Case Title: ROBERT STOKES V MILLEN ROOFING CO

Citation: 

Docket Number: 119074

State: michigan

Court: Michigan Supreme Court

Date: 2002-07-23T00:00:00Z

Document:
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Michigan Supreme Court 
Lansing, Michigan 48909 
C hief Justice 
Justices 
Maura D. Corrigan  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Opinion 
Stephen J. Markman 
FILED JULY 23, 2002  
ROBERT and PATRICIA STOKES,  
Plaintiffs-Appellants, 
Cross-Appellees,  
v  
No. 119074  
MILLEN ROOFING COMPANY,  
Defendant-Appellee, 
Cross-Appellant.  
BEFORE THE ENTIRE BENCH  
KELLY, J.  
This is a dispute over money claimed by cross-plaintiff  
Millen Roofing Company from the cross-defendant homeowners,  
Robert and Patricia Stokes, related to the parties'  
residential construction contract.  We hold that (1) Millen's  
construction lien was properly extinguished because it was  
invalid 
and 
unenforceable, and (2) MCL 339.2412 barred Millen,  
an unlicensed contractor, from seeking compensation from  
plaintiffs under its contract with them for the installation  
of a slate roof.  
 
I  
Millen Roofing Company, a roofer unlicensed in Michigan,  
placed a lien on the title to the Stokes' home after they  
refused to pay the amount it claimed was due.  The Stokes sued  
to clear title, alleging that the lien was invalid and that  
the residential builders act1 barred Millen from recovery  
under the contract.  Millen counterclaimed for breach of  
contract, quantum meruit, and foreclosure of the construction  
lien.  
In response to various motions by the parties, the trial  
court dismissed the counterclaim and extinguished the  
construction lien. 
After Millen submitted an amended  
counterclaim raising equitable claims, the court determined  
that Millen was entitled to equitable relief.  It held that  
the Stokes could pay Millen the full amount of the original  
contract price.  If they chose not to do so, Millen could  
reimburse plaintiffs for payments made and reclaim the slate  
it had installed on plaintiffs' roof. Both parties appealed  
from the trial court's decision.  
The 
Court 
of 
Appeals affirmed, following the precedent of  
Republic Bank v Modular One LLC, 232 Mich App 444; 591 NW2d  
335 (1998).  245 Mich App 44; 627 NW2d 16 (2001). However,  
1MCL 339.2401 et seq.  
2  
 
 
 
the panel disagreed with the holding in Republic and sought  
the vote of a special panel to resolve the conflict between  
its view and the holding in Republic. No panel was convened.  
Both 
parties 
appealed from the Court of Appeals judgment.  
We granted the Stokes' application for leave to appeal along  
with Millen's cross appeal of the dismissal of its legal  
claims. 465 Mich 909 (2001).  
II  
The residential builders act states:  
A 
person 
or 
qualifying 
officer 
for 
a  
corporation . . . shall not bring or maintain an 
action in a court of this state for the collection  
of compensation for the performance of an act or 
contract for which a license is required by this 
article without alleging and proving that the 
person was licensed under this article during the 
performance of the act or contract. 
[MCL 
339.2412(1).][2]  
Under the statute, a builder may not bring an action for  
collection of compensation unless it can prove that it  
possesses the license "required by this article."  
Millen argues that the only claims barred are those  
arising from work for which "a license is required by this  
article."  It asserts that the "article" to which the statute  
refers is article 24 of the Occupational Code. MCL 339.2401  
et seq. Article 24 contains language that describes the scope  
of 
a 
builder's 
license, 
application 
procedure, 
qualifications,  
2This statute was amended while the case was being 
appealed.  A subsection was added that is not relevant to this  
case.  
3  
and process for suspension of a license.  It also contains  
procedures for complaints against licensees.  
Millen asserts that no explicit requirement of a license  
is found in article 24.  Instead, it contends, the express  
prohibition on unlicensed activity is in article 6 of the  
Occupational 
Code. 
 
