California Business and Professions Code § 7031(a) Bars Recovery for Unlicensed Contract Work Even if Contractor Receives a License Prior to Completion; Contractor Must Have License Before Starting Work
MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc., 36 Cal. 4th 412 (2005)
In this case, the California Supreme Court expanded on the body of licensing law set forth in Hydrotech Sys. Ltd. v. Oasis Water Park, 52 Cal. 3d 998 (1991).
In MW Erectors, subcontractor Niederhauser Ornamental & Metal Works Company was hired to perform specialized metal work on a project. Niederhauser awarded two contracts to MW Erectors, one for “structural” steel work and one for “ornamental” steel work. MW Erectors began work on the structural contract on December 3, 1999, but did not receive a steel contractor’s license until December 21, 1999. MW Erectors began work on the ornamental contract in early January. MW Erectors subsequently sued Niederhauser and its payment bond surety for amounts due on both contracts. The trial court granted summary judgment in favor of Niederhauser. The court of appeals reversed, and held that MW Erectors was entitled to prove amounts due for its work on the structural contract after the license was issued.
The California Supreme Court reversed the judgment of the court of appeals insofar as it permitted MW Erectors to sue for compensation for work on the structural contract, but affirmed the judgment in all other respects. The Supreme Court held that a contractor was barred from any recovery for work performed on a contract when the work was started before the contractor held a valid license. However, the Supreme Court further held that a contractor was not barred from recovery simply because the contractor was unlicensed at the time the contract was formed, so long as the contractor was licensed before starting work.