Licensing of Florida Contractors.
Contractor Licensing--Ch. 489
* Licensing Requirements--Under our current statutory scheme, F.S. Ch. 4894 provides the regulatory vehicle for contractor licensing, establishing a Construction Industry Licensing Board (CILB), imposing barriers to entry based on competence, (5) creditworthiness, (6) insurability, (7) and moral rectitude, (8) and setting forth the various classes of contractors (9) and the scope of work covered by each class. (10) Specifically, state contractor licenses are grouped into two divisions. Division I consists of general contractors, building contractors, and residential contractors, and are defined in [section]489.105(3)(a), (b), and (c), respectively. Division II consists of contractors such as air conditioning, plumbing, and roofing contractors, and their various scopes of work as set forth in [section]489.105(3)(d)-(o). (11) Chapter 489 also describes the process by which an individual license holder must "qualify" a company in order that it may carry out the business of contracting and identifies prohibited activities for licensed and unlicensed contractors, 12 as well as the associated penalties. (13)
Corporate entities (14) wishing to operate as contractors in Florida must follow a two-step process that starts with individual "certified contractors." (15) An individual must first demonstrate requisite competence in one of the categories identified in [section]489.105(3)(a)-(o), (16) whereupon the state will issue a certificate of competency (17) to that individual, who will then be deemed a "certified contractor," and "allowed to contract in any jurisdiction in the state without being required to fulfill the competency requirements of that jurisdiction." (18)
The second step of the licensing process applies to all forms of business organization except the sole proprietorship. (19) An individual certificateholder who seeks to practice construction under any other corporate form must attach him or herself to the entity by becoming its "qualifying agent" by completing certain application forms, background checks, (20) fingerprinting, (21) and credit checks. (22) Once an individual has satisfied these requirements, the CILB issues a license that allows that individual to operate as a contractor through the "qualified" company.
The term "qualifying agent" can cause some confusion (23) in reading Ch. 489, and this muddle is exacerbated by its reduction to "qualifier" in popular parlance and by its conflation with a common term for competence. Chapter 489 adds to the confusion by using the term "qualified" to refer to both licensing and competency, (24) and more than one trial court has held that a competent contractor is a qualified (read: licensed) contractor, (25) despite CILB records showing otherwise.
A qualifying agent is responsible for all of the activities of the licensed entity, specifically to "supervise, direct, manage, and control the contracting activities of the business organization with which he or she is connected [and] has the responsibility to supervise, direct, manage, and control construction activities on a job for which he or she has obtained the building permit." (26)
Florida's administrative and circuit courts repeatedly insist on the qualifying agent's hands-on involvement (27) under the rationale that to "allow a contractor to be the 'qualifying agent' for a company without placing any requirement on the contractor to exercise any supervision [over work done] under his [or her] license would permit a contractor to loan or rent his [or her] license to the company." This practice would completely circumvent "the legislative intent that an individual, certified as competent, be professionally responsible for supervising construction work on jobs requiring a licensed contractor." (28)
In Gatwood v. McGee, 475 So. 2d 720 (Fla. 1st DCA 1985), the Fifth District Court disagreed with the license holder's claim that he satisfied his duty to supervise by hiring an apparently competent but unlicensed person to supervise. (29) On the other hand, in Department of Business and Professional Regulation, Construction Industry Licensing Board, Petitioner v. Edwin A. Henry, Respondent, 2000 WL 248376, at * 15, the administrative court observed that there is no prescribed method for reasonably achieving such supervision, and found that "[i]t is reasonable for a person to rely on other qualified individuals in the performance of such supervision." (30)
This decision directly contradicts the holding in Alles v. Department of Professional Regulation, 423 So. 2d 624 (Fla. 5th DCA 1982), and Gatwood, and no other decision has been found that supports this dilution of a qualifying agent's supervisory responsibilities.
With this background, one might ask how a large contractor is able to comply with this rule. (31) The qualifying agent for a large construction company simultaneously building three or four or more high-rise condominiums cannot plausibly argue that he or she supervises, directs, manages, and controls construction activities on all ongoing projects. Perhaps the legislature will review the decisions in Gatwood and Edwin A. Henry, and decide that the realities of the construction industry are such that a qualifying agent should be permitted to delegate his or her supervisory obligations to others. A decision of this import should not be taken lightly, for it would require a rewrite of [section]489.1195, (32) and result in a delegation of the legislative interest in "the public health, safety, and welfare" (33) to persons whose interests may not be aligned with the goals of Ch. 489.
