American Building Innovations v. Balfour Beatty Construction

Summary

American Building Innovation (ABI) was hired by contractor, Balfour Beatty Construction, as a subcontractor. When the project began, ABI had a workers' compensation insurance policy issued through State Compensation Insurance Fund. During the project, State Fund canceled ABI's policy due to nonpayment of outstanding premiums. The Contractors' State License Board then suspended ABI's license due to lack of insurance coverage. Despite the cancellation and license suspension, ABI continued working on the project. ABI was later able to reinstate its license albeit by lying to the Board. Meanwhile, ABI was also disputing the insurance bill. When Balfour refused to pay ABI, ABI sued Balfour who cross-complained, asserting that ABI should be barred from recovering certain payments because it was unlicensed during a portion of the project. ABI settled with the insurance company and its canceled policy was retroactively reinstated as part of the settlement. ABI then applied to the Board for retroactive reinstatement of its license, asserting that its failure to file for coverage had been due to circumstances beyond its control. The Board retroactively reinstated the license. The trial court, however, found for Balfour, concluding that because ABI was not licensed for the duration of the contract, it could not be compensated. ABI appealed.

Affirmed. Business & Professions Code Section 7031 states that parties not licensed at all times during contracting work cannot collect compensation for that work. Here, the trial court was right and all ABI's arguments failed. First, ABI was not entitled to retroactive reinstatement. The Board could only reinstate the license if ABI's excuse was based on circumstances beyond its control. However, ABI did have control over the policy cancellation and the circumstances thereafter; ABI decided not to pay the premiums nor did it try to obtain other insurance. As to ABI's other arguments--that State Fund admitted it overcharged ABI; that ABI substantially complied with licensing requirements--the appellate court generally reasoned that because licensing laws are intended to protect the public from incompetence and dishonesty, licensing requirements are to be strictly applied regardless of any harsh results.

— Antoneth Dizon Fong