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 Published Article in Los Angeles Lawyer Magazine- Hammering the ContractorThe appellate court ruling in Tellis has
significantly increased the exposure of contractors to disciplinary action in
disputes with their clients. By Bruce D.
Rudman and Sam K. Abdulaziz The Contractors’ State License Board (CSLB)—one of the many boards and bureaus of the California Department of Consumer Affairs—licenses, regulates, and disciplines building contractors. The board’s disciplinary process consists of various types of actions that may be taken against California contractors who violate their professional or licensing obligations. Not surprisingly, the statutes that regulate contractors are often referred to as the Contractors’ License Law.1 Pursuant to those statutes, the CSLB investigates complaints filed against contractors. It is estimated that more than 70 percent of all complaints and their resulting disciplinary proceedings involve consumer, as opposed to commercial, transactions. Most administrative disciplinary actions do not reach the court of appeal and thus are not published. Lately, it seems the only actions that are eventually published are those that benefit the administrative agency rather than the licensee.2 Recent appellate cases appear to be strengthening, if not actually increasing, the ability of the CSLB to discipline a contractor. Consequently, even the most conscientious contractors may find themselves facing the board at some point. Indeed, in Tellis v. Contractors’ State License Board,3 a case decided last year, the actual language of the decision, with its far-reaching implications, should strike fear into the hearts of all contractors. A major difference between licensed contractors and many other professional licensees is that contractors may not have the same formal education and sophistication as their customers. This disparity frequently leads to misunderstandings and disagreements between contractors and their customers almost from day one. Thus it is not hard to imagine how a poorly written contract containing a vaguely described scope of work can lead to significant disagreements and a consumer complaint—even against an innocent contractor. In response to a complaint by a consumer, the CSLB can issue 1) a warning letter, 2) a citation, or 3) an accusation.4 The board can also refer a matter for criminal prosecution and, in rare instances, may seek injunctive relief in superior court5 or an immediate suspension of a licensee by an interim suspension order pursuant to the Administrative Procedures Act.6 The severity of the discipline being sought may be dictated by the staff member handling the complaint. In many instances, if a contractor is not a repeat violator and the problem is merely a technical violation, the CSLB will send the contractor a warning letter. The warning letter may state something as simple as "your contract does not contain your contractor’s license number." The letter warns the contractor that further violations will result in disciplinary action. These warning letters are kept in the licensee’s file and can be used as an aggravating factor in a future disciplinary proceeding. The CSLB also may issue a citation that requires the contractor to take specified actions. For example, the board may require the contractor to correct, or pay to correct, a deficiency in the construction project. It may require the contractor to pay a penalty ranging from $50 to $2,000, or a citation may require the contractor to take corrective action and pay a penalty.7 Although a citation may require the contractor to correct any deficiencies in its work, a citation often is issued after the owner is disenchanted with the contractor or after repairs have already been made. In these situations, the corrective order will require the contractor to pay the owner the amount of the injury as determined by either the owner or the CSLB’s industry expert. This determination frequently seems one-sided and hugely excessive compared to the owner’s actual loss. A citation for a single construction project cannot assess civil penalties in excess of $2,000;8 however, a penalty of $15,000 may be assessed for violations that involve contracting with an unlicensed contractor or aiding and abetting an unlicensed contractor to evade the law.9 The civil penalty is in addition to any correction order: The former constitutes a sanction, while the latter constitutes restitution. In the administrative arena, the charging instrument that seeks the harshest form of discipline is an accusation, which is a more formal process compared to the much simpler citation procedure. In the typical accusation proceeding, the administrative agency will seek to suspend or revoke the license it has issued. The agency may also seek restitution, civil penalties, attorney’s fees, and the costs of investigation. Like a civil complaint, an accusation is a pleading that tells the contractor what he or she has done that violates the law. The contractor can deny the accusation and proceed to an administrative hearing. Government Code Section 11503 sets forth the parameters of an accusation:
