Legal Question in Construction Law in California

Re: Contractor Company RMO payments

I strongly suggest that you cancel this agreement and disassociate with the company. If you are acting as an RMO as you describe but not involved with the supervision of jobs or involved in the daily activities of the company then the company has what is referred to as a "sham RMO" arrangement and is essentially acting as an unlicensed contractor. The potential for your liability in getting personally sued and liable in this situation is great. (See Ranchwood Communities Limited Partnership v. Jim Beat Construction Co. (1996) 49 Cal. App. 4th 1399, MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal. 4th 412 and Buzgheia v. Leasco Sierra Grove (1997) 60 Cal. App. 4th 374).

In Buzgheia the court agreed that a sham RMO arrangement should not be sanctioned and stated, �Evasion and deception in obtaining and maintaining a contractor's license in violation of the licensing law should not be sanctioned. We agree. It is possible for a party in a civil action to attack a contractor's license by going behind the face of the license and proving that a required RME is a "sham."

I suggest you disassociate yourself with the license immediately and file for a disassociation with the CSLB. Next you could seek payment and an accounting in court by a civil action but you may not be successful because you entered into an illegal contract. If the money is substantial then an attorney should help you and may be able to craft causes of action around the sham RMO after he discovers all of the facts and interviews you (perhaps you had a partnership?). If the money is not substantial then I suggest you cut your losses and run.

If you seek legal representation then please check my profile and contact me.