Contractor can’t sue for more than limit of his license

June 27, 2008

Class B contractor cannot sue to recover more than the monetary limit of his license, a Fairfax judge has ruled.

The issue arose from renovation of a home by Daniel Jones Remodeling LLC. The contract called for the payment of $128,600 for the work, and the homeowners paid that amount plus a few hundred dollars.

The company contended, however, that alterations requested by the owners cost an additional $62,355.42. It sued to recover that extra money and filed a mechanic’s lien on the property.

Fairfax lawyer James P. Connor, representing the homeowners, asked the court to dismiss the lawsuit. Under the Virginia Code, the maximum amount for a single project for a Class B contractor is $120,000, Connor argued.

And another Code section makes it a misdemeanor to do construction work without a license or certificate, or without the proper class of license. Because the company had violated the law, it could not recover, Connor maintained.

Ralph D. Rinaldi, the attorney for the remodeling company, responded that no court had ever ruled that exceeding the monetary restrictions on a license was a bar to recovery. Even if it might be a bar, a good-faith exception in the statutes saved the contract because the contractor was unaware of the monetary limitation and did the work requested, Rinaldi contended.

Judge Charles J. Maxfield agreed with Connor. The statutory scheme in the Code “is designed to protect the public and is a valid exercise of police powers,” Maxfield wrote in Daniel Jones Remodeling LLC v. Chiu.

The good faith exception “is designed to protect innocent contractors and places a burden on them to know when their license expires,” Maxfield said. “It creates no exception for a contractor innocently or otherwise exceeding the monetary limits of his [license] and the Court cannot read such a saving provision into the statute.”

The provision that extended the criminal penalty to work done without a proper class of license was enacted in 2004, Connor said. The law has been amended several times over the years in an effort to strike a balance between protecting the public from unscrupulous contractors and giving a customer a way to avoid paying for work that was substantially performed, Connor said.

Connor noted that the equities of the case were on his side because the homeowners had paid the face amount of the contract, which coincided roughly with the monetary limitation of the Class B license. A more difficult situation would have been presented if a homeowner refused to pay substantially less than the contract amount because the amount slightly exceeded the monetary limit, he said.

Written by Alan Cooper  |  Filed Under Real Estate 

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