Press enter to begin your search
 
Construction Law Authority / licensing  / New Case Opening Door for Unenforceability of Contracts With Subcontractor Lacking Local License

New Case Opening Door for Unenforceability of Contracts With Subcontractor Lacking Local License

 

     All construction contracts entered into with contractors lacking state licenses are unenforceable. The contractor also loses lien rights and the ability to claim under a bond. However, the consequence of unlicensed subcontracting is less clear and made more so by a recent court case. 

     A subcontractor’s failure to maintain the required license may not deprive it of payment from the general contractor for whom they worked. Poole & Kent Co. v. Gusi Erickson Const. Co., 759 So.2d 2, 6 (Fla. 2d DCA 1999), held the unlicensed subcontractor was entitled to payment because it was the general contractor’s responsibility to ensure its subcontractors are licensed and, if the contractor could avoid paying unlicensed subcontractors, then contractors would be encouraged to hire unlicensed subs. However, there is at least one case holding to the contrary. Deep South Systems, Inc. v. Heath, 843 So. 2d 378, 381 (Fla. 2d DCA 2003).

     The new case of MGM Const. Services Corp. v. Travelers Casualty & Surety Co. of America, 2011 WL 710191 (Fla. 3d DCA 2011), is a landmark case in which the court reversed a trial court’s finding that a subcontract with an unlicensed drywall subcontractor was unenforceable. The appellate court correctly determined that section 489.128 of the Florida Statutes, rendering contracts with unlicensed contractors unenforceable, only applied to state licenses and had no bearing on local licenses like drywall. However, the court went on to hold that, where the Legislature has not added the penalty of non-enforceability to a licensing provision, the courts may nevertheless still do so after weighing the relative strength of the policies behind the local licensure requirement and any competing policies of injustice. Therefore, in summary, although local ordinances requiring local licenses like drywall may not expressly make a contract with an unlicensed subcontractor unenforceable, the courts may nevertheless do so with their own powers after weighing various policy considerations on a case by case basis.

Lee Weintraub

Lee Weintraub

lweintraub@bplegal.com

At age 46, Lee Weintraub was the youngest recipient ever of the Lifetime Achievement Award from the Florida Bar’s Construction Law Committee. Mr. Weintraub is also an adjunct professor of law at Nova Southeastern University Shepard Broad College of Law teaching construction law. Mr. Weintraub has been recognized by Chambers USA – America’s Leading Business Lawyers every year since 2003. Chambers USA noted he focuses on licensing and construction defect litigation, but is particularly renowned for his expertise in the Construction Lien Law. He was also selected in the The Best Lawyers in America© every year from 2006 through 2018.

No Comments

Post a Comment