Court Opinion

ID: 865575
Source: CourtListenerOpinion
Date Created: 2013-04-27 00:31:20.08136+00
Date Added: 2024-06-11T15:25:54.045444
License: Public Domain

IN THE SUPREME COURT OF MISSISSIPPI

                               NO. 2008-CA-00464-SCT

LUTZ HOMES, INC. AND BARRY R. LUTZ,
INDIVIDUALLY

v.

CARL WESTON AND LORRAINE WESTON

DATE OF JUDGMENT:                         04/14/2008
TRIAL JUDGE:                              HON. ROBERT P. KREBS
COURT FROM WHICH APPEALED:                JACKSON COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANTS:                  E. FOLEY RANSON
ATTORNEY FOR APPELLEES:                   DUSTIN N. THOMAS
NATURE OF THE CASE:                       CIVIL - CONTRACT
DISPOSITION:                              REVERSED AND REMANDED - 08/20/2009
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

       BEFORE WALLER, C.J., RANDOLPH AND CHANDLER, JJ.

       WALLER, CHIEF JUSTICE, FOR THE COURT:

¶1.    Lutz Homes, Inc., and Barry R. Lutz seek review of the final judgment of the Jackson

County Circuit Court releasing their construction lien and barring the counterclaim of Lutz

Homes, Inc. Finding that Lutz Homes, Inc., complied with Mississippi Code Section 73-59-

9(3) prior to the commencement of this action, we reverse and remand.

                       FACTS AND PROCEDURAL HISTORY

¶2.    In April 1999, Barry R. Lutz obtained a residential builder’s license from the

Mississippi State Board of Contractors in his name. He operated as a sole proprietorship
until October 2001, at which time he incorporated his business as Lutz Homes, Inc., naming

himself as president and sole shareholder. Though Lutz thereafter operated in the corporate

name, he did not have his license re-issued under the name of Lutz Homes, Inc.1

¶3.      On June 6, 2005, Carl and Lorraine Weston entered into a contract with Lutz Homes,

Inc., for the construction of a home. At the time of contract, and during the course of

performance, Lutz Homes, Inc., was unlicensed because the residential builders license

remained in Lutz’s individual name.

¶4.      In the spring of 2006, a dispute caused the Westons to terminate the services of Lutz

Homes, Inc., and to refuse payment. The Westons asserted that Lutz Homes, Inc., had not

performed in a workmanlike manner, had misrepresented its standards, and had refused to

address their concerns. On April 24, 2006, Lutz Homes, Inc., responded by filing a notice

of construction lien in the amount of $118,125.

¶5.      In August 2006, Lutz contacted the State Board of Contractors and requested that

“Lutz Homes, Inc.” be named a license holder. Lutz’s request was granted on August 11,

2006.2

         1
         Lutz claims that the annual license renewal forms requested information about his
corporate structure. He submits that he included information about Lutz Homes, Inc., in
these forms; therefore, the State Board of Contractors had notice of the change as early as
April 2002.
         2
           According to the record, Lutz requested the name change by telephone, and the
change was verified by the State Board of Contractors in a memo dated November 2, 2006.
This memo is listed as “Exhibit A” to Lutz Homes, Inc.’s, and Lutz’s Motion for Declaratory
Judgment, but it was not included in the record. In their brief, the Westons do not contest
the fact that Lutz Homes, Inc., acquired a residential builder’s license in August 2006. They
contend, rather, that Lutz did not request merely a change of name, but sought an entirely
new license for Lutz Homes, Inc.

                                               2
¶6.    On October 24, 2006, the Westons filed suit against Lutz Homes and Lutz individually

(hereinafter “Defendants”), requesting that the contract be declared null and void, and

seeking a preliminary injunction to terminate the construction lien. The Westons argued that

Mississippi Code Section 73-59-9(3)3 rendered the contract void because Lutz Homes, Inc.,

was an unlicensed residential builder at the time the contract was entered. They asserted that

a preliminary injunction was proper because Lutz Homes, Inc., being unlicensed, was not

authorized to file a construction lien, and that such lien caused them irreparable harm by

preventing them from receiving relief grants in the aftermath of Hurricane Katrina. The

Westons sought $300,000 in damages for breach of contract, wrongful interference with a

contractual right, and slander of title. The Defendants filed an answer acknowledging that

the residential builder’s license had remained in Lutz’s individual name until August 2006.

