Legal Update: Unlicensed Contractor Can’t Recover for Sub-Standard Work

In a recent blog, we discussed the Louisiana 5^th Circuit’s ruling in Korrapati v. Augustino Brothers Construction, LLC, et al, which held that a construction contract is null and void if the contractor is not properly licensed.

In November 2020, the Louisiana 1^st Circuit held that an unlicensed contractor may not recover for the costs of materials, labor, and services under the theory of unjust enrichment if the contract was fraudulently obtained or the work performed was substandard.

Case Study

In Quaternary Resource Investigations, LLC v. Phillips, the plaintiff (“QRI”) entered into a construction contract with the Phillips on June 1, 2010 to renovate and add a substantial addition to their home in Denham Springs, Louisiana.  When the Phillips initially inquired as to the status of QRI’s licensure, the supervisor walked them to the Building Permit placard at the property and told them, “We’re covered.”

A year and a half into the construction, QRI was still performing work on the project.  On January 6, 2012, the Phillips terminated the contract partly because they discovered that QRI did not possess a residential contractor’s license.   

At the time of the termination, the Philips still owed approximately $20,000.00 to QRI.  The Philips refused to pay any more money in light of QRI’s failure to obtain a proper license and general dissatisfaction with QRI’s work.

QRI filed a lawsuit in the 19^th Judicial District Court to recover damages and the Phillips reconvened for reimbursement for the monies paid.  On April 30, 2018, the 19^th Judicial District Court rendered Judgment in favor of QRI in the amount of $141,876.72.

On appeal, the 1^st Circuit found that due to QRI’s misrepresentations regarding its licensure and the substandard work performed pursuant to a null and void contract, QRI could not recover the costs of materials, labor, and services.

The 1^st Circuit reversed the judgment granting an award to QRI, increased the amount of damages owed to the Phillips to $154,483.57, and affirmed the judgment as amended.

Therefore, jurisprudence is becoming ever more clear that unlicensed contractors performing shoddy work will not be able to recover a dime from customers who are unwilling to pay.