609 S.W.3d 16
Ark. Ct. App.2020Background
- Southern Construction (owner Jared Forbus) contracted in June 2017 to remodel Horton's home for $63,490; a November 2017 supplemental “punch‑list” described remaining work with a Dec. 15 completion date.
- Horton sued in July 2018 for negligent construction and breach, alleging defective work (notably rotten floor joists, uneven floors, plumbing leaks) and seeking repair costs; Southern counterclaimed for an unpaid final invoice (~$12,698–$16,998).
- At bench trial the circuit court dismissed Southern’s counterclaim under Ark. Code Ann. § 17‑25‑103(d) (Southern was a licensee limited to jobs < $50,000).
- The court found the June contract ambiguous as to whether “remove rotten siding & damaged wood work” included crawlspace floor joists, admitted extrinsic evidence (texts) and found joist removal was part of the agreement; it awarded Horton $15,291.22 (after later removing an offset it had initially applied).
- Southern appealed, challenging (1) the contract interpretation/admissibility of parol evidence and (2) the circuit court’s refusal to allow an offset under § 17‑25‑103(d). The appellate court affirmed the contract‑ambiguity ruling but reversed and remanded on the offset issue, holding the statute does not bar an unlicensed contractor from asserting an offset in defense.
Issues
| Issue | Horton’s Argument | Southern’s Argument | Held |
|---|---|---|---|
| Whether the June 2017 contract was ambiguous and whether the November punch‑list superseded or replaced it / whether extrinsic evidence is admissible | The June term “remove rotten siding & damaged woodwork” is ambiguous and texts/party conduct show joist repair was included; the November document was only a punch list | The June wording is unambiguous (relating to siding only); the November agreement superseded/modified the June contract; prior writings resolve any ambiguity | Court: Contract was ambiguous; November punch‑list did not supersede the June contract; extrinsic evidence (texts, conduct) properly considered; joist removal held part of agreement (affirmed) |
| Whether Ark. Code Ann. § 17‑25‑103(d) barred Southern from asserting an offset for amounts due under the contract | Horton: The statute prohibits any action to enforce a contract by an unlicensed contractor and thus precludes any offset/claim by Southern | Southern: The statute bars bringing suit but does not prevent an unlicensed contractor from defending or offsetting amounts owed; plain meaning permits a defense/offset | Court: Statute does not forbid an unlicensed contractor from defending or asserting an offset; reversed circuit court on this point and remanded for calculation of damages/offset (reversed in part/remanded) |
Key Cases Cited
- Barrett v. Thurston, 2020 Ark. 36 (bench‑trial standard of review)
- Keller v. Safeco Ins. Co. of Am., 317 Ark. 308 (court initially decides contract ambiguity)
- First Nat’l Bank of Crossett v. Griffin, 310 Ark. 164 (statement of parol‑evidence rule)
- Youree v. Eshaghoff, 99 Ark. App. 4 (consideration required for contract modifications)
- Hees v. Burke Constr., Inc., 961 A.2d 373 (Conn. 2009) (analogous authority holding barred plaintiffs may still be subject to contract‑damage principles)
- Epps v. 4 Quarters Restoration LLC, 872 N.W.2d 412 (Mich. 2015) (statutory bar on suing does not prevent defending or asserting offsets)