California Civil Jury Instructions (CACI) (2017)

4561. Damages—All Payments Made to Unlicensed Contractor

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4561.Damages—All Payments Made to Unlicensed Contractor
A person who pays money under a contract to an unlicensed contractor
may recover all compensation paid to the unlicensed contractor under
the contract.
If you decide that [name of plaintiff] has proved that [he/she/it] paid
money to [name of defendant] for services under the contract and that
[name of defendant] has failed to prove that [he/she/it] was licensed at all
times during performance, then [name of plaintiff] is entitled to the
return of all amounts paid, not just the amounts paid while [name of
defendant] was unlicensed. The fact that [name of plaintiff] may have
received some or all of the benefits of [name of defendant]’s performance
does not affect [his/her/its] right to the return of all amounts paid.
New June 2016
Directions for Use
Give this instruction to clarify that the plaintiff is entitled to recover all
compensation paid to the unlicensed defendant regardless of any seeming injustice
to the contractor. (See Hydrotech Systems, Ltd. v. Oasis Waterpark (1991) 52
Cal.3d 988, 995 [277 Cal.Rptr. 517, 803 P.2d 370].) It may be modified for use if
an allegedly unlicensed contractor brings a claim for payment for services
performed. (See Bus. & Prof. Code, § 7031(a).)
Sources and Authority
• “Because of the strength and clarity of this policy, it is well settled that section
7031 applies despite injustice to the unlicensed contractor. ‘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 maintain any action for compensation in the courts of this
state. [Citation.] . . .’ ” (Hydrotech Systems, Ltd., supra, 52 Cal.3d at p. 995,
original italics.)
• “[T]he courts may not resort to equitable considerations in defiance of section
7031.” (Lewis & Queen v. N. M. Ball Sons (1957) 48 Cal.2d 141, 152 [308 P.2d
713].)
• “[I]f a contractor is unlicensed for any period of time while delivering
construction services, the contractor forfeits all compensation for the work, not
merely compensation for the period when the contractor was unlicensed.”
(Judicial Council of California v. Jacobs Facilities, Inc. (2015) 239 Cal.App.4th
882, 896 [191 Cal.Rptr.3d 714].)
• “We conclude the authorization of recovery of ‘all compensation paid to the
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unlicensed contractor for performance of any act or contract’ means that
unlicensed contractors are required to return all compensation received without
reductions or offsets for the value of material or services provided.” (White v.
Cridlebaugh (2009) 178 Cal.App.4th 506, 520−521 [100 Cal.Rptr.3d 434],
original italics, internal citation omitted.)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2010) Contracts, § 489 et seq.
12 California Real Estate Law and Practice, Ch. 430, Licensing of Contractors,
§ 430.70 (Matthew Bender)
10 California Forms of Pleading and Practice, Ch. 104, Building Contracts,
§ 104.83 (Matthew Bender)
5 California Points and Authorities, Ch. 50A, Contracts: Performance, Breach, and
Defenses, § 50A.52 et seq. (Matthew Bender)
29 California Legal Forms, Ch. 88, Licensing of Contractors, § 88.18 (Matthew
Bender)
4562–4599. Reserved for Future Use
CONSTRUCTION LAW CACI No. 4561
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