MCL 339.601(1). Therefore, Millen insists  
that its claims are not barred because, although a license was  
required, it was not required by article 24.  
Millen's reading of § 2412 would render the statute's  
prohibition 
nugatory.  Under its interpretation, no license of  
any kind would be "required" by article 24, and no claim of  
any kind would be barred.  
In actuality, virtually every section of article 24  
specifically refers to a license requirement. Indeed, § 2403  
contains several exceptions to the licensure requirement. By  
implication, if a residential builder does not fit within one  
of the exceptions there, it must be licensed.  When the  
Occupational Code is read as a whole and its provisions  
harmonized to fulfill the purpose of the Legislature, it  
becomes clear that Millen had to be licensed.  State Treasurer  
v Wilson, 423 Mich 138, 145; 377 NW2d 703 (1985). Section 601  
specifically 
refers 
to 
occupations 
regulated 
under 
"this 
act,"  
the Occupational Code.  Residential builders are regulated  
pursuant to article 24 of the act, unless an exception from  
4  
  
 
that article applies.3  
Millen argues in the alternative that, even if § 2412  
applies, it does not prevent it from recovering the reasonable  
value of the labor and materials furnished to plaintiffs.  It  
claims that in such an action it would be seeking merely a  
reimbursement for its materials, and not "compensation"  as  
that word is used in the act.  
Because "compensation" is not defined in the act and is  
not a term of art, we apply a dictionary definition. Random  
House 
Webster's 
College 
Dictionary 
(1995) 
defines  
"compensation" as  
something given or received as an equivalent for 
services, debt, loss, injury, etc.; indemnity; 
reparation; payment."  
Applying that meaning of "compensation," we find that § 2412  
disallows an action for the reasonable value of materials  
conveyed, 
because 
such an action seeks "payment" or "something  
3We do not agree with the dissent's footnoted suggestion 
that Millen could be exempt from licensing as a subcontractor 
of the plaintiffs.  The dissent points out that plaintiffs are 
allowed by § 2403(b) of the act to function in the capacity of 
a residential builder with respect to property they own. It  
suggests that there is a "strong argument" that, under this 
contract, Millen could be exempted from licensing as a 
subcontractor of plaintiffs.  
In fact, the act prevents Millen from being exempted.  If  
Millen were not the contractor here, it would have to be a 
person "engage[d] in the business of or act[ing] in the 
capacity of a residential builder" for purposes of the act. 
Sections 2401(a) and 2403.  At subsection (e) of § 2403, such 
persons must be licensed unless they are working with a 
contractor licensed under the act.  Plaintiffs could have been  
contractors, but they were never licensed under the act.  
5  
given or received as an equivalent for [a] debt" or "loss."  
Finally, Millen argues that, even if it is barred from  
seeking compensation, it should be allowed to recover the  
value of the materials it supplied.  A "supplier" does not  
require a license under the act.  
The fact that Millen was not required to be licensed to  
supply slate is of no consequence here.  In order for the  
"supplier" portion of this contract to be enforced, it would  
have to be severed from the illegal portions of the agreement.  
As the dissent points out, for that to occur, the illegal  
provision must not be central to the parties' agreement.  See  
2 Restatement Contracts, § 603, pp 1119-1120.  
[I]f the agreements are interdependent and the 
parties would not have entered into one in the 
absence of the other, the contract will be regarded 
. . . as entire and not divisible.  [3 Williston, 
Contracts (3d ed), § 532, p 765.]  
Hence, the contract can be bifurcated only if the  
agreement to install the materials is independent of the  
agreement to supply them. But, here the agreements were not  
independent of one another. Applying the test formulated by  
the dissent, it becomes apparent that the illegal section,  
which provided for the installation of a slate roof, was  
central to the parties' agreement.  The parties' contract  
required Millen to "furnish and install" the roofing  
components and did not specify the portion of the total cost  
attributable solely to materials.  If the parties had not  
6  
 
  
intended Millen to install the roof, the Stokes would have had  
the installer they selected deliver the slate.  It follows  
that the contract is entire and indivisible.  
Even if, normally, the contract could be bifurcated, the  
statute prohibits it. 
Section 2412 bars a suit for  
compensation if a license was necessary for performance of "an  
act or contract."  The statute requires us to look for either  
an act or a contract requiring a license.  It does not make  
provision for bifurcating building contracts into separate  
labor and supply components.  Accordingly, it is irrelevant  
that Millen could have supplied slate without a license.  
Millen's counterclaim was properly disallowed.4  
III  
Millen further alleges that, notwithstanding its lack of  
a license, its lien is valid.  The Construction Lien Act5  
states:  
A contractor shall not have a right to a 
construction lien upon the interest of any owner or 
lessee in a residential structure unless the  
contractor has provided an improvement to the 
residential 
structure 
pursuant 
to 
a 
written  
contract between the owner or lessee and the  
contractor and any amendments or additions to the 
contract also shall be in writing.  The contract  
required by this section shall contain a statement, 
in type no smaller than that of the body of the  
4All members of the Court share the concern that the  
result reached here seems on its face unfair to Millen.  
However, we, and the concurring justices, agree that this 
result is mandated by the residential builders act.  
5MCL 570.1101 et seq.  
7  
 
