Contract – Unlicensed/Under Licensed Contractor – Illegal Contract

Plaintiff failed to produce evidence from which a trier of fact could find Defendants’ representations were deceitful.

Affirmed in part, reversed in part, and remanded.

Shawn D. Anderson is a general contractor doing business as Anderson Construction under license number 80145, a limited license permitting him to construct residential buildings up to a value of $500,000. In 2021, Plaintiff AC Developments LLC was issued an unlimited license authorizing it to construct residential buildings without regard to amount. After this application, but before issuance of his unlimited license, Anderson was approached by Defendants to serve as the general contractor for their residential building in Hendersonville, North Carolina. Anderson agreed to begin work under Anderson Construction, which was licensed to start immediately, then take over as AC Developments once the unlimited license was issued, due to the estimated project cost exceeding $500,000.

Anderson Construction began work on the project and received the requested payments from Defendants until Plaintiff received its unlimited license, at which time it took over the work and payments were directed to it. At the time the authority over the work was transferred to Plaintiff, the total work completed was within Anderson Construction’s $500,000 license authorization. Defendants contended Anderson and his companies issued fraudulent and erroneous invoices and failed to complete the work in a workmanlike manner. Plaintiff claimed Defendant stopped making payments over the course of the process and brought this action to collect $702,654.81 in unpaid construction materials and labor. Plaintiff alleged breach of contract, breach of covenant of good faith and fair dealing, construction lien foreclosure, misrepresentation, quantum meruit, and unjust enrichment. Defendants moved for summary judgment on the grounds the parties’ contract was illegal. The trial court granted Defendants summary judgment.

On appeal, Plaintiff argued the terms of the contract were ambiguous concerning identity of the parties to the contract and the trial court erred in refusing to admit extrinsic evidence before granting summary judgment. Plaintiff claimed the contract is at least ambiguous concerning the parties to it and summary judgment is inappropriate. Defendants claimed they were entitled to judgment as a matter of law because an essential element of the Plaintiff’s claims, a valid contract, is nonexistent. There are details within the terms of the contract sufficient to find that the contract is ambiguous as to the parties to it. For instance, Paragraph 13 indicates that the contract was signed “on behalf of Contractor, Anderson Construction by Shawn Anderson.” This comports with the inclusion of the license number for Shawn Anderson d/b/a Anderson Construction, whom Plaintiff contends was in fact a signatory to the contract. Similarly, the contract designates AC Developments as “Anderson Construction,” but does not identify that company as “Contractor.” Rather, Paragraph 13 lists “Contractor” as Anderson Construction by Shawn Anderson. Despite the inartful drafting, these terms are sufficiently ambiguous for a reasonable trier of fact to conclude the term Contractor refers in part to Anderson d/b/a Anderson Construction, who was licensed to perform the work at the time. Further, Paragraph 13 includes Anderson’s contractor’s license number under the signatories section. This detail supports Plaintiff’s claims and tends to show Anderson was made party to the contract.

Plaintiff’s assertion of parties to the contract is a reasonable way to give effect to the license number for Anderson Construction in Paragraph 13. The terms of the contract make it fairly susceptible of Plaintiff’s or Defendants’ interpretations and understandings, and a genuine issue of material fact exists regarding the identities of the parties to the contract. In general, a contractor may recover for work done under a contract only up to the limitation on its contracting license, but a contractor who enters into a contract that exceeds its license limitation does not violate the licensing statutes until the value of the work performed exceeds its license limitation. When the cost of a construction development specified by a contract exceeds the limitation of the contractor’s license, the contractor may increase the license limitation during the course of performing the contract and remain in compliance. When a licensing defect is cured this way, the contractor may enforce the contract to its full value. The value of the work performed was within Anderson’s license limitation at the time Plaintiff received its unlimited license. Anderson performed all work on the project until Plaintiff received its license, at which point it took over. If, as Plaintiff contended, Anderson was made party to the contract in addition to Plaintiff, it would be lawful for him to undertake a portion of the work within his license limitation until Plaintiff received its unlimited license and the contract would be enforceable. Because enforceability of the contract depends on the identities of the parties to it, issues of fact exist, and summary judgment was improper.

Affirmed in part, reversed in part, and remanded.

AC Developments LLC v. Edwards (Lawyers’ Weekly No. 011-191-25, 11 pp.) (John Tyson, J.) Appealed from Henderson County Superior Court (Michael L. Robinson, J.) Capua Law Firm, P.A., by Paul A. Capua, and Natalia L. Talbot, for the plaintiff-appellant. The Van Winkle Law Firm, by Philip S. Anderson, for the defendant-appellees. North Carolina Court of Appeals