Court of Appeal of California

Case no.: G064691
Date filed: February 4, 2026

The California Court of Appeal has ruled that a subcontract called for more than the “mere installation of equipment.” The work required a contractor license. Additionally, the contractor could pursue an action against the unlicensed sub even though the contractor had terminated the subcontract for convenience.

Moorefield Construction Inc. was the prime contractor for a restaurant construction project in a casino in Orange County. The project included a refrigerated wine storage and display area, for which Moorefield sought a design-build subcontractor.

Steve Pantalemon submitted a proposal in the name of Custom Wine Cellar. Moorefield indicated its intention to award the subcontract and requested a certificate of insurance. Pantalemon submitted certificates in the names of Wine Cellar Designers Construction LLC and Wine Cellar Designers Group LLC. The two certificates of insurance and the multiple names were left unquestioned and unexplained.

Moorefield Construction prepared a subcontract naming Custom Wine Cellar as the subcontractor. Pantalemon signed as “Custom Wine Cellar CEO” and entered a contractor license number with expiration date. Moorefield countersigned the subcontract and paid a $230,400 deposit.

Several months later but before Custom Wine had commenced work at the site, Moorefield Construction terminated the subcontract for convenience. Custom Wine questioned the termination, claimed it had already performed extensive design work, and refused to return the deposit. Moorefield then learned that the contractor license number had belonged to an uninvolved party. Pantalemon, Custom Wine Cellar, and the two LLCs were all unlicensed.

Moorefield sued Pantalemon for unlicensed contractor work pursuant to the Business and Professional Code section 7031. The defendant argued that a contractor license had not been required because this was essentially equipment delivery and installation, an exception under section 7045 of the licensing statute. Also, Moorefield Construction had not been damaged by the licensing misrepresentation. The contractor’s convenience termination of the subcontract had not been based on licensing status.

The Orange County Superior Court rejected these arguments and awarded Moorefield the full amount of its deposit. The Superior Court declined to award punitive damages under the statute, finding there was insufficient evidence of intent to harm. Pantalemon appealed.

The Court of Appeal of California, in an unpublished opinion, said the subcontract’s scope of work belied the contention that this had been a mere installation of equipment. Custom Wine was responsible for furnishing custom-built, climate-controlled units with glass walls and multiple doors. These units were to become a fixed part of the structure. Custom Wine expressly took responsibility for selecting materials and coordinating its work with other subcontractors. These were not “plug-and-play” units. They became a permanent improvement to the property. As such, the section 7045 licensing exception did not apply.

The court also ruled that the termination for convenience of the subcontract did not affect Moorefield’s rights under the unlicensed contractor statute. Moorefield Construction was not seeking damages for work performed prior to the convenience termination. Moorefield was seeking return of payment it had made to an unlicensed contractor.

“Just because Moorefield decided to end its relationship with Pantalemon based on facts independent of misrepresentation does not mean it would have entered that relationship regardless…. The trial court expressly credited the vice president’s testimony that Moorefield ‘would never have signed the contract with [Pantalemon] if [Pantalemon] had not provided a contractor’s license number and expiration date’ (emphasis added by the court).”

The subcontractor in this case was fortunate to avoid the punitive damages provision of the licensing statute. The contractor, however, did not appeal that ruling.

The subcontracting practices of this contractor left a lot to be desired. The multiple names and entities should have prompted some due diligence regarding both licensing and insurance status.

Participants:
For Moorefield Construction: Christopher M. Bunge
For Steve Pantalemon: Joseph M. O’Connor

Before: Judges Scott, Motoike, and Gooding

Opinion by: Judge Scott

Outcome: Trial court judgment affirmed

Source: Please click here to read the complete opinion.