The failure of the charging instrument to state grounds for discipline is fatal to the board’s ability to discipline the licensee.10 However, the Government Code is very liberal in allowing amendments to the accusation any time prior to the time the matter is submitted for decision11 and even allows for amendment after submission in certain cases.12 In addition to civil disciplinary actions, a contractor may face criminal charges for certain serious violations. Under the criminal statutes that are part of the Contractors’ Licensing Law, the CSLB can proceed against a licensed contractor or an unlicensed contractor through the criminal courts. For example, it is a crime to contract without a license.13 Using money received for a particular operation or project for another operation or project not only gives rise to civil discipline14 but is also a criminal offense under Penal Code Section 484b. Under Penal Code Section 484c, the submission of false vouchers to obtain construction loan funds is criminal embezzlement. Thus the CSLB may not only proceed through the attorney general’s office with a civil disciplinary process but may also go to the city attorney or district attorney and ask for a criminal complaint to be filed. However, criminal charges generally are not sought by the board. The criminal process is used mainly when a contractor is a repeat offender or there is substantial injury resulting from the contractor’s misconduct. In addition to disciplinary actions, the denial of a license application may lead to the issuance by the board of a "statement of issues" that will need to be defended by a license applicant. Agencies may issue this document after the denial of a license when the applicant requests a hearing, or the agency may issue the denial of a license application in the form of a statement of issues. Hearings contesting a statement of issues are conducted in the same manner as accusations,15 though the burden of proof is on the prospective licensee rather than the agency.16 Responses and Proceedings Probably the most important step that practitioners must take when contractor clients are served with a citation or accusation is to serve a responsive pleading—the "notice of defense." If a contractor is facing a citation, the contractor may choose to pay the civil penalty and correct, or pay for the correction of, any deficiencies that are alleged in the citation. In the alternative, a contractor may seek to appeal all or any portion of the citation. A contractor can do this by checking off boxes on a form that is provided along with the citation. A contractor may appeal an alleged violation of the Business and Professions Code section cited in the citation as well as the amount of a civil penalty and an order of correction.17 The contractor only has 15 days from the date of service of the citation to contest it, in writing, by filing the notice of defense. If the contractor fails to do so, the citation becomes a final order.18 Contractors who comply with their citations will have this fact noted in their records, and no further actions in connection with the citations will arise. The failure to comply with a citation will result in the suspension of the contractor’s license until the contractor complies with the citation. If the contractor continues not to comply, the CSLB can revoke the contractor’s license after the noncompliance has occurred for a requisite time period.19 Although it might make economic sense to simply pay the fine, the truth is that a citation remains on the contractor’s record forever and can affect the contractor’s prospects for future work. Therefore, if the contractor has any defenses to a citation, it is usually in a contractor’s interest to fight a citation rather than simply pay the penalty. Contractors facing the more serious accusation process should be aware of the short time available in which to respond. The charging document must be accompanied by notices advising the contractor of this fact. A failure to respond will result in a waiver of the right to respond.20 The charging document also should include a form response, which is the notice of defense.21 In addition, the CSLB usually will send a request for discovery to the contractor along with the accusation. Although an accusation is more formal than a citation, the response to it may be merely a notice that the contractor intends to present a defense of the charges. The contractor may also object to the accusation, admit the accusation in whole or in part, or raise affirmative defenses such as the statute of limitations, laches, or constitutional arguments.22 The notice of defense must be served within 15 days of the service of the accusation or the right to a hearing may be waived.23 Hearings for contested citations and accusations are held by an administrative law judge, who sits on behalf of the registrar of contractors—the executive director of the