Defendants asserted affirmatively that the delay and cost overruns were the result of

Hurricane Katrina, and that the Westons themselves had prevented completion of the

contract. Additionally, Lutz Homes filed a counterclaim for breach of contract, and sought

$152,898 in damages for the cost of labor and materials.

¶7.    On December 12, 2007, Defendants filed a motion for declaratory judgment to

establish Lutz Homes, Inc.’s right to proceed on the counterclaim and to maintain the

construction lien. They argued that Lutz’s residential builder’s license should benefit Lutz

Homes, Inc., because the company was essentially Lutz’s alter ego. On February 29, 2008,

       3
         Mississippi Code Section 73-59-9(3) states that “[a] residential builder or remodeler
who does not have the license provided by this chapter may not bring any action, either at
law or in equity, to enforce any contract for residential building or remodeling or to enforce
a sales contract.” Miss. Code Ann. § 73-59-9(3) (Rev. 2008), extended by 2009 Miss. Laws
ch. 556.

                                              3
the trial court denied Defendants’ Motion for Declaratory Judgment. It further found that

Lutz Homes, Inc., was not a licensed residential builder at the time of contract and ordered

that its lien be released and its counterclaim barred. On April 15, 2008, the trial court entered

a final judgment pursuant to Rule 54(b) of the Mississippi Rules of Civil Procedure

dismissing Lutz Homes, Inc.’s counterclaim. Defendants now appeal, raising one assignment

of error.

                                        DISCUSSION

       Whether Mississippi Code Section 73-59-9(3) prohibits Lutz Homes4 from
       proceeding on its counterclaim for breach of contract.

¶8.    “Statutory interpretation is a matter of law which this Court reviews de novo.”

Wallace v. Town of Raleigh, 815 So. 2d 1203, 1206 (Miss. 2002) (citing Donald v. Amoco

Prod. Co., 735 So. 2d 161, 165 (Miss. 1999)).

¶9.    When a statute is unambiguous and coveys a clear and definite meaning, this Court

follows its plain terms. Nat'l Union Fire Ins. Co. v. Miss. Ins. Guar. Ass'n, 990 So. 2d 174,

180 (Miss. 2008) (quoting Marx v. Broom, 632 So. 2d 1315, 1318 (Miss. 1994)). This Court

resorts to the canons of statutory interpretation only where a statute is ambiguous or silent

on a specific issue. Nat'l Union Fire Ins. Co., 990 So. 2d at 180 (citing Dupree v. Carroll,

967 So. 2d 27, 30 (Miss. 2007)).

       4
         Both parties concede that Lutz Homes, Inc., is the rightful party to the contract. As
an aside, we note that, even though the contract is signed solely in Lutz’s individual name,
the signature line is preceded by the term “Authorized Signature.” This implies that Lutz
signed as an authorized agent of Lutz Homes. See Turtle & Hughes, Inc. v. Browne, 1996
U.S. Dist. LEXIS 9555, *10 (S.D.N.Y. July 9, 1996); Marveon Sign Co. v. Roennebeck, 694
P.2d 604, 604 (Utah 1984).

                                               4
¶10.   Section 73-59-9(3) states that “[a] residential builder or remodeler who does not have

the license provided by this chapter may not bring any action, either at law or in equity, to

enforce any contract for residential building or remodeling or to enforce a sales contract.”

Miss. Code Ann. § 73-59-9(3) (Rev. 2008), extended by 2009 Miss. Laws ch. 556. The term

“residential builder” encompasses corporations, partnerships, and individuals alike. Miss.

Code Ann. § 73-59-1(b) (Rev. 2008), extended by 2009 Miss. Laws ch. 556. Accordingly,

any “corporation, partnership or individual” seeking a residential builder’s license must file

a written application with the State Board of Contractors. Miss. Code Ann. § 73-59-5 (Rev.

2008), extended by 2009 Miss. Laws ch. 556. Mississippi’s residential builder’s licensing

statutes thus indicate that a corporation operating as a residential builder should maintain a

license distinct from its individual incorporator(s), officer(s), member(s), or shareholder(s).

