Twenty-Nine Palms Ent. Corp. v. Bardos

No. E051769 12 C.D.O.S. 12625 [4th App. Dist.] (November 8, 2012)

Corporate officer could not use his license to operate as contractor in his individual capacity when the license was already use to qualify a corporation.

Twenty-Nine Palms Enterprises Corporation, a tribal corporation, hired Paul Bardos, doing business as Cadmus Construction Co., to perform a casino construction project. At that time, neither Bardos nor Cadmus had a contractor's license in their own name. Upon discovering that Cadmus did not hold its own license, Twenty-Nine Palms sued for disgorgement under Business & Professions Code section 7031 ("section 7031) of the entire amount it paid Bardos for the work.

Bardos argued that Cadmus was adequately licensed because it was operating under the contractor's license issued to Bardos Construction, Inc. (BCI). Bardos was the responsible managing officer of BCI. The trial court granted summary judgment in favor of Twenty-Nine Palms, finding that Cadmus did not have a contractor's license at the time it performed the construction work. Bardos appealed, and the court of appeal affirmed summary judgment.

As an initial matter, the court of appeal held that Twenty-Nine Palms’ status as a tribal entity did not render section 7031 inapplicable. The sovereign immunity defense is only available to the tribe and the tribal entities, and not to parties attempting to avoid liability to tribal entities.

The court also rejected Bardos' argument that the license issued to BCI allowed him to operate as a licensed contractor because he was the officer that held the license to qualify BCI. The problem with this argument, the court explained, was that BCI, as a corporation, was a separate legal entity from its officers and shareholders.

Business & Professions Code section 7059.1 prohibits a licensee from conducting business under more than one name for each license.  BCI was already using the license at the time Bardos was doing the work for Twenty-Nine Palms. Thus, Bardot’s status as BCI's qualifying officer did not entitle either Bardos or Cadmus to operate under the license at that time.  Furthermore, Cadmus did not "substantially comply" with section 7031's licensing requirement. Bardos knew at the time Cadmus entered into its contract with Palms that neither he nor Cadmus was licensed. He nonetheless made no effort to apply for a license until a few days before the project was completed. This could not be deemed substantial compliance.