CSLB. The registrar is empowered to make all disciplinary decisions on behalf of the board, which distinguishes the CSLB from other administrative boards that make decisions as a whole. The registrar is the actual judge overseeing the disciplinary proceeding, even though the registrar is never present at a hearing. The decision of the administrative law judge is not binding on the registrar. The registrar can adopt the decision of the administrative law judge in full or in part or refuse to adopt it at all.24 The Administrative Procedures Act, codified at Government Code Sections 11500 et seq., governs CSLB proceedings.25 The hearing before the administrative law judge, while formal, is less so than civil or criminal court proceedings, and some of the rules of evidence, such as the hearsay rule, are relaxed.26 The only available discovery is pursuant to the act27 and is limited to the names and addresses of all witnesses, any statements that were taken, investigative reports, and any documents that would be admissible. One of the most important differences between the various charging instruments may be the burden of proof at the administrative hearing. At least one commentator has stated that the burden of proof for a citation is a preponderance of the evidence.28 However, if the continued viability of a license is at issue—as in the case of an accusation that seeks to suspend or revoke a license—the burden of proof on the agency is clear and convincing evidence to a reasonable certainty because the license has been held to be a vested right.29 Following the hearing, the administrative law judge will issue a proposed decision.30 The registrar then may adopt the decision in its entirety or in part, reduce the penalty proposed, or may depart from the decision and enter his or her own ruling based on the record.31 The registrar also can request that additional evidence be heard.32 The decision of the judge becomes effective 30 days following its service unless reconsideration is ordered by the registrar.33 Reconsideration, however, is rarely granted, although the contractor has 30 days from the service of the decision to request it.34 The licensee may seek judicial relief under the Government Code if he or she is unhappy with the decision.35 The relief is in the form of a petition for a peremptory writ of administrative mandamus in the superior court. The provisions of Code of Civil Procedure Section 1094.5 govern such a proceeding, and require the superior court to conduct an independent review of the administrative law judge’s decision based upon the administrative record.36 It is rare for additional evidence to be admitted,37 and if a proper record was not made before the administrative law judge, there is really no point in seeking judicial relief. If either party is displeased with the decision of the superior court, the matter can proceed to the court of appeal—a lengthy and expensive process that few contractors are willing to undertake. While the CSLB has a wealth of statutes under which it can discipline a licensee, the most typical grounds are conviction of a felony,38 fraud or misrepresentation in obtaining the license,39 breach of a construction contract,40 abandonment of a construction project without lawful excuse,41 and deviation from acceptable trade standards or departure from plans and specifications.42 Contractors are sometimes also cited or disciplined for violations of the Public Contract Code, aiding and abetting an unlicensed contractor,43 or misrepresentation.44 Business and Professions Code Section 7110 provides for disciplinary action for what it terms "building laws" or other laws regulating construction.45 In the realm of residential construction, the failure of a contractor to use the proper form and to provide certain notices to the owner is a violation of the Contractors’ License Law, which can result in discipline.46 If the form violation is the only violation, generally the board will issue a warning letter. However, if other violations exist in addition to the form violation, a citation or accusation may come into play. The plain language of some of the more common disciplinary statutes require the board to prove by clear and convincing evidence that a "willful" violation occurred. For example, Business and Professions Code Section 7109(b) applies to a "willful departure from or disregard of plans or specifications"; Business and Professions Code Section 7110 refers to a "willful or deliberate disregard and violation of the building laws of the state." Many of the disciplinary statutes also require that a "material injury" be sustained. For example, a contractor may run afoul of Business and Professions Code Section 7113 for a "failure in a material respect on the part of a licensee to complete any construction project or operation for the price stated in the contract"; Business and Professions Code Section 7109(a) covers "a willful departure in any material respect from accepted trade standards for good and workmanlike construction." Under charging provisions