 
contract, setting forth all of the following:  
(a) That 
a 
residential 
builder 
or 
a  
residential maintenance and alteration contractor  
is required to be licensed under article 24 . . .  
(b) If the contractor is required to be 
licensed to provide the contracted improvement, 
that the contractor is so licensed.  
(c) If 
a 
license 
is 
required, 
the  
contractor's license number. [MCL 570.1114.]  
A "contractor" is defined in the statute as "a person  
who, pursuant to a contract with the owner or lessee of real  
property, provides an improvement to real property."  MCL  
570.1103(5).  Millen built a slate roof pursuant to a contract  
with the owners.  Therefore, it is a contractor. 
Under  
subsections (b) and (c), it needed to state that it was  
licensed and provide its license number in order to have a  
right to a lien.  
Millen argues that its lack of a contractor's license  
number is not dispositive, because the Construction Lien act  
contains no penalty for failure to be licensed.  It relies on  
In re Craft,6 a case in which a federal bankruptcy court held  
that failure to comply with the requirement to furnish a  
contractor's license number does not invalidate a lien.  
Because the statute is remedial, the Craft court  was  
satisfied with the defendant's "substantial compliance" with  
the requirements of the act.  
6120 BR 84 (ED Mich, 1989).  
8  
We find Craft inapplicable to this case. The contractor  
there actually possessed a license, but did not properly write  
the license number on the form for a lien.  We will not extend  
a "substantial compliance" protection to Millen because it  
lacked a license and could not have completed the form  
properly under any circumstances.  There is nothing in the  
Construction Lien Act to suggest that the Legislature intended  
the act to extend "substantial compliance" protection to  
unlicensed builders.  
IV  
Having 
determined 
that 
the 
trial 
court 
properly  
extinguished Millen's construction lien and dismissed its  
legal claims, we consider whether Millen was entitled to  
equitable relief.  This Court first considered the interplay  
between the residential builders act and a court's equitable  
powers in Kirkendall v Heckinger, 403 Mich 371; 269 NW2d 184  
(1978).  
There, plaintiff Frank Kirkendall conveyed a parcel of  
property to the defendant contractor. 
Pursuant to the  
contract, the defendant then paid off Frank's land contract  
and back taxes and constructed a house on the land for Frank's  
son, plaintiff Dennis Kirkendall.  Dennis helped with the  
construction.  A dispute arose about the amount plaintiffs  
owed, and the plaintiffs brought suit.  They asked for  
equitable relief that would deem the sale an equitable  
9  
 
mortgage, return the land to plaintiffs, clear title, and  
eject defendant from the land.  Defendant counterclaimed for  
breach of contract.  
This Court held that the residential builders act barred  
the defendant's counterclaim because he had no Michigan  
residential builder's license.  However, the dismissal of the  
counterclaim did not end the litigation.  The Court had to  
clear title.  It declared that the sale to defendant was an  
equitable mortgage.  If the plaintiffs wanted clear title,  
they had to first do equity by paying the amount owed to the  
defendant as an equitable mortgagee:  
The plaintiffs sought an equitable remedy. 
Before ordering the conveyance to Dennis Kirkendall, 
the trial court was obliged to determine the amount 
the plaintiffs were required to pay the defendants 
in order to do equity.  As the equitable mortgagee,  
Heckinger 
was 
entitled 
as 
a 
condition 
to  
reconveyance 
to 
reasonable 
expenditures 
for  
improvements 
on 
the 
property 
made 
with 
the  
Kirkendalls' consent (and in fact with Dennis 
Kirkendall's 
active 
participation) 
while 
[defendant] 
had title to the property. [Id. at 374.]  
The Court of Appeals considered the Kirkendall decision  
in Republic Bank and applied it, enlarging its scope.  In  
Republic Bank, the plaintiff had purchased eight residential  
lots on which the defendant had a lien.  The plaintiff  
asserted that the liens were invalid, because they were for  
monies owed for residential improvements made by the  
defendant, who did not possess a license.  
The Court of Appeals concluded that, as an unlicensed  
10  
 
