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Construction Services Group, LLC v. MS Electric, LLC

Alabama Court of Civil Appeals

June 28, 2019

Construction Services Group, LLC
v.
MS Electric, LLC MS Electric, LLC
v.
Construction Services Group, LLC

          Appeals from Jefferson Circuit Court (CV-17-900918)

          Donaldson, Judge.

         In case no. 2171099, Construction Services Group, LLC ("Construction Services"), appeals from a judgment of the Jefferson Circuit Court ("the trial court") insofar as it found in favor of MS Electric, LLC ("MS Electric"), with respect to its unjust-enrichment claim against Construction Services. In case no. 2171124, MS Electric cross-appeals from that judgment insofar as it found in favor of Construction Services with respect to its negligent-misrepresentation counterclaim against MS Electric. Because the damages awarded by the trial court's judgment, exclusive of interest and costs, do not exceed $50, 000, this court has jurisdiction pursuant to § 12-3-10, Ala. Code 1975.

         In case no. 2171099, we reverse the trial court's judgment insofar as it found in favor of MS Electric with respect to its unjust-enrichment claim against Construction Services. In case no. 2171124, we affirm the trial court's judgment insofar as it found in favor of Construction Services on its negligent-misrepresentation counterclaim against MS Electric.

         Facts and Procedural History

         Construction Services entered into an agreement with the Alabama Public School and College Authority and the Shelby County Board of Education; that agreement provided, among other things, that Construction Services would act as the general contractor on a construction project ("the Montevallo project") pursuant to which additions and alterations to Montevallo Middle School would be made. MS Electric submitted a bid to perform the electrical work on the Montevallo project to Construction Services; Construction Services accepted MS Electric's bid. In its judgment, the trial court made the following pertinent factual findings:

"The total amount of [MS Electric's] bid to perform electrical work on the Montevallo project was $198, 831.10. It is undisputed that [MS Electric] possessed a valid electrical contracting license from the Alabama Board of Electrical Contractors at the time it submitted its bid to [Construction Services] for this job. However, it is also undisputed that, on jobs the size of the Montevallo project (i.e., jobs over $50, 000.00), electrical subcontractors like [MS Electric] are required to have an additional license from the State Licensing Board for General Contractors.[1] It is undisputed that [MS Electric] did not have this additional electrical subcontractor license when it performed work for [Construction Services] on the Montevallo project. ...
"[MS Electric] performed work on the Montevallo [project] for about 12 days. ... [MS Electric] seeks a recovery of $23, 650.00 for some 430 'man hours' it claims it expended on the Montevallo [project].
"After [MS Electric] left the Montevallo [project], [Construction Services] hired Dobbs Electric Co., Inc. (which had in place all appropriate licenses) to complete the electrical work. Dobbs'[s] contract was for $209, 800.00 -- $10, 968.90 higher than what [Construction Services] was going to pay [MS Electric] for the same work. ...
"[Construction Services'] misrepresentation counterclaim is based on the allegation that [MS Electric] stated in its written bid that it had an appropriate Alabama license in place when it in fact did not have the proper license at that time. As damages on its misrepresentation claim, [Construction Services] seeks $10, 968.90 for the extra amount it had to pay Dobbs Electric to finish the electrical work on the [project] as well as an unspecified amount of punitive damages on grounds that [MS Electric] intentionally or wantonly misrepresent[ed] that it had an electrical subcontractor license from the State Licensing Board for General Contractors at the time [MS Electric] started work on the Montevallo project. The specific factual basis for [Construction Services'] counterclaim is that the bid [MS Electric] submitted for the Montevallo [project] was well in excess of $50, 000.00, yet contained an 'Alabama State License Number 05097,' which was not the correct or appropriate license for a job of this size. [MS Electric's vice president] freely admitted that [MS Electric] did not have the additional license required by the [State Licensing Board for General Contractors] at the time [MS Electric] bid the job or when it performed the work at issue. He also testified, however, that he did not know [MS Electric] was supposed to have that additional license until [Construction Services] provided a draft contract for the Montevallo Middle School project. Because [MS Electric] did not have the additional license, [MS Electric's vice president] never signed the Montevallo contract."

         In March 2017, MS Electric commenced the present action by filing a complaint against Construction Services stating claims of open account, account stated, and breach of contract and seeking damages in the amount of $23, 650 plus interest. Construction Services denied that it owed MS Electric any money and asserted various affirmative defenses. One of the affirmative defenses asserted was that MS Electric was barred from recovering any money from Construction Services because, Construction Services asserted, the contract pursuant to which MS Electric performed work on the Montevallo project was an illegal contract and the transaction pursuant to which MS Electric performed its work was an illegal transaction. Construction Services also filed a counterclaim in which it stated against MS Electric claims of breach of contract; fraud by misrepresentation of a material fact made willfully, recklessly, negligently, or innocently; bad faith; and deceit by making a willful misrepresentation of a material fact.

         In June 2017, Construction Services filed a motion for a summary judgment with respect to MS Electric's claims against Construction Services. Construction Services asserted that, because the cost of the electrical work on the Montevallo project was $50, 000 or more, Alabama law required that a subcontractor who performed the electrical work on the Montevallo project be licensed by the State Licensing Board for General Contractors; that MS Electric had not been licensed by the State Licensing Board for General Contractors when MS Electric submitted its bid or when it performed its work on the Montevallo project; and that, therefore, the subcontract pursuant to which MS Electric had performed its work on the Montevallo project and that work itself were illegal. Construction Services further asserted that, because Alabama law did not permit a party to profit from an illegal contract or an illegal transaction, Construction Services was entitled to a summary judgment with respect to MS Electric's claims.

         Following a hearing, the trial court, in July 2017, entered a summary judgment in favor of Construction Services with respect to MS Electric's claims because it was undisputed that MS Electric had not been issued a license by the State Licensing Board for General Contractors when it performed its work on the Montevallo project. The trial court also pointed out that, although a motion challenging Construction Services' breach-of-contract counterclaim was not then pending, the illegality of the subcontract would also necessitate the dismissal of Construction Services' breach-of-contract counterclaim and granted both parties time to amend their pleadings.

         In August 2017, MS Electric filed an amended complaint against Construction Services stating claims of unjust enrichment, misrepresentation, suppression, conversion, and bad faith. In October 2017, MS Electric filed a motion to dismiss Construction ...


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