California law precludes actions by unlicensed contractors to recover payment for services as a contractor. In Ball v. Steadfast-BLK, the California Court of Appeal ruled that the law did not prevent recovery by contractor who, while licensed as a sole proprietor, entered into a contract under an unregistered false business name.
Mr. Ball was a licensed contractor who registered a fictitious business name, Clark Air Conditioning and Heating. However, he entered a contract under the name Clark Heating and Air Conditioning. When his client failed to pay, he recorded a mechanic’s lien and ultimately filed suit to foreclose the lien. The client claimed that since “Clark Heating and Air Conditioning” was not licensed, it could not recover payment.
The Court of Appeal ruled that California’s licensing law did not preclude the claim. The court noted that Mr. Ball was a licensed sole proprietor doing business under a business name. Unlike an entity, such as a partnership or a corporation, that can obtain a license under California law, a fictitious business name can not obtain a contractor’s license. Mr. Ball, not the business name, was the licensee. The court ruled that, at most, Mr. Ball’s use of the incorrect fictitious business name might be grounds for disciplinary action by the Contractors State License Board.