Court Opinion

ID: 9762541
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:26:02.620454+00
Date Added: 2024-06-11T07:29:35.352981
License: Public Domain

Opinion for the court by Associate Judge FARRELL.
Dissenting opinion by Associate Judge RUIZ at p. 24.
FARRELL, Associate Judge:
Once again we confront the situation of a home improvement contractor who accepted progress payments without having obtained the required license to perform work. Once again our decisions compel us to affirm the trial court’s determination, under the applicable regulations, that the contractor thereby forfeited the right to recover for work performed on either a contract or a quantum meruit theory. Our dissenting colleague invites us down a path we have long since rejected of deciding whether substantial compliance or equitable notions may substitute for the strict obedience to licensing which the legislature has commanded. We decline the invitation.
I.
Cevern, Inc., the appellant, brought an action to establish a mechanic’s lien on the home of appellees Robert Ferbish and Viola Stanton. Cevern sought to recoup a balance of $10,295.61 it said was owed to it for work performed under a home improvement contract with Thelma Ferbish, also an appellee, who allegedly acted as the owners’ agent. Appellees counterclaimed, alleging that they had expended $43,600 to correct Cevern’s work.
On August 24, 1992, the scheduled date of trial, counsel for appellees orally moved for summary judgment, asserting that Cevern was not licensed at the time it entered into the home improvement contract. The trial judge granted the motion the next day on the ground that “[Cevern] was not a licensed contractor at the time it received payment on the home improvement contract ..., notwithstanding the fact that [Cevern] subsequently received a valid license before the work was completed.” The judge also rejected Ce-vern’s claim for recovery in quasi-contract. At appellees’ request, he dismissed without prejudice their counterclaim. On September 3, 1992, Cevern moved for reconsideration of the judgment, which the trial judge denied. *19Also, pursuant to a request in appellees’ opposition, the judge entered judgment in their favor for $14,000, the amount counsel for appellees stated they had paid to Cevern. (To do so, the judge on his own motion reinstated the counterclaim and deemed it amended to demand restitution).
In the trial court, the parties stipulated orally to the following facts:
(1) Cevern was bonded and insured as of August 8, 1990, as required by District of Columbia regulations;
(2) Cevern applied for a home improvement contractor license on August 14, 1990;
(3) The Department of Consumer and Regulatory Affairs approved all of the required certifications for Cevern’s application on August 20, 1990;
(4) On August 24, 1990, the investigator for the Department of Consumer and Regulatory Affairs certified that Cevern met all regulatory requirements;
(5) Cevern and the appellees entered into a home improvement contract on August 27, 1990;
(6) Cevern received a $7,000 advance payment[1] from appellees on August 31, 1990;
(7) Cevern paid its licensing fee[2] and was issued its home improvement license on September 5,1990.[3]
Counsel for appellees further represented, and Cevern did not appear to dispute, that appellees paid Cevern an additional $7,000 after September 5, 1990.
In entering judgment for appellees for $14,000 in restitution, the trial judge declared that, under this court’s decisions, “a contract made in violation of a licensing statute that is designed to protect the public will usually be considered void and unenforceable, and the party violating the statute cannot collect monies due on a quasi-contraetual basis.” Therefore, since Cevern accepted an advance payment from appellees on August 31, 1990, in violation of 16 DCMR § 800.1,4 it could recover neither in contract nor in quantum meruit. The fact that Cevern acquired a license before completing the contracted-for work, and before receiving the balance of payment therefor, did not avail it. The judge explained:
[TJhe purpose of licensing statutes would be frustrated if recovery were permitted for work performed without a license.... [T]h[is] rationale equally applies to situations where the contract is entered before the issuance of a license, or where some of the preliminary work is done before a license is issued, and a balance of the work is completed after the license has is-sued_ [Sjuch a “straddle” arrangement would also run afoul of the underlying rationale for the statutory and regulatory scheme in this area of the law.
II.