  
 
 
builder, the defendant could not place a lien on the  
properties. However, it required the plaintiff to do equity  
by paying the defendant for the value of the homes before  
getting equity in the form of a clear title.  The Republic  
Bank Court declined to distinguish the Kirkendall decision  
even though, in Republic Bank, the defendant had no valid lien  
or mortgage that survived dismissal of his claim and clouded  
title.  
In the case before us, the Court of Appeals followed  
Republic Bank because it was binding authority. 
MCR  
7.215(I)(1).  Still, the Court made clear its dissatisfaction  
with the holding in that case, opining that Republic Bank was  
wrongly decided and that it should have distinguished  
Kirkendall on its facts.  
We agree that Kirkendall must be distinguished from  
Republic Bank.  First, the Court's reason for entertaining  
equity in Kirkendall was because the conveyance to the  
defendant was valid and clouded title.  After the defendant's  
counterclaim 
was 
dismissed, 
the 
plaintiffs' 
complaint  
remained, and the Court had to find an equitable remedy.  
Conversely, in both Republic Bank and this case, once it  
was determined that the defendants' liens on the properties  
were defective, the titles were clear.  The complaints could  
be dismissed.  No further relief was necessary, equitable or  
legal.  By not recognizing this distinction, the Republic Bank  
11  
 
 
decision allowed an unlicensed contractor leverage to force  
payment, using equity in a circumstance where no equity was  
required.  Moreover, the relief afforded was barred at law by  
§ 2412.  
The Kirkendall case also differs from the case at bar in  
another key respect:  the defendant's property right there was  
not only created by the plaintiff, it was acquired in a valid  
and legal manner.  By contrast, both Millen and the defendants  
in Republic Bank acquired liens by committing a misdemeanor,  
performing an unlicensed activity.  MCL 339.601(3). 
In  
addition, they sought to force payment using a construction  
lien acquired in derogation of the Construction Lien Act.  
In its bench ruling granting equitable relief to Millen,  
the trial court stated that a court in equity may provide for  
nonlegal, equitable remedies to avoid unduly harsh legal  
doctrines.  Its analysis is invalid because, in this case,  
equity is invoked to avoid application of a statute.  Courts  
must be careful not to usurp the Legislative role under the  
guise of equity because a statutory penalty is excessively  
punitive.7  As the Court of Appeals stated:  
7Our concurring colleagues assert that the Stokes used 
the statutory provision to avoid paying for the slate roof. 
In fact, they tendered a written offer to Millen in July 1994 
to pay the balance of the original contract, along with a 
$2,684 change order, in exchange for unconditional waiver of 
lien. Millen rejected their offer.  
Contrary to Justice Markman's assertion, slip op at 3, n 
3, we make no assessment of the Stokes' motives in their  
12  
 
 
Regardless of how unjust the statutory penalty 
might seem to this Court, it is not our place to 
create an equitable remedy for a hardship created by 
an 
unambiguous, 
validly 
enacted, 
legislative 
decree. 
[245 Mich App 57-58.]  
Moreover, as was stated in Bilt-More Homes, Inc v French,  
373 Mich 693, 699; 130 NW2d 907 (1964):  
"Contracts by a residential builder not duly 
licensed are not only voidable but void-
-
-and it is  
not for a trial court to begin the process of 
attrition whereby, in appealing cases, the statutory 
bite is made more gentle, until eventually the 
statute is made practically innocuous and the teeth 
of the strong legislative policy effectively pulled. 
If cases of such strong equities eventually arise 
that the statute does more harm than good the 
legislature may amend it . . . ."  
We overrule the holding of Republic Bank. 
If it were  
allowed to stand, any unlicensed contractor could defy the  
residential builders act and the Construction Lien Act by  
refusing to obtain a Michigan residential builder's license.  
It could contract with a residential home owner to perform  
work on the owner's home.  Then, if a dispute arose over money  
due, it could cloud the title with a lien and wait until the  
owner brought suit to clear title.  It could then recover the  
amount due in an equity judgment.  Such a result violates MCL  
339.2412 and ignores key distinctions in Kirkendall.  
dealings with Millen.  As our colleagues are well aware, their 
good faith or lack of it was not a consideration available to 
us in rendering this decision.  If equity were available here, 
we might all have agreed that the trial court acted fairly and 
reasonably in applying equity as it did.  
13  
 
