Attention Contractors!

Law Talk

Do you know what a Verified Certificate is? You will soon.

A recent case by a California Court of Appeal in the Second Appellate District, can be very harmful to contractors who are involved in litigation.

For a number of years, Business and Professions Code Section 7031 has stated "Except as provided in subdivision (e) [which sets forth limited circumstances, not applicable here], no person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action, or recover in law or equity in any action, in any court of this state for the collection of compensation for the performance of any act or contract where a license is required by this chapter without alleging that he or she was a duly licensed contractor at all times during the performance of that act or contract, regardless of the merits of the cause of action brought by the person. (emphasis added.) Under subdivision (d) of section 7031 it states: "If licensure or proper licensure is controverted, then proof of licensure pursuant to this section shall be made by production of a verified certificate of licensure from the Contractors' State License Board which establishes that the individual or entity bringing the action was duly licensed in the proper classification of contractors at all times during the performance of any act or contract covered by the action". When licensure or proper licensure is controverted, the burden of proof to establish licensure or proper licensure shall be on the licensee."

Essentially, this rule states that if you are a contractor suing for work that was done that required a contractor's license, and your opposing party controverts (denies) that you are properly licensed, the only way you can prove proper licensure is through what is called a Verified Certificate obtained from the Contractors' State License Board. Some contractors have already been burned by this requirement.

However, and more importantly, in this recent case, the appellate court stated that a "general denial" (a general denial is an answer to the complaint filed by the defendant) of the material allegations of the contractor's claim, is sufficient to challenge (controvert) licensing, thus shifting the burden to the contractor to prove licensure through a Verified Certificate. In this case answering party never stated in its general denial that the contractor was not licensed or that it was challenging licensing. However, the court stated that a "general allegation" which many attorneys use in denying allegations made by the other party such as we deny each and every material allegation of the complaint or (cross-complaint) is sufficient to bring about the requirement for a Verified Certificate. The general denial language is language used by almost every halfway decent pleading.

In this case, the contractor did not give any thought to the requirement of obtaining a Verified Certificate. However, because of the all-inclusive line in the answer (general denial) the contractor lost because he did not have a Verified Certificate to prove licensure. The trial court and the appellate court decided that the general allegation denying all material allegations, was sufficient to call in the requirement for a Verified Certificate.

Even worse, during the trial, when the issue came up, the contractor asked for a short continuance to obtain the Verified Certificate and the court denied that. The contractor lost the case.

This is a very important and tough case that you should keep in mind. A Verified Certificate can only be obtained from the Contractors' State License Board.