Trent Cotney, Partner, Adams and Reese LLP
In the state of Florida, contractors must be licensed to legally perform construction work they are contracted to do. Everyone in our industry is aware of this requirement but there are times when contractors may cut corners and work without all the necessary licensure. Although that may seem harmless in some regards, as a recent case illustrates, that oversight can be costly.
Following Hurricane Irma in 2017, Incident365 Florida, LLC (Incident365) provided disaster mitigation services for three condominium associations – Ocean Pointe III, Ocean Pointe IV and Ocean Pointe V (collectively, Associations) – that had experienced water intrusion. The work performed included the following:
■ Water damage mitigation
■ General and structural dehumidification
■ Removal of damaged building materials
■ Disposal of debris
■ Application of anti-microbial solutions
■ Mold remediation.
Incident365 performed these services without having a contractor’s license at the time of the agreements or during the work. The total scope of work completed by Incident365 amounted to approximately $1.4 million. However, after the work was complete, the Associations refused to pay a $1 million balance, which prompted Incident365 to file suit. In its complaint, Indicent365 argued breach of contract, open account and unjust enrichment.
In response, the Associations raised affirmative defenses under Florida law, specifically citing unlicensed contracting and unlicensed mold remediation under sections 489.128 and 468.8419 of the Florida Statutes. These defenses, if valid, would bar Incident365 from enforcing the agreements.
The Associations filed motions for summary judgment based on their affirmative defenses. They asserted that Incident365’s services constituted unlicensed contracting since Incident365 was engaged in interior demolition and disaster mitigation work, which required a contractor’s license. According to section 489.128(1), contracts entered into by unlicensed contractors are unenforceable in both law and equity. The trial court agreed with the Associations, ruling that Incident365’s work was considered “contracting” under section 489.105(3), which describes contractors as those who construct, repair, alter or improve buildings for compensation.
The trial court emphasized that:
■ “Contractors” are defined broadly to include any person or entity that improves or repairs buildings, even if the
structural members of the building are not affected.
■ The dictionary definitions of “repair,” “remodel” and “improve” supported the conclusion that Incident365’s services aimed to restore, alter or enhance the properties, falling within the statutory definition of contracting.
Because Incident365 lacked the required contractor’s license, the court found that the agreements were unenforceable. Therefore, the court granted summary judgment in favor of the Associations, determining that Incident365 could not pursue legal claims based on the agreements, even though the ruling was recognized as producing a “harsh outcome.”
Following that initial decision, Incident365 filed an appeal, arguing that not all services provided required a license. It also contended that although certain aspects of the contract required a license, those parts should be severed and Incident365 should still recover for services that did not require a license.
Incident365 asserted that the trial court had misapplied the statutes governing contractor licensing and unlicensed contracting. It sought to enforce the portions of the agreements that involved tasks such as water extraction and mold remediation, which it believed did not require a contractor’s license.
After reviewing the details of the case, the appellate court concluded that the trial court had made a mistake in granting summary judgment since there were issues of material fact regarding the specific services provided by Incident365 and whether they required a contractor’s license. The appellate court highlighted the following:
■ Not all disaster recovery tasks necessarily require a contractor’s license.
■ A fact-specific analysis was needed to determine which services performed by Incident365 fell under the statutory definition of contracting.
Additionally, the appellate court acknowledged Incident365’s argument that the enforceable portions of the agreements could be severed from the parts that required a license, potentially allowing Incident365 to recover for the services that did not require licensing. The appellate court chose to reverse the trial court’s summary judgments. It remanded the case for further proceedings to resolve these factual disputes and to reconsider the enforceability of the agreements.
The appellate court’s decision to reverse and remand the case reflected its view that the trial court had prematurely granted summary judgment. The court determined that further analysis was required to decide which of Incident365’s services required a license and whether portions of the agreements could still be enforced. The decision ensures that Incident365 will have the opportunity to present evidence regarding the nature of its work and potentially recover some of the outstanding balance from the Associations.
This case highlights that having a valid contractor’s license is required. If Incident365 had been fully licensed,
recovering the outstanding $1 million would have been a simpler task. However, the case also illustrates that there is some gray area surrounding licensure requirements for various types of work.
The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation. Trent Cotney is a Partner and Construction Team Leader at the law firm of Adams & Reese, LLP and FRSA General Counsel. For more information, you can contact him at trent.cotney@arlaw.com or by phone at 813-227-5501.
Previous Article
Next Article