In Capital Constr. Co. v. Plaza West Coop. Ass’n, 604 A.2d 428 (D.C.1992) (per curiam), this court stated:
In the District of Columbia it is a principle of long standing that an illegal contract, made in violation of a statutory prohibition designed for police or regulatory purposes, is void and confers no right upon the wrongdoer. This rule applies to a breach of 16 DCMR § 800.1, a prohibitory regulation enacted to protect the pub-*20lie.... Therefore, we have oft held that receipt of payment by an unlicensed contractor before completion of the work under the contract violates the home improvement regulations and renders the contract void and unenforceable, even on a quasi-contractual basis.
Id. at 429-30 (citations, internal quotation marks, and footnotes omitted). Our decisions rejecting any deviation from this rule span more than a quarter-century. See Marzullo v. Molineaux, 651 A.2d 808, 809-10 & n. 3 (D.C.1994); Nixon v. Hansford, 584 A.2d 597, 598 (D.C.1991); Billes v. Bailey, 555 A.2d 460, 462 (D.C.1989); Woodruff v. McConkey, 524 A.2d 722, 724 n. 1 (D.C.1987); Erwin v. Craft, 452 A.2d 971, 971-72 (D.C. 1982) (per curiam); Truitt v. Miller, 407 A.2d 1073, 1078 (D.C.1979); Bathroom Design Inst. v. Parker, 317 A.2d 526, 528 (D.C.1974); Miller v. Peoples Contractors, Ltd., 257 A.2d 476, 477-78 (D.C.1969); cf. Saul v. Rowan Heating & Air Conditioning, Inc., 623 A.2d 619, 621 (D.C.1993) (unlicensed refrigeration and air conditioning contractor); Jackson v. Holder, 495 A.2d 746, 748 (D.C.1985) (unlicensed master plumber); Family Constr. v. District of Columbia Dep’t of Consumer & Regulatory Affairs, 484 A.2d 250, 254 (D.C. 1984) (home improvement contractor, not registered as a retail seller, who entered into retail installment contract).
In some, even most, of these cases we have been met with the plea (usually by way of a petition for rehearing en banc) that the nullification of a contract effected by receipt of advance payments alone is harsh and disproportionate, resulting in a windfall to consumers who received good value for their money and then were allowed to keep the money anyway. Our response uniformly has been rejection of this appeal, primarily for two reasons: first, because compliance with the licensing requirement by a qualified contractor is a simple administrative matter; and second, because anything but an unyielding rule would put temptation in the way of unqualified (and unscrupulous) contractors and invite recurrence of the same abuses that underlay enactment of the regulatory scheme. See, e.g., Bathroom Design Inst., 317 A.2d at 529.5 In short, potential unfair applications of the rule at the margins have not persuaded us to sacrifice the benefits of a clear-cut, unmistakable requirement, with equally clear consequences for noncompliance, in this area of consumer protection.
Cevern nevertheless offers two reasons why we should relieve it of the consequences of the rule. First, Cevern argues that it “all but” complied with the regulation by meeting every one of the requirements for licensure except the act of paying for and receiving the license. Second, Cevern eventually — indeed, shortly after being certified by the Department investigator — did obtain the license, and argues that denying it payment for work performed thereafter is a reductio ad absur-dum of the rule barring even quasi-contractual recovery. We reject both contentions.
A.
As to the first, Cevern’s position as one who had met the bonding, insurance and other requirements for licensing, but had not been licensed when it accepted advance payment, distinguishes it only in degree but not kind from others who have felt the full impact of the nullification (“void[ance]”) rule. In Capital Constr. Co., for example, the court required the contractor to disgorge progress payments accepted after its license had lapsed or expired before completion of the work. One assumes, since the contractor still possessed the license at most a few months before it accepted progress payments,6 that at the time it violated the regulation it was in compliance with some if not all of the other licensing requisites; yet this was unavailing. Similarly, in Saul v. Rowan *21Heating & Air Conditioning, Inc., supra, it was “undisputed that [the contractor] had no license to engage in the regulated activity at the time the work was performed, even though it appears that it may have met at least the eligibility requirements set forth in 17 DCMR § 305.1 [governing refrigeration and air conditioning licensing].” 628 A.2d at 621. Specifically, we held that “[a]lthough its president had an individual Master Mechanic’s license [thus satisfying a key requirement of the regulation], this could not excuse Rowan, Inc., the contracting party, from obtaining the required license before engaging in the business.” Id. at 621-22. Accordingly, the contractor could not recover for work performed “on either a contract or a quantum meruit theory.” Id. at 620. While Ce-vern may have come closer than these contractors to complying with the regulation, the fact is that it did not do so, and our decisions specify the consequence.
