Unlicensed Contractor Agrees to Drop Million Dollar Suit Against SpaceX

2017

Payne & Fears LLP recently obtained a victory in favor of their client, SpaceX, before the California Court of Appeal which upheld the dismissal of certain claims against SpaceX by an unlicensed contractor seeking to collect on what it claimed were over $1 million in unpaid invoices. 

In Phoenix Mechanical Pipeline, Inc. v. Space Exploration Technologies Corp., No. B269186 (Cal. Ct. App. June 13, 2017), a published opinion, the Court of Appeal for the Second Appellate District ruled that plaintiff’s claims for contracting services were barred by California Business & Professions Code section 7031(a). That section requires a party to have license in order to maintain an action for compensation for contracting-related services. SpaceX prevailed in demonstrating that plaintiff did not have a license and that it was not sufficient for plaintiff to merely allege that it had a licensed “responsible managing officer.” The appellate court did, however, permit the contractor to try to recover for items that did not require a license. Rather than pursue the case, the contractor walked away to avoid a cross-complaint by SpaceX seeking reimbursements for previous payments made for work requiring a license.

The published decision is important because it reinforces the strong public policy of section 7031 that contractors hold a valid license to receive compensation for their services. It also underscores that a contractor may not evade the strict licensing laws by “borrowing” a license from a licensed person.

SpaceX was defended by Scott Luskin, Benjamin Nix, Robert Matsuishi, and Erik Andersen (on appeal).

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