 
CONCLUSION  
We hold that  Millen Roofing Company's failure to obtain  
a residential builder's license constitutes a bar to its  
seeking compensation for installing slate on the Stokes' roof,  
pursuant to MCL 339.2412. 
Also, because Millen was  
unlicensed, its construction lien was invalid.  Finally,  
Millen cannot have equitable relief because any such relief  
would allow equity to be used to defeat the statutory ban on  
an unlicensed contractor seeking compensation for residential  
construction.  
The order of the trial court is reversed and the case  
remanded for proceedings consistent with this opinion.  
CORRIGAN, C.J., and TAYLOR and YOUNG, JJ., concurred with  
KELLY, J.  
14  
 
 
____________________________________ 
S T A T E 
O F 
M I C H I G A N  
SUPREME COURT  
ROBERT and PATRICIA STOKES,  
Plaintiff-Appellants, 
Cross-Appellees,  
v 
No. 119074  
MILLEN ROOFING COMPANY,  
Defendant-Appellee, 
Cross-Appellant.  
WEAVER, J. (concurring).  
I concur in the majority’s conclusion that the contract  
may not be bifurcated into separate labor and supply  
components; the contract is entire and indivisible.  
I also concur in the majority’s conclusion that defendant  
Millen Roofing may not be awarded equitable relief.  The  
residential builders act clearly prohibits a contractor not  
licensed in this state from maintaining an action for  
compensation.1  Likewise, under the Construction Lien Act, MCL  
1 As noted in the majority opinion, MCL 339.2412(1) 
provides in pertinent part:  
A 
person 
or 
qualifying 
officer 
for 
a  
corporation or member of a residential builder or 
residential maintenance and alteration contractor  
(continued...)  
 
 
570.1101 et. seq., a contractor does not have a right to a  
construction 
lien 
unless 
it 
complies 
with 
licensing  
requirements. MCL 570.1114.  
In this particular instance, where plaintiff homeowners  
invited defendant to enter into the illegal contract, knowing  
defendant contractor was unlicensed in Michigan and having  
already availed themselves of the statute to avoid paying a  
previous unlicensed contractor, the statutory provision for  
noncompliance with the licensing requirement undoubtedly  
imposes a heavy penalty on defendant, while providing an  
unwarranted windfall to these plaintiffs.
 Plaintiffs, who  
sought out defendant and helped draft the actual contract, do  
not allege that defendant was incompetent or inexperienced or  
that defendant’s work was of inferior quality, and defendant  
could hardly be characterized as some fly-by-night contractor.  
Rather, plaintiffs are now using the statutory provision to  
their advantage to avoid paying for their slate roof.  
Nonetheless, in entering into the contract, defendant  
1(...continued) 
shall not bring or maintain an action in a court of 
this state for the collection of compensation for 
the performance of an act or contract for which a 
license is required by this article without  
alleging and proving that the person was licensed 
under this article during the performance of the 
act or contract.  
2  
contractor specifically violated the licensing requirements of  
the residential builders act, albeit at the plaintiff  
homeowner’s invitation.  Further, in filing a lien to seek  
compensation for its services, which was done at defendant’s  
own initiative, defendant violated both the residential  
builders act and the Construction Lien Act.  Additionally, as  
noted by the majority, defendant rejected plaintiffs’ offer to  
pay the balance of the $162,519 contract price plus a $2,684  
change order.  Defendant rejected the offer because it  
believed it was owed approximately $50,000 more than  
plaintiffs offered to pay.  The language of the statutes is  
clear, and, under these circumstances, equity may not be used  
to avoid their effect.  
For these reasons, I concur in the result of the majority  
opinion.  
3  
 
 
                                          
