Both contractors and subcontractors in Florida must comply with all local and state licensing requirements. Unlicensed contractors are prohibited from entering into contracts that call for them to perform work that requires licensure under the law. A subcontractor license lawyer at the law firm of Jonathan P. Cohen, P.A. can help you understand your licensing requirements so that you can remain compliant. Recently, the Florida Fourth District Court of Appeal considered whether a general contractor could withhold payment after discovering a subcontractor failed to secure the local license it needed to perform work on a construction project.
Factual and Procedural Background
ABA Interior Inc. v. The Owen Grp. Corp., No. 4D21-874 (Fla. Dist. Ct. App. Feb. 9, 2022) dealt with a general contractor that stopped paying a subcontractor once the general contractor learned that the subcontractor had failed to acquire the appropriate local licenses before performing work under its contract. The subcontractor, ABA Interior Inc., made interior improvements on a commercial project, including installing flooring, acoustical ceilings, and completing millwork.
Under the contract between the general contractor and ABA Interior, the subcontractor was required to comply with all local, state, and federal licensing requirements. After ABA completed its work, The Owen Group made partial payments to the subcontractor until it learned that the subcontractor had failed to secure the appropriate local and county licenses in Palm Beach where the project was located. After The Owen Group stopped paying ABA for its completed work, ABA filed a breach of contract lawsuit against the general contractor for the unpaid balance. The Owen Group filed a motion for summary judgment and argued that it did not have to make any additional payments because ABA Interior had already breached the contract by failing to secure the appropriate licenses. ABA Interior argued that it was not required to get a license for the type of work it had completed.
The trial court granted partial summary judgment to The Owen Group and found that since ABA Interior did not obtain its certificates of competency, it could not file a lawsuit against The Owen Group under the laws of Palm Beach County. The Owen Group subsequently filed a motion for summary judgment and argued that ABA Interior’s failure to secure the local licenses was a material breach of its contract. The trial court granted this motion as well, and ABA Interior filed an appeal.
Court of Appeal Ruling
The Fourth District Court of Appeal noted that the county ordinance made it unlawful for anyone who is required to get a license but fails to do so to claim to be a contractor in any court in Palm Beach County. The court found that even though the lawsuit was filed outside of the county, the work was performed in the county, so its ordinance was controlling. The court found that ABA Interior could not pursue legal remedies for claims for work that required a county certificate but could pursue claims for work that didn’t require a certificate.
The court noted that the contract involved ABA Interior’s performance of multiple types of work on the project. ABA claimed that the flooring did not require a certificate from Palm Beach County and also argued that the company had employed licensed subcontractors to perform some of the other work. The Court of Appeal reversed the summary judgment orders of the trial court and returned the case to the lower court for a review of whether ABA Interior had cured its licensing requirement by hiring licensed subcontractors and whether its failure to secure a license meant that the general contractor was not responsible for paying it for its work.
What This Case Demonstrates for Contractors
Contractors should understand a few things from this case. While many local and county licensing requirements will end in 2023, they are still the law until then. Contractors need to ensure that they comply with all licensing requirements, including local ordinances. Contractors should also ensure that they comply with the terms of their contracts, including provisions that require compliance with local and state licensing laws. It is also unclear whether or not an unlicensed subcontractor can cure licensing problems by hiring subcontractors that are properly licensed. However, under state law, unlicensed companies and individuals are not required to enter into contracts to perform work for which licenses are required. The licensed party is the only one who can enter into contracts.
Speak to a Fort Lauderdale Subcontractor License Lawyer
If you are embroiled in a construction contract dispute over licensing issues, you should speak to an experienced Fort Lauderdale construction lawyer at the law firm of Jonathan P. Cohen, P.A. Jonathan P. Cohen, Esq. has 20 years of experience handling construction claims and can help you understand your legal rights and obligations. Contact us today to request a consultation by calling (954) 758-8940.
The information provided in this article does not, and is not intended to, constitute legal advice. The content in this article is presented for general informational purposes only.