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Mind Your Ps and Qs:
Owner’s Own Statements Hand Rare Victory to “Unlicensed” Contractor
By Jennifer Tung, Esq.
The general rule in California has been that if you are an unlicensed contractor, or a licensed contractor without proof of licensure, you had no access to the courts or any way to compel payment for your work. (See “Nowhere to Run to Baby: Arbitration is Nowhere to Hide for Unlicensed Contractors,” by Kathlynn Smith, Esq., and “Contractor Licensing Law: The High Price of Being an Unlicensed Contractor,” by Aaron Flores, Esq.). In Womack v. Lovell, however, the California Court of Appeal relied on the doctrines of judicial admission and sham pleadings to grant recovery to a general contractor, even though the contractor had not provided proof of licensure.
In Womack, a homeowner sued a general contractor, and the contractor’s license bond company, for the contractor’s allegedly deficient work. In his unverified complaint, the homeowner alleged twice that the contractor was a licensed contractor at all times relevant to the suit.
The contractor cross-complained against both the homeowner and a subcontractor, alleging that it had been a licensed contractor in good standing for the past 20 years. The homeowner and subcontractor, represented by the same firm, answered with a general denial of the contractor’s allegations.
As the contractor was about to rest its case, counsel for the homeowner and subcontractor made a motion for nonsuit based on the absence of a verified certificate of licensure, as required when the issue of licensure is “controverted,” pursuant to Business and Professions Code section 7031(d). The trial court granted the motion for nonsuit, stating that there was no case law providing an exception to Business and Professions Code section 7031(d). The Court of Appeal, however, reversed the trial court’s decision and ruled in favor of the general contractor.
The Court of Appeal reasoned that, by explicitly alleging that the contractor was licensed, the homeowner’s complaint effectively told both the court and the contractor that the issue of licensure was not controverted. The Womack court stated that the homeowner could not obtain an advantage from the original, but unverified, admission that the contractor was licensed (by ensuring recovery against the bond company), only to then assert non-licensure against the contractor.
The Womack court also found that the homeowner’s general denial in his answer failed to make the issue of licensure controverted because of the sham pleading doctrine. “Under the sham pleading doctrine, a pleader cannot circumvent prior admissions by the easy device of amending a pleading without explanation.”
The Womack decision is an important reminder that contractors should provide proof of licensure, even when it does not appear to be disputed. Especially in light of budget cuts within governmental agencies, contractors should request verifications of their licenses from the Contractors’ State License Board early on in litigation to avoid potential last minute scrambles like the one in Womack.
Jennifer Tung is an Associate with Hunt Ortmann, a leader in California construction law. If you have any questions about this bulletin or contractor license law, please contact her at Tung@huntortmann.com.