Court Opinion

ID: 9549060
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:12:46.874452+00
Date Added: 2024-06-11T15:19:47.514098
License: Public Domain

MOSK, J.
I dissent.
To achieve what they perceive as a desirable result, the majority employ equity in a simple contract action and in doing so they emasculate a legislative enactment that is clear and unambiguous.
Indeed, the majority concede, as they must, that “Since plaintiff did not have a license in his own name, he performed these contracts in violation of sections 7028.5 and 7117. Hence, he was not duly licensed. If literal compliance with section 7031 is required, he cannot legally maintain these actions.” (Ante, p. 285.) Nevertheless the majority proceed by deft legerdemain to find that “the policy,” if not the text, of the law has been satisfied. (Ibid.) This result, obtained by categorizing required compliance with the statute as “a technicality” (ante, p. 289), is untenable in an action at law.
To complete their total disregard of governing statutes, the majority even permit enforcement of an alleged oral contract for home improvements, despite section 7159 which makes it a crime to enter into such an agreement. It is inconceivable to me that a contract, specifically made illegal by the Legislature, can be enforced civilly on a theory that a civil judgment “does not defeat the policy of the statute.” (Ante, p. 294.) The result may be that the plaintiff will enjoy the fruits of his money judgment in a jail cell.
The Court of Appeal reached the proper result in this case. Therefore I adopt as my own the relevant parts of the opinion of Justice Rouse, concurred in by Presiding Justice Kline and Justice Miller:
*296Defendants first contend that plaintiff was required to allege and prove that he possessed a valid contractor’s license in his name in order to recover damages in this action.
Section 7031 of the Business and Professions Code1 provides that “No person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action in any court of this state for the collection of compensation for the performance of any act or contract for which a license is required by this chapter without alleging and proving that he was a duly licensed contractor at all times during the performance of such act or contract, except that such prohibition shall not apply to contractors who are each individually licensed under this chapter but who fail to comply with Section 7029.”
In this case, no evidence was introduced of a contractor’s license in the name of “Krikor Asdourian.” Instead, the evidence established that the license was issued to “Artko Remodeling and Construction” (Artko). Plaintiff was the sole owner and operator of Artko and his name appears as the responsible managing party on the license.
Plaintiff argues that there is no legally significant distinction between “Krikor Asdourian” and “Artko,” because Artko is merely another name under which he was doing business. In this instance, however, there is no evidence that plaintiff dealt with defendants in the capacity of Krikor Asdourian doing business as Artko. Artko’s name does not appear on the contract for the construction work. Moreover, plaintiff testified that he never filed a fictitious name statement, because he was using the name Krikor Asdourian for his business.
Even assuming that Krikor Asdourian was doing business as Artko, plaintiff’s argument is without merit. In Rothwell v. Vaughn (1920) 49 Cal.App. 429 [123 P. 611], the court acknowledged that there is a legally significant distinction between an individual and a fictitious business name. The issue there was whether an action could be maintained despite the fact that the plaintiff had not complied with the fictitious name statute. The court concluded that “As this contract was not made in the fictitious or partnership name, but was made in the individual names of the parties, it is clear that the section [former Civ. Code, § 2468] does not prohibit the parties maintaining an action of this nature.” (P. 435.)
Plaintiff next relies on section 7025, which defines “person,” as used in the chapter requiring the contractor’s license, as “an individual, a firm, *297copartnership, corporation, association or other organization . . . Plaintiff then asserts that a fictitious business name does not fall within the language of this statute. Thus, he contends that there is only one “person” to be licensed pursuant to section 7031.
However, a “firm” is defined, among other things, as “the name, title, or style under which a company transacts business: the firm name . . . .” (Webster’s Third New Internal. Diet. (3d ed. 1961) p. 856; “Business entity or enterprise. Unincorporated business . . . .” Black’s Law Diet. (5th ed. 1979) p. 571, col. 1.) Under either of these definitions, Artko is a firm.2 Thus, both Artko and Krikor Asdourian are “person[s]” within the meaning of section 7025 and each must comply with the licensing requirement of section 7031.
Therefore, in a literal application of section 7031, the license issued to Artko can be of no use to plaintiff as a means of satisfying the licensing requirement where Artko was not involved in either the execution or the performance of the contract.
Plaintiff next contends that the facts of this case merit the application of the doctrine of substantial compliance. He points out that the purpose of the licensing requirement is to protect the public against dishonest or incompetent persons becoming involved in the contracting business. (Lewis & Queen v. N. M. Ball Sons (1957) 48 Cal.2d 141, 149-150 [308 P.2d 713].) He asserts that consistent with this purpose, the doctrine of substantial compliance has been applied where, despite the failure to comply literally with the licensing requirements, the party seeking to escape his obligation has received the full protection which the statute contemplates. (Latipac, Inc. v. Superior Court (1966) 64 Cal.2d 278, 281 [49 Cal.Rptr. 676, 411 P.2d 564]; Vitek, Inc. v. Alvarado Ice Palace, Inc. (1973) 34 Cal.App.3d 586, 590 [110 Cal.Rptr. 86].) Case law, however, does not support plaintiff’s position.
In Lewis & Queen v. N. M. Ball Sons, supra, 48 Cal.2d 141, one partner was individually licensed, but neither the other partner nor the partnership was. The partnership was not allowed to maintain an action. The California Supreme Court stated, “Section 7031 represents a legislative determination that the importance of deterring unlicensed persons from engaging in the contracting business outweighs any harshness between the parties, and that such deterrence can best be realized by denying violators the right to main*298tain any action for compensation in the courts of the state [citation]. [1] . . . [T]he courts may not resort to equitable considerations in defiance of section 7031.” (Id., at pp. 151-152.)
