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SpaceX Survives 'Contractor' Suit

By William Vogeler, Esq. on June 21, 2017 | Last updated on March 21, 2019

A California appeals court said a construction company has no "contractor" claims against SpaceX because the company was not licensed.

Phoenix Pipeline Mechanical performed services for the private aerospace business, but it was not licensed for construction work. The Second District Court of Appeal in Los Angeles said the company can only sue for non-contractor work.

"Phoenix Pipeline has not alleged one contract, but rather a series of agreements for each separate task that it was asked to perform," the court said in Phoenix Pipeline Mechanical, Inc. v. Space Exploration Technologies, Corp. "It may therefore seek compensation under those alleged agreements that apply to tasks for which no license was required."

No Flight for Phoenix

Based on Business and Professions Code Section 7031, the appeals court decision was straightforward. The law "requires a contractor's license to maintain an action for compensation for services for which a contractor's license is necessary."

A trial judge had granted the defendant's demurrer because Phoenix conceded that it did not have a contractor's license for the work it did. However, the company claimed it had done some non-contractor work.

On appeal, a judicial panel affirmed the demurrer as to the contractor claims but reversed on the non-contractor claims. On remand, Phoenix will be limited to claims such as "general maintenance and repair, trash clean-up, hauling, and disposal, and car washing."

The company said it was owed more than $1 million, but most of the services were for construction work.

SpaceX Has Landed

Space Exploration Technologies, popularly known as SpaceX, builds and launches private rockets into space. Founded in 2002 by entrepreneur and futurist Elon Musk, the company made history last year by landing a rocket at sea.

This month, the company launched its eleventh commercial resupply mission. SpaceX plans to send two private citizens around the moon next year.

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