R.A.M. OF SOUTH FLORIDA, INC., and George Miquel, Appellants,
v.
WCI COMMUNITIES, INC., Appellee.
District Court of Appeal of Florida, Second District.
*1213 Sharon Kung and David J. Valdini of Valdini & Palmer, P.A., Fort Lauderdale, for Appellants.
Kelley Geraghty Price of Cummings & Lockwood, LLC, Naples, for Appellee.
CANADY, Judge.
R.A.M. of South Florida, Inc., a subcontractor, appeals the trial court's ruling that its contract action and lien claim against the appellee, WCI Communities, Inc., are based on an unenforceable contract. Because 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 that the illegality and unenforceability of the construction contract-which contained an arbitration provision-was an issue to be decided by the trial court rather than by the arbitrator. See § 682.03(1), Fla. Stat. (2000); Riverwalk Apts., L.P. v. RTM Gen. Contractors, Inc.,
I. BACKGROUND
A. Facts of the Case
On May 10, 2000, WCI and R.A.M. executed a standard form contract for construction work in which R.A.M. agreed to perform concrete and masonry work for WCI's "Bay Club at the Colony" project, a club facility located in the Pelican Landing subdivision in Fort Myers. George Miquel, R.A.M.'s president, signed the contract on behalf of R.A.M. At the time the contract was signed, neither R.A.M. nor Miquel were licensed to perform the construction work required under the contract.
R.A.M. began its work in late May of 2000. During the course of construction, a dispute arose between R.A.M. and WCI regarding the quality and timeliness of the work being performed by R.A.M. As a result of this dispute, WCI refused to pay certain sums due under the contract. In response to WCI's nonpayment, on January 28, 2001, R.A.M. recorded a claim of lien against the real property on which the *1214 work was done. In January of 2001, R.A.M. ceased all work on the project.
Subsequently, R.A.M. filed a cross-claim against WCI in litigation which had been initiated by a third party against both R.A.M. and WCI. This cross-claim sought to enforce the claim of lien and also sought damages for breach of contract and unjust enrichment. WCI responded to the cross-claim by invoking a clause in the contract between R.A.M. and WCI that required binding arbitration of disputes arising out of the contract.
During arbitration, WCI became aware that R.A.M. and Miquel were not licensed contractors. Following this discovery, WCI filed an action seeking a declaratory judgment that the contract between WCI and R.A.M. was illegal and unenforceable and a judgment discharging R.A.M.'s lien. WCI also filed a motion to stay the arbitration pending a judicial determination of the enforceability of the contract.
The trial court held a hearing on the motion to stay the arbitration. At the hearing, the parties agreed that the material facts relating to the enforceability of the contract were undisputed. Specifically, the parties agreed that R.A.M. and Miquel were not licensed to perform the construction when the work was performed. However, both parties also agreed that R.A.M. and Miquel did become licensed on October 25, 2002, more than two years after the construction work began and more than a year and a half after it was terminated. It was also agreed that the legal issue of the enforceability of the contract was ripe to be decided.
The trial court granted WCI's motion to stay the arbitration, ruled that the contract between R.A.M. and WCI was illegal and unenforceable pursuant to section 489.128, Florida Statutes (2000), and discharged R.A.M.'s lien on WCI's property. R.A.M. now appeals those rulings.
B. The Statutory Framework
This case turns on whether R.A.M.'s claims were properly barred by the provisions of section 489.128:
As a matter of public policy, contracts entered into on or after October 1, 1990, and performed in full or in part by any contractor who fails to obtain or maintain a license in accordance with this part [i.e., part I, chapter 489] shall be unenforceable in law or in equity.
An earlier version of this statute, which was in force in May of 2000 when the contract between R.A.M. and WCI was executed and work on the construction project began, contained an additional provision allowing a contractor to cure the contractor's unlicensed status. Under this earlier version of the statute, when such a cure was effected by a contractor the otherwise unenforceable contract would become enforceable. This earlier version of the statutecodified in the 1999 Florida Statuteswas identical to the version in the 2000 Florida Statutes, except that it contained an additional sentence at the end of the section: "However, in the event the contractor obtains or reinstates his or her license, the provisions of this section shall no longer apply." § 489.128, Fla. Stat. (1999). This cure provision present in the 1999 statute was repealed by the legislature effective July 1, 2000. See ch. 00-372, § 35, at 4338 (repealing cure provision), § 48, at 4344 (providing effective date of July 1, 2000), Laws of Fla.[2]
*1215 The provisions of section 489.128 concerning the enforcement of contractual rights under construction contracts performed or entered into by unlicensed contractors should be viewed in the context of section 489.127(1)(f), Florida Statutes (1999), which makes it a crime for any person to "[e]ngage in the business or act in the capacity of a contractor ... without being duly registered or certified as having a certificate of authority."
