Court Opinion

ID: 9745926
Source: CourtListenerOpinion
Date Created: 2023-08-27 13:43:07.190722+00
Date Added: 2024-06-11T07:25:06.329731
License: Public Domain

McINTYRE, J.
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 it may be argued the execution of a construction contract is an act for which a license is required, that act is clearly not an act for which compensation for performance is made. Compensation for performance is made for acts called for in the contract and it is that performance which section 7031 controls.”
Moreover, cases defining “compensation” for the purposes of section 7031 confirm that the statute only bars suits to recover remuneration for work performed without a license. This court stated in Davis Co. v. Superior Court (1969) 1 Cal.App.3d 156,159 [81 Cal.Rptr. 453]: “The term ‘compensation’ as used in the statute ‘denotes sums claimed as an agreed price, fee or percentage earned by performance, and also sums claimed as the reasonable value of work done under implied contract.’ ” (Citing Grant v. Weatherholt (1954) 123 Cal.App.2d 34, 42-43 [266 P.2d 185].) Here, appellants are not seeking compensation for unlicensed work. Rather, they are strictly liable to the plaintiffs for claimed damages based on the costs of repairing the alleged deficiencies or the diminution in value of the property, and are seeking to transfer these damages to other parties who are allegedly at fault.
*1424Furthermore, allowing these developer/contractors to bring contract based indemnity claims promotes the policy of placing financial responsibility in accordance with fault, and makes it easier for consumers to collect damages where warranted. As appellants argued, in the normal course of construction defect litigation, the developer/contractor, an entity strictly liable to consumers, pursues subcontractors on both contractual and equitable indemnity theories. If contractual indemnity claims are barred by section 7031, the burden of pursuing subcontractors may shift, at least in part, to consumers who will also have to prove fault on the part of the subcontractor. Such a result does not benefit consumers.
Accordingly, I believe the proper result is that neither contract- nor tort-based indemnity claims are barred by section 7031.
A petition for a rehearing was denied October 25, 1996. McIntyre, J., was of the opinion that the petition should be granted.