WSS Industrial Construction Inc v. Great West Contractors Inc

In WSS Industrial Construction, Inc. v. Great West Contractors, Inc. (2008) 162 Cal.App.4th 581, a corporate subcontractor (WSS) sued a general contractor to recover for work performed under a subcontract. WSS performed some of the work before it obtained a contractor's license. WSS contended that it had "substantially complied with the licensing requirements because . . . the corporation's RMO responsible managing officer . . . had previously qualified a WSS partnership for a contractor's license and had held various individual contractor licenses of his own at all times before and after the corporation obtained its license." (WSS Industrial Construction, supra, 162 Cal.App.4th at p. 594.) The appellate court rejected this contention. It observed: "The contract at issue was between the general contractor and WSS, the corporation, the entity which bid the project and the only entity to have performed work for which recovery was sought in this action, not WSS, the partnership or the RMO as an individual." (Ibid.) The court concluded that the substantial compliance doctrine was unavailable to WSS because it "does not and cannot argue it was ever licensed as a contractor or held that status at a time that preceded its performance in this case." (Id. at p. 596.) WSS Industrial Construction recognized that this result was harsh, but "if the bar of section 7031 applies, it applies regardless of equitable considerations." (WSS Industrial Construction, supra, 162 Cal.App.4th at p. 596.) The court reasoned: "The Supreme Court has determined 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, 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. . . ."' . . . We are bound by this reasoning. . . . WSS was never licensed before it commenced work under the subcontract. That lack of prior licensure precludes application of the statutory substantial compliance exception. Thus, irrespective of the RMO's good faith, competence and his or the WSS partnership's prior license history, section 7031 bars the corporation from maintaining this action." (Ibid.)