A. No contractor shall act as agent or bring or maintain any action in any court of the state for the collection of compensation for the performance of any act for which a license is required by the Construction Industries Licensing Act without alleging and proving that such contractor was a duly licensed contractor at the time the alleged cause of action arose.
B. Any contractor operating without a license as required by the Construction Industries Licensing Act shall have no right to file or claim any mechanic's lien as now provided by law.
History: 1953 Comp., § 67-35-33, enacted by Laws 1967, ch. 199, § 33; 1977, ch. 245, § 192.
ANNOTATIONSCross references. — For mechanics' and materialmen's liens, see Chapter 48, Article 2 NMSA 1978.
Licensed contractor is precluded from collecting compensation for work performed by an unlicensed contractor. — Where a licensed general contractor entered into a contract with defendants to stucco defendants' home; the general contractor employed an unlicensed contractor to perform the work; and the general contractor fully compensated the unlicensed contractor for the work, the general contractor was precluded from collecting compensation for the work performed by the unlicensed contractor. Reule Sun Corp. v. Valles, 2010-NMSC-004, 147 N.M. 512, 226 P.3d 611, rev'g 2008-NMCA-115, 144 N.M. 736, 191 P.3d 1197, overruling Latta v. Harvey, 1960-NMSC-046, 67 N.M. 72, 352 P.2d 649 and Campbell v. Smith, 1961-NMSC-059, 68 N.M. 373, 362 P.2d 523.
Unlicensed subcontractor. — An unlicensed subcontractor is barred by this section from recovering compensation for construction work performed for a general contractor. Romero v. Parker, 2009-NMCA-047, 146 N.M. 116, 207 P.3d 350.
Recovery of payments from an unlicensed subcontractor. — A general contractor who did not act responsibly in hiring an unlicensed subcontractor is barred by this section from recovering compensation paid to the subcontractor. Romero v. Parker, 2009-NMCA-047, 146 N.M. 116, 207 P.3d 350.
Where a general contractor hired an unlicensed subcontractor; the subcontractor did not withhold information concerning the subcontractor's licensure from the general contractor; the general contractor could have obtained information concerning the subcontractor's licensure upon reasonable inquiry; and the general contractor paid the subcontractor for work performed by the subcontractor, the general contractor did not act responsibly in hiring the subcontractor and is barred from recovering the payment from the subcontractor by this section. Romero v. Parker, 2009-NMCA-047, 146 N.M. 116, 207 P.3d 350.
Equitable principles do not apply. — Equitable principles do not apply in actions covered by this section to permit recovery. Romero v. Parker, 2009-NMCA-047, 146 N.M. 116, 207 P.3d 350.
Subcontractor is not an employee of the general contractor. — Where a masonry contractor used various methods to bill a general contractor, including per hour, per load, per square foot and per item methods; the masonry contractor used its own tools and equipment, had its own employees, invoiced the general contractor under a business name, was responsible for its own registration and licensing, and was paid when each assignment was completed; the general contractor did not direct or control the details of the masonry contractor's work, did not withhold employee related state and federal taxes from the masonry contractor's invoices; and did not include the masonry contractor and its employees under the general contractor's workers' compensation coverage, the masonry contractor was not an employee of the general contractor. Romero v. Parker, 2009-NMCA-047, 146 N.M. 116, 207 P.3d 350.
Construction acts cannot be separated to evade the licensing requirement. — Where an unlicensed subcontractor performed work for a general contractor on several individual job assignments; some of the assignments did not require a license, the subcontractor cannot evade the licensing requirement of this section by separating construction acts into individual job assignments. Romero v. Parker, 2009-NMCA-047, 146 N.M. 116, 207 P.3d 350.
