CACI 4561 Damages—All Payments Made to Unlicensed Contractor

California Civil Jury Instructions CACI

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.

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.” (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)