316 So.3d 448
La. Ct. App.2020Background
- QRI contracted on June 1, 2010 to renovate and build a substantial addition to the Phillips' home; the contract price (after a change order) was $232,195.46. QRI lacked a required residential building contractor license while performing the work.
- The Phillips discovered licensing concerns in September 2010; QRI applied for a residential license later in 2010 and was expressly warned by the Board it was not eligible to perform residential work of $75,000 or more; QRI continued work and the Board later fined QRI and ultimately issued a license in January 2012.
- The Phillips terminated the contract January 6, 2012 after alleged defective, incomplete work; they had paid QRI about $210,780.63 (leaving a 10% retainage).
- QRI sued for the unpaid balance/other sums; the Phillips filed reconventional claims for breach, defective construction, fraud, LUTPA, and sought damages and disgorgement on the ground the contract was void ab initio for lack of licensure.
- A Special Master found the contract void ab initio but recommended unjust-enrichment recovery be limited; the trial court differed on several legal points (applied the NHWA and awarded QRI damages beyond the contract amount netting QRI $141,876.72).
- On appeal the court: held the contract void ab initio; held the NHWA did not apply; reversed the award to QRI (barred unjust-enrichment recovery because QRI’s substandard work fell within the licensing statute’s protective scope); amended and affirmed the Phillips’ damage award to $154,483.57 plus interest and costs against QRI.
Issues
| Issue | Phillips' Argument | QRI's Argument | Held |
|---|---|---|---|
| Validity of the contract given QRI's lack of residential license | Contract is absolute nullity and void ab initio because QRI was not licensed | Contract enforceable or QRI entitled to relief in equity | Contract is void ab initio for violating licensing statutes; nullity affirmed |
| Applicability of the New Home Warranty Act (NHWA) | NHWA does not apply to a void contract and need not govern additions here | NHWA applies (covers additions) and limits owners' remedies | NHWA does not apply because the underlying contract is void; trial court erred in applying NHWA |
| Recovery by QRI under unjust enrichment / quantum meruit after null contract | QRI should be barred from recovering because it (a) knew it lacked a license and (b) performed substandard work | Even if contract void, QRI may recover actual costs (no profit/overhead) under unjust enrichment | QRI barred from unjust-enrichment recovery: its conduct falls within the licensing statute’s protective scope and the "substandard work" exception precludes recovery |
| Limitation under La. C.C. art. 2033 and reimbursement of Phillips’ payments | Phillips seek reimbursement of all payments ($≈210,780) and argue QRI’s recovery should be limited | QRI seeks actual costs (~$389,962 less Phillips’ payments) | Under Art. 2033 Phillips are not entitled to full reimbursement because they knew or should have known of the licensure defect and received value; court denied full reimbursement and reversed QRI’s award |
| Quantum of damages and net recovery | Phillips sought full remediation costs for defects | QRI sought recovery of its costs; trial court had offset awards | Appellate court amended award: Phillips awarded $154,483.57 plus interest and costs; QRI’s award reversed; appeal costs assessed to QRI |
Key Cases Cited
- Boxwell v. Department of Highways, 14 So.2d 627 (La. 1943) (contract made in violation of prohibitory law is unenforceable; vendor may recover actual costs but not profit)
- Hagberg v. John Bailey Contractor, 435 So.2d 580 (La. App. 3d Cir. 1983) (where licensing statute’s protective purpose is implicated, unjust-enrichment recovery may be barred; distinguished cases where no incompetence/fraud)
- Dennis Talbot Const. Co. v. Privat Gen. Contractors, 60 So.3d 102 (La. App. 3d Cir. 2011) (applies Hagberg; exotic facts may trigger denial of unjust-enrichment recovery when subcontractor’s conduct/substandard work falls within licensing protection)
- Minyard v. Curtis Prod., 205 So.2d 422 (La. 1967) (articulates actio de in rem verso / unjust enrichment elements)
- Palermo v. Homes & More, Inc., 286 So.3d 557 (La. App. 3d Cir. 2019) (interprets NHWA language to include builders of additions, but court here did not reach that issue because the contract was void)