S T A T E 
O F 
M I C H I G A N  
SUPREME COURT  
ROBERT and PATRICIA STOKES,  
Plaintiffs-Appellants, 
Cross-Appellees,  
v
 No. 119074  
MILLEN ROOFING COMPANY,  
Defendant-Appellee 
Cross-Appellant.  
MARKMAN, J. (concurring).  
I concur in the result reached by the majority, as well  
as its analysis, because I agree that (1) cross-plaintiff’s,  
Millen Roofing Company’s, construction lien was invalid under  
MCL 570.1114 because Millen was unlicensed, (2) Millen cannot  
seek compensation from the cross-defendant homeowners, Robert  
and Patricia Stokes, under his contract with them for the  
installation of a slate roof because MCL 339.2412 prevents an  
unlicensed contractor from seeking such compensation, and (3)  
Millen is not entitled to equitable relief because allowing  
  
 
  
such relief would essentially enable Millen to circumvent a  
statute that expressly prohibits an unlicensed contractor from  
seeking compensation for the performance of an act or contract  
for which a license is required.  Accordingly, I would reverse  
the trial court and remand this case to that court.  
I write separately simply to point out the unfairness of  
the result reached here today—a result nonetheless mandated by  
the residential builders act. The Stokes have obtained a roof  
from Millen at substantially below the contract price on the  
basis that Millen lacked a residential builder’s license;  
Millen is simply out of luck for the time, the materials, and  
the money he has put into this roof’s construction because he  
lacked this license.  What renders this particularly unfair in  
this case is that the Stokes knew that Millen was unlicensed,  
knew that this meant that Millen would be unable to bring suit  
against them for their failure to pay and be unable to obtain  
a lien against their property, and had expressly indicated to  
Millen that there was no need for him to be or become  
licensed.1 
In addition, the Stokes repeatedly assured Millen  
1 Matt Millen testified that Mrs. Stokes had told him  
that the “licenses would be her responsibilities,” that the 
license “wasn’t a problem,” and that the license “was taken 
care of.”  The Stokes further communicated to Millen that they 
would be willing to waive the assertion of Millen’s unlicensed 
status in exchange for Millen’s waiver of his right to file a 
construction lien.  While such a communication is in accord  
with Millen’s assertion that he was unaware that such a lien  
(continued...)  
2  
  
 
 
 
 
that he would be paid for his work.2  
The Stokes here avoid payment for work they requested  
from Millen with full knowledge that Millen was required to be  
licensed and that he was not.  They also had full knowledge  
that, as a result of Millen’s status, they would be able to  
avoid paying him for his work, as evidenced by the fact that  
the Stokes had recently prevailed in another lawsuit against  
an unlicensed contractor they had hired to do home improvement  
work.  Under these facts, it appears that the Stokes were  
seeking to take financial advantage of Millen’s unlicensed  
status.3  
1(...continued) 
was unlawful, and that he was acting in good faith when he 
subsequently filed the lien, it is also consistent with the 
Stokes’ interest in avoiding the need to bring a suit to quiet 
title.  
2 There is no indication from either party that the work 
eventually performed by Millen was below par or substandard in 
any respect. Thus, the Stokes had no apparent reason not to 
pay Millen for his work, as agreed.  
3 I do not believe, as the majority apparently does, that 
the fact that the Stokes had, at one juncture, offered to pay 
the balance of the contract price in exchange for an 
unconditional 
waiver 
of lien necessarily means that the Stokes 
were acting in good faith during the entirety of this process. 
The fact that the Stokes now are unwilling to pay the contract 
price, and now are strenuously opposed to the trial court’s 
decision, which essentially ordered them to do nothing more 
than pay the contract price, causes me to disagree with the 
majority in its assessment of the Stokes’ conduct.  The  
majority states that it makes “no assessment” of the Stokes’ 
motives, slip op at 13, n 8, but this statement is difficult 
to reconcile with its immediately preceding statement in the 
(continued...)  
3  
 