requiring willfulness, the Contractors’ License Law seems to require the board to prove that the accused willfully intended to violate the license law or cause the harm; under charging provisions requiring a material injury, it appears that the materiality of the act or injury must be proven. However, courts have offered conflicting decisions on the meaning of "material injury" and "willfulness"—and Tellis,47 the most recent case, wholly departs from many of the prior contractor discipline cases in addressing these issues. Materiality The dispute in Tellis centered on a contract for the construction of a residence and a request for repairs after the new homeowners had paid the contractor in full. The owners claimed they were satisfied at the time they made their final payment. The owners had given three punchlists (lists of items to be repaired) to the contractor, and these were completed to the satisfaction of the owners. Thereafter, the owners presented more items they wanted repaired, and the contractor stated his willingness to do the work. This was before the charging instrument, the citation, was issued. The citation alleged "significant" errors—allegedly caused by the contractor—amounting to approximately $5,000 in damages. Unfortunately, no bright-line rule exists for what constitutes "materiality" or a "material injury," although Tellis seems to imply that any amount of injury should be deemed material so long as it is not "trivial." In Tellis, the amount of damages allegedly suffered by the owners was only about 2 percent of the contract price—an amount that in the construction realm could hardly be construed as material to anyone, including the owners. Given the fact that the contractor had been trying to work with the owners and the CSLB until a board supervisor stepped in, the Tellis result seems to be absurd. The Tellis court did not address the issue of materiality with regard to the allegations of a departure from trade standards under Business and Professions Code Section 7109(a). As to the breach of contract allegation under Business and Professions Code Section 7113, the court, after recognizing that neither the Contractors’ License Law nor any cases define "material," dispensed with the issue by stating that the common meaning of the term "material" is "‘substantial,’ as opposed to trivial."48 The court disagreed with the contractor’s argument that the materiality of the injury or harm should be measured by its proportionality to the entire performance. If it were, the result would be that on larger projects, a contractor would be allowed to perform "more substandard work…without a sanction."49 Perhaps the superior court and the court of appeal held against the contractor because a mere citation was at issue and not a suspension or revocation. Indeed, the dispute between the parties rested on the repairing of tiles and did not involve matters of health and safety. Although the Tellis decision is based upon the maxim that a case should not be overthrown when there is no judicial error by a lower court, its far-reaching language is troubling. More than 50 years ago, in the context of a breach of contract dispute, the court in Terminix Company v. Contractors’ State License Board found that a sufficient settlement offer by a contractor to an owner prior to the institution of a disciplinary action should preclude a disciplinary action against the contractor.50 If the owner had taken the offer, there would be no injury.51 This ruling implicates the issue of materiality. The Terminix reasoning should also apply in those cases in which a contractor is attempting to make the property owner happy but the owner will not let the contractor return to the property and make any repairs. One can argue that if the contractor has tendered performance and that performance has been denied or declined, Civil Code Section 1485 apparently would excuse further performance.52 The CSLB, however, would disagree, though that position has not been adequately tested in the courts. The Terminix court held that no charges could be sustained under Business and Professions Code Section 7113 if the owner suffered no prejudice or material injury. While it is true that the facts in Terminix were that settlements were offered to the owners prior to a full payment by the owners and before the CSLB brought charges against the contractor, the gist of the case is that the owner suffered no prejudice or material harm.53 The Tellis court cited Terminix and quoted from its holding:
