Monthly Archives: February 2013

MORE ON THE HARSH REALITIES OF CONTRACTORS NOT BEING PROPERLY LICENSED

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UnknownPreviously, we posted an article about the Florida’s court’s decision in Earth Trades, Inc. v. T&G Corp., 2013 WL 264440 (Fla. 2013), which demonstrates the huge risk an unlicensed contractor undertakes by entering into a contract based on Florida Statute s. 489.128 that would render contracts by the unlicensed contractor unenforceable in law or equity.

 

Well, unfortunately for the unlicensed contractor, there are more harsh realities further demonstrated by the Fourth District Court of Appeal’s ruling in Home Construction Management, LLC v. Comet, Inc., 2013 WL 440101 (Fla. 4th DCA 2013). This case references Florida Statute s. 768.0425 which provides in material part: “In any action against a contractor for injuries sustained resulting from the contractor’s negligence, malfeasance, or misfeasance, the consumer shall be entitled to three times the actual compensatory damages sustained in addition to costs and attorney’s fees if the contractor is neither certified as a contractor by the state nor licensed as a contractor pursuant to the laws of the municipality or county within which she or he is conducting business.”

 

In Home Construction Management, an owner hired an unlicensed contractor to complete the construction of a residence. Due to issues that are not discussed in the case, the owner sued the contractor for treble damages pursuant to s. 768.0425 and recovered a judgment against the unlicensed contractor (although the appellate court found that the representative of the unlicensed contractor–likely the person that signed the contract–was not a specific party to the contract and could not be liable for treble damages).

 

Besides the unlicensed contractor being unable to enforce its contract in any way, shape, or form in the event they are not paid, they could expose themselves to treble damages under s. 768.0425 (in addition to having to pay back all funds it received as an unlicensed contractor since a party cannot profit from an illegality). Statute 768.0425 is potentially extremely harsh because this statute would extend to contractors that do not necessarily need to be licensed by the state, but need to be licensed by a local jurisdiction in which they are performing work!!!  Thus, ensuring proper licensure is important to any contractor performing work, regardless of whether that work requires a license by Florida’s Construction Industry Licensing Board.

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

THE HARSH REALITIES OF A CONTRACTOR NOT BEING PROPERLY LICENSED

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imagesThe recent Florida Supreme Court’s decision in Earth Trades, Inc. v. T&G Corp., 2013 WL 264440 (Fla. 2013), demonstrates the harsh realities for an unlicensed contractor. In this case, a general contractor hired a site subcontractor. The subcontractor, alleging nonpayment, filed suit against the contractor and the contractor’s payment bond. The contractor argued that its site subcontractor was unlicensed and therefore was unable to pursue any cause of action against either the contractor or the payment bond. The contractor relied on Florida Statute s. 489.128 which provides in material part: “As a matter of public policy, contracts entered into on or after October 1, 1990, by an unlicensed contractor shall be unenforceable in law or in equity by the unlicensed contractor.”

 

The unlicensed subcontractor argued what is referred to as the in pari delicto doctrine.  This doctrine stands for the proposition that a party who has knowledge and participates in the wrongdoing cannot reap the benefits of the wrongdoing. In other words, the subcontractor was arguing that the general contractor knew it was unlicensed and, thus, cannot reap the benefits of the harsh effects of the statute that would prohibit it from any remedy associated with the contractor’s nonpayment.

 

The Florida Supreme Court held that this in pari delicto doctrine does not apply even if the contractor knows that the subcontractor was unlicensed and hires the subcontractor anyway.

 

General contractors and subcontractors that are required to be licensed by the state (Florida’s Construction Industry Licensing Board) need to ensure they are properly licensed. Otherwise, if they enter into a contract with a party and despite the other party knowing about the lack of license, they will be out of luck. This could mean the other party has no legal obligation to pay it and arguably could seek to recoup monies paid to the unlicensed contractor. Obviously, this could be avoided by ensuring proper licensure, especially now that the defense “well, the other party knew I wasn’t properly licensed” no longer applies.

 

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.