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License-holder’s death could be costly to contractor

ROCKVILLE — A Montgomery County Circuit Court judge will allow a Gaithersburg couple to pursue their nearly $400,000 counterclaim against a home improvement contractor who sued them for a fraction of that amount.

But Judge Marielsa A. Bernard on Monday also asked a lawyer for Ferris R. Bond and Jane C. Norman to provide more details concerning the damages they are seeking.

Bond and Norman claim the contractor was not entitled to any money because, they allege, the company wasn’t licensed when it performed work on their house.

Bernard called the case, which stems from a $50,000 lawsuit filed by Germantown-based SBR Construction Co., “very interesting.” Several construction law lawyers not involved in the case agreed and said it would be difficult for SBR to prevail on its claim.

Bond and Norman hired SBR in July 2010 to renovate a powder room, re-tile a bathroom and ensure there were proper drain pipes underground, among other jobs, according to court documents. The work was completed in July 2012, according to court documents.

SBR’s lawsuit against Bond and Norman, filed in June, claimed unjust enrichment and breach of contract. Two months later, Bond and Norman — both attorneys — filed their counterclaim, alleging SBR owner Tom Sullivan did not have a home improvement license and seeking a return of the $383,000 they had already paid the company.

Sullivan, in an affidavit, said he formed SBR with Michael Baker in 1974. State law requires an individually licensed contractor to be responsible for a corporation’s home improvement work; Baker had a home improvement license issued to him in 2009, which was good for two years.

But Baker died in February 2010, and Bond and Norman argued the license became invalid at that point. They did not find out about Baker’s death and the potential licensing issue from Sullivan until late 2011, according to court documents.

“If that person dies, can the corporation continue?” Bernard asked SBR’s lawyer.

Jerry W. Hyatt responded that the law is not for “strict compliance” but to prevent “snatch-and-grab” contractors.

SBR is insured and financially stable, he added, and Bond and Norman paid SBR more than $150,000 for work after finding out about Baker’s death.

“Clearly, by their actions, they didn’t care,” said Hyatt, of Clifford, Debelius, Bonifant, Fitzpatrick & Hyatt Chtd., in Gaithersburg.

Thomas A. Mauro, a lawyer representing Bond and Norman said the construction was too far along by then.

“The project is so deeply involved that terminating would not be realistic,” said Mauro, a Washington, D.C. solo practitioner.

Fleshing out the rule

Whatever the homeowners did might not matter, however, because the license would have been invalid upon Baker’s death, according to several construction law lawyers not connected with the case.

“A company does need an individual to hold a contractor’s license,” said Louis J. Kozlakowski, a partner at Wright, Constable & Skeen LLP in Baltimore. “I don’t know how [SBR] can get around that.”

Without a license, SBR would be unable to pursue its lawsuit for the $50,000, added Stanford G. Gann Jr. A contractor’s license shows the holder is competent and is not transferable, he said.

“If you don’t have a competency license, you can’t enforce the contract at all,” said Gann, of Levin & Gann P.A. in Towson.

What remains unsettled in Maryland is whether a homeowner can force the contractor to return the funds.

“Generally, a court will say the owner will get the money back if the work was defective,” Gann said.

Andrew H. Vance, another veteran construction law lawyer, said the case’s facts would help clear up the confusion should it reach an appellate court.

“I think it’s going to flesh out what these rules allow you to do,” said Vance, of counsel to Pessin Katz Law P.A. in Towson.