In fashioning equitable relief, the trial court sought to  
maintain the parties in the status quo ante.  That is, the  
court awarded Millen the amount of money that the Stokes had  
agreed to pay Millen for the roof minus the amount that the  
Stokes had already paid Millen.4  To the extent that equity was  
appropriately applied in this case, I believe that the trial  
court 
acted 
altogether 
fairly 
and 
reasonably, 
indeed  
correctly.  
However, despite this personal view that allowing the  
Stokes here to have their roof without paying Millen the  
contract price is a highly inequitable result, I nonetheless  
agree with the majority that we cannot allow equity to  
contravene the clear statutory intent of the Legislature.  
Such an intent is established in the residential builders act,  
which 
prohibits 
unlicensed 
residential 
builders 
from  
recovering compensation from homeowners for their work.  The  
Legislature has determined that one, very considerable,  
penalty for performing work without the required license is  
that the unlicensed builder will be denied the ability to sue  
3(...continued) 
same footnote.  
4 The trial court did not award Millen any portion of the 
$52,824 in “extras” that Millen claimed the Stokes owed him. 
Rather, the trial court merely ordered the Stokes to pay 
Millen the balance of the agreed upon contract price, which 
was $113,269, as the Stokes had agreed to pay Millen $165,203 
for the roof and had only paid Millen $51,934 for the roof.  
4  
 
 
 
for payment for the work performed.  The trial court here,  
despite the best of intentions, circumvented this legislative  
intent by ordering the Stokes to pay Millen for the work  
performed, even though Millen performed the work without the  
required license.  This is impermissible under the language of  
MCL 339.2412.  Accordingly, if such inequitable results are to  
be avoided, it is the Legislature that must take action.  
At the time Republic Bank v Modular One LLC, 232 Mich App  
444; 591 NW2d 335 (1998), was decided, a case that I authored,  
I believed that Kirkendall v Heckinger, 403 Mich 371; 269 NW2d  
184 (1978), mandated the result reached in Republic Bank. At  
the time, I understood Kirkendall to stand for the proposition  
that equity may be invoked on behalf of an unlicensed builder  
to require a homeowner to pay for work done when such  
homeowner seeks to clear title.  However, upon further  
reflection, and after considering the analysis of the majority  
opinion, I now agree with the majority that Republic Bank  
erred and that Kirkendall was reasonably distinguishable.  
In Kirkendall, the unlicensed builder had an equitable  
mortgage on the subject property.  When the homeowner filed  
suit to clear his title, the Court concluded that before title  
could be cleared, the homeowner would first have to pay the  
unlicensed builder for the improvements that he made on the  
property with his consent.  Kirkendall, supra at 374. 
In  
5  
 
 
 
Republic Bank, as well as in this case, the unlicensed  
builders did not have equitable mortgages on the properties;  
instead they simply had invalid liens.  Therefore, when the  
homeowners brought suit to clear their titles, there was no  
need for the homeowners to first pay the unlicensed builders  
because the liens were simply unenforceable.  That is, while  
in Kirkendall, there was a valid encumbrance on the land  
requiring the homeowner to do equity before the cloud on his  
title could be removed, in Republic Bank and this case, there  
simply were no valid encumbrances on the lands, and thus the  
homeowners should not have been required to do equity in order  
to get the clouds on their titles removed.  Accordingly, I now  
agree with the majority that Republic Bank erred, and that it  
should be overruled.  The homeowners here should not have been  
required to pay the unlicensed builder for the roof because  
MCL 339.2412 expressly prohibits an unlicensed contractor from  
seeking compensation for the performance of an act or contract  
for which a license is required.  
6  
 
 
___________________________________ 
 
v 
S T A T E 
O F 
M I C H I G A N  
SUPREME COURT  
ROBERT and PATRICIA STOKES,  
Plaintiffs-Appellants 
and Cross-Appellees,  
No. 119074  
MILLEN ROOFING COMPANY,  
Defendant-Appellee, 
and Cross-Appellant.  
CAVANAGH, J. (dissenting).  
The majority holds that the residential builders act  
(RBA), MCL 339.2401 et seq., bars an unlicensed builder from  
seeking compensation under a contract for both labor and  
supplies because a license is required for the labor  
component.  Because I would hold that such a contract may be  
bifurcated into separate labor and supply components under the  
RBA, so that an unlicensed builder may recover for the supply  
costs, I respectfully dissent.  
Section 2412(1) of the RBA states:  
 
