The following story is true. However, as they say in “DRAGNET,” the names have been changed to protect the innocent. Ken Contractor was putting together a list of subcontractors in order to finalize his bid for a residence when he received a call from his old pal, Pete Painter. Pete had painted for many years, and although he lived out of the area, he was friends with Ken and Ken thought it would be good to have Pete come up and work on the project.
Pete Painter showed up and did not seem to work particularly hard. Since they were friends, there was an oral agreement for a per diem pay rate. Meanwhile, Pete Painter was supposed to submit a bid to paint the entire house, interior and exterior. Pete drafted a bid, gave it over to Ken Contractor, and Pete returned down state.
Despite the owners’ insistence, Pete Painter refused to use oil-based paints and, thus, Ken Contractor did not utilize the services of his old friend. He picked a licensed painter from the area and the job was completed in an excellent fashion.
Unfortunately, Pete Painter was not the friend that Ken Contractor thought he was. Despite having been paid a tremendous wage for the few days that he did actually work, Pete Painter was upset that he did not get the entire job and threatened to put a lien on the residence. Worse, Pete Painter actually sued Ken Contractor for tens of thousands of dollars in alleged damages because Ken Contractor gave the painting contract to another painter. These last two acts by Pete Painter were particularly egregious, given that Pete was unlicensed.
The law in the State of Michigan prohibits any person or corporation from bringing an action in court for the collection of any type of fee for a building contract unless they possess a builder’s or maintenance and alterations license. See MCL 339.2412. That same code section also prohibits the filing of a lien by an unlicensed individual. A person is allowed to engage in what is called the “handyman’s exception” if the contract for material and labor is less than $600.00 or that person “engages solely in the business of performing work and services under contract with a residential builder…licensed under this article.” See MCL 339.2403.
We filed a motion to have Pete Painter’s suit against Ken Contractor dismissed. Pete Painter tried to get the court here in our judicial circuit to basically eliminate the requirement of being a licensed contractor or subcontractor in order to maintain his suit for money damages. Pete urged the court to read the above exemption regarding working for a licensed contractor to mean that any individual that has a contract with a licensed contractor is in no need of being licensed. In effect, Pete’s argument was making a mockery of the prohibition against unlicensed subcontractors working and collecting money, assuming that the general contractor had a builder’s license.
Fortunately, this story has a happy ending. We were able to convince the court that Pete Painter was completely barred from recovering money in the State of Michigan for his activity, before we even got to the merits (or lack thereof) of his case. The court accepted our reasoning as persuasive that the exemption for someone working under contract with a building contractor applied to an actual employee and not to any unlicensed subcontractor that might have entered into a contract with a licensed builder.
Although the case ended well, it was not without some heartache and emotional turmoil for Ken Contractor. It does serve as notice to keep a wary eye out for any unlicensed contractor that might be involved in a project, and if that should ever happen, make certain that you do not pay that subcontractor.
If any of you have any questions about this topic or any related to it, please contact Smith & Johnson.