Taylor Morrison Services, Inc. V. ECOS
Florida unlicensed contracting lawyer Robert S. Tanner, Esq.
The Short Story
Unlicensed contracting is a common claim and, certainly a more common occurrence, in Florida. It is illegal and often leads to severe disappointment or financial setbacks for the person who hired the unlicensed contractor. Here are some things to know about Florida law concerning unlicensed contracting:
- An unlicensed contractor may be liable for three times the compensatory damages for injury caused by its negligence, misfeasance, or malfeasance. “Injury” is not limited to bodily injury.
- An unlicensed contractor is prohibited from enforcing any claim for payment for work performed that required a license.
- To be considered licensed, a business entity (e.g., Joe’s Keep It Dry Roofing, Inc.) must be properly certified or registered through a qualifying agent whose license allows her or him to contract for the scope of work.
- To be considered licensed for a particular project or job, the contractor must have a proper qualifying agent as of the effective date of the contract; if an effective date is not stated in the contract, then (ii) the date of the last signature to the contract; or if the date of last signature is not stated in the contract, then (iii) the first date the contractor provides labor, materials, or services under the contract.
- Events occurring after the date for determining whether a contractor is licensed, such as shenanigans in obtaining a building permit or the qualifier’s failure to supervise the project, may not be considered in determining whether the contractor was licensed.
The case Taylor Morrison Services, Inc. v. Ecos (Fla. 1st DCA, May 28, 2015) implicated several of these rules.
I. Taylor Morrison Services, Inc. v. Ecos
In The Trial Court
In 2004, Carol Ecos and Susan Bessing (“Owners”) contracted with Taylor Morrison Services, Inc. (“Developer”) for the construction and purchase of a home. After closing, Owners sued Developer for defects in the construction. Owners alleged that Developer violated Florida construction licensing law by contracting without a license. Owners’ complaint alleged a violation of Florida Statutes, section 768.0425, which provides for treble damages against an unlicensed contractor causing injury by negligence, misfeasance, or malfeasance.
The case went to trial on a stipulation between Owners and Developer that Owners’ compensatory damages for the defective construction was $200,000.00. Due to the treble damages allowed under Florida Statutes, section 768.0425, Owners would be entitled to judgement for $600,000.00 plus attorney’s fees if successful in proving that Developer was unlicensed.
To establish that Developer was unlicensed, Owners had to show that Developer did not “have a primary or secondary qualifying agent in accordance with [the law] concerning the scope of the work to be performed under the contract.” Florida Statutes, §489.128(1)(a).
Developer also had to establish that the contractor was unlicensed at a particular point in time. Under Florida Statutes, §489.128(1)(c), Owners had to show that Developer was unlicensed either (i) on the effective date stated in the original contract for the work, if an effective date was stated therein; (ii) on the date the last party to the contract executed it; or, if the contract does not state either the effective date or the date of the last signature, then (iii) on the first date the contractor furnished labor, materials or services under the contract.
Within 90 days of entering the contract, a building permit was sought for Owners’ home. The permit application indicated that it was signed before a notary by Lisa Marie Steiner as the licensed contractor for the project on behalf of Developer. However, Ms. Steiner had resigned from her employment with Developer before the contract’s effective date. Moreover, Ms. Steiner testified that she had no involvement with Owners’ project, that she doubted the authenticity of the signature on the permit application, and that she did not authorize Developer to use her license to obtain the permit for the project.
Records of the Department of Business and Professional Regulation Construction Industry Licensing showed that, on the effective date of the contract between Owners and Developer, there were four persons who were qualifying agents for Developer. One of those was Ms. Steiner. Another was Douglas Guy, who was a licensed certified building contractor. Mr. Guy was employed by Developer at all material times. Mr. Guy testified at trial that he was a primary qualifying agent for Developer on the contract date.
Rather than strictly applying Section 489.128, the trial court focused on the permit issue. The trial court found that the permit was procured using Ms. Steiner’s license without her permission and that the house was built “without the direction, supervision, management, and control of the licensed contractor listed on the building permit or any other licensed contractor,” in violation of Florida law. Despite the fact that Developer had a qualifying agent on the effective date of the contract, the trial court found that Developer was unlicensed. The trial court entered final judgment in favor of Owners.
II. The Appellate Court’s Analysis
On appeal, Owners argued that the trial court was correct to include the permitting issues in its analysis due to the statutory definitions of “primary qualifying agent” and “secondary qualifying agent”. Each of those terms imposes on the individual qualifying agent the responsibility to “supervise, direct, manage, and control the construction activities on a job for which he or she has obtained a permit . . . .”
The appellate court rejected Owners’ argument. It found that, for purposes of determining whether a contractor is unlicensed under 489.128, the statute’s requirement that the business organization have a qualifying agent “concerning the scope of the work to be performed under the contract” meant only that as of the contract effective date, the date of last signature, or the date of commencing provision of services under the contract, the organization must “have at its disposal a person who is recognized as a qualifying agent and licensed as an individual to perform the type of work addressed in the contract.”
The written contract between Owners and Developer contained an effective date. The appellate court found that the question that the trial court should have answered was whether Developer had a qualifying agent as of the effective date. It was improper for the trial court to consider the events surrounding the permitting issues, which occurred after the contract’s effective date.
Because Developer had a qualifying agent as of the effective date of the contract with Owner, the trial court’s judgment that Developer was unlicensed was incorrect. Accordingly, the appellate court reversed the trial court’s judgment.
An owner, or even a contractor, who sustains damages as a result of contracting with an unlicensed contractor, has powerful weapons available to him. Florida Statutes, section 768.0425, allows recovery of triple damages, as well as attorney’s fees, against the unlicensed contractor. Florida Statutes, section 489.128 eliminates any right to payment the unlicensed contractor would have had if it had been licensed.
Proving that a contractor is unlicensed requires at least two showings. A claimant must show (a) that the contractor did not have a primary or a secondary qualifying agent on (b) the effective date of the contract, if one is stated in the contract; or, the date of the last signature on the contract, if stated in the contract; if there is no effective date or date of last signature stated in the contract, then the date to be used is the first date the contractor furnished labor, materials, or services under the contract.
 Hancock-Gannon Joint Venture II v. McNully, 800 So. 2d 294 (Fla. 3d DCA 2001).
 Florida Statutes, § 489.128.
 Taylor Morrison Services, Inc. v. Ecos, 163 So. 3d 1286 (Fla. 1st DCA May 28, 2015).