POOF!, Unlicensed Contractors: $155,008.50 Fee Award Against Unlicensed Contractor Under CCP § 1029.8(a) Reversed As A Matter Of Law

Absence Of True Injury To Owners Did Not Justify An Award Even Though Substantial Payments To Unlicensed Contractor Disgorged Under B&P § 7031(b).

            When you are dealing with fee entitlement, frequently, statutory interpretation is involved.  If that is the case, you get de novo review—which can lead to a reversal of a fee award not meeting the statutory requirements as a matter of law.  That is what happened in Kivel v. McInerney, Case No. D074173 (4^th Dist., Div. 1 Mar. 17, 2021) (unpublished).

            CCP § 1029.8(a) provides in relevant part: “Any unlicensed person who causes injury or damage to another person as a result of providing goods or performing services for which a license is required under . . . Division 3 (commencing with Section 5000) . . . of the Business and Professions Code . . . shall be liable to the injured person for treble the amount of damages assessed in a civil action in any court having proper jurisdiction. The court may, in its discretion, award all costs and attorney’s fees to the injured person if that person prevails in the action.”  (Emphasis added.)  

            Kivel involved a situation where an unlicensed contractor on an upscale residential construction was ordered to disgorge $2.732 million in payments by the owner, despite no evidence there was defective construction.  Then, to add insult to “injury” (sorry about the pun), the lower court determined owner was entitled to attorney’s fees of $155,008.50 and to costs of $52,689.13 under section 1029.8.  Contractor appealed the fee award, a good move.

            The 4/1 DCA reversed the fee award as a matter of law.  The defect in the fee award was the statutory requirement of injury.  Section 7031(b) is a statutory penalty which requires disgorgement from the unlicensed contractor for being unlicensed, untethered to whether there was any injury separate and apart such as defective construction.  In this case, there was no showing of added “injury” such that the section 1029.8 fee award went POOF!  However, contractor did get penalized—he had to disgorge $2.732 million, probably enough of a sanction if we read what the appellate court likely saw in deciding the case!