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Monthly Archives: February 2013

19FEB 2013

The failure to have a proper license as a contractor, where a license is required, may have adverse consequences to the party performing the work. Work done by an unlicensed contractor may result in the inability to collect, loss of lien rights, prosecution for a crime, and treble damages resulting from injury arising out of the work performed. Florida Statute § 768.0425, authorizes recovery by a consumer of three times the actual compensatory damages for injuries sustained from an unlicensed contractor’s negligence, misfeasance, or malfeasances, plus costs and attorney fees.

Florida Statute § 768.0425, titled “Damages in actions against contractors for injuries sustained from negligence, malfeasance, or misfeasance” states:

(1) For purposes of this section only, the term “contractor” means any person who contracts to perform any construction or building service which is regulated by any state or local law, including, but not limited to, chapters 489 and 633; and the term “consumer” means a person who contracts for the performance of any construction or building service which is regulated by any state or local law, including, but not limited to, chapters 489 and 633.

 (2) 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.

Emphasis added.

While the public policy behind the statute is to protect a consumer, a recent decision from the Fourth District Court of Appeal evidences how the courts are balancing consumer protection and punitive damages in their statutory interpretations. In Home Const. Management, LLC v. Comet, Inc., 2013 WL 440101 (Feb. 6, 2013), the Plaintiffs, Home Construction Management, LLC (“HCM”) and Abraham “AVI” Omer (“Omer”), were contacted by Comet, LLC (“Comet”) for construction management services to assist with the construction of a single family residence in Florida. Comet and HCM entered into a written contract for completion of the project. Omer was an agent of HCM and was the agent involved in the construction management of the project. Eventually, HCM and Comet had a dispute which resulted in the termination of their relationship. Comet filed suit against HCM and Omer for disgorgement of contract payments and treble damages pursuant to Florida Statute § 768.0425, as neither HCM nor Omer were licensed contractors. The trial court found that HCM entered into a contract with Comet, and breached that contract. It did not find that Omer entered into any contract with Comet, but found that both HCM and Omer engaged in contracting without being properly licensed. Therefore, the trial court entered treble damages against both HCM and Omer, pursuant to Florida Statute 768.0425, and held them jointly and severally liable for the damages.

The issue on appeal was whether Omer could be jointly and severably liable for treble damages, as he did not personally enter into a contract with Comet. See Florida Statute § 768.0425(1). HCM and Omer argued that Omer was not a contractor, as defined by Florida Statute § 768.0425, and thus the damages the trial court awarded against him for contracting without a license under Florida Statute 489.128 could not be trebled. HCM and Omer further argued, that even if the appellate court upholds the trial court’s finding that Omer performed contracting services without a license, it is un-rebutted that Omer did not “contract to perform” those services. Comet argued that Omer directly negotiated with and retained subcontractors, received subcontractor’s invoices, supervised subcontractors, and paid the subcontractors. Comet further argued that Omer and HCM engaged in contracting, and Omer acted alone and personally participated in the actions at issue before the court. Therefore, Omer’s direct and personal participation subjected Omer to individual liability under Florida Statute 768.0425 at the trial court level.

On appeal, the Fourth District Court narrowly interpreted Florida Statute § 768.0425, and stated that since Omer was not a party to the written contract, he did not “contract[] to perform” within the meaning of Florida Statute § 768.0425(1).  The appellate court was silent as to whether Omer was considered a “contractor” pursuant to the Statute. The Court reasoned that  since treble damages are punitive in nature, they must be construed strictly in favor of the one against whom the penalty is imposed.

On the other hand, the Third District Court of Appeal previously refused to limit the application of Florida Statute § 768.0425 in Hancock-Gannon v. McNully, 800 So. 2d 294 (Fla. 3d DCA 2001). In this case, a homeowner sued an unlicensed roofing contractor and construction company that pulled project permits for substandard roof repairs. The Plaintiffs sought treble damages “for injuries sustained resulting from the contractor’s negligence…”, as per Florida Statute § 768.0425(2). The Defendants argued that the court should limit the statute’s application to “personal injuries”, as Florida Statute § 768.0425 is part of Chapter 768, entitled  “Negligence” and sections 768.041 through 768.31 discuss personal injuries and death, not damage to property. The Third District Court stated that the Defendant’s presented a “flimsy argument” and thus did not limit their interpretation of injuries to personal injuries.

Extensive case law in the area of unlicensed construction activities exemplify the serious nature of the consequences arising from unlicensed contractor activities. While consumer protection is paramount in the realm of unlicensed contractor activities, these cases seem to present a tug-of-war between the districts of the public policy behind imposing punitive damages and protecting a consumer.