See Miss. Code Ann. §§ 73-59-1 to 73-59-21 (Rev. 2008), extended by 2009 Miss. Laws ch.

556.

¶11.   Mississippi Code Sections 73-59-1 through 73-59-21 charge the State Board of

Contractors with enforcement and supervisory authority for licensing residential builders and

remodelers. Miss. Code Ann. §§ 73-59-1 to 73-59-21 (Rev. 2008), extended by 2009 Miss.

Laws ch. 556. Pursuant thereto, the State Board of Contractors has promulgated rules and

regulations concerning changes in a licensee’s name or corporate structure. Board of

Contractors Regulations, 50-023 CMSR § 002-1 (1994). The rules state that, when corporate

structure is altered, the currently licensed person or entity must complete an application

outlining the change of structure, articulating the impact of the change, paying a fifty-dollar

fee. Id. Specifically, the pertinent rule provides that:

                                              5
       Any corporation or other legal business entity holding a valid license shall
       immediately notify the [State Board of Contractors] of any change of name or
       corporate structure by filing an application with the Executive Secretary of the
       Board outlining the specific change and the impact on the status of the entity.
       A fee of $50.00 shall accompany each application filed pursuant to this rule.

Id.

¶12.   As early as 2002, Lutz noted the change in business structure by filing his annual

license renewal forms. In his April 2002 license renewal form, Lutz reported that he had

incorporated his business in October 2001. Thereafter, Lutz provided information about his

new business structure on each annual license renewal form until 2006, when the form was

modified so that such information was no longer required. While Lutz may be credited for

diligently and accurately filing his annual license renewal forms, he did not comply with the

rules set forth by the State Board of Contractors in submitting the required application for

a change in corporate structure. Lutz failed to submit the requisite application or fifty-dollar

fee.

¶13.   No issue exists on appeal concerning whether Lutz Homes, Inc., was licensed prior

to August 2006. Lutz acknowledges that “technically speaking, at the time of execution of

the construction contract (June 6, 2005) Lutz Homes Inc. [sic] did not have a residential

builders license.”

¶14.   We agree that Lutz Homes, Inc., was unlicensed at the time it entered into the

construction contract with the Westons. Nevertheless, Section 73-59-9(3) does not bar its

counterclaim or lien. Miss. Code Ann. § 73-59-9(3) (Rev. 2008), extended by 2009 Miss.

Laws ch. 556.

                                               6
¶15.   As previously discussed, under Section 73-59-9(3), a corporation must be licensed

prior to asserting an “action.” 5 Miss. Code Ann. § 73-59-9(3) (Rev. 2008), extended by 2009

Miss. Laws ch. 556. The plain language of Section 73-59-9(3) requires only that a residential

builder obtain a license prior to bringing an action. Id. Unlike similar statutes found in Title

73 of the Mississippi Code, Section 73-59-9(3) does not require that a residential builder be

licensed at the time of performance or at the time the cause of action accrued. Cf. Miss. Code

Ann. § 73-34-55 (Rev. 2008) (in order to maintain an action to recover a commission, fee,

or compensation, a real estate appraiser must have been licensed at the time of doing the act

or rendering the service); Miss. Code Ann. § 73-35-33(1) (Rev. 2008) (in order to maintain

an action to recover a commission, fee, or compensation, a real estate broker must have been

licensed at the time of the act or service).        Once a license has been obtained, the

disqualification is removed and an action may be brought to enforce a residential building

or sales contract, regardless of whether the contract was made before or after the license was

acquired.6 See Miss. Code Ann. § 73-59-9(3) (Rev. 2008), extended by 2009 Miss. Laws ch.

556.

       5
          An “action” is defined at common law as “a legal demand of one’s right.” United
States v. Smelser, 87 F.2d 799, 800 (5th Cir. 1937); cf. Black’s Law Dictionary 24 (abridged
7th ed. 2000) (defining “action” as “[a] civil or criminal judicial proceeding”).
       6
          In an unpublished opinion issued August 17, 2004, the United States Court of
Appeals for the Fifth Circuit found that Section 73-59-9 required a license at the time the
cause of action accrued. Libbey v. Ridges, 113 Fed. Appx. 3 (5th Cir. 2004) (unpublished).
This unpublished opinion, however, is not considered precedent under Fifth Circuit Rules.
5th Cir. R. 47.5.4. Moreover, while Fifth Circuit decisions are highly persuasive, they are
not binding authority for this Court. Sperry-New Holland, Div. of Sperry Corp. v. Prestage,
617 So. 2d 248, 256 (Miss. 1993) (superseded on other grounds by statute).

