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What is the process for collecting on a contractor's bond for damages done to our house?

California

I recently prevailed in small claims court for a $10K award against a contractor, who caused over $70K in damage to our house. I also attempted to collect on his $15K bond from his insurance company. In order to collect on the bond, I was required to name the insurance company as a codefendant. Now that the case has been adjudicated, the insurance company says they will pay their share of the judgment but no more. Additionally, the judge in the case stated that the defendant, who performed the work without a proper license, must, by state law, return all the money I paid him, which was $28K. As of now, he has not responded to my demand for the money. I would like to discuss this matter with you to determine if I am entitled to the bond and how best to collect from the contractor.

1 reply

Oct 16, 2018

I'm very sorry to hear about that. Considering that this dispute has already gone to small claims court and that a judgment is in hand, plus considering the amount of the dispute - it might be more helpful to consult with a local attorney familiar with collections and the California Contractors State License Board. While we specialize in construction payment, claims against contractors' bonds and other claims against contractors for damages are a bit outside of our wheelhouse. Regarding making a claim against a contractor's license bond, a claim should be made directly with the surety who provided that license bond - or a lawsuit must be filed which names that surety as a defendant. If a suit has already been filed against the contractor, but not the surety, there may be an opportunity to bring suit against the surety to recover from the contractor's license bond. Regarding paying back sums already paid, this is true - in California, a contractor may be required to pay back all amounts they have been paid if the contractor was performing work they were not licensed to perform. However, to force the contractor to pay those amounts, a judgment would likely be necessary. If a judgment stating that the contractor must repay those amounts has not been made, filing suit may be necessary (note that, in Small Claims Court, the amount of claims is limited - so it may be wise to instead file in the local district court). If a previously-obtained judgment states that a contractor must pay those amounts back, an owner could potentially obtain a judgment lien against the contractor's property. Of course, as mentioned above, this is a bit outside of our normal discussion at the Construction Legal Center, so it would be wise to consult a local attorney to advise on next steps. Plus, they'll be able to get a much clearer understanding of what's going on here since they'll have the opportunity to review all relevant documentation and the small claims court judgment. Good luck!

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