* Exemptions--The licensing requirements of Ch. 489 apply to all contracting, subject to certain exemptions. Section 489.103 identifies the bulk of these exemptions, which includes material suppliers, road and bridge contractors, and other specialized categories. (34) Property owners, (35) subject to some restrictions, are also exempt, as are the direct employees of a contractor working within the scope of their employer's license. (36)
F.S. [section]489.113(2) provides that subcontractors working within the scope of the contractor's license are exempt if a state license is not required. For example, if a licensed general contractor employs a subcontractor to perform concrete placement work, and the contractor supervises and takes responsibility for the subcontractor's work, the subcontractor need not be licensed. This exemption does not apply to plumbing or other subcontractors whose work requires a state license. The close supervision that must be exercised over independent contractors to comply with F.S. [section]489.113(2) appears to contradict the federal definition of an independent contractor, (37) but no case or scholarly article has been found to shed any light on this interrelationship.
The Jim Walter (38) Exemption: Set forth in F.S. [section]489.117(4)(d), (39) this exemption applies to "[a]ny person who is not required to obtain registration or certification pursuant to s. 89.105(3)(d)-(o)," (40) performing work on single-family homes and townhouses, and allows the subcontractor to avoid local licensing requirements if the contractor is under the supervision of a licensed general, building, or residential contractor. (41)
The Big Boy Exemption: The so-called Big Boy Exemption, found in F.S. [section]489.119(7), allows an entity with a minimum net worth of $20 million to skip the qualification process if it employs one or more licensed individuals to pull permits and supervise construction on its own property. Under such a scenario, a theme park or other large business can carry on construction without needing to engage the services of an outside contractor.
The Developer Exemption: The Developer Exemption, buried in [section]489.105(6), is more of a clarification than an exemption, and states that an entity selling "completed residences on property in which [it] has any legal or equitable interest," is not engaged in contracting, and neither is an entity that "sells manufactured or factory-built buildings." This exemption only extends to the sale of residences; actual construction must still be undertaken by properly licensed entities.
As in most if not all states, unlicensed contractors are viewed with disfavor in Florida, and the DBPR actively prosecutes unlicensed activity. (42) The DBPR and numerous counties have active "ULA" (43) programs, and reports of arrests are not unusual. (44) Chapter 489 contains sections defining prohibited activities and the consequences for engaging in those activities: [section]489.127 identifies prohibited activities; [section]489.128 identifies the civil consequences of unlicensed activity; and [section]489.129 sets forth the administrative disciplinary proceedings.
Under F.S. [section]489.127(1), activities prohibited to unlicensed contractors include falsely holding oneself out as a licensed contractor, using another's license as one's own, and using a suspended or revoked license. Continuing to operate 60 days after losing one's only qualifying agent and commencing work without a permit are also prohibited to contractors, whether licensed or not. Violation of any of these provisions constitutes a first-degree misdemeanor, and a second offense constitutes a third-degree felony punishable by up to five years in prison. (45)
F.S. [section]489.127(4) adds that licensed contractors may not allow their license to be used by another, (46) nor apply for a permit for a project for which he or she does not have a contract, the latter covering those not infrequent situations in which contractors "rent out" their licenses.
Section 489.128 sets out the civil consequences of unlicensed contracting, which are among the most stringent in the nation. (47) Simply put, an unlicensed contractor has no contract, lien, or bond rights if he or she engages in the business of contracting. F.S. [section]489.128(1) states 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."
There has been substantial tinkering with F.S. [section]489.129 since it was first created in 1990, (48) almost all of it having the effect of tightening the screws on unlicensed activity. A 1993 amendment removed a contractor's ability to seek equitable relief, (49) and a 2000 amendment eliminated the so-called cure provision. (50) Chapter 2003-357 clarified that a contract with an unlicensed contractor is not so much illegal as it is unenforceable by the unlicensed entity, adding that a surety cannot hide behind a contractor's unlicensed status to avoid its obligations. Chapter 2006-154 inexplicably added to [section]489.128(1)(a) the tautology that "if no state or local license is required ... the individual performing that work shall not be considered unlicensed," but this language became meaningful when it was amended (51) to remove the reference to local licenses and, with this change, exempted all local contractors from enforcement under Ch. 489.
