Builders Beware: Georgia Court Rejects Suit by Unlicensed Contractor for Unpaid Work

Unlicensed contractors in Georgia recently were dealt a blow by the state’s Court of Appeals when three judges held that a contractor’s failure to possess a valid state contractor’s license precluded the contractor from bringing a lawsuit for unpaid fees. In Fleetwood v. Lucas, __ S.E.2d __, 2020 WL 1149734 (Ga. Ct. App. March 10, 2020), a panel of judges ruled against a contractor, who completed extensive repair and renovation work on two properties, because the contractor was not properly licensed by the state government.  

Property owners hired the contractor to perform renovations and improvements at a home and a commercial property in excess of $100,000. During the work, the contractor informed the property owners that the project was over budget by about $10,000. The property owners responded by stopping payments. The contractor subsequently filed a lawsuit against the property owners for breach of contract and unjust enrichment.

The property owners argued in a motion for summary judgment and a motion for a directed verdict during trial that a state law prohibited courts from enforcing a contract or an equitable claim (such as quantum meruit or unjust enrichment) for the benefit of an unlicensed contractor if the underlying work required a state license. See Ga. Code Ann. § 43-41-17(b). The trial judge rejected the property owners’ motions, and a jury awarded damages to the contractor.

The Appellate Court reversed. Focusing almost entirely on the Georgia general residential and contracting statute, Ga. Code Ann. § 43-41-1 et seq., the panel of judges held that the fact the contractor did not hold a valid state license was fatal to the contractor’s breach of contract and equitable quantum meruit claims. Importantly, the contractor might have been able to recover if he had disclosed his lack of a license to the property owner before the project. However, the contractor testified at trial that he never previously disclosed his lack of a license. 

Like most states, Georgia requires professionals performing residential or general contracting work to be licensed as part of an effort to “safeguard homeowners, other property owners, tenants, and the general public against faulty, inadequate, inefficient, and unsafe residential and general contractors.” Ga. Code Ann. § 43-41-1. Contractors should take care to follow applicable state laws.