Advantec Group, Inc. v. Edwin's Plumbing Co.
63 Cal. Rptr. 3d 195, 153 Cal. App. 4th 621 (2007)
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Rule of Law:
Under California law, a defendant's general denial in an answer is sufficient to 'controvert' a contractor's required allegation of licensure, thereby triggering the statutory requirement for the contractor to prove its license status by producing a verified certificate from the Contractors’ State License Board.
Facts:
- Advantec Group, Inc. (Advantec) was the developer of a multiunit apartment building.
- On December 29, 2003, Advantec hired Edwin’s Plumbing Co., Inc. (Edwin's) via a subcontract to furnish plumbing services and materials for the project.
- Edwin’s worked on the apartment building project from February 2004 until November 2004.
- In November 2004, Advantec terminated Edwin's from the project before the work was completed.
Procedural Posture:
- Advantec sued Edwin's for breach of contract in a state trial court.
- Edwin's filed an answer to Advantec's complaint.
- Edwin's filed a cross-complaint against Advantec for breach of contract, alleging that it was a licensed plumbing contractor.
- Advantec filed an answer to the cross-complaint which contained a general denial of all allegations.
- The case proceeded to a jury trial.
- During the trial, the court granted Advantec's motion for a nonsuit on Edwin's cross-complaint because Edwin's failed to produce a verified certificate of licensure.
- The jury returned a verdict in favor of Advantec on its original complaint.
- Edwin's, as the appellant, appealed the judgment to the intermediate appellate court, challenging the nonsuit on its cross-complaint. Advantec is the appellee.
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Issue:
Does a defendant's general denial in an answer to a contractor's cross-complaint sufficiently 'controvert' the contractor's allegation of licensure under Business and Professions Code section 7031, subdivision (d), thus requiring the contractor to prove its licensure with a verified certificate?
Opinions:
Majority - Willhite, Acting P. J.
Yes, a general denial in an answer is sufficient to controvert a contractor's allegation of licensure. Business and Professions Code section 7031, subdivision (a), requires a contractor suing for compensation to allege they were duly licensed. This makes the allegation of licensure a 'material allegation' of the complaint. Under Code of Civil Procedure section 431.30, a general denial puts all material allegations of a complaint in issue, or 'controverted'. Therefore, once a defendant files a general denial, the contractor's licensure is controverted, and section 7031, subdivision (d), requires the contractor to prove licensure by producing a verified certificate from the Contractors' State License Board. The court rejected the argument that nonlicensure is 'new matter' that must be raised as an affirmative defense, reasoning that it is directly responsive to an essential allegation of the complaint. Similarly, it is not a plea in abatement that must be specifically pleaded, because the governing statute, section 7031, requires the plaintiff-contractor to affirmatively plead its capacity to sue (i.e., its licensure), making a general denial a sufficient challenge.
Analysis:
This decision solidifies the strict procedural requirements for contractors seeking to recover payment through litigation in California. It clarifies that defendants do not need to specifically plead nonlicensure as an affirmative defense; a simple general denial is sufficient to put the contractor's license status at issue. This places the burden squarely on contractor-plaintiffs to be prepared from the outset of a case to produce a verified certificate of licensure. The ruling reinforces the strong public policy of deterring unlicensed contract work, demonstrating that courts will enforce the harsh penalties of section 7031 'regardless of the equities' and prioritize consumer protection over any potential unfairness to the contractor.
