So You're Installing Improvements In Your
Coin Laundry! Is Your Contractor Licensed?

      So,  at  long last, you have decided to install a  few  new
improvements  in your coin laundry and wish to hire  a  competent
contractor to perform the work.  Should you be concerned that the
contractor is licensed?

     In a recent case before the California Supreme Court, an out-
of-state  corporation which subcontracted to  provide  labor  and
materials for a wavemaking machine in a waterpark project in Palm
Springs sought to recover payment from the owners of the project.
The Supreme Court confirmed that

                     "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."

     In California, if you wish to quickly determine whether your
proposed contractor is licensed, telephone the Contractors' State
Licensing  Board at (800) 321-2752.  Upon being  advised  of  the
name  or  license number of your proposed contractor,  the  Board
representative will immediately advise you as to the contractor's
license  status.   A written history regarding your  contractor's
license  can  be  obtained by writing to the  Contractors'  State
Licensing Board, Post Office Box 26000, Sacramento, CA 95826.

      Beware!  Some individuals simply place a contractor's state
license  number upon their business cards with numbers last  used
to purchase a lottery ticket!

      Unlicensed  persons engage in the contracting  business  at
their  peril.  California Business and Professions  Code  §  7031
generally  bars  an  unlicensed contractor  from  maintaining  an
action  for  compensation.  In the above Supreme Court  decision,
the   out-of-state  corporation  was  a  New  York   corporation,
unlicensed  as  a  contractor  in  California.   The   New   York
corporation  argued  that  its  work  in  Palm  Springs  was   an
"isolated"  California transaction and sought to be  exempt  from
the licensing requirements on that ground.

      The  California  Supreme Court observed, in  rejecting  the
argument,  that "the concern for the public inherent  in  Section
7031  is  just as applicable to a project done by an out-of-state
contractor with few jobs in California as to a project done by  a
California  contractor who performs only one  job  in  California
before  going  out of business."  The Court thus  concluded  that
there  is  "no  implied exception for 'isolated' transactions  by
foreign contractors."

      The  New York corporation further argued that the defendant
committed  fraud  by  promising to pay for  the  work  performed,
without any actual intent of making payment, and that such  fraud
induced  the New York corporation to enter into the contract  and
perform.   The  California  Supreme  Court  dispensed  with  this
argument as follows:

                     "In  a garden-variety dispute over
          money  owed  an  unlicensed  contractor,  the
          contractor  cannot  evade  Section  7031   by
          alleging that the express or implied  promise
          to   pay   for  the  contractor's  work   was
          fraudulent  . . . if the primary fraud  is  a
          false   promise   to   pay   for   unlicensed
          construction  work,  and the  primary  relief
          sought  is compensation for the work, Section
          7031 bars the action."

      It  is important to know that the license law pertains only
to  actions  for  compensation and, except for  the  above  false
promise  to pay scenario, it does not shield a person who  enters
into   a  contract  with  an  unlicensed  contractor  from   tort
liability.  In one case, a plaintiff was told that land was  free
of  encumbrances,  and  based upon that representation,  advanced
funds, performed improvement work, and furnished materials,  with
the  understanding that his compensation would be credited toward
the  purchase  price of a homesite.  When the deed of  trust  was
foreclosed,  the  plaintiff sought tort  damages  for  the  false
representations of the defendant and was successful in recovering
compensation.

      In addition, an unlicensed contractor has been permitted to
maintain  an  action for breach of warranty against  a  materials
supplier that furnished defective materials.

      Although  an  unlicensed  contractor  may  be  barred  from
compensation,  employees  of  an unlicensed  contractor  are  not
barred  by this statute from asserting their mechanics'  lien  or
rights against the property owner.

      On  the  other side of the coin, a property  owner  is  not
prohibited  from  bringing  an action  for  damages  against  the
unlicensed contractor.

     Involving yourself with an unlicensed contractor can lead to
a cesspool of trouble.  Protect yourself, and make that telephone
call to the Contractors' State Licensing Board!

[This column is intended to provide general information only  and
is  not intended to provide specific legal advice; if you have  a
specific  question  regarding the  law,  you  should  contact  an
attorney  of your choice.  Suggestions for topics to be discussed
in this column are welcome.]


Reprinted from New Era Magazine
Myles M. Mattenson © 1997-2002