Yet another California court decision has been issued requiring a contractor to return over $750,000 received for work he performed on a casino while he was unlicensed. In rejecting the contractor’s arguments against disgorgement, the court found that (a) California Business and Professions Code § 7031’s penalties applied to work performed for tribal corporations and on tribal lands by a non-tribal entity, (b) the contractor, a sole ownership, could not use his individual standing as the RMO for a licensed separate corporation contractor to cover work done by the sole ownership, and (c) the contractor did not meet substantial compliance with the licensure statute when he knew a license was required yet waited until the construction work was nearly completed to apply for a license. Twenty-Nine Palms Enterprises Corporation v. Bardos (2012) 210 Cal. App. 4th 1435, 149 Cal Rptr 3d 52. 

While this contractor’s license failure was fairly blatant, the case serves as a reminder of courts’ consistent opinions that should a contractor allow its license to lapse for even one day from the time of contracting through completion, it may be denied payment or required to disgorge substantial sums already received. Contractors and owners alike should always ensure those contributing to the work of improvement are properly licensed. Both California’s Contractors State License Board and Oregon’s Construction Contractors Board have online license lookup services that are quick and easy. Checking these sites to ensure an active license may just be the difference between getting paid and performing significant construction work for free. 

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Andrew Gibson helps his clients build successful projects and negotiate and resolve disputes. As a partner in Stoel Rives’ Real Estate, Construction and Design practice, Andrew is experienced in drafting and negotiating all forms of project documents, from the design phase through construction…

Andrew Gibson helps his clients build successful projects and negotiate and resolve disputes. As a partner in Stoel Rives’ Real Estate, Construction and Design practice, Andrew is experienced in drafting and negotiating all forms of project documents, from the design phase through construction, and regularly  assists clients with navigating the typical tricks and traps of contracting and insurance coverage issues. He is also a veteran of a variety of legal proceedings and has successfully pursued construction defect claims, insurance and bond claims, bid protests, stop payment notices, mechanic’s liens, real estate disputes, and collection actions through mediation, arbitration, and litigation.