Opinion ID: 1158320
Heading Depth: 3
Heading Rank: 1

Heading: Arizona's Licensing Scheme

Text: A.R.S. §§ 32-1101 to -1170.03 set forth the requirements for obtaining and keeping a contractor's license. Among other things, contractors must qualify under § 32-1122, maintain a surety bond or cash deposit, § 32-1152, and not commit any act or omission listed in § 32-1154(A). A.R.S. § 32-1153 sets forth prerequisites for bringing an action for unpaid work. It provides: No contractor as defined in § 32-1101 shall ... commence or maintain any action in any court of the state for collection of compensation for the performance of any act for which a license is required by this chapter without alleging and proving that the contracting party whose contract gives rise to the claim was a duly licensed contractor when the contract sued upon was entered into and when the alleged cause of action arose. Although we have not decided whether substantial compliance with the licensing statute satisfies § 32-1153, we have applied the statute before. In Northen v. Elledge, 72 Ariz. 166, 232 P.2d 111 (1951), a contractor knowingly allowed his license to expire before finishing a project, and made no effort to renew it. The owner defaulted. Northen brought an action in which the owner raised the predecessor to § 32-1153 as a defense. That earlier statute only required licensing at the time the cause of action arose, and we thus rejected Northen's argument that his license at the time he entered into the contract was adequate. Id. at 171, 232 P.2d at 116. We also rejected his argument that equity favored his recovery, and noted that if contract performance were the only test, the statute would have little effect. Id. at 173, 232 P.2d at 118. But Northen never argued that in addition to performing his contract he substantially complied with the licensing statute. Nor could he have in light of the facts of the case. He knew his license had expired, but continued to work and never bothered to renew it, even up to the time of bringing the action. Thus, this court did not have an opportunity to decide whether substantial compliance with the licensing statute is adequate under § 32-1153. The issue is therefore one of first impression. [1]