Legal Question in Civil Litigation in California

First of all, the doctrine of substantial compliance is a defense to an argument that the contractor did not have a license. It deals with situations in which the contractor had a license, but it lapsed. You stated that the contractor never had a license, so the doctrine of substantial compliance is inapplicable. The doctrine of substantial compliance does not apply in situations where the contractor has never been licensed. (WSS Industrial Construction, Inc. v. Great West Contractors, Inc. (2008) 162 Cal.App.4th 581, 587.)

You are mixing up legal issues in an area that you are unfamiliar with. The defense of substantial compliance is usually made when the contracting party sues for recovery of money they paid to an unlicensed contractor under Business and Professions Code section 7031 subd. (b). This is known as the sword provision, rather than the shield. It is not "inconsistent" with a contract claim that an unlicensed contractor performed work and completed the work. You are going to get the judge in a position where he is not going to listen to any valid claims you make.

If you are getting sued, you need to raise the shield provision. "Except as provided in subdivision (e), no person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action, or recover in law or equity in any action, in any court of this state for the collection of compensation for the performance of any act or contract where a license is required by this chapter without alleging that he or she was a duly licensed contractor at all times during the performance of that act or contract, regardless of the merits of the cause of action brought by the person, except that this prohibition shall not apply to contractors who are each individually licensed under this chapter but who fail to comply with Section 7029." (Bus. & Prof. Code, sec. 7031 subd. (b).)

I suggest you get an attorney to defend you. I know a few in your area that may assist you for a lot less than you assume, who know what they are doing in this area of law.

a. The entire contract is not necessarily void, but may be. There is clear caselaw that work that is done in furtherance of work that requires a contractors license is covered by section 7031. A contractor who did not have a license but later got one did shop drawings and ordered materials while unlicensed. No construction work was done. The court held that the work was part of the construction work. So if services 1 and 2 were in furtherance of the work of service 3, the whole contract unenforceable.

b. The tax certificate is between the contractor and the city. You obtain no rights from his failure to obtain it.

c. As Mr. Roach says, you are mixing up legal doctrines that have no place in your situation.