Baker v. Dolphin Beach Rental & Management, LLC (6/15/2010)

June 22, 2010

Baker v. Dolphin Beach Rental & Management, LLC - 6/15/2010

Scott Baker, an Arizona resident, entered into a contract with Dolphin Beach Rental & Management, an Arizona limited liability company, under which Baker agreed to perform repair and maintenance work on air conditioners in condos managed by Dolphin Beach in Rocky Point, Mexico.  Baker performed under the contract for several months, and Dolphin Beach paid him periodically, but eventually Dolphin Beach notified Baker that it no longer required his services.  Baker sued Dolphin Beach for breach of contract, among other things.  The trial court dismissed the suit, relying on A.R.S. § 32-1153, which prohibits an unlicensed contractor from bringing suit on a contract for which a license is required. 

The Court of Appeals reversed.  The prohibition in A.R.S. § 32-1153 applies only to “contractor[s] as defined in § 32-1101” who contract to perform “any act for which a license is required by this chapter.”  This language, the Court said, did not encompass work performed outside Arizona’s borders.  Relying heavily on a California case addressing “virtually the same issue,” the Court concluded that, because the police power of the state to regulate occupations is limited to activities within the state, Baker was not required to be licensed in Arizona to perform work in Mexico.  Therefore, A.R.S. § 32-1153 did not bar his suit in Arizona state court.

Judge Gemmill authored the opinion; Judges Thompson and Irvine concurred.