Professional Liability

The interesting aspect of this case is that we are not dealing with an issue of claimed defective work or resulting damages from the work. Instead, the issue centers on the fact that the subcontract contained the standard provision that the subcontractor would comply with all federal, state and local laws and ordinances. In Palm Beach County, where the work was performed, there is a local ordinance that requires subcontractors to obtain a certificate of competency for their scope of work. Further, Palm Beach County made it unlawful for someone without that certificate of competency to “hold himself/herself out as a contractor, whether as a plaintiff, defendant or witness in any court in this county.” 

Because of this local code, when the general contractor learned that ABA Interior did not hold the required certificate of competency, they stopped paying under the contract, despite the work being complete. ABA Interior sued to collect under the subcontract. In the underlying suit, the general contractor was granted summary judgment because the Palm Beach County local ordinance prevented them from being a plaintiff in any action. However, the lower court did not rule on whether or not the failure to obtain the certificate of competency was a breach of the subcontract. The appellate court reversed the summary judgment in favor of the general contractor because only a portion of the work by ABA Interior required the specialty certificate. 

Despite the reversal, this case highlights the importance of ensuring that a contractor is licensed and complying with all local ordinances for areas it does work. This includes on the front end and in the case of ensuing litigation. The subcontract provision requiring compliance with federal, state and local laws, and ordinances is a standard provision and likely to appear in many subcontracts. And while the court here did not rule on whether or not failing to obtain the local specialty certificate was a breach, this issue is open and ripe for consideration. Further, this is not the fight you want to be in as a contractor, so the lesson is pay close attention and comply with all licensing requirements. 
 

^{Case Law Alerts, 1st Quarter, April 2022 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2022 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.}