Section 489.129 describes the disciplinary procedures attending unlicensed activity and also describes additional prohibitions, including mismanagement, abandonment, fraud, gross or repeated negligence, and incompetence, all of which are punishable by license suspension or revocation, restitution, and fines of up to $10,000 per violation. It also clarifies some of the prohibited activities described in [section]489.127, including the aiding and abetting of unlicensed contracting by "[k]nowingly combining or conspiring with an uncertified or unregistered person by allowing his or her certificate or registration to be used by the uncertified or unregistered person with intent to evade the provisions of this part." (52)
Chapter 455, Business and Professional Regulation--General Provisions applies to all licensed professions, including contractors and its [section][section]227-228 describe the grounds for discipline for unlicensed activity and criminal proceedings against licensees. Much of the language of these sections mirrors that of the related sections of Ch. 489, and in administrative proceedings, reference to F.S. [section]455.227-28 is often made simultaneously with reference to F.S. [section][section]489.127-29. In Department of Business and Professional Regulation, Construction Industry Licensing Board, Petitioner v. Andres R. Villarreal, Respondent, Fla. Div. Admin. Hrgs., 11-004156PL, respondent was found guilty of violating F.S. [section]489.129 (1)(b), and would also have been found guilty under a second count of violating F.S. [section]455.227(1)(c), but for their overlapping nature. (53)
Consequences of Unlicensed Contracting
The loss of contract rights can spell financial ruin for a contractor who loses entitlement to contract payments through neglect, inadvertence, or misrepresentation. Although some instances of noncompliance are certainly due to innocent oversights and errors, the Florida Supreme Court rightly has little sympathy for unlicensed activity, and observed in Earth Trades v. T&G Corporation, 108 So. 3d 580 (Fla. 2013), that "to avoid the draconian effects of the statute, the unlicensed contractor need only comply with the law." (54) The apparent complexity of Ch. 489 notwithstanding, compliance is not that hard to achieve. Nevertheless, there are numerous ways to be an unlicensed contractor, and an attorney having anything to do with a contractor as a client, adversary or otherwise, is well advised to verify the contractor's licensing status at the DBPR website (55) as soon as possible.
* Nonlicensure Through Timing --There is some tension within Ch. 489 concerning the actual beginning of unlicensed activity. F.S. [section]489.128(1)(c) states that a contractor is unlicensed "only if the contractor was unlicensed on the effective date of the original contract for the work," but the prohibited activities under F.S. [section]489.127 preclude one from even advertising oneself as available to engage in the business of a contractor without being licensed. (56) Moreover, F.S. [section]489.105(6) states that "[t]he attempted sale of contracting services and the negotiation or bid for a contract on these services also constitutes contracting." Accordingly, an unlicensed contractor may bid for and negotiate a contract but not be guilty of unlicensed contracting if he or she obtains a license before executing the contract. Such a situation may occur where an entity has applied for but not yet received a license, particularly for a newly-formed joint venture or other entity.
* Nonlicensure Through Negligence --The paths to nonlicensure are many, and a once properly licensed contractor can find him or herself without a license if he or she changes corporate structure, fails to renew, fails to complete educational requirements, or loses his or her qualifying agent.
If a contractor converts its business from a corporation to an LLC, it is not "converting" anything; it is merely creating a new entity, the LLC, that will in all likelihood operate alongside the corporation until the transition is complete. The new LLC is unlicensed until the corporation's qualifying agent applies for and receives CILB authorization to act as the new entity's qualifier. The qualifying agent can apply to qualify two entities, the corporation and the LLC, or apply to transfer from the corporation to the LLC. (57)
Similarly, a joint venture is a new entity separate and apart from the joint venturers, and it must be "qualified" if it is to operate legally. This holds true whether one, both, or neither of the joint venturers are licensed contractors. (58)
Although generally used by developers, the single-purpose entity may also be used by a contractor-developer, may arise in a design-build scenario or even under an IPD59 agreement. Any such agreement that creates a new legal entity must be separately licensed.
* Nonlicensure Through Subsequent Events--Bankruptcy, criminal convictions, failure to timely satisfy a judgment and failure to renew a license are all events that may, or may not, result in the nonlicensure of a previously licensed contractor.
While the loss of a license due to a failure to renew needs no further explanation, license suspensions and revocations due to criminal activity or bankruptcy have been adjudicated in both the administrative and circuit courts.
Criminal convictions not directly related to the scope of work of the guilty party's license will generally not result in license revocations, but if the crime is sufficiently egregious, an indirect connection may be sufficient. In one case, the federal mail fraud conviction of licensed contractor Frederick B. Nowell, Sr., arising out of a fraudulent check scheme, earned him a license revocation and an order of restitution in the amount of $11,441,100.99. (60)
The failure to timely satisfy a judgment, a violation of F.S. [section]489.129(1)(q) is grounds for license revocation, but if that judgment is discharged in bankruptcy, "the judgment is void and cannot be used by the government to suspend the license of a person with whom the bankrupt has been associated." (61)
Licensing--Causes of Action and Other Applicable Statutes
As with most other penal statutes, violations of Ch. 489 do not create a personal cause of action. In Murthy v. N. Sinha Corp., 644 So. 2d 983 (Fla. 1994), the Florida Supreme Court rejected a lower court's "conclusion that a corporation's qualifying agent may be held individually liable for a breach of the duty created by [[section][section]]489.119 and 489.1195." (62) That said, it is still possible to hold a contracting entity, if not the qualifying agent, liable for its failure to be licensed, the most straightforward way being to include within the contract a requirement that the contractor be licensed or, as more frequently stated, that it comply with all applicable laws, statutes and regulations.
