Quaternary Res. Investigations, LLC v. Phillips

• Decision Date: 19 November 2020
• Docket Number: 2018 CA 1543
• Citation: 316 So.3d 448
• Parties: QUATERNARY RESOURCE INVESTIGATIONS, LLC v. Ronald David PHILLIPS and Angela Phillips
• Court: Court of Appeal of Louisiana — District of US

316 So.3d 448

QUATERNARY RESOURCE INVESTIGATIONS, LLC

v.Ronald David PHILLIPS and Angela Phillips

2018 CA 1543

Court of Appeal of Louisiana, First Circuit.

JUDGMENT RENDERED: NOVEMBER 19, 2020

G. Steven Duplechain, T. Michael Murphy, Baton Rouge, Louisiana, ATTORNEYS FOR APPELLANT, PLAINTIFF/DEFENDANT-IN RECONVENTION—Quaternary Resource Investigations, LLC

J. Mark Robinson, Baton Rouge, Louisiana, ATTORNEYS FOR APPELLEES, DEFENDANTS/PLAINTIFFS-IN RECONVENTION—Ronald David Phillips and Angela Phillips

BEFORE: MCCLENDON, WELCH, THERIOT, CHUTZ, AND LANIER, JJ.

WELCH, J.

In this owner-contractor dispute over renovations to and construction of an addition to an existing home, the defendants/plaintiffs-in-reconvention—Ronald David Phillips and Angela Phillips (collectively, "the Phillips")—appeal the trial court's judgment rendered in favor of the plaintiff/defendant-in-reconvention—Quaternary Resource Investigations, LLC ("QRI")—in the amount of $141,876.72. For the following reasons, we reverse in part, affirm in part, amend in part, and affirm as amended.

FACTUAL AND PROCEDURAL HISTORY

Background

QRI entered into a construction contract with the Phillips to renovate and add a substantial residential addition to their home at 7211 Garrison Lane, Denham Springs, Louisiana (the "project"). The contract, dated June 1, 2010, set the cost of construction initially at $214,148.07, and by change order dated May 6, 2011, increased the contract price by $18,047.39, for a total contract price of $232,195.46. There was no time period set forth in the contract for the completion of the project. A year and a half later, QRI was still performing construction work on the project, when on January 6, 2012, the Phillips terminated the contract with QRI because of issues with the quality of QRI's workmanship and upon learning that QRI did not possess the required residential building contractor's license to perform the construction work. At the time of termination, the Phillips had paid QRI $210,780.63 toward the contract price of $232,195.46. A balance remained in the amount of $21,414.80, which is the amount of the contractually agreed-upon ten percent retainer.

Prior to contracting with QRI, the Phillips met with Paul Henderson, an experienced, independent residential home improvement contractor, to discuss the renovations and addition to their home. As the Phillips’ design plans evolved, Mr. Henderson realized that the project would exceed the limitations of his home improvement contractor's license, which licensed him to perform construction work on residential projects valued at less than $75,000.00. Mr. Henderson advised the Phillips that he could not undertake their project.

Then, in 2009, Mr. Henderson began working for QRI—which he described as a large corporation—as its "construction manager," and resumed his discussions with the Phillips regarding their project. Mr. Henderson told the Phillips that QRI possessed all the necessary licenses to renovate and construct an addition to their home. Based on his representations, the Phillips entered into the contract with QRI on June 1, 2010.

However, QRI did not possess the required residential building contractor's license. On June 18, 2009—almost a year before entering into the contract with the Phillips—QRI obtained a Home Improvement Contractor's license from the Louisiana State Licensing Board ("Board"), allowing QRI to bid, contract, and perform work on residential construction projects valued at less than $75,000.00. In addition to that license, the Board sent QRI a separate transmittal letter, dated June 24, 2009, reiterating the fact that QRI was required to "obtain a State residential building license to bid, contract, perform work, or be issued a permit for the remodel, repair, alteration, or addition to an existing home where the cost is $75,000.00 or more."

In September 2010, after QRI had begun construction work on the Phillips’ project, Mr. Phillips confronted Mr. Henderson with concerns regarding information he had obtained from the Board wherein he discovered that QRI did not possess the required residential building contractor's license. At the trial of this matter, Mr. Henderson testified about the September 2010 incident as follows:

Mr. Phillips came to me in September, sometime, of that year, and said that he had found out that we did not have the proper licensure. He had spoken with the state licensing board, I believe; called [Carl] Bourque [sic], specifically. And so, I called Carl and spoke with him[,] and he did confirm that the licensure [QRI] had did not cover that particular situation.