Work by employee. — Where a licensed general contractor employed an unlicensed individual and his crew to perform work, issued a detailed work order, observed and oversaw the performance of the work by the individual and his crew, and furnished the individual and his crew with insurance and most of the major equipment and material to perform the work; the individual worked exclusively for the contractor on a full time basis; the individual and his crew were required to wear the contractor's uniforms and display the contractors signs, and the contractor was responsible for defects in the individuals' work, the individual was an employee of the contractor, not a subcontractor, and the contractor could sue for payment on a construction contract for work performed by the individual. Reule Sun Corporation v. Valles, 2008-NMCA-115, 144 N.M. 736, 191 P.3d 1197, rev'd, 2010-NMSC-004, 147 N.M. 512, 226 P.3d 611.
False conflict doctrine applied. — Where the plaintiff performed construction work on a project in Arizona for the defendant; both parties were New Mexico citizens; Arizona law required the plaintiff to have an Arizona contractor's license to perform the work on the project; the plaintiff did not have the required Arizona contractor's license; the defendant had the required Arizona contractor's license; and under both New Mexico and Arizona law unlicensed contractors are barred from recovering for their work under any cause of action, the plaintiff was an independent contractor of the defendant notwithstanding the fact that the parties' contract purported to create an employer-employee relationship between the parties, and the plaintiff did not substantially comply with contractor licensing requirements, the trial court properly applied the false conflict doctrine and dismissed the plaintiff's action for breach of contract and unjust enrichment. Fowler Brothers, Inc. v. Bounds, 2008-NMCA-091, 144 N.M. 510, 188 P.3d 1261.
Contrary to public policy. — Contracts entered into by unlicensed contractors are contrary to public policy and unenforceable. Gamboa v. Urena, 2004-NMCA-053, 135 N.M. 515, 90 P.3d 534, cert. denied, 2004-NMCERT-005, 135 N.M. 565, 92 P.3d 10.
No due process or equal protection contravention. — Section does not contravene due process clause or deny equal protection of law as guaranteed by the New Mexico constitution. Fischer v. Rakagis, 1955-NMSC-057, 59 N.M. 463, 286 P.2d 312.
Act does not violate N.M. Const., art. IV, § 18 as attempt to amend the Mechanic's Lien Law by reference. Fischer v. Rakagis, 1955-NMSC-057, 59 N.M. 463, 286 P.2d 312.
Courts reluctant to construe act broadly. — Purpose of the act is to protect public from incompetent and irresponsible builders and in view of the severity of sanctions and forfeitures which could be involved, the court is reluctant to construe the statute more broadly than necessary for achievement of its purpose. Peck v. Ives, 1972-NMSC-053, 84 N.M. 62, 499 P.2d 684; Olivas v. Sibco, Inc., 1975-NMSC-027, 87 N.M. 488, 535 P.2d 1339.
Section overrides policy disfavoring unjust enrichment. — The legislature chose to harshly penalize unlicensed contractors by denying them access to the courts to collect compensation for work performed, and its policy must override the judicial principle that disfavors unjust enrichment. Triple B Corp. v. Brown Root, Inc., 1987-NMSC-058, 106 N.M. 99, 739 P.2d 968.
Legislative intent to bar suit by unlicensed contractor. — Intent of legislature under this section was to prohibit bringing of suit by unlicensed contractors acting illegally, and not to bar remedy of lawful contractors because of a technical error in their pleadings. Daughtrey v. Carpenter, 1970-NMSC-151, 82 N.M. 173, 477 P.2d 807.
The provisions of this section should not be transformed into an "unwarranted shield for the avoidance of a just obligation." Olivas v. Sibco, Inc., 1975-NMSC-027, 87 N.M. 488, 535 P.2d 1339.
Not applicable to joint venturer. — This section did not apply to a party engaged in a joint venture agreement who undertook to perform repair and construction work on property of which he was a joint owner. Lightsey v. Marshall, 1999-NMCA-147, 128 N.M. 353, 992 P.2d 904, cert. denied, 128 N.M. 148, 990 P.2d 822.
