In Construction Services
Group, LLC v. MS Electric, LLC, 2019 WL 2710115 (Ala. Civ. App. 2019), the
parties entered into an agreement with the Alabama Public School and College
Authority. The agreement provided that Construction Services Group, LLC
(“Construction Services”) would act as the general contractor on a construction
project for additions and alterations to Montevallo Middle School (“the
Project”). MS Electric, LLC (“MS Electric”) submitted a bid to perform the
electrical work on the Project, which Construction Services accepted.
The total amount of MS Electric’s
bid was $198,831.10. MS Electric possessed a valid electrical contracting
license from the Alabama Board of Electrical Contractors. However, Alabama Law
requires electrical subcontractors to have additional licensure for jobs
exceeding $50,000.00. MS Electric did not have this additional subcontractor
license.
MS Electric worked on the Project
for twelve days, expending $23,650.00. When it never received payment, MS
Electric filed a claim against Construction Services for breach of contract in
March 2017. That claim was dismissed given the illegality of the contract, but
the judge allowed MS Electric to amend its claims.
In August 2017, MS Electric filed
an amended complaint against Construction Services stating a claim of unjust
enrichment. The trial court found in favor of MS Electric on its unjust enrichment
claim, and Construction Services appealed.
On appeal, Construction Services
argued that the trial court’s holding was erroneous because the accepted bid
pursuant to which MS Electric performed its work on the Project was an illegal
contract. Construction Services argued that Alabama law provides that, where a
party is precluded from maintaining a breach of contract claim because that
claim is based on an illegal contract, that party may not circumvent the law by
stating a different claim based on another or equitable theory of recovery.
Alabama’s Court of Civil Appeals
agreed with Construction Services’ arguments, holding that the undisputed facts
establish that the accepted bid pursuant to which MS Electric performed work
was an illegal contract, and that the work itself was illegal. It ruled that
Alabama law prohibits MS Electric from recovering for that illegal work
regardless of whether it seeks to do so by means of a breach of contract claim,
or by means of a claim based on another theory of recovery.
The Court further held that current Alabama law does not recognize any exceptions to the rule that public policy will not permit recovery by an unlicensed contractor, regardless of the conduct by the other party. Accordingly, the Court reversed the trial court’s ruling. It is important for subcontractors—and especially electrical subcontractors—to ensure adequate licensure before submitting a bid and performing work pursuant to that bid.