In response to Mr. Phillips’ questioning, Mr. Henderson walked the Phillips out to where a building permit was posted on their property, pointed to the permit and said, "they've issued the permit. We're covered." However, Mr. Henderson admitted at trial that the permit was improperly issued by Livingston Parish based on QRI's commercial contractor's license number. Mr. Henderson claimed that when he spoke with Mr. Bourque of the Board later that day, Mr. Bourque told him that the failure of QRI to have the required license was "not a big deal," and that QRI could continue construction work on the Phillips’ project as long as it applied for the required license. That same day, Mr. Henderson spoke with Kenneth New, the President of QRI, and informed him about the call with Mr. Bourque and the licensing issue. QRI never advised the Phillips about Mr. Henderson's call to the Board, but Mr. Henderson did tell the Phillips that QRI was "taking care" of the licensing issue.

Soon thereafter, in October 2010, QRI submitted an application to the Board for a residential building contractor's license while continuing construction work on the Phillips’ project. On November 29, 2010, after receiving QRI's application, the Board sent QRI a letter, advising as follows:

We caution that you are not eligible at this time to bid, contract, perform work, or be issued a permit for residential construction in the amount of $75,000 or more...."

(Emphasis in original). Despite receiving clear notification from the Board that QRI was not licensed to perform the residential construction work that was required on the Phillips’ project, QRI did not disclose the November 29, 2010 letter to the Phillips and continued construction work on the project without the legally required license. On May 6, 2011, QRI and the Phillips agreed to a change order in the amount of $18,047.39. At trial, Mr. Henderson testified that QRI did not include profit when calculating the change order amount because his understanding was that QRI was not entitled to charge the Phillips for profit due to QRI's failure to have the required license.

Ultimately dissatisfied with the poor quality of QRI's workmanship on the project, and again contacting the Board and learning that QRI still did not possess the required residential building contractor's license, the Phillips terminated their contract with QRI on January 6, 2012. At the time of termination, the Phillips had already paid QRI $210,780.63 toward the contract price of $232,195.46, with a balance remaining in the amount of $21,414.80, which is the amount of the contractually agreed-upon ten percent retainer.

That same day, the Phillips filed a consumer complaint with the Board, contending that QRI misrepresented to them that it was properly licensed to undertake the construction work on their residential project because QRI was never licensed at any time during the pendency of the Phillips’ contract to perform the construction work on their residential project.

Following review of the Phillips’ complaint, the Board ordered QRI to cease and desist any residential construction work it may have been performing. The Board further ordered QRI to appear for a hearing on its violation of the Louisiana State Contractors Licensing Law, La. R.S. 37:2150 -2175.6, and specifically La. R.S. 37:2167(A), which requires all residential building contractors to obtain and maintain an active license in accordance with the licensing statute. Following a hearing, the Board found QRI in violation of the Contractors Licensing Law and fined it $500.00. The Board ultimately issued QRI a residential building contractor's license on January 24, 2012, licensing QRI to contract and perform construction work on residential projects at or in excess of $75,000.00.

Proceedings in the Nineteenth Judicial District Court ("19th JDC")

QRI filed a petition against the Phillips, alleging that the Phillips owed QRI $21,414.80, plus costs and legal interest pursuant to the terms of the June 1, 2010 contract. QRI averred that it substantially completed all construction work on the Phillips’ project on April 25, 2011, and alleged that the Livingston Parish Building & Permit Department issued a certificate of occupancy. QRI further alleged that the Phillips took occupancy of the renovations and addition to their home on April 25, 2011, but refused to pay QRI the ten percent retainer amount of $21,414.80 owed to it under the contract. QRI acknowledged that some "warranty items" existed that it had attempted to resolve, but claimed that the Phillips refused to allow QRI to complete the "warranty work."

QRI later amended its petition, increasing the alleged sum owed by the Phillips to $44,344.65. In addition to the ten percent retainer amount of $21,414.80, QRI alleged that it was owed an additional $20,691.85 for "labor and materials, administrative costs, overhead and profit," as well $2,238.00 for roof warranty repair work because the Phillips allegedly "insisted that a roofer of their selection perform warranty work[,] which cost $2,238.00 more than the warranty repairs if performed by" QRI.

The Phillips answered QRI's petitions, raising affirmative defenses and asserting a reconventional demand against QRI.¹ The Phillips denied that QRI's construction work on their residential project pursuant to the June 1, 2010 contract was...