In Latipac, Inc. v. Superior Court, supra, 64 Cal.2d 278, the doctrine of substantial compliance was applied. However, in that case, the corporate plaintiff was licensed at the time the contract was executed and the plaintiff performed for 15 months before the license expired. The license was not renewed until two months after the contract terminated. The test for substantial compliance, as articulated by the court, was whether the policy of section 7031 had been satisfied. To answer that question, the court noted the following three considerations: “(1) the fact that plaintiff held a valid license at the time of contracting, (2) that plaintiff readily secured a renewal of that license and (3) that the responsibility and competence of plaintiff’s managing officer were officially confirmed throughout the period of performance of the contract.” (Id., at pp. 281-282.) Since all three considerations were present in Latipac, the court did not “determine whether any of them, singly or in more limited combination, would constitute ‘substantial compliance.’ ” (Id., at p. 281.)
In Vitek, Inc. v. Alvarado Ice Palace, Inc., supra, 34 Cal.App.3d 586, substantial compliance with the statute was also found. Although the corporate plaintiff in that case did not possess a valid license at the time the contract was executed, the plaintiff was licensed prior to and during the performance of the contract. To reach its conclusion, the court focused on the specific language of section 7031 that a contractor must be licensed “during the performance of such act or contract.”
General Ins. Co. v. Superior Court (1972) 26 Cal.App.3d 176 [102 Cal.Rptr. 541], involved a factual situation more closely analogous to this case. There, the plaintiff corporation was not licensed at the time the contract was executed nor at any time during its performance. The appellate court acknowledged that, since plaintiff’s sole owner, president, chairman of the board and responsible managing officer was personally licensed at all times and personally supervised the performance of the contract, the ultimate statutory purpose of protecting the public, as set forth by the Latipac court, was satisfied. However, the court nevertheless held that the doctrine of substantial compliance was inapplicable. (Id., at p. 183.)
In this case, plaintiff was not licensed at the time the contract was executed nor at any time during its performance. However, plaintiff’s business, Artko, of which plaintiff was the sole owner, supervisor, and responsible managing party, was duly licensed during this period. Obviously, Artko could never have received and maintained its license unless plaintiff had *299been able to demonstrate the requisite experience and knowledge deemed necessary for the safety and protection of the public. Under these circumstances, the ultimate purpose of section 7031 has been served.
However, the General Ins. Co. court went further and concluded that a more specific and immediate purpose of section 7031, the practical enforcement of the licensing requirement, must be considered. The court stated, “to disregard its corporate existence [citation] would nullify that part of the licensing law requiring a separate license for a corporation (see Bus. & Prof. Code, §§ 7068, subd. (c), 7069), and to hold that plaintiff has nevertheless substantially complied with Business and Professions Code, section 7031, requiring that it be duly licensed at all times during performance, would emasculate the statutory language and nullify the section’s purpose of pragmatically enforcing the Contractors License Law.” (26 Cal.App.3d at p. 184.)
Initially, we note that, in contrast to General Ins. Co. v. Superior Court, supra, 26 Cal.App.3d 176, this action involves an unlicensed individual plaintiff whose business is licensed. However, sections 70683 and 7069 are included in article 5, which encompasses licensing procedures, and they contemplate separate licenses for both individuals and corporations. To ignore the requirement that an individual must be personally licensed would also nullify the purpose of enforcing the Contractors License Law. (Bus. & Prof. Code, § 7000 et seq.)
Furthermore, as the court pointed out in General Ins. Co. v. Superior Court, supra, 26 Cal.App.3d 176, there is only one exception to section 7031: “. . . the situation in which a partnership has failed to secure a separate license but each of its partners is personally licensed. ” {Id., at p. 184.) The court stated that “the creation of another exception is a matter for the Legislature, not the courts.” {Id., at p. 185.) In accordance with this rea*300soning, we find that an individual who brings an action in his name alone claiming that he is licensed by reason of a business of which he is an owner, but which is not a party to the action, may not recover damages. [End of Court of Appeal quotation.]
The judgment should be reversed.
Appellants’ petition for a rehearing was denied April 18, 1985. Mosk, J., was of the opinion that the petition should be granted.

Unless otherwise indicated, all statutory references are to the Business and Professions Code.

Moreover, assuming that plaintiff was doing business as Artko, section 17902, which defines “person,” as used in the fictitious name context, does not include a “firm.” The statute thus distinguishes between an individual and an individual doing business under a fictitious name.

At all times here pertinent, section 7068 provided that “The board shall require an applicant to show such degree of knowledge and experience in the classification applied for, and such general knowledge of the building, safety, health and lien laws of the state and of the administrative principles of the contracting business as the board deems necessary for the safety and protection of the public. An applicant shall qualify in regard to his experience and knowledge in one of the following ways: [f] (a) If an individual, he shall qualify by personal appearance or by the appearance of his responsible managing employee. [K] (b) If a copartnership or a limited partnership, it shall qualify by the appearance of a general partner or a responsible managing employee, [f] (c) If a corporation, or any other combination or organization, it shall qualify by the appearance of the responsible managing officer, the responsible managing employee, or a member of the personnel of such applicant. [t] A responsible managing employee for the purpose of this chapter shall mean an employee who is regularly employed by the applicant and is actively engaged in the classification of work for which such responsible managing employee is the qualifying person in behalf of the applicant. ” (Italics added.)