The California Court of Appeals recently held in favor of a construction management company that was denied payment because it was not licensed as a general contractor. In The Fifth Day, LLC v. Bolotin, a construction management company sued a project owner and its principals to recover compensation allegedly owed for construction management services provided on a private project. The defendants moved for summary judgment on the grounds that the plaintiff was an unlicensed contractor and was, therefore, barred under California Business and Professions Code § 7031 from maintaining an action for compensation. The trial court granted the defendants’ motion, holding that the plaintiff was a contractor, was not licensed and was, therefore, barred from bringing suit. The plaintiff appealed.

On appeal, the Court of Appeals reviewed the definitions of “contractor” and “general building contractor” under Business and Professions Code §§ 7026 and 7057, as well as the plaintiff’s duties under its contract with the defendants. The court determined that the plaintiff was not a contractor or a general building contractor on the project. Instead, the plaintiff was providing construction management services. The defendants argued that, even as a construction manager, the plaintiff was required to carry a license. The court, however, rejected this argument. Although the legislature provided that construction managers on public works projects must be licensed architects, engineers or general contractors pursuant to Government Code § 4525(e), it has not enacted a similar statute requiring private construction managers to be licensed.

The Fifth Day, LLC v. Bolotin, 172 Cal.App.4th 939 (2009)