Ranchwood Communities Limited Partnership v. Jim Beat Construction Co.

May an unlicensed contractor who worked on a project, but who is barred by statute from bringing an action for any recovery of compensation for work performed, nevertheless seek equitable indemnity from the subcontractors it hired to perform other work on the project, on the basis that such subcontract work was negligently performed? Such indemnity rights would stem from the fact that this unlicensed contractor at the same time was acting in the related capacity of developer of the overall project (i.e., its own contract principal), and is subject as a developer to strict liability for construction defects, in favor of the plaintiff-homeowners who purchased the units it built.

These issues arise in the following context: In these construction defect actions, consolidated on appeal, the trial court granted summary judgments in favor of numerous cross-defendant subcontractors and against cross-complainants, the developers/general contractors of the two separate condominium projects involved. The trial court found that since neither of the developers/general contractors possessed contractors’ licenses, their cross-complaints for equitable and implied contractual indemnity,…

JConcurring and Dissenting.—I concur in the holding of the majority except insofar as it concludes that contract based claims for indemnity in these cases are barred by Business and Professions Code section 7031 (hereafter section 7031). As to that point, I respectfully dissent.

Section 7031, subdivision (a) bars an unlicensed contractor from bringing suit “for the collection of compensation for the performance of any act or contract for which a license is required . . . .” (Italics added.) I believe the majority has too broadly construed these terms. Section 7031 prevents an unlicensed contractor from obtaining, directly or indirectly, “compensation for unlicensed work” (Lewis & Queen v. N. M. Ball Sons (1957) 48 Cal.2d 141, 154-155 [ 308 P.2d 713 ], italics added.) The majority attempts to broaden the reach of the statute by referring to contracts entered into by unlicensed contractors as “illegal.” Assuming this term is accurate, section 7031 still does not bar the enforcement of every provision contained in a contract executed by an unlicensed contractor. As this court held in Vitek, Inc. v. Alvarado Ice Palace, Inc. (1973) 34 Cal.App.3d 586, 590 [ 110 Cal.Rptr. 86 ]: “While…

Lorber, Volk, Greenfield & Blick, Joyia Z. Greenfield, Linda S. Wisener, Jill Ann Herman, Jeffrey A. Garofalo, Koletsky, Mancini & Feldman, Marc S. Feldman and Stacey R. Friedman for Cross-complainants and Appellants.

Epsten & Grinnell and Duane E. Shinnick as Amici Curiae on behalf of Cross-complainants and Appellants.

Shifflet, Walters, Kane & Konoske, Gary P. Sinkeldam and Amy E. Volk for Cross-defendant and Respondent Southwest Construction Co.

No appearance for Cross-defendants and Respondents Jim Beat Construction Co., et al.

OPINION

HUFFMAN, J.

May an unlicensed contractor who worked on a project, but who is barred by statute from bringing an action for any recovery of compensation for work performed, nevertheless seek equitable indemnity from the subcontractors it hired to perform other work on the project, on the basis that such subcontract work was negligently performed? Such indemnity rights would stem from the fact that this unlicensed contractor at the same time was acting in the related capacity of developer of the overall project (i.e., its own contract principal), and is subject as a developer to strict liability for construction defects, in favor of the…