PCP brought suit against Universal and Turner, the defendants, for the remainder of the contract price. Explain who should prevail.
Universal City Studios, Inc. (Universal), entered into a general contract with Turner Construction Company (Turner) for the construction of the Jurassic Park ride. Turner entered into a subcontract with Pacific Custom Pools, Inc. (PCP), for PCP to furnish and install all water treatment work for the project for the contract price of $959,131. PCP performed work on the project from April 2016 until June 2017 for which it was paid $897,719. PCP’s contractor’s license, however, was under suspension from October 12, 2016, to March 14, 2017. In addition, PCP’s license had expired as of January 31, 2017, and it was not renewed until May 5, 2017. California Business and Professions Code Section 7031 provides that no contractor may bring an action to recover compensation for the performance of any work requiring a license unless he or she was “a duly licensed contractor at all times during the performance of that [work], regardless of the merits of the cause of action brought by the contractor.” The purpose of this licensing law is to protect the public from incompetence and dishonesty in those who provide building and construction services. PCP brought suit against Universal and Turner, the defendants, for the remainder of the contract price. Explain who should prevail.
The purpose behind the law is the protection of the public from lack of skill and deception from those providing building and construction services. This motive is promoted by Section 7031 by restricting those asking for judicial help to recover compensation while performing unlicensed work.
This is an initiative to not support the people who have failed to comply with the licensing laws by providing unlicensed services in exchange for an amount.
However, such law can be excused if the contractor succeeds in proving that the license had been acquired before the performance of the work, they acted rationally in making an effort to obtain and maintain a license, or they did not know that they were unlicensed.
In the given case, Organization P was aware of the expiry of the license, the renewal application was not sent within the stipulated time, and the filing fee check paid by Organization P had been dishonored. So, it cannot be said that Organization P acted rationally in maintaining its license.
Organization U should win because there has been noncompliance of regulatory license. So, such a party cannot recover for services provided if the law states that such a non-complying agreement cannot be enforced. Also, the public policy behind the regulatory objective takes precedence over noncompliant parties who have the interest to be paid for services given. In the given case, the law mentions that the non-complying agreement cannot be enforced.