No foreclosure of lien or judgment on contract where no license. — Failure of contractor to have license at the time contract was entered into prevented foreclosure of mechanic's lien or any judgment based on the contract for work done, even though a license was secured before work was completed or his cause of action arose. Crawford v. Holcomb, 1953-NMSC-102, 57 N.M. 691, 262 P.2d 782, overruled on other grounds by State ex rel. Gary v. Fireman's Fund Indem. Co., 1960-NMSC-100, 67 N.M. 360, 355 P.2d 291.
No recovery based on contract entered into by unlicensed contractor. — To recover damages for breach of contract, where the plaintiff must rely on an alleged contract entered into by him in violation of statutes which prohibit contracting as unlicensed contractor and provide a criminal penalty for the violation, his action may not be maintained. Fleming v. Phelps-Dodge Corp., 1972-NMCA-060, 83 N.M. 715, 496 P.2d 1111.
Unlicensed contractor should not be able to recover for the fabrication of his clients' cabinets and countertops in light of the fact that, under his view of the agreement, he did not charge anything for installation, because under his legal theory, contractor is in effect asking the court to excuse the construction work he performed without a license and exempt him from the requirements of the Construction Industries Licensing Act. Gamboa v. Urena, 2004-NMCA-053, 135 N.M. 515, 90 P.3d 534, cert. denied, 2004-NMCERT-005, 135 N.M. 565, 92 P.3d 10.
When recovery prohibited. — The statute only prohibits an unlicensed contractor from bringing or maintaining an action "for the collection of compensation" for construction work, and therefore, recovery by cross-plaintiff was prohibited only if its action on note and mortgage was one for collection of compensation for a construction contract. Institute for Essential Hous., Inc. v. Keith, 1966-NMSC-067, 76 N.M. 492, 416 P.2d 157.
To establish that plaintiff is precluded from recovery by this section requires proof that cabinets were "fabricated" into the structure within the meaning of 60-13-3C(1) NMSA 1978 (now see 60-13-3D(1) NMSA 1978). American Builders Supply Corp. v. Enchanted Builders, Inc., 1972-NMSC-012, 83 N.M. 503, 494 P.2d 165.
Recipient of work can recover payments made on a contract to an unlicensed contractor. Mascarenas v. Jaramillo, 1991-NMSC-014, 111 N.M. 410, 806 P.2d 59.
No license requirement for cleanup activity. — When construction work had been completed without objection and the only dispute centered around the amount of offset defendant should be allowed as costs for cleaning up the work site, the cleanup activity involved did not require a contractor's license according to the definitions of 60-13-3 NMSA 1978 and was therefore not governed by this section. Olivas v. Sibco, Inc., 1975-NMSC-027, 87 N.M. 488, 535 P.2d 1339.
Substantial compliance with licensing requirement. — The doctrine of substantial compliance developed in California, which has a licensing act similar to that of New Mexico, is applicable in New Mexico. The three elements of substantial compliance are: (1) appellant held a valid license at the time of contracting; (2) appellant readily secured a renewal of his license; and (3) the responsibility and competence of plaintiff's managing officer were officially confirmed throughout period of performance of contract. Peck v. Ives, 1972-NMSC-053, 84 N.M. 62, 499 P.2d 684.
Since appellant has violated provisions of the act as to aggregate dollar amount of contract for which he is financially responsible at any one time, and thus taken himself out of the duly licensed category, he has "substantially complied" with the licensing requirements to such a degree that he is not barred from bringing suit. Peck v. Ives, 1972-NMSC-053, 84 N.M. 62, 499 P.2d 684.
A contractor was in substantial compliance with the act, despite an inadvertent lapse in his license prior to entering into and performing a construction contract; the cancellation of his license occurred for reasons beyond his control and not for reasons of incompetence or discipline, the contractor readily secured a renewal of his license, and the contractor exhibited fiscal responsibility and competence by complying immediately upon becoming aware of the default. Koehler v. Donnelly, 1992-NMSC-058, 114 N.M. 363, 838 P.2d 980.
