Restitution in Unlicensed Contractor Case, PC 1202.4

In 2015, in the Airport Courthouse, Michael Kerr Walker entered a no contest plea to a misdemeanor count of contracting without a license, a violation of Business & Professions Code § 7028(a).

The case arose in August, 2013, when Mr. Walker entered into a written contact with Sharon Curto to paint her home and install ten new windows. The original contract fee was $49,860.

As the work progressed, additional work was added to the project and additional invoices were issued by Mr. Walker. On November 30, 2013, Mr. Walker sent Ms. Curto a letter stating she owed him $9,851. At that point, Ms. Curto had paid Mr. Walker $61,428.

Ms. Curto subsequently paid Mr. Walker $2,000 against the $9,851 balance, but Mr. Walker initiated a lawsuit against Curto for the nonpayment of the full amount due. Ms. Curto hired an attorney to defend her. This attorney then filed a complaint against Mr. Walker with the Department of Consumer Affairs Contractors’ License Board.

During the Board’s investigation, it discovered rather quickly that Mr. Walker was not a licensed contractor and referred the matter for criminal prosecution of Mr. Walker by the Santa Monica City Attorney’s Office.

As mentioned above, Mr. Walker then entered a no contest plea to a violation of Business & Professions Code § 7028(a). The trial court judge conducted an extensive restitution hearing over four days, which included briefing by both parties. The Santa Monica City Attorney requested that the judge order Mr. Walker to pay the entire amount Ms. Curto had paid Mr. Walker for his work, plus interest, and attorney fees incurred in the civil action, as well as the cost that Ms. Curto incurred to install one and a half windows not installed by Mr. Walker and to repair and repaint her house.

The trial court declined this request by the Santa Monica City Attorney, but did order Mr. Walker to repay Ms. Curto $15,800 to repaint her house and $625 to complete the window installation. The judge awarded Ms. Curto half of the paint job expenses ($7,900), because half of the alleged need to repainting was due to just normal wear and tear and the window installation expenses ($1,250).

The City of Santa Monica then appealed to the Los Angeles Superior Court appellate division, reversing and holding that the trial court abused its discretion and ordered that Mr. Walker pay Ms. Curto all fees she paid to Mr. Walker, plus interest and the attorney fees she incurred in the civil action.

The appellate division recognized that Business & Professions Code § 7031 is not directly applicable in a criminal case, but “even if the work performed by [Walker] bestowed a benefit to the homeowner, she nonetheless incurred an economic loss for purposes of her constitutional and statutory right to restitution.”

Mr. Walker then appealed up to the Second Appellate District, which declined to review the case. Mr. Walker then appealed up to the California Supreme Court, which did review the case and remanded it to the Second Appellate District to issue an order to show cause hearing why the amount ordered by the trial court should not be the restitution amount.

The Second Appellate District Court then did so, first finding that the appellate division abused its discretion, as Penal Code § 1202.4(f) should have been applied, not Business & Professions Code § 7031 because § 7031 is restricted to civil proceedings.

As this was a criminal proceeding, the court should have looked to Ms. Curto’s actual economic losses incurred, including the attorney fees she incurred in the civil action ($6,526.63), or about $18,000 total, including half the paint job and the window installation expenses.

We present this case to the reader because with the COVID-19 pandemic and economic chaos that took place with people losing their jobs, there has seemed to be a flood of unlicensed contractor cases in our courts. Restitution is always the big issue in the case, so we present this summary.

The citation for this case is Michael Kerr Walker v. Appellate Division of the Superior Court (2017) 14 Cal. App. 5th 651, 222 Cal. Rptr. 3d 524.

For more information about restitution in general, please click on the following articles: