By Rob Hofmann

Plaintiffs Amanda Goldstein and Eric Mizrahi contracted with Ami Weisz and ‘his company’ Barak Construction (“Defendants”) to build a new garage and related remodeling at the projected cost of $363,000. Neither Defendant was a licensed contractor at the time the parties entered into the contract nor when work on the project commenced. Although it is unclear whether Plaintiffs were initially aware of Defendants’ licensure status, Defendants concede they were not licensed until some three months into the project. Plaintiffs contend that Defendants subsequently abandoned the project prior to completion and with material defects despite having allegedly already been paid $362,660.50.

Plaintiffs sought a prejudgment writ of attachment against Defendants, claiming Defendant’s failure to comply with the licensure requirements of the California Contractors’ State License Law, Business and Professions Code sections 7000 et seq. (“CSLL”), as the basis for the writ. Defendants argued, in part, that the CSLL could not provide the basis upon which attachment could be issued. Specifically, attachment is only available “if the claim sued upon is: 1) a claim for money based upon a contract, express or implied; 2) of a fixed or readily ascertainable amount not less than $500; 3) either unsecured or secured by personal property, not real property (including fixtures); and 4) commercial in nature. (Code of Civ. Proc. § 483.010.)

The appeals court upheld the trial court’s conclusion that the CSLL appropriately provides “the basis for a right to attach order since an agreement for the performance of services lies at the heart of such claim.” The claim is “fundamentally contractual in nature since it is based on an unlicensed contractor’s agreement with the beneficiary to provide services, and the beneficiary’s agreement to pay for the same.” Further, the contractor must be fully licensed at all times during performance of the contract otherwise the contractor is not entitled to recovery for work performed, “even when the person for whom the work was performed has taken calculated advantage of the contractor’s lack of licensure.” Although the trial court respected Barak Construction as a distinct legal entity, its order to Weisz not to sell, encumber, or diminish the value of his residence until further order of the court was also upheld.

Goldstein reemphasizes the strong public policy in favor of protecting against unlicensed contractors, despite the potential for arguable “injustice to the unlicensed contractor.” An unlicensed contractor may still be protected if the licensure deficiency only existed at the time the contract is entered into. Upon the commencement of work, however, the unlicensed contractor proceeds entirely at its own risk. 

Goldstein v. Barak Construction (2008) 164 Cal.App.4th 845

Rob Hofmann is an associate with Abbott & Kindermann, LLP, and is a member of the City of Davis Planning Commission, and a member of the San Joaquin Valley Air Pollution Control District Hearing Board.  For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.