No substantial compliance. — Subcontractor did not "substantially comply" with licensing requirements to the degree necessary to avoid being barred under this section from bringing suit where he was not licensed at the time he entered into the contract, his efforts to secure a new license when his performance under the subcontract was near completion did not constitute the securing of a "renewal" of his license, and his efforts to secure a license did not confirm his responsibility and competence throughout the period of performance. Roth v. Thompson, 1992-NMSC-011, 113 N.M. 331, 825 P.2d 1241.
Party mining copper ore considered contractor. — A party who contracts to "perform certain mining work on copper siliceous ores" and to "pay for all labor, work, mining expenses, material, explosives and moving commercial copper ores to specified stockpile location" is contractor within the terms of this section. Salter v. Kindom Uranium Corp., 1960-NMSC-040, 67 N.M. 34, 351 P.2d 375.
Employee not independent contractor where performance controlled. — Since plaintiff was hired by defendant for drilling purposes, and since defendant retained at all times the right of control of performance of work as well as the right to direct manner in which the work would be done, the plaintiff was an employee, not an independent contractor, and was not barred from recovery under this act for failure to obtain contractor's license. Latta v. Harvey, 1960-NMSC-046, 67 N.M. 72, 352 P.2d 649.
Effect of knowledge contractor not licensed. — Under former law, fact that defendants in action to establish and foreclose mechanic's lien knew at the time they entered into contract with plaintiff that latter was not duly licensed did not estop them from asserting plaintiff's noncompliance with the statute. Kaiser v. Thomson, 1951-NMSC-037, 55 N.M. 270, 232 P.2d 142.
Allegation required that contractor duly licensed. — Former law required allegation that contractor was duly licensed at time cause of action arose. Kaiser v. Thomson, 1951-NMSC-037, 55 N.M. 270, 232 P.2d 142.
Raising issue of noncompliance with licensing requirements. — If a complaint on its face shows that compliance with requirement that a contractor be licensed is essential to cause of action, the issue of noncompliance may be raised and dealt with as a matter of law. American Builders Supply Corp. v. Enchanted Bldrs., Inc., 1972-NMSC-012, 83 N.M. 503, 494 P.2d 165.
Failure to allege license is affirmative defense. — The defense of failure to allege license under the statute is affirmative in nature, and should be pleaded. American Builders Supply Corp. v. Enchanted Bldrs., Inc., 1972-NMSC-012, 83 N.M. 503, 494 P.2d 165.
Failure to allege license is equivalent to failure to state claim. — Since failure to allege license under the act is fatal to complaint, it may be asserted at any time that complaint fails to state claim on which relief can be granted. American Builders Supply Corp. v. Enchanted Bldrs., Inc., 1972-NMSC-012, 83 N.M. 503, 494 P.2d 165.
Evidence of license treated as tried by parties' consent. — Where appellants made no objection to evidence of contractor's license and raised neither jurisdiction nor limitation question at trial, and requested no findings on either question, the requirement of allegation of a contractor's license was a matter of public policy and did not, otherwise, bear any relation to the cause of action; and appellant cannot object to appellate court treating issue tried with consent of the parties as though it had been raised by the pleadings. Daughtrey v. Carpenter, 1970-NMSC-151, 82 N.M. 173, 477 P.2d 807.
Default judgment on crossclaim. — Subcontractor's failure to state a claim upon which relief could be granted by alleging in his crossclaim that he was duly licensed as a contractor did not deprive the district court of jurisdiction to enter a default judgment on the crossclaim. Sundance Mech. & Util. Corp. v. Atlas, 1990-NMSC-031, 109 N.M. 683, 789 P.2d 1250.
Am. Jur. 2d, A.L.R. and C.J.S. references. — Failure to procure occupational or business license or permit as affecting validity or enforceability of contract, 30 A.L.R. 834, 42 A.L.R. 1226, 118 A.L.R. 646.
Failure to procure license as affecting validity of plumber's contract, 118 A.L.R. 646.
Unjust enrichment of landowner based on adjoining landowner's construction, improvement, or repair of commonly used highway, street, or bridge, 22 A.L.R.5th 800.
53 C.J.S. Licenses §§ 74 to 77.