926 F. Supp. 2d 1286
S.D. Ala.2013Background
- TKS and UFI entered into a HSM contract for concrete work; UFI substantially completed, with 53 change orders (two alleged significant).
- CRM project also involved UFI performing reinforced concrete work; TKS paid UFI in full for CRM, but UFI claimed additional compensation for change orders and prejudgment interest.
- TKS and UFI sued/ counterclaims centered on Counts I–V of UFI’s counterclaim related to HSM and Counts II and IV related to lien waivers; TKS opposed summary judgment.
- TKS moved for summary judgment on illegality under Alabama law; UFI argued unlicensed subcontractors performed part of the HSM work.
- Court analyzed AGCPA implications: whether illegal subcontracts with unlicensed subcontractors void the entire general contract, and whether such illegality bars recovery only to the extent tied to the unlicensed work.
- Court held that (i) illegal contracts generally bar recovery for work performed in violation, but (ii) the HSM contract is not automatically voided in its entirety; limited summary judgment granted where reliance on unlicensed work is shown, with issues remaining for phase II.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does AGCPA illegality bar entire HSM contract? | TKS argues unlicensed Liberty/Reliable taints entire contract. | UFI argues illegality should bar but not necessarily entire contract. | Partial illegality bars certain claims; not the whole contract. |
| Do lien waivers preclude Counts II and IV? | Waivers unambiguously release all claims under the contract. | Waivers must be interpreted in light of consideration and timing; some claims not waived. | Counts II (HSM through Sept 30, 2009) and IV (CRM) limitedly waived; others survive. |
| Is Count V unjust enrichment viable given waivers and illegality? | Unjust enrichment cannot be barred by unambiguous waivers. | Unjust enrichment barred where contract is illegal or waived. | Unjust enrichment claim denied as to scope; no basis to override unambiguous waivers. |
| What is the impact of UFI’s performance deficiencies on the HSM balance? | Bevis affidavit shows defects; issues for trial on contract balance. | Performance issues disputed; balance should be resolved on Phase II. | Denial of UFI summary judgment; Phase II to address value and performance. |
| Should court enforce summary judgment despite questions about consideration/timing of lien waivers? | Release language is broad and unambiguous; covers all claims. | Consideration/timing may raise factual disputes; extrinsic evidence not needed if ambiguous. | Release language unambiguous for most waivers; some factual issues remain. |
Key Cases Cited
- White-Spunner Construction, Inc. v. Construction Completion Co., LLC, 103 So.3d 781 (Ala.2012) (unlicensed subcontractor contributions and public policy; contracts with unlicensed entities are scrutinized.)
- Oden v. Pepsi Cola Bottling Co. of Decatur, Inc., 621 So.2d 953 (Ala.1993) (limits on recovery when relying on illegal acts; moral turpitude consideration.)
- Limestone Creek Developers, LLC v. Trapp, 107 So.3d 189 (Ala.2012) (public policy and enforcement of contracts with potential illegality.)
- Cooper v. Johnston, 219 So.2d 392 (Ala.1969) (unlicensed general contractor cannot recover for illegal contract.)
- Architectural Graphics & Constr. Servs., Inc. v. Pitman, 417 So.2d 574 (Ala.1982) (unlicensed status affects enforceability of contracts.)