II. ISSUE ON APPEAL
The dispositive issue on appeal is whether R.A.M. was entitled to cure its unlicensed status pursuant to section 489.128, Florida Statutes (1999), when the cure provision of the statute was no longer in force. R.A.M. contends it was entitled to obtain the benefit of the provisions of the statute in force when it entered the construction contract with WCI. R.A.M. argues that the 2000 version of the statute cannot be applied to remove R.A.M.'s vested right granted by the 1999 version of the statute to cure its unlicensed status. In support of its position, R.A.M. relies on Palms v. Magil Construction, Inc.,
WCI argues that the enforcement of the 2000 version of the statute properly foreclosed the ability of R.A.M. to cure its unlicensed status after the effective date of the 2000 amendment. WCI contends that the 2000 amendment to the statute is a remedial measure and that application of that amendment does not abrogate or impair any vested right of R.A.M.
III. ANALYSIS
A. Legal Principles Governing the Analysis of Retroactivity Issues
Determining proper limitations on the temporal reach of statutes is a recurring problem in the law. The threshold question is whether the proposed application of the statute to a particular case constitutes a retroactive application. Where the contemplated application is judged to be retroactive, the court must determine whether there is a sufficient basis in the relevant statute to justify the retroactive application. If the statute is construed as being properly given retroactive effect, it must finally be determined if such application is inconsistent with any constitutional limitation.
Deciding whether the application of a statute is retroactive involves "a process of judgment concerning the nature and extent of the change in the law [effected by the statute] and the degree of connection between the operation of the new rule and a relevant past event." Landgraf v. USI Film Prods.,
In Landgraf,
[D]eciding when a statute operates "retroactively" is not always a simple or mechanical task. Sitting on Circuit, Justice Story offered an influential definition in Society for Propagation of the Gospel v. Wheeler,22 F.Cas. 756 (No. 13,156) (CCNH 1814), a case construing a provision of the New Hampshire Constitution that broadly prohibits "retrospective" laws both criminal and civil. Justice Story first rejected the notion that the provision bars only explicitly retroactive legislation, i.e., "statutes ... enacted to take effect from a time anterior to their passage." Id., at 767. Such a construction, he concluded, would be "utterly subversive of all the objects" of the prohibition. Ibid. Instead, the ban on retrospective legislation embraced "all statutes which, though operating only from their passage, affect vested rights and past transactions." Ibid. "Upon principle," Justice Story elaborated,
"every statute, which takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past, must be deemed retrospective...." Ibid. (citing Calder v. Bull, 3 [U.S.] Dall. 386,1 L.Ed. 648 (1798), and Dash v. Van Kleeck, 7 Johns. *477 (N.Y.1811)).
Though the formulas have varied, similar functional conceptions of legislative "retroactivity" have found voice in this Court's decisions and elsewhere.
(Footnote omitted.) As Justice Story's definition has been employed by the courts, the concept of vested rights has played a central role in the analysis of retroactivity issues.
Where the retroactive application of a statute is at issue, the task of interpreting the statute is guided by the rule of statutory construction which establishes a presumption against the retroactive application of substantive lawas distinct from procedural or remedial law-in the absence of a clear expression of legislative intent that the statute be given retroactive effect. See Landgraf,
Retroactive application of a civil statute ordinarily transgresses constitutional limitations on legislative power "if the statute impairs vested rights, creates new obligations, or imposes new penalties." LaForet,
B. Application of the Law to R.A.M.'s Claims
Here, R.A.M. claims that application of the 2000 version of section 489.128 impairs R.A.M.'s vested right to cure its unlicensed status. R.A.M's argument is predicated on the assumption that the trial court retroactively applied the 2000 version of the statute to preclude R.A.M.'s cure of its unlicensed status. We conclude that the trial court's application of the 2000 version of section 489.128 was not a retroactive application of law.
R.A.M. was on "fair notice" that the statutory provision for curing its unlicensed and unlawful status was a matter of legislative grace that could be withdrawn by subsequent legislative action. R.A.M. could have no "settled expectation" or claim of "reasonable reliance" based on the cure provision until R.A.M. had taken the steps necessary to be legally licensed. Landgraf,
"A vested right has been defined as `an immediate, fixed right of present or future enjoyment' and also as `an immediate right of present enjoyment, or a present, fixed right of future enjoyment.'" City of Sanford v. McClelland,
"[R]ights are vested, in contradistinction to being expectant or contingent. They are vested when the right to enjoyment, present or prospective, has become the property of some particular person or persons, as a present interest. They are expectant when they depend upon the continued existence of the present condition of things until the happening of some future event. They are contingent when they are only to come into existence on an event or condition which may not happen or be performed until some other event may prevent their vesting."
