This concern was brought home recently in the case of Vallejo Development Company vs. Beck Development Company, Inc. (1994) 24 Cal App 4th 929. The case involving professional engineers, illustrates the need for a contractor's license when one undertakes contractor-type activities. Vallejo Development took on the development of a large rural parcel of six "neighborhoods" that were sold to individual developers who constructed homes for sale to private individuals. Vallejo agreed to install roads, sewers and other improvements for the neighborhood developers. Vallejo then retained various construction companies to build the improvements. Vallejo Development did not obtain a contractor's license.

The California Court of Appeal ruled that Vallejo's activities constituted the illegal practice of providing contracting services without a contractor's license. Vallejo's $17 million claim for payment for their services was rejected by the court under the rule that one who provides such services without the proper license cannot collect fees charged.

There is an important lesson here for professional engineers who agree to retain contractors on behalf of their clients. While Business and Professions Code section 7051 exempts licensed architects and registered engineers from the need to obtain a contracting license, this section only applies to the architect or engineer while "acting solely in his professional capacity". Services exempted might typically include drilling, the taking of soil samples, and other 'investigatory measures necessary for one to perform purely professional services.

However, if actual remediation operations are offered, such as hiring someone to remove an underground tank, the engineer has crossed the line into contracting services and a contractor's license is necessary. Typically, this will require that your firm obtain what the Contractors State Licensing Board calls a Class "A" general engineering contractor's license. This license is for use in connection with fixed works requiring specialized engineering knowledge and skill. The license is authorized pursuant to section 7056 of the Business and Professions Code. In addition, asbestos abatement activities require yet another special certification to be issued by the Board.

In these changing times, it is important that you keep up with developments so that you do not fall prey to what happened to Vallejo Development Corporation. Should you be interested in obtaining insurance coverage for such activities, please call us to discuss how Dealey, Renton & Associates can help.