B & F Building Corp. v. Liebig, 76 N.Y.2d 689 (1990)
An unlicensed home improvement contractor cannot enforce a contract for work performed when a license was required but not held, even if the contractor obtains a license after the work is completed and the lawsuit is initiated.
Summary
B & F Building Corp., an unlicensed home improvement contractor, sued the Liebigs for breach of contract after they refused to pay the remaining balance for renovation work. The Liebigs counterclaimed for faulty work. B & F obtained a license after commencing the suit and attempted to amend its complaint under CPLR 3015(e) to allege the after-acquired license. The New York Court of Appeals held that CPLR 3015(e) does not permit an unlicensed contractor to enforce a contract if they were unlicensed at the time of contract execution and work performance, affirming the lower courts’ decisions.
Facts
William and Suzanne Liebig hired B & F Building Corporation to renovate their cooperative apartment in Manhattan.
The Liebigs paid B & F over $237,000 as the work progressed.
The Liebigs refused further payments, claiming B & F breached the agreement.
B & F, unlicensed at the time of the agreement and work, sued to recover the unpaid balance or to declare a valid mechanic’s lien.
The Liebigs counterclaimed for expenses to correct faulty work.
B & F obtained a home improvement contractor license after litigation commenced.
Procedural History
Supreme Court granted the Liebigs’ motion to dismiss the complaint and denied B & F’s cross-motion to amend the complaint, holding that the failure to have a license at the time of contract and work rendered the contract unenforceable.
The Appellate Division affirmed for the reasons stated by the Supreme Court.
The New York Court of Appeals granted leave to appeal.
Issue(s)
Whether CPLR 3015(e) allows a home improvement contractor, unlicensed at the time of contract execution and work performance, to enforce a contract by obtaining a license after commencing the lawsuit and amending the complaint to allege the after-acquired license.
Holding
No, because the after-acquired license provision of CPLR 3015(e) applies only when the contractor was licensed at the time the work was performed; it cannot validate a contract prohibited when performed.
Court’s Reasoning
The court reasoned that the Home Improvement Business provisions of the Administrative Code of the City of New York were enacted to protect consumers against fraudulent practices and inferior work. Allowing an after-acquired license to validate a contract would undermine these protective goals.
CPLR 3015(e) was intended to benefit consumers by shifting the burden to the contractor to prove licensure, not to strengthen contractors’ rights.
The legislative history of CPLR 3015(e) demonstrates no intent to weaken existing protections against unlicensed contractors. The Attorney-General’s Memorandum supporting the bill highlighted case law precluding recovery by unlicensed contractors.
The court presumed the Legislature was aware of existing law and abrogated the common law only to the extent clearly required by the statute’s language.
Validating a contract based on a license obtained after work completion affords none of the consumer protections applicable to licensed contractors during the work, such as background checks, performance bonds, and Department of Consumer Affairs oversight. As the court notes, “A license issued after the work is completed affords none of the consumer protections contained in the regulations and applicable to licensed home improvement contractors while the work is being performed.”
The court emphasized the importance of deterring unlicensed activity: “[T]he protective purposes of the statute and the various licensing laws which CPLR 3015 (e) addresses would be undermined by overturning this body of case law and validating an illegal contract upon the issuance of a license after suit.”