BILL NUMBER: AB 1920 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 13, 2012
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 amended, 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. Existing
law authorizes the court to determine whether a contractor has
substantially complied with the contractor licensure requirement for
purposes of these provisions, as specified.
The
This 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. The bill would authorize the court to
consider specified mitigating and aggravating factors relative to the
loss of a contractor's license in determining whether the
contractor has substantially complied with the contractor licensure
requirement for purposes of these provisions.
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 and the
loss of licensure was not caused by a disciplinary action taken by
the board . In making a determination of substantial
compliance, the court may consider mitigating factors for a loss of
licensure, including whether (1) the contractor acted reasonably and
in good faith to maintain proper licensure, (2) the contractor knew
or should have known of the loss of licensure, (3) the contractor
took prompt action to request reinstatement of the license after
learning that it was invalid, and (4) persons receiving the benefit
of the work performed would be unjustly enriched. In addition, the
court may consider aggravating factors for a loss of licensure,
including (1) the seriousness of the violation that resulted in the
loss of licensure, and (2) the degree to which the loss of licensure
harmed or could have harmed the public.
(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.