Pearsall,
R.A.M.'s right to enforce the contract based on the cure of its unlicensed status was not an "immediate, fixed right." On the contrary, it was merely an expectant and contingent right. Until R.A.M. obtained its license, it could have no cause of action on the contract. And it would never have a cause of action if for any reason it were unable to be licensed. So long as R.A.M. failed to take the steps necessary to cure its unlicensed status, its right to enforce the contract based on the cure of that unlicensed status remained a merely expectant and contingent right. R.A.M. had nothing more than a hope that the opportunity to cure its unlicensed status would remain available-a "`mere expectation based on an anticipation of the continuance of an existing law.'" Brevda,
Our analysis of the vested rights issue here is parallel to the Fifth District's analysis in Promontory Enterprises, Inc. v. Southern Engineering & Contracting, Inc.,
R.A.M.'s claim is easily distinguishable from the types of claims that have been held to involve vested rights. The unvested nature of R.A.M.'s right to cure stands in contrast with the vested rights that have been protected from infringement by the application of statutes *1220 passed subsequent to the vesting of rights. Under the case law, once a cause of action has accrued, the right to pursue that cause of action is generally considered a vested right. When a cause of action has accrued, a statute that becomes effective subsequently may not be applied to eliminate or curtail the cause of action. See Forbes Pioneer Boat Line v. Bd. of Comm'rs,
We do not conclude that there are no circumstances in which a vested right could come into existence pursuant to the cure provision of the 1999 version of section 489.128. A vested right would be created if an unlicensed contractor cured its unlicensed status pursuant to the statutory cure provision while that provision was still in force. The circumstances of the instant case thus are distinguishable from those cases in which a contractor cured its unlicensed status prior to the effective date of the 2000 amendment to section 489.128. See Mivan (Fla.), Inc. v. Metric Constructors, Inc.,
The decision of the Third District in Magil Construction,
In Magil Construction, although the right to cure is characterized as a substantive right, there is no discussion of how application of the 2000 version of the statute "`attach[ed] new legal consequences to events completed before its enactment[,]'" Chase Fed. Hous. Corp.,
IV. CONCLUSION
R.A.M. had no vested right to cure its unlicensed status after the statutory cure provision had been repealed. Since the trial court correctly concluded that R.A.M.'s claims against WCI are barred, the judgment of the trial court is affirmed.
Affirmed.
COVINGTON and VILLANTI, JJ., Concur.
NOTES
Notes
[1] We recognize that the Eleventh Circuit has concluded that both the Federal Arbitration Act and the Florida Arbitration Code allow an arbitrator, rather than a court, to decide whether a contract is unenforceable under section 489.128 once a determination has been made by a court that the dispute falls within the scope of a valid agreement to arbitrate. See John B. Goodman L.P. v. THE Constr., Inc.,
[2] The 2000 version of section 489.128 was in force from July 1, 2000, through June 25, 2003. In response to questions concerning the interpretation of the various versions of section 489.128 and related statutory provisions, the legislature in 2003 while this appeal was pendingadopted legislation with certain provisions intended to "clarify existing law."Ch. 03-257, § 8, at 1294, Laws of Fla. The 2003 version of section 489.128 provides, in pertinent part: "(1) 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." Id. § 1, at 1290. The 2003 version of the law contains no cure provision like the cure provision in the 1999 version of the statute. The 2003 legislation which became effective on June 25, 2003 explicitly provides that its provisions affecting section 489.128 "are intended to be remedial in nature and to clarify existing law," and that those provisions "shall apply retroactively to all actions ... initiated on or after, or pending as of, the effective date of this act." Id. § 8, at 1294. The changes made by the 2003 statute are not pertinent to the questions at issue in this appeal.
[3] We note that when contract rights are involved a claim that a statute is impermissibly being given retroactive effect often is based on the constitutional prohibition on impairment of the obligation of contract. See U.S. Const. art. I, § 10; art. I, § 10, Fla. Const. In order for this constitutional restriction to come into play, there must be a lawful contract. "It must be made to appear that a lawful contract is in existence which is the subject of impairment." Mahood v. Bessemer Props., Inc.,
[4] We note that the holding in Promontory Enterprises that the contract was not unenforceable under section 489.128 turned on the retroactive application of the particular provisions of the 2003 version of section 489.128 concerning what constituted unlicensed status. See § 489.128(1)(b). Those provisions of the 2003 statute are not at issue in the instant case.
[5] Just as the right to enforce a judgment or to pursue an accrued cause of action may not be cut off by subsequent legislation, so the benefit of the extinguishment of a claim under a statute of limitations is considered a vested right. See Estate of Smith v. Scruggs,