Chapter 489 covers most of the sanctions arising from unlicensed activity, but several other statutes also address unlicensed contracting and its consequences. Section 455.228 provides the DBPR with the authority to seek administrative remedies against unlicensed contractors, much the same as F.S. [section]489.13 and F.S. [section]713.02(7) of Florida's Lien Law reiterates almost verbatim the language of F.S. [section]489.128(1)-(3).
Section 501.211 of Florida's Deceptive and Unfair Trade Practices Act (63) creates a private cause of action, and anyone aggrieved by a FDUTPA violation may bring an action to enjoin a person who has or is committing the violation." (64) Claimants may recover actual damages, plus attorneys' fees and court costs. (65) Although there is a small number of cases that include FDUTPA claims against contractors, only one discusses the lack of a license as a FDUTPA violation. In Anden v. Litinsky, 472 So. 2d 825 (Fla. 4th DCA 1985), the Fourth District Court awarded damages to homeowners and against an unlicensed contractor and against the company's president individually on the grounds that he was "a direct participant in the dealings with the appellee." (66)
Perhaps the most onerous of the penalties is to be found in F.S. [section]768.0425, which entitles a consumer to treble damages from an unlicensed state or local contractor "for injuries sustained resulting from the contractor's negligence, malfeasance, or misfeasance." (67) The statute contains an expansive definition of a "consumer" as any person who contracts for construction regulated by Chs. 489 and 633. (68) In John Hancock-Gannon Joint Venture II v. McNully, 800 So. 2d 294, 297 (Fla. 3d DCA 2001), (69) the Third District Court held that "injuries" were not limited to personal injuries. In 2013, in Home Const. Mgmt., LLC v. Comet, Inc., 125 So. 3d 221 (Fla. 4th DCA 2013), the Fourth District Court affirmed a lower court ruling that granted treble damages to a general contractor who sued an unlicensed subcontractor, reversing only that portion of the judgment directed against the subcontractor's representative. (70) Section 768.0425 is a heavy club to wield against unlicensed contractors, and construction attorneys would do well to make greater use of it. (71)
Contracts with Unlicensed Contractors Are Neither Void Nor Illegal
Although it is the general rule that a contract entered into for an illegal purpose is void ab initio, (72) this principle has not applied to contracts with unlicensed contractors since 2003. (73) Nevertheless, Florida courts have continued to characterize such contracts as illegal, and have combined the words "unenforceable" and "illegal" as if they were interchangeable. See, for example, R.A.M. of South Florida, Inc. v. WCI Communities, Inc., 869 So. 2d 1210 (Fla. 2d DCA 2004), where, in discharging R.A.M.'s lien, the district court held that, "we conclude that R.A.M.'s claims were properly barred by a statutory provision prohibiting the enforcement of illegal construction contracts, we affirm the decision of the trial court.... At the outset, we note.the illegality and unenforceability of the construction contract."
In Promontory Enterprises, Inc. v. Southern Engineering & Contracting, Inc., 864 So. 2d 479 (Fla. 5th DCA 2004), the Fifth District Court held that "[c]ontracts entered into in violation of [[section]]489.128 are declared by the [legislature to be against public policy and, therefore, unenforceable. The courts consider such contracts to be illegal." Similarly, in Vacation Beach, Inc. v. Charles Boyd Const., Inc., 906 So. 2d 374, 377 (Fla. 5th DCA 2005), the Fifth District held that "[c]ontracts transgressing public policy, including contracts sought to be enforced by an unlicensed contractor ... are considered to be illegal and will not generally be enforced by the courts." Although the Second District avoided the word "illegal" in RTM General Contractors, Inc. v. G/W Riverwalk, LLC, 893 So. 2d 583, 585 (Fla. 2d DCA 2004), it nevertheless described such contracts as "null, void, and unenforceable." A February 2009 recommended order issued by the Department of Business and Professional Regulation, referred to a general contractor's contract with an unlicensed shutter installer as an "illegal agreement." (74)
A contract with an unlicensed contractor is neither void nor illegal, for if it were void, it would not bind any of the parties. Rather, it would be a mere nullity, (75) unenforceable by anyone, and contrary to the plain and unambiguous language of [section]489.128(1). In the cases cited above, any description of these contracts as illegal, null, or void made after June 2003 impermissibly expands the intent of the statute. Only the enforcement of a contract by an unlicensed contractor is contrary to public policy; the contract itself is not, and public policy goals are achieved in [section]489.128(1) by denying contractual and equitable recovery to the unlicensed contractor. The enforcement remedy of [section]489.128(3) added a remedial element (76) to an otherwise penal statute. (77) While remedial statutes are to be liberally construed, (78) the statute's remedial elements are in derogation of the common law and, as with the penal portions of the statute, must be strictly construed (79) to the extent that such construction does not defeat the intent of the legislature. This intent, expressed through the unambiguous language of the statute, (80) does not extend to finding contracts with unlicensed contractors illegal, nor does it require clean hands of the other contracting parties. Finally, 10 years after the amendment of [section]489.128, the Florida Supreme Court put to rest any question concerning the enforceability (81) of such contracts and simultaneously abolished the notion that mere knowledge of a contractor's unlicensed status was sufficient to place the parties in pari delicto and nullify the contract. (82)
Lake Eola Builders
Lake Eola Builders, LLC v. The Metropolitan at Lake Eola, LLC, 416 F. Supp. 2d 1316 (M.D. Fla. 2006), is a decision out of Florida's Middle District that was bad law when written and is, after Ch. 489's 2009 amendments, even worse law. It is 11 years old, has been cited to only once, and would not be worthy of comment except that it keeps reappearing as a spurious defense to claims of nonlicensure.
