Most are familiar with California’s harsh penalty for unlicensed contractor work. California Business and Professions Code Section 7031 (Section 7031) bars any recovery for compensation for work performed by an unlicensed contractor under any theory of recovery “regardless of the merits of the cause of action.” Cal. Bus. and Prof. Code § 7031(a). It is well-established that subcontractors are covered by Section 7031 from recovering from owners and general contractors if not properly licensed. See Cal. Bus. and Prof. Code § 7026. However, in Kim v. TWA Construction, Inc., 78 Cal.App.5th 808 (2022), the California Court of Appeal, in a matter of first impression, expanded the effect of Section 7031(a) to bar a licensed general contractor recovering from an owner for work completed by an unlicensed subcontractor.
Cindy Lee
COVID-19 and Remobilization: Returning to the Construction Site Without Mandated COVID-19 Restrictions
By Jamey Collidge & Cindy Lee on
This article summarizes the current landscape in Pennsylvania and California as COVID-19 restrictions are lifted, and highlights important considerations for employers in the construction industry in relation to vaccines and navigating a post-mask mandate world.
What the United States-Mexico-Canada Agreement Means for International Construction Disputes
By Zach Torres-Fowler & Cindy Lee on
Posted in Construction Dispute, International Arbitration
Zachary Torres-Fowler and Cindy J. Lee were published in the American Bar Association’s Forum on Construction Law (Summer 2020) with their article, “What the United States-Mexico-Canada Agreement Means for International Construction Disputes.”
California Appeals Court Provides Guidance on ‘Pay-When-Paid’ Provisions in Construction Subcontracts
By Ted Gropman & Cindy Lee on
Posted in Contracts, General Contractors
On April 17, the California Court of Appeal decided Crosno Construction, Inc. v. Travelers Casualty & Surety Company of America,1 effectively narrowing the scope of enforceable “pay-when-paid” provisions in construction subcontracts to the extent the subcontractor seeks recovery against a general contractor’s payment bond surety. Although the Crosno case involved a public works project, the rationale and holding should apply with equal force to private works projects. Basing the bulk of its decision on the Wm. R. Clarke Corp. v. Safeco Insurance Co.2 case, the court found that an open-ended “pay-when-paid” provision in a subcontract is not enforceable against a subcontractor that seeks to recover on a public works payment bond claim. This article discusses the Crosno decision and the implications for contractors on both sides of the contract moving forward.