Court Opinion

ID: 9605923
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:43:23.025096+00
Date Added: 2024-06-11T13:38:00.308628
License: Public Domain

BURKE, J.
I dissent. The majority find that Business and Professions Code section 7113.5 conflicts with the objectives of the federal Bankruptcy Act (11 U.S.C. § 1 et seq.) and is therefore invalid under the supremacy clause (U.S. Const., art. VI, cl. 2). My colleagues feel compelled in reaching this result to overrule our unanimous decision in Tracy v. Contractors’ State License Board, 63 Cal.2d 598 [47 Cal.Rptr. 561, 407 P.2d 865], I cannot concur in this holding because I believe section 7113.5 is supported by a sound public policy and was correctly characterized by this court in Tracy (p. 600) as “not designed to aid collection of debts but to protect the health, safety, and welfare of the public.”
In Tracy, we specifically rejected the claim that section 7113.5 conflicted with the Bankruptcy Act. We noted that “ ‘The purpose of the act [Contractors License Law] is to guard the public against the consequences of incompetent workmanship, imposition and deception.’ [Citations.] Accordingly, the present statute . . . bears only tangentially on the purposes served by the Bankruptcy Act and does not conflict with it.” (63 Cal.2d at p.,600; see also Hope v. Contractors’ etc. Bd., 228 Cal.App.2d *315414 [39 Cal.Rptr. 514]; Hopkins v. Contractors’ State License Bd., 240 Cal.App.2d 710 [49 Cal.Rptr. 917].)1
I do not believe the majority’s reliance on Perez v. Campbell, 402 U.S. 637 [29 L.Ed.2d 233, 91 S.Ct. 1704], is justified, for section 7113.5, which we upheld in Tracy v. Contractors’ State License Board, supra, 63 Cal.2d 598, presents a different question than was decided by the high court in Perez. In Perez the court was faced with a statute which provided for the suspension of driving privileges following an accident unless the resulting judgment was paid in full, regardless of its prior discharge in bankruptcy. The court stated that: “The sole emphasis in the [Arizona] Act is one of providing leverage for the collection of damages . . . .” (402 U.S. at p. 646 [29 L.Ed.2d at p. 241].) This purpose was held to conflict with the federal Bankruptcy Act which was designed to give the debtor a fresh start.
On the other hand section 7113.5 is merely a codification of a proper state policy to protect the public from incompetence and deception by authorizing state officers to revoke or suspend a bankrupt contractor’s license. The imposition of such discipline does not promote any debt-collection policy in conflict with the bankruptcy laws. (See fn. 1, ante.)
We noted in Tracy v. Contractors’ State License Board, supra, 63 Cal.2d 598, 601, that the sanctions imposed by section 7113.5 “‘are much less drastic than those of the Utah Financial Responsibility Act. Here acts of bankruptcy do not require peremptory license revocation. They merely give cause for the taking of some disciplinary action. Whether such action will be taken and, if so, the extent thereof, is left to be gauged by a comprehensive appraisal of all factors relevant to the ultimate issue: Can this person at the present time be deemed competent to continue to pursue a vocation substantially affecting the public weal?’ ” (Quoting from Hope v. Contractors’ etc. Bd., supra, 228 Cal.App.2d 414, 425.)
The majority suggest that section 7113.5 is invalid because “it tends to discourage a licensed contractor from having his business debts dis*316charged,¿n>.bankruptcy,...” (Ante, p. 312.) Evidently;,the majority-assume that any law which discourages a debtor from taking the extreme measure of bankruptcy would be invalid! To the contrary, in view of the likely hardship to creditors and the public, and the damage to his own reputation, the debtor quite properly should be inhibited in this regard. Of course, once the debtor does elect to file for bankruptcy, the state may not interfere with the policy underlying the bankruptcy laws to effect a permanent discharge- of business debts. Yet, section 7113.5, in authorizing thé board .to take disciplinary action against a bankrupt contractor, has no effect whatever upon the discharge or collection of the contractor’s debts.
Thus, I would conclude that statutory authority to revoke a bankrupt contractor’s license for the protection of the public does not conflict With the purposes of the federal Bankruptcy Act to relieve a debtor from payment of his past obligations.
Wholly apart from the propriety of license revocation, however, is the question whether a contractor such as Grimes must pay his previously discharged debts as a condition to reinstatement of his contractor’s license. Section 7102 of the Business and Professions Code sets forth the conditions for obtaining reinstatement or reissuance of a license previously revoked by the board, including the provision that such reinstatement or reissuance shall not occur for a period of one year following revocation, “and then only on proper showing that all loss caused by the act or omission for which the license was revoked has been fully satisfied and that all conditions imposed by the decision of revocation have been complied with.” (Italics added.) Grimes forcefully contends that section 7102 would conflict with the bankruptcy laws (and the rationale of the Perez decision) were it interpreted as requiring Grimes to repay his discharged debts as a condition to reinstatement of his license. (See also Note, 15 Hastings L.J. 348.)
Yet the validity and interpretation of section 7102 is not yet before us in this case, for Grimes only attacks the initial revocation of his license and not the board’s failure to reinstate it. (See Hope v. Contractors’ etc. Bd., supra, 228 Cal.App.2d 414, 426.) If, contrary to the board’s representations to this court,2 the board attempts to impose such a condition *317then the question of the validity of section 7102, as so applied, will be ripe for our consideration.
I would reverse the judgment.
McComb, J., and Clark, J., concurred.
Appellants’ petition for a rehearing was denied September 19, 1974. McComb, J., Burke, J., and Clark, J., were of the opinion that the petition should be granted.

 As appellants point out, the state has a legitimate interest in protecting subcontractors, materialmen, employees and property owners from loss resulting from the financial irresponsibility or incompetence of building contractors. Accordingly, the fact of bankruptcy properly triggers an investigation leading to possible license revocation, as does any failure to pay suppliers, materialmen or subcontractors (§ 7120) or failure to complete a construction job (§7113). Under such circumstances, revocation occurs to prevent similar loss in the future, and not to provide past creditors with any additional leverage or recourse against the contractor.

 Appellants have disclaimed any intention to apply the provisions of section 7102 to cases wherein a license.has been revoked under section 7113.5. Appellants further state that “The Registrar [of Contractors], in protecting-the public, is concerned with whether or not the licensee has rehabilitated himself and is likely to practice his *317chosen profession competently and responsibly so as not to represent a threat to the laborers, materialmen, and homeowners with whom he will come into contact as a contractor.”