The fact pattern reads like a Ch. 489 test question: In 2003, owner Metropolitan approached licensed contractor, PCI, regarding an upcoming construction project. PCI's principals set up a new legal entity--Lake Eola Builders, LLC (LEB)--to undertake the project. Owens, PCI's qualifying agent, signed a contract on behalf of LEB with Metropolitan, pulled permits on behalf of LEB, and supervised the construction undertaken by LEB. Although Owens applied to be LEB's qualifying agent, he did not do so until two months after construction started. Disputes arose, LEB was terminated, and the lawsuit followed.
Based upon this set of facts, the court reasoned that "the best method for determining whether LEB should be considered licensed is to determine whether LEB had a qualified contractor (83) who was responsible for the Four Points project beginning with the effective date of the contract." (84) The court then concluded that Owens, a licensed general contractor, "linked" himself to the project by pulling the permits and was, thus, "responsible for the Four Points project beginning with the effective date of the contract." Based on this rationale, the court found that "evidence would support a conclusion that LEB should be considered licensed for purposes of [[section]]489.128." (85) The court's conclusion is erroneous, and LEB and PCI's qualifying agent have, in fact, committed no less than three separate crimes: The underlying agreement between PCI and LEB violates [section]489.127(4) (a); obtaining a permit for work for which the qualifier does not have a contract violates [section]489.127(4)(c); and LEB's execution of the contract with Metropolitan violates [section]489.127(1)(f).
Each of these crimes is a first-degree misdemeanor, and yet the court derives its entire rationale for finding that LEB was "licensed-by-linkage" from the fact that these crimes were committed. Since not one Florida case explicitly contradicts the Middle District's application of equitable principles to licensing compliance, attorneys defending claims of unlicensed contracting continue to beguile trial court judges with this opinion. Construction law, and Chs. 489 and 713 (86) in particular, is complicated and arcane, and the courts may be forgiven their consideration of a Lake Eola Builders defense. On the other hand, the same courtesy should not be extended to those using this matter as the basis of their defense. Only the nonexistence of any explicitly contrary state cases prevents a defense based on Lake Eola Builders from violating Rule 4-3.3 of the Rules Regulating The Florida Bar. (87)
Although some may believe contractor licensing to be no more than an unnecessary load of administrative red tape and regulations, one should consider whether one would hire an unlicensed attorney or an unlicensed cardiologist. Unlicensed attorneys and doctors have a certain pariah status in the community, and for good reason. They have abused the trust placed in them by their clients, and their actions can lead to severe problems for those clients. Similarly, the consequences of poor construction, substandard building materials, defective components, and disappearing contractors expose owners to unacceptable physical and economic risks, and there are sufficient numbers of victims who have suffered expensive repairs or outright theft that the continuing enforcement of Ch. 489 is well justified.
(1) The legislature had a point. Construction is a major industry in Florida, and construction spending in the state for 2016 was $10,900,000,000, according to Dodge Data and Analytics, TheRealDeal, https://therealdeal.com/miami/2017/01/26/ construction-spending-in-south-florida- totaled-10-9b-up-from-2015/.
(2) Created by Ch. 79-200, Laws of Fla.
(3) Jonas v. Fla. Dep't of Bus. & Prof'l Reg., 746 So. 2d 1261, 1262 (Fla. 3d DCA 2000) ("[S]tatutes such as those at issue authorizing the imposition of discipline upon licensed contractors are in the nature of penal statutes, which should be strictly construed.").
