Fine Against Principal of Unlicensed Contractor Upheld

FINE AGAINST PRINCIPAL OF UNLICENSED CONTRACTOR UPHELD

By: Larry Leiby, Esq. and Robert S. Tanner, Esq.

About the Author: Larry Leiby, Esq. was the founder and first chairman of the Florida Bar Construction Law Committee in 1976. He is the author of the Florida Construction Law Manual. He is Board Certified in Construction Law and was on the Construction Law Certification Committee that creates and grades the tests for construction law board certification. He was awarded the lifetime achievement award by the Florida Bar Construction Law Committee and teaches construction law at the Florida International University College of Law. He can be reached at leiby@mkpalaw.com. For more information, please visit www.mkpalaw.com.

In David Helms v. Pinellas County Construction Licensing Board, 17 Fla. L. Weekly Supp. 1161a (Pinellas County Circuit Court, August 18, 2010), David Helms ("Helms") was the principal of two construction companies. Helms did not hold any construction licenses. The first of his two companies was Signature Built Construction, Inc. ("Licensed Entity"), which was properly qualified by a licensed contractor. The second was Signature Built by David Helms, Inc. ("Unlicensed Entity"), which was not qualified by any license to engage in contracting.

On October 18, 2005, Unlicensed Entity entered into a contract with the Wolberts to build a home. The contract showed Unlicensed Entity as the "Builder" or "Seller" and identified Licensed Entity as "the Contractor/Builder of record for [the Unlicensed Entity] and is joined under this agreement." Unlicensed Entity recorded a claim of lien against the property for an unpaid balance. The Wolberts filed a complaint with the Pinellas County Construction Licensing Board ("PCCLB"). The PCCLB issued a citation to Helms individually for violating the Pinellas County Code by contracting without a license.

Helms appealed the citation. A Special Master held a hearing and based upon a PCCLB investigator's testimony, Sunbiz business records, and the construction contract and related documents, the Special Master found that Unlicensed Entity had violated the Code and that Licensed Entity was not a party to the contract. Helms sought review in the Circuit Court of the Special Master's decision.

The Circuit Court, in its appellate capacity, reviewed the matter. In that forum, Helms argued that the Special Master exceeded the essential requirements of law by accepting unauthenticated Sunbiz internet business records and other hearsay evidence. The Circuit Court rejected that argument upon the finding that Florida law did not require local code enforcement boards to observe the formal rules of evidence.

Helms also argued that the Special Master incorrectly found that Licensed Entity was not a party to the contract. The Circuit Court found that change orders referenced Licensed Entity's license number but identified Unlicensed Entity as the builder. Further, the claim of lien and the contractor's final payment affidavit were in the name of Unlicensed Entity and signed by Helms as the President of Unlicensed Entity. Additionally, the Circuit Court found that there was no signature block for Licensed Entity on any of the documents submitted. Based on the foregoing, the Circuit Court concluded that the Special Master's decision was sufficiently supported by competent and substantial evidence.

Finally, Helms argued that the fine should not have been imposed on him since he signed the contract on behalf of the corporation. The Circuit Court noted that both the Pinellas County Code and the statewide counterpart in the Florida Statutes prohibited any person from contracting without a license and that the Pinellas County Code specifically allowed for both corporate and personal responsibility for a violation. Accordingly, the Circuit Court rejected Helms' argument.

The Helms case addressed only one administrative consequence of contracting without a license - a fine imposed by local licensing board. It does not address the whether the state licensing board may also take administrative action and it does not address whether the Wolberts avoided payment based on the Florida law prohibiting an unlicensed contractor from enforcing their contracts. It is quite possible that the Wolberts succeeded in having Unlicensed Entity's lien discharged (and recovering their attorney's fees in connection with that) and avoided having to pay any payments claimed due by Unlicensed Entity. The case also does not address whether Licensed Entity applied for a lien and sought enforce its contract rights.