All is Fair in Lovell and Litigation
Most California construction attorneys know, or should know, that you need to “prove” you’re a licensed contractor in a construction case.
And, by “prove,” that means more than simply alleging in a pleading that you are a licensed contractor (that’s an allegation not proof) and it also means more than simply signing a declaration or testifying in court that you are a licensed contractor (while that is proof, it’s insufficient proof under the law).
What you need is a verified certificate of licensure issued by the California Contractor State License Board (“CSLB”). And if you don’t have one during trial, you’re out of luck, . . . until now.
The Verified Certificate of Licensure Requirement
If you’re a contractor suing for money in California for work requiring a contractor’s license you need to prove you were validly licensed during the time you performed work under Business and Professions Code section 7031(d), which provides:
If licensure or proper licensure is controverted, then proof of licensure pursuant to this section shall be made by production of a verified certificate of licensure from the Contractors’ State License Board which establishes that the individual or entity bringing the action was duly licensed in the proper classification of contractors at all times during the performance of any act or contract covered by the action. Nothing in this subdivision shall require any person or entity controverting licensure or proper licensure to produce a verified certificate. When licensure or proper licensure is controverted, the burden of proof to establish licensure or proper licensure shall be on the licensee.
You can obtain a verified certificate of licensure by submitting a Request for Certified License History (Verified Certificate) to the CSLB. If you’re on the other side of a legal action you can also obtain a verified certificate of non-licensure by submitting a Request for Certificate of Non-License. However, it can take some time, sometimes as long as several weeks, for the CSLB to process your request, so plan ahead.
I can’t emphasize that enough. In fact, in one of the leading cases interpreting Business and Professions Code section 7031(d), Advantec Group, Inc. v. Edwin’s Plumbing Co., Inc., 153 Cal.App.4th 621 (2007), the court held that: (1) a general denial in an answer to a complaint was sufficient to “controvert” licensure under Section 7031(d); and (2) the trial court’s refusal to permit counsel time to obtain a verified certificate of licensure during trial was proper because “the clear weight of the statutory burden fell on Edwin’s to prove its licensure.”
Womack v. Lovell: A Limited Exception to Section 7031(d)
However, in a case decided earlier month, Womack v. Lovell, Case No. G049587 (June 15, 2015), the California Court of Appeals for the Fourth District gave a contractor a Hail Mary from the verified certificate requirement, and in doing so carved out a limited exception to Business and Professions Code section 7031(d), noting itself that it was “one of those relatively rare cases.”
Womack started out unremarkably enough. Homeowner hires contractor. Homeowner doesn’t like contractor’s work and files complaint against contractor. Contractor in turn files cross-complaint against homeowner for unpaid work.
But then it starts getting interesting. At trial, the homeowner asserted that: (1) he had “controverted” licensure under Business and Professions Code section 7031(d) though his general denial in his answer to the contractor’s cross-complaint; (2) it was the contractor’s burden to prove licensure by presenting a verified certificate of licensure from the CSLB under Section 7041(d); and (3) the contractor had failed to do so, so game over.
We’ll, not quite, according to the Court of Appeals. You see, while the homeowner had, though his general denial in his answer, controverted licensure under Advantec, the homeowner had also stated in his complaint that the contractor was a “licensed contractor” and even sued the contractor’s license bond surety which statutorily could and would only issue a bond to a licensed contractor. So, there’s the rub: a general denial in the answer which contradicts statements and claims made in the complaint.
So, what did the Court of Appeals do? Well, it found that by stating that the contractor was a “licensed contractor” and making a claim against the contractor’s license bond in the complaint, that the homeowner had judicially admitted that the contractor was duly licensed, and by doing so had not “controverted” licensure and had not triggered the contractor’s obligation to present a verified certificate of licensure from the CSLB under Business and Professions Code section 7031(d). This was so, even though the complaint was unverified.
But what about the general denial in the answer? The Court of Appeals essentially ignored the general denial altogether by characterising it as a sham pleading which cannot circumvent prior admissions, namely, the allegations made by the homeowner in his complaint against the contractor and its license bond surety.
The Court of Appeals also gave a third reason supporting its decision. The trial court’s local rules required that the parties specify all “controverted issues,” and because the homeowner had not specifically indicated that he would be controverting licensure at trial, he had waived his ability to do so.
If you read the case, you’ll quickly discover that the Court of Appeals didn’t have much love for Business and Professions Code section 7031(d) and even less for the homeowner and his counsel who it suggests were a bit sharp elbowed when they sprung the licensure issue on the contractor at trial.
But, while the Court of Appeals suggested that it was “one of those relatively rare cases,” I think it may have ramifications that extend beyond the rare to the more mundane. For example, what if I had represented the homeowner, and instead of alleging that the contractor was a licensed contractor, alleged instead that the contractor was “required to be licensed under the laws of the State of California.” Presumably, this would still allow me to go after the license bond surety, but it wouldn’t be an admission that the contractor was licensed either. Would the inclusion of the license bond claim alone, then, be a sufficient admission to preclude me from arguing that the contractor is required to prove licensure? And what if I’m in a court without a local rule that requires that all “controverted issues” be specified, in that case, would I be able to raise the licensure issue even though I also have a license bond claim? Womack doesn’t address these issues.
What you can take away from this case though, is that if you’re a contractor and you’re suing to get paid, make sure you get a verified certificate of licensure well before trial, and if you’re an owner, be careful what you allege in your pleadings (even unverified pleadings) as they can come back to bite you (and, while I think it’s a bit unfair, you need to consider whether you need to give up certain claims – like the homeowner’s license bond claim in Womack – in order to preserve your right to defend against other claims).
After all, all’s fair in love(ll) and litigation.
One Response to “All is Fair in Lovell and Litigation”
[…] I mentioned in an earlier post, in California you must “prove” you’re a licensed contractor in a construction […]