CACI No. 4561. Damages - All Payments Made to Unlicensed Contractor

Judicial Council of California Civil Jury Instructions (2022 edition)

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4561.Damages - All Payments Made to Unlicensed Contractor
A person who pays money to an unlicensed contractor may recover all
compensation paid to the unlicensed contractor.
If you decide that [name of plaintiff] has proved that [he/she/nonbinary
pronoun/it] paid money to [name of defendant] for services and that [name
of defendant] has failed to prove that [he/she/nonbinary pronoun/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/nonbinary pronoun/its] right to the
return of all amounts paid.
New June 2016; Revised May 2021
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].)
Give CACI No. 4562, Payment for Construction Services Rendered - Essential
Factual Elements, if an allegedly unlicensed contractor brings a claim for payment
for services performed. (See Bus. & Prof. Code, § 7031(a), (e).)
Sources and Authority
Recovery of All Compensation Paid to Unlicensed Contractor. Business and
Professions Code section 7031(b).
“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.”
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(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
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 (11th ed. 2017) Contracts, § 491
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)
CACI No. 4561 CONSTRUCTION LAW
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