The Tellis court relied on the fact that in Terminix the owners had not yet paid the contractor and held that no violation of Business and Professions Code Section 7113 will be found if during or after construction but prior to payment the contractor makes any repairs or offers to make repairs. Unfortunately, the Tellis court wrongly examined Terminix and determined that Terminix only applied when payment in full had not been made. There should be no difference in offering to perform and correct one’s work either before or after final payment. The contractor in the Tellis case had no opportunity to correct the alleged deficiencies prior to final payment because there were no complaints made prior to final payment. Indeed, why should a final payment be the determining factor when a settlement offer or offer of performance had been made and was refused? The Tellis court also relied on Viking Pools, Inc. v. Maloney,55 in which the supreme court ruled that the failure to make warranty repairs was tantamount to a breach of contract. There is no doubt that Viking Pools correctly states the law. In Tellis, however, it appears that at the time the project was completed in September 1996, the contractor had performed all the warranty work (the punchlists) that was requested of him. The owners signed a statement that they were satisfied with the work and paid for the work. Thereafter, additional problems were found. It appears that Tellis stood ready, willing, and able to respond to the additional problems. Tellis thus provides no clear guidance on the issue of what is material, despite seeming to do so. It is hoped that future courts will construe the relevant statutes to find that an amount in dispute must be more substantial than 2 percent of the contract price in order for a disciplinary charge against a contractor to be sustained. Willfulness Business and Professions Code Sections 7109, 7110, and 7116 are the only three sections in the entire contractors’ licensing scheme that require willfulness.56 Of these sections, Section 7109 is the most common basis for allegations by the CSLB:
Commenting on all three Business and Professions Code sections, the court of appeal in Bailey-Sperber, Inc. v. Yosemite Insurance Company stated, "We must assume that the difference in statutory phraseology among the sections indicates a legislative determination to differentiate between conduct not subject to discipline where inadvertent and that is subject to discipline even [if] inadvertent."57 These statutes on their face require a willful violation, but recent cases have stated that a contractor’s "knowing action" constitutes willfulness. In one case, Mickelson Concrete Company v. Contractors’ State License Board, work that did not comply with the Uniform Building Code was deemed a willful departure from trade standards.58 The court found that the contractor violated Section 7109 even though prior to doing the substandard work, the contractor informed the owner that the work was not proper and sought to absolve himself by a written agreement of responsibility for doing the repairs in the manner requested by the owner. Moreover, the contractor’s representation that he could repair his prior work with what was stated to be an improper repair, and his inadequate preparation of the existing work to accept that repair, indicated a purposeful departure from accepted trade standards that could properly be characterized as willful. Defense practitioners and contractors might validly argue that knowledge alone does not constitute willfulness. The Tellis court stated that it need not address this issue because it found that there was sufficient evidence to support the trial court’s finding that Tellis knew his work was substandard. The court of appeal stated, "If more than one rational inference can be deduced from the facts, we may not replace the trial court’s conclusion with our own."59 Indeed, in appeals from administrative rulings, appellate courts examine whether there was an abuse of discretion because of the lack of substantial evidence to support the agency’s decision in light of the administrative record.60 The Tellis court held that the record demonstrated that sufficient inferences were present to sustain the charges based upon substantial evidence. The court referred to the record—which indicated that Tellis was a knowledgeable licensed contractor with substantial experience, and documented 17 instances of substandard work involving significant errors—and stated that an inference could be made that Tellis had knowledge that his work was substandard.61 In Tellis, the contractor’s poorly done tile work was considered to be a willful deviation from general accepted trade standards. The contractor had been attempting to work with the owners and the CSLB to rectify the problem, but the owners were not willing to accept the contractor’s proposed fix.62 The contractor argued that the willfulness element of Section 7109 required him to know that his conduct was substandard in order for there to be a finding that he willfully departed from trade standards in violation of Section 7109. The CSLB argued that the general intent willfulness standard, as defined in Penal Code Section 7, subdivision 1, was applicable, which meant that all that was required was the willful act of performing substandard construction; knowledge of the substandard work was not required.63 The court stated that it did not need to rule on the issue of willfulness, though perhaps the court should have done so. If the court wished to apply the Penal Code statute and obtain a finding of willfulness under that statute, the burden of proof for that issue should have been the beyond-a-reasonable-doubt standard. In Tellis, only a preponderance of the evidence needed to be proved (or arguably, clear and convincing evidence to a reasonable certainty) because a citation was at issue. Using the Penal Code section thus seems inappropriate. While the Business and Professions Code does not have a definition of "willful," Insurance Code Section 12340.9 does define "willful" in a manner that may be more appropriate for use in noncriminal matters:
