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  1. #1

    Default Can We Enforce Our Contract?

    We are a general contractor in the state of GA. We signed a contract with another GA company to erect a hangar building in the state of Florida.

    Our contract stated specific prices for each part of work on the project, erection, electrical, plumbing, etc.

    The owner paid one of our subcontractors directly for the price they quoted us and cut us out of our profits altogether. This left them owing us approx. 65,000.00 of profit (contracted amount vs. amount we were to pay our subcontractor). Our contract also prohibited this.

    We are currently in arbitration concerning this matter.

    In answer to our demand for arbitration they stated that " we cannot recover under any of the counts raised in the demand because we are not a licensed and qualified general contractor in the state of florida and pursuant to fl stat ch 489, cannot enforce our contract in law or in equity"

    Our contract specifically states that we will be working as a subcontractor under a licensed florida general contractor. This was done because we are not licensed as a general contractor in florida. However we are registered in the state of florida and authorised to conduct business there pursuant to fl stat 607.1501; we were a subcontractor under a licensed general contractor for this project as stipulated in the contract and per fl stat 489.113; and should have the same rights and restrictions as a domestic corporation of like character pursuant to fl stat 607.1505.

    We thought we did everything required by the state of Florida. My question is Are they right, can we not enforce our contract? Does our case hold merit? Please help!!!!! Any advice on this is greatly appreciated. We donot want to pay additional monies for arbitration if we have no chance to win......

  2. #2
    Join Date
    Oct 2007
    Location
    Atlanta, Georgia
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    Default Re: Can We Enforce Our Contract?

    Your attorney, if you have one, should be able to answer this question for you. However, if you had a licensed contractor on the job, that defense may be without merit. I apologize for the length of this post, but have your attorney look at this case:

    United States District Court,
    M.D. Florida,
    Orlando Division.
    LAKE EOLA BUILDERS, LLC, Plaintiff,
    v.
    The METROPOLITAN AT LAKE EOLA, LLC, Defendant.

    No. 6:05 CV 346 ORL 31DA.

    Feb. 22, 2006.

    Holdings: The District Court, Presnell, J., held that:
    (1) fact that contractor had not filed its license application before it signed contract did not compel finding that contractor was unlicensed, and
    (2) fact issues remained as to whether contractor had qualifying agent responsible for project as of contract's effective date.


    Motion denied.

    PRESNELL, District Judge.

    This matter came before the Court after a hearing on the summary judgment motion (Doc. 53) filed by the Defendant, The Metropolitan at Lake Eola, LLC (“Metropolitan”). In resolving this motion, the Court has also considered the memorandum in opposition (Doc. 55) filed by the Plaintiff, Lake Eola Builders, LLC (“LEB”).


    I. Background

    Except as noted, the following facts are undisputed. Metropolitan approached Pertree Constructors, Inc. (“PCI”) regarding an upcoming construction project. (Doc. 55-2 at 4). PCI's principals opted to set up a new legal entity-LEB-to undertake the project. (Doc. 55-2 at 4). According to the records of the Florida Department of State, Division of Corporations, LEB was formed in November of 2003. J. Michael Pertree (“Pertree”) and Andrew Owens (“Owens”) served as manager members of LEB, with Owens also serving as registered agent. Owens (vice president) and Pertree (president, secretary, treasurer) were officers in PCI.


    Metropolitan and LEB entered into a contract on December 9, 2003 under which LEB would act as general contractor for the renovation of the Downtown Orlando Sheraton Four Points Hotel (the “Four Points project”). (Doc. 53 at 2). LEB did not file its application for a certificate of authority (in essence, a general contractor's license) until February 20, 2004 (Doc. 55 at 20), and did not receive the certificate until June 18, 2004 (Doc. 55 at 18). The parties disagree as to whether Metropolitan was aware of LEB's certification status when the contract was signed.


    According to LEB, it commenced work on the Four Points project on December 29, 2003. (Doc. 2 at 3). Approximately one year later, Metropolitan terminated LEB from the project. (Doc. 5 at 21). On January 12, 2005, LEB recorded an amended claim of lien for monies it contended it was due under the contract. (Doc. 2 at 4).