(4) All references are to the 2016 Florida statutes unless indicated otherwise.
(5) FLA. STAT. [section]489.111.
(6) However, "the past or present bankruptcy of an applicant ... may not be considered." 1982 Op. Att'y Gen. Fla. 129 (1982).
(7) FLA. STAT. [section]489.115(a)-(b).
(8) FLA. STAT. [section]489.111(2)(b), elaborated in [section]489.111(3)(a)-(b). Convictions for fraud and crimes related to construction may preclude licensing, but not always. See Scherer v. Dep't of Bus. & Prof'l, 919 So. 2d 662, 664 (Fla. 5th DCA 2006) (Observing that licensure denial based on a prior conviction "requires a connection between the felony conviction and the professional responsibility of a contractor.").
(9) FLA. STAT. [section]489.105(a)-(o).
(11) Chapter 489 is divided into three parts. The present discussion is limited to Part I, which concerns the licensing of all but electrical, alarm system, and septic tank contractors.
(12) FLA. STAT. [section]489.127.
(13) FLA. STAT. [section][section]489.127, 129, 13.
(14) FLA. STAT. [section]489.119(2), referring to business organizations, "including any partnership, corporation, business trust, or other legal entity, or in any name other than the applicant's legal name or a fictitious name where the applicant is doing business as a sole proprietorship."
(15) FLA. STAT. [section]489.105(8). Also known as "certificateholder." The term appears 94 times in Ch. 489 but is undefined. Its meaning may be implied from FLA. STAT. [section]489.115(2)(b), which states that "certification allows the certificateholder to engage in contracting only for the type of work covered by the certificate and only while the certificate is on active status."
(16) FLA. STAT. [section]489.113(a).
(17) FLA. STAT. [section]489.105(7).
(19) To operate a sole proprietorship, an individual certified contractor need only hang out his or her shingle to begin operations. FLA. STAT. [section]489.119(1).
(20) FLA. STAT. [section]489.115(6).
(21) FLA. STAT. [section]489.115(9).
(22) FLA. STAT. [section]489.115(7).
(23) The term, "qualified," as used in Ch. 489, may be broken down into two broad categories: licensing and competency or suitability, as illustrated by the following examples: Licensing: 489.105(3) (m): "Such contractor shall subcontract, with a qualified contractor in the field concerned, all other work incidental to the work...." 489.105(19): "'Initial issuance' means the first time a certificate or registration is granted to an individual or business organization ... and the first time a business organization is qualified by that individual." 489.119(e): "A joint venture, including a joint venture composed of qualified business organizations, is itself a separate and distinct organization that must be qualified in accordance with board rules." 489.127(4)(a), prohibiting the lending of a certification number or registration number to "a business organization that is not duly qualified as provided for in this chapter. "489.129(1) (q), referring to disciplinary actions that may be taken for failing to timely satisfy "the terms of a civil judgment obtained against the licensee, or the business organization qualified by the licensee." 489.1402(1)(k), discussing the Homeowners' Construction Recovery Fund, defines "same transaction" as a "contract, or a series of contracts, between a claimant and a contractor or qualified business." Competency or suitability: 489.105(3): "'Contractor' means the person who is qualified for, and is only responsible for, the project contracted for...." 489.107(5), defining quorum requirements for the CILB, and referring to "members of the other division, who are otherwise qualified to serve on the division unable to obtain a quorum...." 489.111(3)(b), referring to the CILB's duties when, "an applicant is found to be unqualified for a certificate because of a lack of good moral character." 489.115(2)(a), requiring the department to "issue a certificate or registration to each person qualified by the board and upon receipt of the original license fee." 489.115(3), requiring the CILB to "certify as qualified for certification by endorsement any applicant who [meets the stated requirements for licensing by reciprocity]." 489.129(5), stating that the CILB may not reinstate the license of "a person who or business organization which the board has determined is unqualified. until it is satisfied that such person or business organization has complied with all the terms and conditions [of a final order]." 489.141(2), states that a Recovery Fund claimant "is not qualified to make a claim for recovery from the recovery fund if" it meets certain exclusionary criteria.
(24) Chapter 489 refers to a license as a "certificate of competency." FLA. STAT. [section]489.105(7). See note 25.
(25) Based in no small part upon the holding of Lake Eola Builders, LLC v. Metro. at Lake Eola, LLC, 416 F. Supp. 2d 1316 (M.D. Fla. 2006).
(26) FLA. STAT. [section]489.105(4).