The Tellis court, by allowing an inference of knowledge, has made the willful element in the Business and Professions Code disciplinary sections illusory. Following Tellis, if there are merely problems with a contractor’s work, an inference can be made that they were willfully committed. Other Grounds for Discipline Business and Professions Code Section 490 allows almost every administrative board and bureau to seek revocation of a license for the commission of a felony that is "substantially related to the qualifications, functions, and duties of the licensee."64 The Contractors’ License Law, unlike laws governing other professions, does not allow for discipline solely based upon an act of moral turpitude. Instead, the act must be substantially related to the qualifications, functions, and duties of contractors. The CSLB, like other agencies, was required to establish criteria, through regulation, that define the term "substantial relationship."65 The board’s regulation requires proof that the act evidences to a substantial degree the present or potential unfitness of the licensee to perform the duties of his or her license.66 While this issue appears rather clear-cut when a contractor commits a felony while performing his or her duties as a licensee, the question becomes more difficult when the licensee performs a felony that at first blush seems unrelated to his or her licensed activities. In any disciplinary action, there are mitigation and aggravation factors. An aggravation factor could be a prior disciplinary action against the contractor, the action itself, and the contractor’s activities after the alleged violations were committed. Grounds for mitigation can consist of efforts by the licensee to mitigate the present action, an unblemished license record showing years of experience, and other "rehabilitation factors." Business and Professions Code Section 482 required the CSLB to adopt criteria for rehabilitation, and these are contained in Title 16 of the California Code of Regulations.67 The administrative law judge is required to apply mitigating and aggravating factors in each proposed decision sent to the registrar. It would seem that rehabilitation factors must be applied in any case requiring a substantial relationship analysis. If the licensee is substantially rehabilitated, then no prior act or crime can evidence to a requisite degree the present or potential unfitness of the licensee with respect to the qualifications, functions, and duties of the licensee. A contractor who is rehabilitated is not presently or potentially unfit. While the disciplinary process for contractors is similar to what other licensees face, contractors often are less able to properly react to a consumer complaint. At the same time, the CSLB is burdened with more complaints than it can properly investigate, so the board may settle for something less than what was charged. The most important act that counsel for a contractor can take to protect his or her client is to respond to a charging instrument promptly upon its receipt. In addition, affirmative defenses may be raised even after the filing of a notice of defense or other response. In evaluating the charges, counsel should look for alleged violations that require either materiality or willfulness and see whether the facts support such allegations. Finally, practitioners should consider an attempt to distinguish Tellis by arguing that the applicability of the decision should be limited by the particular facts of the case and, further, that the appellate court only found that the decision of the trial court was proven by substantial evidence. 1 The Contractors’ License Law includes the specific provisions of Bus. & Prof. Code §§7000 et seq, the more general provisions of Bus. & Prof. Code §§1-500, as well as regulations promulgated by the CSLB that are contained in Cal. Code Regs. tit. 16. There are numerous other provisions regulating contractors contained in the Pub. Cont. Code, Health & Safety Code, Lab. Code, and Civ. Code. It should be noted that violations of a variety of other laws are often grounds for disciplinary action against a contractor under Bus. & Prof. Code §7110:
