Judicial Council v. Jacobs Facilities, Inc.

Plaintiff Judicial Council of California, Administrative Office of the Courts (JCC), entered into a contract with defendant Jacobs Facilities, Inc. (Facilities), a wholly owned subsidiary of defendant Jacobs Engineering Group Inc. (Jacobs). Performance of the contract required a license issued pursuant to the Contractors’ State License Law (Bus. & Prof. Code, § 7000 et seq.; CSLL), and Facilities was properly licensed when it commenced work. In the ensuing months, Jacobs, as part of a corporate reorganization, transferred the employees responsible for performing the JCC contract to another wholly owned subsidiary. In the process, Jacobs caused the new subsidiary to obtain a contractor’s license, while permitting the Facilities license to expire. Notwithstanding the lapse of its license, Facilities remained the signatory on the JCC contract until nearly a year later, when the parties entered into an assignment of the contract to the new, licensed subsidiary.

JCC sued Jacobs and the two subsidiaries under section 7031, subdivision (b), which requires an unlicensed contractor to disgorge its compensation. JCC sought return of all monies paid to Facilities under the…