A 
person 
or 
qualifying 
officer 
for 
a  
corporation . . . shall not bring or maintain an 
action in a court of this state for the collection  
of compensation for the performance of an act or 
contract for which a license is required by this 
article without alleging and proving that the person 
was 
licensed 
under 
this 
article 
during 
the  
performance of the act or contract.  
The RBA requires that a residential builder be licensed;  
however, the definition of a residential builder does not  
include supplying duties, as the majority notes.  Thus, a  
license is required to install, but not to supply.  
Defendant, known by plaintiff to be an unlicensed  
builder, contracted with plaintiffs to “supply and install” a  
slate roof.1  The majority asserts that because a license was  
1 A strong argument can be made that under this contract, 
plaintiffs were the property owners and the general 
contractors with defendant as the subcontractor. As the  
defendant pointed out in its supplemental brief, plaintiffs 
clearly requested defendant to return to the job, plaintiffs 
listed 
defendant 
as 
a 
subcontractor, 
and 
plaintiffs 
supervised 
over $700,000 worth of contracts.  This would exempt defendant 
from the license requirement under MCL 339.2403(b), which 
provides:  
Notwithstanding article 6, a person may engage 
in the business of or act in the capacity of a 
residential builder or a residential maintenance  
and alteration contractor or salesperson in this 
state without having a license, if the person is 1 
of the following:  
* * *  
(b) An owner of property, with reference to a 
structure on the property for the owner’s use and 
occupancy.  
(continued...)  
2  
 
 
 
 
 
required for the installation duty of the contract, defendant  
may not recover for performing its duty as a supplier.  
Although § 2412 looks for the “performance of an act or  
contract” that requires a license, I cannot agree that the  
entire contract qualifies as one requiring a license.  
The contract expressly imposed two separate duties on  
defendant: to “supply and install” the slate.  According to  
the majority, the installation duty, which requires a license,  
prevails over the supply duty, which does not require a  
license.
 Reading the contract as the majority does  
effectively requires an unlicensed builder who has contracted  
to supply materials in a single contract (in which he has also  
agreed to install those supplies) to have a license to supply. 
 The RBA does not provide for such a result.  Rather, the act  
does allow bifurcating the labor and supply components of a  
single contract by barring lawsuits for compensation of a  
contract that requires a license. 
The bar, therefore, is  
expressly limited to lawsuits involving a contract that  
provides for the specific acts that require a license under  
the RBA, i.e., installing.  I cannot agree that including both  
an installation and supply duty into one document extends the  
license requirement necessary to perform the installation duty  
1(...continued) 
Because I conclude that the contract is severable, however, I 
do not rest on this argument.  
3  
 
 
to the supply duty, thus, generating an unenforceable  
document.
 The result of such a holding requires this  
unlicensed builder to create a separate supply contract,  
stating the same information already repeated in a “supply and  
install” contract, but limited to those duties relevant to  
supplying.  In other words, the majority’s holding mandates  
bifurcation.  
My position is supported not only by a plain reading of  
the RBA, but also by traditional contract principles.  
Under the occupational code, engaging in a licensed  
activity without a license is a misdemeanor, thus, making the  
installation part of the contract in this case illegal.2  The  
general rule is that severance of an illegal provision of a  
contract is warranted and the lawful portion of the agreement  
is enforceable when the illegal provision is not central to  
2 MCL 339.601(1) states:  
A person shall not engage in or attempt to 
engage in the practice of an occupation regulated 
under this act or use a title designated in this 
act unless the person possesses a license or 
registration issued by the department for the 
occupation.  
MCL 339.601(3) describes the penalty for such a  
violation:  
A 
person, 
school, 
or 
institution 
which  
violates subsection (1) or (2) is guilty of a 
misdemeanor, punishable by a fine of not more than 
$500.00, or imprisonment for not more than 90 days, 
or both.  
4  
the parties’ agreement and the illegal provision does not  
involve serious moral turpitude, unless such a result is  
prohibited by statute. See 2 Restatement Contracts § 603, pp  
1119-1120; Calamari & Perillo, Contracts, 3d, § 22-6.  
As noted, I cannot agree that the RBA prohibits  
severance.  Moreover, in my view, the illegal provision,  
providing for defendant to engage in the separate duty of  
installation, is not central to the parties’ agreement that  
the defendant “supply and install” a slate roof.  The legal  
provision, defendant engaging in the separate duty of  
supplying, is clearly an entirely different component of the  
contract, therefore, warranting its enforcement.  
For the above reasons, I would hold that defendant was  
only barred from the breach of contract suit seeking  
compensation 
for 
the 
installation 
services 
and 
allow  
defendant’s suit for supply costs.  Accordingly, I would  
conclude that the trial court erred in summarily disposing of  
defendant’s entire breach of contract action.  
5