Section 1717, Unlicensed Contractors: Unlicensed Contractor Obtaining $28,413 Contractual Fee Award Was Affirmed On Appeal Because It Was “On The Contract”

Breadth Of Clause Led To The Result.

            Co-contributor Mike had wished we had this decision many moons ago because the Second District, in an unpublished decision before the law had evolved, denied fees to an unlicensed contractor only seeking attorney’s fees, not construction compensation, in an arbitration proceeding.

            In Rodgers v. HB Construction, Inc., Case No. B317068 (2d Dist., Div. 5 Dec. 27, 2023) (unpublished), owner lost a case involving court and arbitration proceedings against an unlicensed contractor for a remodel of a Hermosa Beach office building.  The case allegations involved a contract with a broad fees clause, although the thrust of the suit was for tort or unlicensed contractor allegations.  Unlicensed contractor moved for contractual attorney’s fees of $149,378.50, but contractor was only awarded fees of $28,413, after prevailing with different entities in an arbitration and after plaintiff owner dismissed the litigation without prejudice. 

            The other side appealed, but to no avail.  Even though plaintiff voluntarily dismissed his complaint without prejudice, that did not divest the lower court from making a fees award.  The “arising out of or relating to this contract” language was broad enough to encompass the overall contractor dispute, including those under the Business and Professions Code licensure issues.  The real kicker was,  although the prevailing party was an unlicensed contractor, that only related to “compensation” under the contract rather than fees because the contract between clients and unlicensed contractors is not automatically rendered void.  Fee award affirmed.