LAW OFFICES OF DAVID L. BRAULT

OWNERS MUST FILE SUIT WITHIN ONE (1) YEAR IF YOU PAID AN UNLINCESED CONTRACTOR AND WANT YOUR MONEY BACK

Under Business and Professions Code §7031 an unlicensed contractor performing work requiring a contractor’s license is prohibited from suing to recover payment for work performed and is required to disgorge all money it was paid. This is true even if the project owner knew that the contractor was unlicensed, the contractor was only unlicensed during part of the time it performed work requiring a license, and even if the work performed by the contractor was free of defects.

Eisenberg Village of the Los Angeles Jewish Home for the Aging v. Suffolk Construction Company, Inc. (2020) 53 Cal.App.5th 1201 held a disgorgement claim under Business and Professions Code §7031 is subject to a “one-year statute of limitation.” The year starts running “when an unlicensed contractor completes or ceases performance of the act or contract at issue.”
 
In this particular case the project owner hired Suffolk Construction Company, Inc. to build a senior home. Problems developed with the hot water supply after residents began to move into the senior home. Suffolk tried to repair the system. Eventually, the owner sued Suffolk. The owner made a claim for disgorgement against Suffolk on the ground Suffolk’s qualifier, Gregory Hescock, who had moved from Suffolk’s Irvine office to Suffolk’s Boston office in 2008, did not exercise “direct supervision and control” over the project in violation of Business and Professions Code §7068. In short, Hescock was a “sham qualifier.”

The Court of Appeal, finding that Business and Professions Code §7031 should be construed as a statute providing for a penalty as opposed to restitution (i.e., the return of money improperly taken), and that the one-year statute of limitation under Code of Civil Procedure §340 applied to disgorgement claims under §7031. The Court then determined the one-year statute of limitation begins to run “when an unlicensed contractor completes or ceases performance of the act or contract at issue.”

If you as an owner think you have such a claim ACT FAST. You can check a contractor’s license status at the CSLB website: https://www2.cslb.ca.gov/OnlineServices/CheckLicenseII/checklicense.aspx

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