2 In the past three years the authors’ firm has participated in two appeals to the court of appeal in which the licensee’s position was favored. One of those decisions was ordered not to be published (Morris v. Registrar of Contractors, G016232 (4th Dist., Aug. 29, 1997)) and the other was published and then depublished following a petition for review in the supreme court by the administrative agency (Butts v. Sands, 76 Cal. App. 4th 739 (1999) (depublished)). 3 Tellis v. Contractors’ State License Bd., 79 Cal. App. 4th 153 (2000). 4 See Bus. & Prof. Code §§7091 and 7099. 5 Bus. & Prof. Code §§125.5-125.8. 6 Bus. & Prof. Code §494. 7 Bus. & Prof. Code §7099. 8 Bus. & Prof. Code §7099.2; Cal. Code Regs. tit. 16, §884(c). 9 Bus. & Prof. Code §§7114 and 7118. 10 See Linda Jones Gen. Builder v. Contractors’ State License Bd., 194 Cal. App. 3d 1320 (1987); Wheeler v. State Bd. of Forestry, 144 Cal. App. 3d 522 (1983). 11 Gov’t Code §11507. 12 Gov’t Code §11516. 13 Bus. & Prof. Code §7028. 14 Bus. & Prof. Code §7108. 15 Gov’t Code §11504.5. 16 Martin v. Alcoholic Beverage Control Appeals Bd., 52 Cal. 2d 238 (1959). 17 Bus. & Prof. Code §7099.3. 18 Bus. & Prof. Code §§7099.3 and 7099.4. 19 Bus. & Prof. Code §7099.6. 20 Gov’t Code §11505. 21 Id. 22 Gov’t Code §11506. 23 Id. 24 Gov’t Code §11517. 25 See Gov’t Code §§11410.20(a) and11410.50. 26 Gov’t Code §11513. 27 Gov’t Code §11507.6. 28 CEB, California Administrative Hearing Practice, The Hearing Process §7.59, at 324 (1997). No authority is stated for that statement other than a cite to Ettinger v. Board of Med. Quality Assurance, 135 Cal. App. 3d 853 (1982), which holds that the burden of proof in suspension or revocation proceedings is clear and convincing evidence to a reasonable certainty. Because suspension or revocation is the result if a contractor does not comply with a citation, the greater burden of proof should apply in an administrative hearing on a citation. 29 Ettinger, 135 Cal. App. 3d 853. 30 Gov’t Code §11517. 31 Id. 32 Id. 33 Gov’t Code §11519. 34 Gov’t Code §11521. 35 Gov’t Code §11523. 36 Code Civ. Proc. §1094.5. 37 Code Civ. Proc. §1094.5(e) provides for the admission of new evidence that, with the exercise of reasonable diligence, could not have been presented or was wrongly excluded at the hearing. 38 Bus. & Prof. Code §490. 39 Bus. & Prof. Code §7112. 40 Bus. & Prof. Code §7113. 41 Bus. & Prof. Code §7107. 42 Bus. & Prof. Code §7109. 43 Bus. & Prof. Code §§7114 and 7118. 44 Bus. & Prof. Code §7116. 45 Bus. & Prof. Code §7110. 46 Under Bus. & Prof. Code §7110, the CSLB commonly will seek to discipline a contractor for "form violations" caused by using contracts that do not comply with Bus. & Prof. Code §7159 (contract requirements for residential remodeling or swimming pools) or Bus. & Prof. Code §7164 (contract requirements for new residential construction). 47 Tellis v. Contractors’ State License Bd., 79 Cal. App. 4th 153 (2000). 48 Id. at 163 (citing Webster’s Third New International Dictionary 1392). 49 Id. at 163. 50 Terminix Co. v. Contractors’ State License Bd., 84 Cal. App. 2d 167, 174 (1948). 51 Id. at 174. 52 Civ. Code §1485. 53 Terminix, 84 Cal. App. 2d at 174:
54 Tellis v. Contractors’ State License Bd., 79 Cal. App. 4th 153, 161 (2000) (quoting Terminix, 84 Cal. App. 2d at 174). 55 Viking Pools, Inc. v. Maloney, 48 Cal. 3d 602 (1989). 56 Bailey-Sperber, Inc. v. Yosemite Ins. Co., 64 Cal. App. 3d 725, 729 (1977). 57 Id. (footnote omitted). 58 Mickelson Concrete Co. v. Contractors’ State License Bd., 95 Cal. App. 3d 631 (1979). 59 Tellis v. Contractors’ State License Bd., 79 Cal. App. 4th 153, 158 (2000). 60 Code Civ. Proc. §1094.5. 61 Tellis, 79 Cal. App. 4th at 159-60. 62 From the appellate decision it appears that the contractor was working with the assigned deputy registrar to resolve the matter informally through negotiations with the owners. The contractor had been refusing to repair the kitchen floor in the manner recommended by the expert and had not completed the repairs of some of the other items. Although the assigned deputy registrar gave the contractor additional time, the owners went above his head and complained to a supervisor. That supervisor, without ever reviewing the case file, concluded that the contractor had ample opportunity to complete the repairs and authorized the owner to hire someone else. The owner did so and had those repairs completed at a cost of $5,286. That amount, when compared to the amount of the contract ($226,000), seems not to be a material injury as required by the Contractors’ License Law. Moreover, there was no mention of any complaints involving issues of health and safety. Nevertheless, the court apparently found that the case involved a material injury. 63 Penal Code §7(1) states:
64 For contractors, see Bus. & Prof. Code §7123. 65 Bus. & Prof. Code §481. 66 Cal. Code Regs. tit. 16, §868. 67 Cal. Code of Regs. tit. 16, §869. Published in LA Lawyer January 2001 The information and comments throughout this website are intended to be of a general nature. Our comments/advice should not be relied upon without your seeking the aid and advice of legal counsel who will have the opportunity to take the time to research all your issues. The firm can be reached at: Please note that any information you provide to
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