In the case The Fifth Day LLC v. Bolotin, construction manager The Fifth Day agreed to provide various project and construction management services on property owner James Bolotin’s behalf, to facilitate the construction of several commercial buildings on his property. In exchange, Bolotin agreed to pay The Fifth Day a percentage of his profits from the sale of the property, after construction was complete.

After construction was completed, Bolotin paid The Fifth Day a portion of the profits from three of the buildings but refused to pay any of the profits from the remaining four buildings. The Fifth Day then filed suit.

The trial court granted summary judgment in favor of Bolotin on grounds that The Fifth Day was acting as a general building contractor and, because The Fifth Day did not hold a contractor’s license, it was barred from filing suit under California Business and Professions Code Section 7031.

On appeal, the trial court’s ruling was overturned. The Court of Appeals reviewed the contractual obligations of The Fifth Day and found that none of them fell within the course and scope of "’contractor’ — a term synonymous with ‘builder’ …" Rather, The Fifth Day’s duties involved coordinating contractors’ activities, recordkeeping, status updates, and representing Bolotin’s interests throughout the construction vis-à-vis the other parties involved in the development project. "Plaintiff had no responsibility or authority to perform any construction work," the court opined.

The court went on to point out that the state Legislature expressly required, in Government Code Section 4525, that construction managers on public works projects must be licensed professionals. Their omission to apply that requirement to private projects clearly indicated, in the court’s opinion, that the Legislature did not intend to do so.

Given that The Fifth Day did not agree to or actually perform services for which a license was required, the trial court’s grant of summary judgment was overturned and the case was sent back to the trial court for trial.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.

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