(27) Including Boatwright Const., LLC v. Tarr, 958 So. 2d 1071 (Fla. 5th DCA 2007); Murthy v. N. Sinha Corp., 644 So. 2d 983 (Fla. 1994); Gatwood v. McGee, 475 So. 2d 720 (Fla. 1st DCA 1985); and Alles v. Department of Professional Regulation, 423 So. 2d 624, 626 (Fla. 5th DCA 1982), all of which point to the licensed individual's duty to supervise the work of the qualified entity.
(28) Alles, 423 So. 2d at 626 (Fla. 5th DCA 1982).
(29) Gatwood, 475 So. 2d at 722-23 (Fla. 1st DCA 1985). Gatwood was disapproved of by Murthy, 644 So. 2d at 985 (Fla. 1994), as to a private cause of action against qualifying agents.
(30) Edwin A. Henry, 2000 WL 248376 at * 15. Note the improvident use of the word "qualified."
(31) The simple answer is that it does not. A review of the DBPR's License Search showed that, of five large contractors with multiple ongoing projects in Miami-Dade County, two had a single qualifying agent, two had two qualifying agents, and only one had three.
(32) Who would determine the delegee's qualifications, and how would such an unregulated distribution of obligations be monitored and enforced?
(33) FLA. STAT. [section]489.101.
(34) FLA. STAT. [section]489.103(1)-(23). The majority of these exemptions are subject to certain restrictions.
(35) FLA. STAT. [section]489.103(7).
(36) FLA. STAT. [section]489.103(2).
(37) David Weil, U.S. Department of Labor, The Application of the Fair Labor Standards Act's "Suffer or Permit" Standard in the Identification of Employees Who Are Misclassified as Independent Contractors, Administrator's Interpretation No. 20151, July 15, 2015. See also IRS Form SS-8 and related publications, https://www. irs.gov/businesses/small-businesses-self-employed.
(38) Jim Walter Homes was a large home builder known for shell homes. It closed its doors in 2009. Jim Walter Homes Closes Offices, Prepares to Shut Down, TAMPA BAY BUSINESS JOURNAL, Jan. 6, 2009, https://www.bizjournals.com/tampabay/ stories/2009/01/05/daily17.html.
(39) This exemption is often stated as being found in FLA. STAT. [section]489.117(4)(e). Amendments under Ch. 2009-195 eliminated [section]489.117(4)(b), changing the exemption numbering from (e) to (d).
(40) FLA. STAT. [section]489.117(4)(d).
(42) The DBPR's website lists examples of cases in which the department has prevailed, 530 of which were prosecuted in 2015 and 600 in 2016. Department of Business and Professional Regulation, Administrative Prosecutions, http:// www.myfloridalicense.com/dbpr/reg/ Prosecutions.html. Note that the DBPR regulates several trades and professions and, although not all of the prosecutions were against contractors, most were.
(43) See DBPR, Unlicensed Activity, http:// www.myfloridalicense.com/dbpr/reg/ula. html.
(44) The DBPR's website notes that it forwards any unlicensed activity cases to the local State Attorney for prosecution, and that 69 persons were arrested on charges of unlicensed contracting between January 2013 and December 2016; several were sentenced to jail time. DBPR, State Attorney Prosecutions, http://www. myfloridalicense.com/dbpr/reg/ StateAttorneyProsecustions.html.
(45) FLA. STAT. [section]489.127(2)(a)-(c).
(46) FLA. STAT. [section]489.127(4)(a)-(b).
(47) California's penalties are stricter than Florida's. See, e.g., California statute [section]7031(b) explicitly provides for restitution of all compensation paid to an unlicensed contractor.
(48) Ch. 90-228, LAWS OF FLA.
(49) Ch. 93-166, LAWS OF FLA.
(50) See R.A.M. of S. Florida, Inc. v. WCI Communities, Inc., 869 So. 2d 1210 (Fla. 2d DCA 2004).
(51) Ch. 2009-195, LAWS OF FLA.
(52) FLA. STAT. [section]489.129(1)(e).
(53) Andres R. Villarreal, Fla. Div. Admin. Hrgs., 11-004156PL at *6.
(54) Earth Trades, 108 So. 3d at 586-87.
(55) Id. at 586-87.
(56) DBPR, Licensee Search Engine, https://www.myfloridalicense.com/wl11. asp?mode=0&SID=.
(57) FLA. STAT. [section]489.127(1)(f).
(58) FLA. STAT. [section]489.119(6).
(59) See, inter alia, Pinellas County Construction Licensing Board, Petitioner v. Louise Wold-Parente, Respondent, 2010 WL 4164166, at *3, observing that, "[j]oint ventures must also be separately qualified, even if composed of qualified business organizations."
(60) Integrated Project Development.
