California Contractors State License Law and Landmark Cases
Business and Professions Code Section 7028 makes it unlawful to engage in the business of or to act in the capacity of a contractor without a license. (See Lewis & Queen v. N. M. Ball Sons (1957) 48 Cal.2d 141, 147 308 P.2d 713.)
"To protect the public, the Contractors' State License Law 7000 et seq. imposes strict and harsh penalties for a contractor's failure to maintain proper licensure. Among other things, the Contractors' State License Law states a general rule that, 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.' ( 7031, subd. (a) ...)" (MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 418 30 Cal. Rptr. 3d 755, 115 P.3d 41 (MW Erectors).)
Section 7031, subdivision (a) provides in relevant part, "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 ... ."
Section 7031 thus "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 Erectors, supra, 36 Cal.4th at p. 419.)
Section 7031 "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. ' " (WSS Industrial Construction, Inc. v. Great West Contractors, Inc. (2008) 162 Cal.App.4th 581, 587 76 Cal. Rptr. 3d 8.)
"'Because of the strength and clarity of this policy,' the Supreme Court has observed, 'section 7031 applies despite injustice to the unlicensed contractor. "Section 7031 represents a legislative determination that the importance of deterring 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. 589.)
"Thus, an unlicensed contractor cannot recover either for the agreed contract price or for the reasonable value of labor and materials. The statutory prohibition operates even where the person for whom the work was performed knew the contractor was unlicensed." (Hydrotech Systems, Ltd. v. Oasis Waterpark (1991) 52 Cal.3d 988, 997 277 Cal. Rptr. 517, 803 P.2d 370 (Hydrotech).)