value of the unlicensed work does not exceed
20 percent of the contract price, the contractor shall not be
prevented from bringing or maintaining an action to recover
compensation payable for that portion of work contracted or performed
for which the contractor was duly licensed. 
   (b)  (1)    Except as provided in subdivision
(e), a person who utilizes the services of an unlicensed contractor
may bring an action in any court of competent jurisdiction in this
state to recover all compensation paid to the unlicensed contractor
for performance of any act or contract. 
   (2) This subdivision shall not apply if the unlicensed contractor
(A) had been previously licensed as a contractor in this state in the
appropriate classification for the work contracted or performed
within the 180-day period immediately preceding commencement of the
work, and (B) the board has acted to retroactively reinstate the
license from the date work commenced through the date of completion.
 
   (3) If an action brought under this subdivision is based on a
claim that a contractor holding a valid license contracted for, or
performed a portion of, any work outside of his or her license
classification and the value of the unlicensed work does not exceed
20 percent of the contract price, any action to recover compensation
previously paid to the contractor shall be limited to the value of
that portion of the work contracted or performed that was outside the
classification for which the contractor was duly licensed. 
   (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.
   (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 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, 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.