California Business and Professions Code Section 7031

"Whether the trial court erred in applying Business and Professions Code section 7031 is a question of law to which we apply a de novo standard of review. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 861-865; see also Code Civ. Proc., 589.)" (Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 937 (Vallejo).) Business and Professions Code Section 7031, subdivision (a) provides that "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." "'The bar extends to actions "in law or equity". . . . ' " (WSS Indus. Const., Inc. v. Great West Contractors, Inc. (2008) 162 Cal.App.4th 581, 587 (WSS).) There are a few narrow exceptions to section 7031, subdivision (a) -- notably for those who sell and install articles that are not a fixed part of the structure under section 7045, and for those who furnish materials only under section 7052. "The Construction Services Licensing Law, Business and Professions Code (CSLL) embodies a comprehensive legislative scheme governing the construction business in California. It reflects a strong public policy, which favors protecting the public from unscrupulous and incompetent contractors. According to our Supreme Court, 'The purpose of the licensing law is to protect the public from incompetence and dishonesty in those who provide building and construction services. The licensing requirements provide minimal assurance that all persons offering such services in California have the requisite skill and character, understand applicable local laws and codes, and know the rudiments of administering a contracting business. ' Section 7031, subdivision (a), applies 'regardless of the equities.' For the past 50 years, it has been held that 'courts may not resort to equitable considerations in defiance of section 7031.' That is because the statute '"'represents a legislative determination that the importance of deterring unlicensed persons from engaging in the contracting business outweighs any harshness between the parties . . . .'" " (WSS, supra, 162 Cal.App.4th at p. 587.) As a further deterrence to contracting to install fixtures without proper licensing, section 7031, subdivision (b), provides that "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." "A 'contractor,' including a corporation so acting ( 7025), 'for the purposes of this chapter, is synonymous with "builder" and, within the meaning of this chapter, a contractor is any person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, or repair,' inter alia, a structure. ( 7026, italics added.)" (Opp v. St. Paul Fire & Marine Ins. Co. (2007) 154 Cal.App.4th 71, 75 (Opp).) Business and Professions Code Section 7031(b) is part of the Contractors' State License Law ( 7000 et seq.), which "is a comprehensive legislative scheme governing the construction business in California. This statutory scheme provides that contractors performing construction work must be licensed unless exempt. ( 7026 et seq., 7040 et seq.) 'The licensing requirements provide minimal assurance that all persons offering such services in California have the requisite skill and character, understand applicable local laws and codes, and know the rudiments of administering a contracting business. ' The laws are designed to protect the public from incompetent or dishonest providers of building and con-struction services. " (White v. Cridlebaugh (2009) 178 Cal.App.4th 506, 517 (White).) This statutory scheme encourages licensure by subjecting unlicensed contractors to criminal penalties and civil remedies. (White, supra, 178 Cal.App.4th at p. 518.) The civil remedies "affect the unlicensed contractor's right to receive or retain compensation for unlicensed work." (Ibid.) The hiring party is entitled to enforce these remedies through a defensive "shield" or an affirmative "sword." (Id. at pp. 518-519.) The shield, contained in section 7031(a), was enacted more than 70 years ago, and provides that a party has a complete defense to claims for compensation made by a contractor who performed work without a license, unless the contractor meets the requirements of the statutory substantial compliance doctrine. (See WSS Industrial Construction, Inc. v. Great West Contractors, Inc. (2008) 162 Cal.App.4th 581, 587 (WSS Industrial).) Section 7031(e), the substantial compliance exception, provides relief only in very narrow specified circum-stances, and ?shall not apply ... where the unlicensed contractor has never been a duly licensed contractor in this state." (see WSS Industrial, supra, 162 Cal.App.4th at pp. 589, 594-595.) Section 7031(a) states: "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. Section 7031(e) states: "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, ... 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." The California Supreme Court has long given a broad, literal interpretation to section 7031(a)'s shield provi-sion. (Hydrotech Systems, Ltd. v. Oasis Waterpark (1991) 52 Cal.3d 988, 994-1002.) The court has held that section 7031(a) applies even when the person for whom the work was performed knew the contractor was unlicensed. (Hydrotech, supra, at p. 997.) Additionally, unlicensed contractors are presumed to have knowledge of the law's requirements and a con-tractor cannot circumvent section 7031(a) by alleging the beneficiary's false promise to pay despite the con-tractor's lack of licensure. (Hydrotech, supra, at p. 1002.) The high court also recently reconfirmed that "section 7031(a) bars a person from suing to recover compen-sation for any work he or she did under an agreement for services requiring a contractor's license unless proper licensure was in place at all times during such contractual performance." (MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 419 (MW Erectors).) The court explained that " ' "Section 7031 represents a legislative determination that the importance of deter-ring unlicensed persons from engaging in the contracting business outweighs any harshness between the parties, and that such deterrence can best be realized by denying violators the right to maintain any action for compensation in the courts of this state. ..." ' " (Id. at p. 423.) " 'Because of the strength and clarity of this policy' , the bar of section 7031(a) applies 'regardless of the equities.' " (Ibid.; see Lewis & Queen v. N. M. Ball Sons (1957) 48 Cal.2d 141, 152 "the courts may not resort to equitable considerations in defiance of section 7031".) The Contractors' State License Law is designed to protect the public. (MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 418.) It "imposes strict and harsh penalties for a contractor's failure to maintain proper licensure." (Ibid.) Generally, "regardless of the merits of the claim, a contractor may not maintain any action, legal or equitable, to recover compensation for 'the performance of any act or contract' unless he or she was duly licensed 'at all times during the performance of that act or contract.'" (Ibid., quoting 7031, subd. (a).) "Where applicable, Business and Professions Code section 7031, subdivision(a) bars a person from suing to recover compensation for any work he or she did under an agreement for services requiring a contractor's license unless proper licensure was in place at all times during such contractual performance." (MW Erec-tors, Inc., supra, at p. 419.) Business and Professions Code Section 7031, subdivision (a), in pertinent part provides that "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 . . . ." Subdivision (b) of section 7031 provides additional protection to those who enter into agreements with con-tractors who are not properly licensed. Specifically, it authorizes "a person who utilizes the services of an unlicensed contractor to bring an action in any court of competent jurisdiction in this state to recover all compensation paid to the unlicensed con-tractor for performance of any act or contract." Together, subdivisions (a) and (b) of section 7031 function as "a stiff all-or-nothing penalty." (MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc., supra, 36 Cal.4th at p. 426; Goldstein v. Barak Construction (2008) 164 Cal.App.4th 845, 856.)