    On February 3, 2005, LEB filed suit against Metropolitan for breach of contract and to foreclose a $925,411.27 construction lien. (Doc. 2). Citing diversity jurisdiction, Metropolitan removed the case to this Court (Doc. 1) and filed a counterclaim against LEB for, inter alia, breach of contract. (Doc. 5 at 22-25). On June 8, 2005, Metropolitan amended its answer, adding an affirmative defense based on LEB's alleged failure to comply with Florida law governing licensing requirements for contractors. (Doc. 30). Metropolitan now moves for summary judgment on that affirmative defense, contending that LEB was not properly licensed on the effective date of the contract and is therefore statutorily barred from attempting to enforce it.

    ...


    III. Application

    Chapter 489, Florida Statutes, governs the licensing, registration, and certification of construction contractors. Pursuant to that chapter, an individual who wishes to engage in construction contracting must pass an examination and otherwise demonstrate his or her qualifications to receive either a certificate of competency, which allows contracting statewide, or register with the Department of Business and Professional Regulation (“DBPR”), which allows contracting in a particular jurisdiction. Section 489.113(1). FN1 A business organization, such as LEB, that wishes to engage in construction contracting must apply for a certificate of authority to do so through a “qualifying agent”. Section 489.119(2). A qualifying agent must be, among other requirements, a certified or registered contractor. Section 489.119(3)(a). For a business organization to receive a certificate of authority, it must designate a primary qualifying agent FN2 who has final approval authority for all construction work performed by the organization. Section 489.119(2)(a)(1).


    FN1. Unless otherwise noted, all statutory references are to the 2005 edition of the Florida statutes.
    FN2. Under chapter 489, there are two types of qualifying agent. The first is a primary qualifying agent, defined asa person who possesses the requisite skill, knowledge, and experience, and has the responsibility, to supervise, direct, manage, and control the contracting activities of the business organization with which he or she is connected; who has the responsibility to supervise, direct, manage, and control construction activities on a job for which he or she has obtained the building permit; and whose technical and personal qualifications have been determined by investigation and examination as provided in this part, as attested by the department.Section 489.105(4). The second is a secondary qualifying agent, defined asa person who possesses the requisite skill, knowledge, and experience, and has the responsibility to supervise, direct, manage, and control construction activities on a job for which he or she has obtained a permit, and whose technical and personal qualifications have been determined by investigation and examination as provided in this part, as attested by the department.Section 489.105(5).
    Section 489.128(1) declares that, 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.”


    An individual contractor is to be considered unlicensed for purposes of *1319 Section 489.128 if he or she “does not have a license required by this part concerning the scope of the work to be performed under the contract.” Section 489.128(1)(a). In contrast, the statute specifies that the lack of a certificate of authority is not grounds for considering a business organization to be unlicensed. Section 489.128(b). Rather, a business organization contractor is to be considered unlicensed if it “does not have a primary or secondary qualifying agent in accordance with this part concerning the scope of the work to be performed under the contract.” Section 489.128(1)(a). Finally, the statute provides that the contractor's licensing status is to be assessed as of the effective date of the contract except under circumstances not present here. Section 489.128(1)(c).


    Thus, to determine whether LEB may enforce its contract with Metropolitan, the Court must decide whether LEB should be considered “licensed” as of December 9, 2005-and, more particularly, whether LEB had a primary or secondary qualifying agent in accordance with Chapter 489 as of that date. Unfortunately, Chapter 489 does not define what it means for a business organization to “have” a qualifying agent.


    It is undisputed that LEB had not even filed its application for a certificate of authority as of December 9, 2003. LEB's certificate of authority was not issued until June 18, 2004. (Doc. 53 at 18). Recognizing that the lack of a certificate, alone, is not enough to compel a finding that LEB was unlicensed, Metropolitan argues that LEB's failure to even apply for a license by that date requires the same result. Simply stated, Metropolitan argues that, as a matter of law, an organization cannot “have” a qualifying agent for purposes of Section 489.128 until it files its application in accordance with the requirements of that section. Metropolitan also argues that previous versions of Section 489.128 allowed contractors to “cure” their lack of a license after entering into the contract, thereby gaining the ability to enforce it. See, e.g., Kvaerner Construction, Inc. v. American Safety Casualty Insurance Co., 847 So.2d 534, 536 n. 3 (Fla. 5th DCA 2003) (discussing amendment of Section 489.128). Metropolitan argues that allowing LEB to be considered licensed in this case would contradict the Legislature's intent-in effect, reading the deleted cure provision back into the statute.


