California Contractor Didn't Know That His License Has Been Suspended

In ICF Kaiser Engineers, Inc. v. Superior Court (1999) a contractor with a suspended license asserted substantial compliance with section 7031 in support of its claim for compensation for services performed. The Court of Appeal noted that the first two prongs of section 7031, subdivision (d), namely prior licensure and reasonable good faith effort to maintain licensure, were not at issue and addressed the third prong: whether the contractor "did not know or reasonably should not have known that he or she was not duly licensed." The undisputed evidence disclosed extensive efforts by the contractor to maintain its license. The Court of Appeal concluded that the contractor had substantially complied with section 7031 to allow recovery of fees for services, under circumstances where during the period of the contract the contractor had no actual knowledge that its license had been suspended; the Contractors' State License Board did not issue a notice of suspension to put contractor on notice of a licensing problem; the Contractors' State License Board itself was unaware of any problem; and an inquiry to the Contractors' State License Board during the time of suspension would have elicited a response that the contractor's license was in good standing. The Kaiser court noted at page 242: "The evidence is clear that . .. [contractor's employees] thought they had done everything they were required to do. The [Contractors' State License] Board . . . did everything possible to lead . . . everyone else at [the contractor] who might arguably be responsible for the licensing process to believe that everything was in order." (Kaiser, supra, 75 Cal. App. 4th at p. 242.)