Homeowners Ghyath Issak and Barbara Weber hired Laurence Wright to do remodeling work at their residence. They paid him approximately $27,000 over four months. Later, Wright sued them for an additional $11,000.

The homeowners cross-complained for fraud, based on Wright’s underreporting of his payroll of only $312 to his workers’ compensation insurer and his lack of a contractor’s license, as required by state law.

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Wright argued that, although his contractor’s license might have lapsed for underreporting of his payroll for workers’ compensation insurance, he should still be entitled to payment of the $11,000 additional owed by the homeowners.

If you were the judge would you award contractor Wright the $11,000 he sought for home remodeling work?

The judge said no!

“The importance of deterring unlicensed persons from engaging in the contracting business outweighs any harshness between the parties,” the judge explained.

Although contractor Wright appears to have performed the remodeling work, the judge continued, his contractor’s license was automatically suspended when he underreported his payroll for workers’ compensation insurance.

As a result, since he was uninsured for workers’ compensation in violation of state law and is no longer a licensed contractor, he is not entitled to sue homeowners Issak and Weber for the payment they allegedly owe to him, the judge emphasized.

Because Wright was unlicensed at the time he performed the remodeling work, he was not entitled to the $27,000 he received so he must refund it, the judge ruled. In addition, Wright must pay Issak and Weber $10,000 punitive damages, plus $90,000 in attorney fees and $7,000 for costs, the judge concluded.

Based on the 2007 California Court of Appeals decision in Wright v. Issak, 58 Cal.Rptr.3d 1.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

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