                                               7
¶16.   Lutz Homes, Inc., became licensed in August 2006, two months prior to the start of

this litigation, and four months before its counterclaim was filed. Its counterclaim and lien,

therefore, are not barred under Section 73-59-9(3).

                                      CONCLUSION

¶17.   We find that the trial court erred in dismissing Lutz Homes, Inc.’s counterclaim and

ordering its construction lien released. Accordingly, we reverse the trial court’s judgment

and remand this case for further proceedings.

¶18.   REVERSED AND REMANDED.

     CARLSON, P.J., RANDOLPH, LAMAR AND PIERCE, JJ., CONCUR.
KITCHENS, J., CONCURS IN RESULT ONLY WITH SEPARATE WRITTEN
OPINION JOINED BY GRAVES, P.J., AND CHANDLER, J.; DICKINSON, J.,
JOINS IN PART. DICKINSON, J., CONCURS IN PART AND IN RESULT WITH
SEPARATE WRITTEN OPINION.

       KITCHENS, JUSTICE, CONCURRING IN RESULT ONLY:

¶19.   I agree that Lutz Homes may bring a counterclaim, but not for the reasons stated by

the majority. In my opinion, there is no need to engage in the business of statutory

interpretation, because Lutz Homes, Inc., was a licensed builder prior to entering into the

contract.

¶20.   Lutz originally obtained his residential builder’s license while operating his business

as a sole proprietorship. As required, each year he filed a renewal application with the State

Board of Contractors, and his license was consistently renewed annually. For several years,

he indicated on the renewal form that he was doing business as an individual, but once he

began operating his business as a corporation, Lutz correctly reported the change. In his

                                              8
2002 application, he noted that ownership of the business was different, that he was now

operating as a corporation, that he was the president of the corporation, and he also listed the

corporation’s federal tax identification number. Lutz filled out the form completely and

accurately. He did not include the name of the new corporation, but the form did not ask for

that information. It did have a blank for the “name in which license is issued” (emphasis

added), and Lutz correctly answered, “Barry R. Lutz.”

¶21.   From the record before us, it appears that Lutz did everything he was required to do

to ensure that his corporation was lawfully operating with a residential builder’s license. The

information filed with the State Board of Contractors clearly indicated that the license

renewal was for a corporation, and this first occurred some three years before Lutz and the

Westons contracted with each other.

¶22.   The majority finds, however, that Lutz Homes, Inc., was not a licensed builder

because Lutz did not file a separate application to change the name on his license. The

majority relies on language from the Board of Contractors Regulations, regulations not cited

by either party, and which, according to the record, are not strictly enforced. In 2006,

according to Lutz, he was able to make the technical name change to his license with a

simple telephone call. There is no indication that the State Board of Contractors required

him to file a separate application or pay a $50 fee. Moreover, Lutz maintains that he was not

aware “that he could have requested that [the license] be transferred from Barry R. Lutz to

Lutz Homes, Inc. or even that this action was desirable and/or necessary as a condition to any

future attempt to enforce a contract.”

                                               9
¶23.   Finding that Lutz Homes, Inc., was unlicensed at the time the contract was entered

into and performed, the majority opinion goes on to reason that the corporation may still

pursue a counterclaim through an interpretation of the statute that, with respect, I find highly

problematic and strained. The majority holds that a residential builder may file a civil action

seeking to collect payment for work done without a license, as long as that builder obtains

a license prior to filing suit. Reading Mississippi Code Section 73-59-9 (3) in the context of

the entire statutory scheme, I believe this interpretation to be erroneous.

¶24.   The pertinent language provides, “[a] residential builder or remodeler who does not

have the license provided by this chapter may not bring any action, either at law or in equity,

to enforce any contract for residential building or remodeling or to enforce a sales contract.”