(61) Department of Business and Professional Regulation, Construction Industry Licensing Board, Petitioner v. Frederick B. Nowell, Sr., Respondent, Fla. Div. Admin. Hrgs, 2008 WL 5565538, at * 9.
(62) Lewis v. State, Dept. of Bus. & Profl Regulation, 711 So. 2d 573, 575 (Fla. 2d DCA 1998).
(63) Murthy v. N. Sinha Corp., 644 So. 2d at 987 (Fla. 1994).
(64) FLA. STAT. [section][section]501.201-213.
(65) FLA. STAT. [section]501.211(1).
(66) FLA. STAT. [section]501.211(2).
(67) Anden v. Litinsky, 472 So. 2d 825, 827 (Fla. 4th DCA 1985).
(68) FLA. STAT. [section]768.0425(2).
(69) FLA. STAT. [section]768.0425(1); Chapter 633 governs fire protection contractors.
(70) On the grounds that he was not a party to the contract. Comet, Inc., 125 So. 3d at 222.
(71) In the 30 years since it first appeared (as FLA. STAT. [section]489.5331), FLA. STAT. [section]768.0425 is mentioned only 20 times in Florida appellate decisions.
(72) See, e.g., Local No. 234 v. Henley & Beckwith, Inc., 66 So. 2d 818, 823 (Fla. 1953) ("[A] contract against public policy may not be made the basis of any action either in law or in equity."); D & L Harrod, Inc. v. U.S. Precast Corp., 322 So. 2d 630, 631 (Fla. 3d DCA 1975) ("There is no legal remedy for that which is illegal itself.").
(73) The 2003 amendment added that the unenforceability of a contract by an unlicensed contractor "shall not affect the rights of parties other than the unlicensed contractor to enforce contract, lien, or bond remedies. This section shall not affect the obligations of a surety that has provided a bond on behalf of an unlicensed contractor." FLA. STAT. [section]489.128(3) (2003).
(74) Department of Business and Professional Regulation v. Frank Clardy and O. E. Total Services, Inc., 2009 WL 422014, at * 5 (Fla. Div. Admin. Hrgs. 2009).
(75) 17 AM. JUR. 2D CONTRACTS [section]7.
(76) A remedial statute is one which confers or changes a remedy. Blankfeld v. Richmond Health Care, Inc., 902 So. 2d 296, 298 (Fla. 4th DCA 2005), rev. den., 917 So. 2d 195 (Fla. 2005).
(77) Hilyer Sod, Inc. v. Willis Shaw Exp., Inc., 817 So. 2d 1050, 1054 (Fla. 1st DCA 2002) (internal citations omitted) (Statutes imposing a penalty must always be construed strictly in favor of the one against whom the penalty is imposed and are never to be extended by construction.).
(78) Liberal construction does not imply reading into the statute that which is not there. Streeter v. Sullivan, 509 So. 2d 268, 271 (Fla. 1987).
(79) Essex Ins. Co. v. Zota, 985 So. 2d 1036, 1048 (Fla. 2008) (It is a well-settled rule of Florida statutory construction that [s]tatutes in derogation of the common law are to be construed strictly....).
(80) Florida Dept. of Revenue v. New Sea Escape Cruises, Ltd., 894 So. 2d 954, 957 (Fla. 2005) (citing Hechtman v. Nations Title Ins. of New York, 840 So. 2d 993, 996 (Fla. 2003)) (In ascertaining the legislative intent, a court must consider the plain language of the statute.).
(81) Earth Trades, Inc. v. T & G Corp., 108 So. 3d at 585 (Fla. 2013) ("Although previously contracts with unlicensed contractors were unenforceable by either party, these  amendments empowered the other party to the construction contract--whether a consumer, owner, or licensed contractor--to seek judicial enforcement of the contract, regardless of the unlicensed status of the contractor.").
(82) "Thus, even if proven, the other party's knowledge [of the contractor's unlicensed status] is insufficient as a matter of law to place the parties in pari delicto." Id. at 587.
(83) Note the conflation of qualifying agent with "qualified," as in competent.
(84) Lake Eola, 416 F. Supp. 2d at 1319.
(85) Id. at 1320.
(86) Florida's Lien Law, FLA. STAT. [section][section]713.0137.
(87) Rules Regulating the Florida Bar, Candor Towards the Tribunal, Comment, "Legal argument based on a knowingly false representation of law constitutes dishonesty toward the tribunal."
Leonard W. Klingen is a board certified construction law attorney and partner at The Barthet Firm in Miami, where he focuses on complex construction claims and related litigation.
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|Author:||Klingen, Leonard W.|
|Publication:||Florida Bar Journal|
|Article Type:||Cover story|
|Date:||Feb 1, 2018|
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