Before any reader gets too excited with this caption, be aware that the California Business & Professions Code section 7031, subdivision (a) bar of compensation for contract work done by anyone other than a person or entity stated in a state-registered license is unaffected by the recent case discussed below. As I wrote in Opp v. St. Paul Fire & Marine Ins. Co. (2007) 154 Cal.App.4th 71, 76, a contractor's taking liberty to use a name to contract with parties that is different from a state-registered name and then seek recovery under the contract "would be tantamount to permitting an individual to adopt a prohibited fictitious business name and then to sue on a contract, when such suit would be barred for any other unregistered business."
Nonetheless, in Ball v. Steadfast-BLK (filed June 14, 2011) 2011 DJDAR 8745, the Court of Appeal, Third Appellate District, concluded that plaintiff Ball was a licensed contractor and as such was able to perform contracting work under the name Clark Heating and Air Conditioning, as was stated on his license, even thought the work in question was contracted under the transposed name of "Clark Air Conditioning & Heating." In so concluding, the appellate court reversed the Sacramento Superior Court's sustaining defendant's demurrer without leave to amend plaintiff's cause of action for foreclosure on a mechanic's lien.
What makes the difference in the Ball case is that plaintiff Ball was the sole proprietor of the business who possessed the license and did nothing to mislead his customers that anyone other than himself was the contractor; that he, rather than some possibly shell corporation, would be responsible for the quality of the work. As the appellate court points out, "Contrary to Steadfast's assertion, such a ruling does not 'deprive the CSLB [Contractors State Licensing Board] from providing the transparency and accountability essential to the integrity of the licensing system.' "Where, as here, Ball was the licensee and contracting party, the public would be able to check licensing status."
Referring back to the Opp case, that situation was very different, as the Ball court notes, in that Opp, while he was the holder of an individual contractor's license, performed the work in question as a corporation (of which he was president). Opp thus appeared to shield himself personally from liability for his work, while he sought to benefit from seeking payment. As a side note, the fact that Opp later secured a license for the corporation did not provide substantial compliance with the licensing statute.
It is my view that contractors must still be careful to use their identical license name as registered with the state, as well as registered number, in drafting contracts with customers as well as in their marketing. I imagine that Ball perhaps decided to emphasize the air conditioning side of his business at the time of the instant transaction, thus thought it made no difference in transposing the name. Luckily for him the appellate court agreed in part because no different words were used in the name nor were previous words subtracted, so no one appeared deceived. But why take a chance? Contractors who find themselves in similar situations would be wise to consult attorneys experienced in contractor licensing matters, such as those in the Construction Law and Litigation Group at Dowling Aaron Incorporated.