Miss. Code Ann. § 73-59-9(3) (Rev. 2008), extended by 2009 Miss. Laws ch. 556. The

immediately preceding subsections make it a misdemeanor, punishable by a fine of up to

$5,000 and/or imprisonment of thirty to sixty days, to build or remodel a residence without

a license. Miss. Code Ann. § 73-59-9(1)-(2), extended by 2009 Miss. Laws ch. 556.

¶25.   This strong prohibition against residential construction work by unlicensed

corporations, partnerships, or individuals, which clearly is penal in nature, is simply

reinforced by the additional penalty of prohibiting unlicensed builders or remodelers from

using the state’s courts to try to collect unpaid bills for residential construction work

performed without benefit of the required license. Such an interpretation is consistent with

the majority’s conclusion that the intent of the statute is “to protect [consumers] against the

dangers associated with unlicensed builders.” Yet, following the majority’s reasoning, an

unlicensed builder could utilize Mississippi’s courts to enforce a contract for work illegally

                                              10
performed if only the builder obtained a license in advance of filing suit. Surely the

Legislature could not have intended such a patently perverse course of events.

¶26.   Indeed, traditional rules of statutory construction militate against this Court’s reaching

the conclusion that it does today via the path traveled by the majority. “Unthought of results

must be avoided if possible, especially if injustice follows, and unwise purpose will not be

imputed to the Legislature when a reasonable construction is possible.” Evans v. Boyle

Flying Service, Inc., 680 So. 2d 821, 825 (Miss. 1996) (quoting McCullen v. State, 217

Miss. 256, 63 So. 2d 856, 861 (1953)). Moreover, “[w]hen no valid reason exists for one of

two possible constructions of a statute, the interpretation with no valid reason ought not be

adopted.” Allred v. Webb, 641 So. 2d 1218, 1222 (Miss. 1994) (citing Thornhill v. Ford,

213 Miss. 49, 56 So. 2d 23, 30 (1952)). I see no valid reason why the Legislature would

allow a builder to sue for work performed without a license, so long as the builder obtains

a license prior to filing suit. The prohibition against bringing suit should apply to those

builders and remodelers who were unlicensed at the time the work in question was

performed.

¶27.   Having said that, I nevertheless would hold that this builder was not and is not

prohibited by the statute from maintaining a civil action, in this case by means of its

counterclaim, in an effort to collect what it claims it is owed by the Westons, inasmuch as

Lutz, either individually or corporately, was continuously licensed at all relevant times.

Barry R. Lutz had done everything the State Board of Contractors’ form asked of him to

transfer the license he had acquired and maintained as an individual to the corporate entity

he had organized to continue his residential construction and remodeling business without

                                              11
interruption. In short, this building contractor is not prohibited from utilizing Mississippi’s

court system in pursuit of its claim against Mr. and Mrs. Weston for the simple and obvious

reason that the contractor was properly licensed at all relevant times.

¶28.   For these reasons, I respectfully concur in result only.

     GRAVES, P.J. AND CHANDLER, J., JOIN THIS OPINION. DICKINSON, J.
JOINS THIS OPINION IN PART.

       DICKINSON, JUSTICE, CONCURRING IN PART AND IN RESULT:

¶29.   Although I agree with the majority’s conclusion that Lutz Homes, Inc. may pursue its

cause of action against the Westons, I do not agree with its reasoning. Rather, I agree with

Justice Kitchens’s reading of the documents, which clearly demonstrates that Lutz Homes,

Inc. was a licensed contractor when the work for the Westons was performed.

¶30.   However, my agreement with Justice Kitchens is not complete. I find myself in the

unfortunate position of parting ways with my esteemed colleague from Copiah County only

as to his view that the clear, unambiguous language of Section 73-59-9(3) of the Mississippi

Code would not have allowed the corporation to become licensed after performing the work,

and then to file suit. I believe it would.

¶31.   Furthermore, I cannot agree that our personal view of what is “perverse” should

control our interpretation of a statute. In my opinion, even where enforcing a statute’s clear

language might yield a “perverse” result (as Justice Kitchens reasonably fears would happen

in this case), it is not within our constitutional prerogative to refuse to apply the statute’s

plain language. Rather, the prospect that a perverse result might flow from the application

of a constitutional statute is a legitimate and serious legislative concern.

                                              12