    [1] Neither of these arguments is persuasive. By directing courts to look at whether an organization has a qualifying agent rather than whether it has the necessary paperwork to demonstrate this fact, the Legislature has expressed a preference in Section 489.128 for substance over form. Making the mailing date of the application dispositive reverses these priorities. As for Metropolitan's “cure” argument, if an organization has a qualifying agent on the proper date, it is entitled to enforce its contract, leaving nothing to cure.


    [2] Section 489.128 was created “to protect the public from the activities of incompetent contractors.” Kvaerner Construction at 536. See also Poole & Kent Co. v. Gusi Erickson Constr. Co., 759 So.2d 2, 6 (Fla. 2d DCA 1999) (stating that legislative history of Section 489.128 “suggests that the statute is intended to address the problems that consumers and the public face due to shoddy work by unlicensed, unqualified contractors.”). As such, the Court finds that the best method for determining whether LEB should be considered licensed is to determine whether LEB had a qualified contractor who was responsible for the Four Points project beginning with the effective date of the contract. Construing the evidence in the light most favorable to LEB, the Court *1320 finds that LEB has at least created a disputed issue of material fact as to this point. Owens-a licensed general contractor at all relevant times-signed the contract on behalf of LEB. (Doc. 5-2 at 37). According to Pertree's affidavit, Owens supervised and was responsible for the Four Points project from its beginning. (Doc. 55-2 at 5).


    [3] [4] In addition, Owens linked himself to the Four Points project by pulling the building permit. (Doc. 55-2 at 5). A qualifying agent has a duty to supervise the organization's construction projects. Murthy v. N. Sinha Corp., 644 So.2d 983, 985 (Fla.1994). When a qualifying agent pulls a permit for a particular project, he has associated himself with the project, and “has a duty to supervise construction and not to willfully or deliberately disregard and violate local building codes.” Hunt v. Department of Professional Regulation, 444 So.2d 997, 999 (Fla. 1st DCA 1994). Unless another qualifying agent is assigned to supervise the project or otherwise assumes responsibility, the qualifying agent who pulled the permit remains obligated to supervise it, even if he states that he had nothing to do with the project. Id.


    The foregoing evidence would support a conclusion that Owens, a licensed general contractor, was responsible for the Four Points project beginning with the effective date of the contract. As such, that evidence would support a conclusion that LEB should be considered licensed for purposes of Section 489.128.


    The Court finds further support for this proposition in Section 489.119(3)(a), which governs, among other things, the requirements for a business organization when its sole qualifying agent ends his or her affiliation with it. The statute provides the business organization with 60 days “in which to employ another qualifying agent.” § 489.119(3)(a). Further, the business organization “may not engage in contracting until a qualifying agent is employed,” unless one of its principals personally obtains a certificate or registration. § 489.119(3)(a). Once the business organization has employed another qualifying agent, the statute does not require additional paperwork before it may engage in contracting. In other words, the focus is on the qualifications of the individual(s) working for the organization rather than the paperwork. Although the situation of a departing qualifying agent is not perfectly analogous to that of the instant case, it is sufficiently similar to suggest that a similar result is warranted.


    Because disputed issues of material fact remain as to the status of LEB's license on the effective date of the contract, Metropolitan is not entitled to summary judgment.FN3 In consideration of the foregoing, it is hereby


    FN3. For now, the Court's conclusion renders it unnecessary to resolve LEB's argument that Metropolitan knew about the licensing issue and is estopped from raising it in these proceedings. The same holds true for the issue of whether Metropolitan's counterclaim for breach of contract had the effect of reaffirming the contract.
    ORDERED that the summary judgment motion (Doc. 53) filed by the Defendant, The Metropolitan at Lake Eola, LLC, is DENIED.



    The foregoing is general information, not specific legal advice. No attorney/client relationship has been created or should be implied.

  3. #3

    Default Re: Can We Enforce Our Contract?

    Thank you so much for your reply.

    We do not have a lawyer on this case, we are ATTEMPTING to handle this case in arbitration without one (as we cannot afford one).

    We looked up the statute and thought that we were covered as long as we had a general contractor for the project, who also pulled the permits, but we did not know if we were missing or miss understanding some part of it because the other party knows this information, but were still saying that we could not enforce our contract per that statute.

    We are going to what I think is a prejudgment hearing in July, and I wanted to make sure we were on the right track with our defence against their alligations.

    Thank you again, every little bit of information sure helps!!!!!

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