Maryland Court of Special Appeals Case Summaries: July 20, 2009

Summary

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Contracts

Home improvement licensure

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Maryland Court of Special Appeals Case Summaries: July 20, 2009

BOTTOM LINE: Circuit court properly declined to enforce contract or establish lien based on contract where builder did not have a home improvement license, as required by BR [section]8-301.

CASE: Baltimore Street Builders v. Stewart, CSA No. 0828, September Term, 2008 (filed July 7, 2009) (Judges SALMON, Graeff & Moylan (retired, specially assigned)).

FACTS: Baltimore Street Builders (BSB) entered into a contract with Thomas G. Stewart to construct an addition to an existing building that Stewart owned.

During the course of the construction work, BSB was directed by Stewart to furnish and install additional labor and materials, which resulted in the issuance of orders that increased the contract price to a projected total cost of $363,780.07. Stewart paid BSB $183,418.60 but failed to pay the $180,361.47 balance.

BSB filed a petition in circuit court to establish and enforce a mechanic's lien against Stewart.

In response, Stewart provided an affidavit in which he swore, inter alia, that prior to signing a home improvement contract with BSB he dealt with Robert Lenkey, who told him that he owned Harbour House Builders, LLC, and that Harbour House would be the entity that would enter into a contract with him. The affidavit further averred that on the day the contract was signed, Lenkey told Stewart that another company he owned, BSB, would perform the home improvement work on Stewart's property, and after the contract was signed, Stewart learned that BSB did not come into existence until near the expiration of Lenkey's work on Stewart's property. Moreover, after the contract was executed, at some unspecified time, Stewart learned that Lenkey and BSB were not licensed as home improvement contractors with the Maryland Home Improvement Commission.

At a subsequent hearing, counsel for BSB admitted that BSB did not have a home improvement license, but that James Kunkel, a 50% owner of BSB, held a home improvement license through a company called Stonehenge International.

According to counsel's proffer, Stonehenge did work on Stewart's home inasmuch as Kunkel, as a representative of Stonehenge, acted as the construction management company on the project. Counsel for BSB further argued that, at some unspecified time, his clients contacted the Home Improvement Commission and were led to believe that they were operating properly because one of the principals in their company held a home improvement license.

At the conclusion of the hearing, the circuit court ruled that because BSB had no home improvement license, it had no right to enforce the contract or to establish a lien based on the contract. Accordingly, the court dismissed BSB's petition.

Stewart appealed to the Court of Special Appeals, which affirmed.

LAW: Under the Maryland Home Improvement Law, as codified in the Business Regulation Article, "except as otherwise provided...a person must have a contractor license whenever the person acts as a contractor in the state." BR [section]8-301(a).

If the legislature does not indicate otherwise, contracts made by unlicensed persons subject to regulatory statutes designed to protect the public are illegal as against public policy and will not be enforced. See S.A.S. Personnel Consultants Inc. v. Pat-...

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