We do not accept our dissenting colleague’s distinction between meeting “the regulatory prerequisites for a license” and obtaining the license itself, which she terms a “bare licensing ... requirement ]” designed solely to raise revenue. If revenue-raising were the only purpose for issuance of the license as such, much the same end could be achieved by a tax or professional fee. To the contrary, common sense suggests the regulatory importance of the certificate of license itself as the final, formal evidence that the contractor has met the licensing requirements. Others, most particularly but not only the homeowner contracted with, should be able to look to it for simple and sufficient proof of qualification under the regulations, rather than having to inquire of agency officials whether the contractor has substantially (or even wholly) completed the certification process.
Further, even if we agreed that the ultimate step of paying a fee to receive the license is a revenue-raising measure, the purpose of the home improvement licensing requirements as a whole is clearly regulatory. In this regard, the Restatement (Second) of CONTRACTS § 181 (1979), upon which the dissent relies, states in part as follows:
In deciding whether a party can enforce an agreement in spite of his failure to [obtain a license, to register or to comply with a similar requirement], courts distinguish between requirements that have a regulatory purpose and those that do not. The policy behind a requirement that has a regulatory purpose may be regarded as sufficiently substantial to preclude’enforcement, while the policy behind one that is merely designed to raise revenue will not be. In determining whether a measure has a regulatory purpose, a court will consider the entire legislative scheme,[7] including any relevant declaration of purpose.
Restatement (Second) of CONTRACTS § 181 cmt. b (emphasis added). Thus, we will not view the final step of obtaining the license in abstraction from the “entire legislative scheme” of home improvement licensure, whose regulatory purpose is unmistakable. The Board of Commissioners of the District of Columbia issued the order antedating the home improvement regulations8 under authority delegated to it by, among other statutes, the Home Improvement Business Act of 1960, Pub.L. No. 86-715, 74 Stat. 815 (current version at D.C.Code §§ 2-501 to - 507 (1994)). See Commissioners’ Order No. 61-563, § 1; 5Y DCRR § 1; Gilliam v. Travelers Indem. Co., 281 A.2d 429, 429 n. 1 (D.C.1971). Congress passed the 1960 Act “because of evidence before it of widespread victimization of District of Columbia homeowners by unscrupulous home improvement contractors.”9 Bathroom Design Inst., 317 *22A.2d at 529; see also Capital Constr. Co., 604 A.2d at 430; Truitt, supra, 407 A.2d at 1077-78; Gilliam, 281 A.2d at 431. The regulations are a unified set of requirements to address this problem, culminating in the issuance of a license, as the Restatement itself recognizes in discussing a similar, hypothetical legislative scheme:
A, an unlicensed plumber, agrees to repair plumbing in B’s home, for which B promises to pay A $1,000. A state statute, enacted to prevent the public from being victimized by incompetent plumbers and to protect the public health, requires persons doing plumbing to be licensed on the basis of an examination, the posting of a bond, and the payment of a fee, and makes violation a crime. A does the agreed work. A court may decide that the public policy against enforcement of B’s promise outweighs the interest in its enforcement, and that B’s promise is unenforceable on grounds of public policy.
Restatement (Second) of Contracts § 181 cmt. c, illus. 2 (emphasis added; citations omitted).
The dissent also contends that, where the D.C.Council or an agency to which the Council has delegated authority intends for a professional’s unlicensed status to bar it from enforcing a contract, the Council or agency expressly so provides. We regard this argument as simply foreclosed by our past decisions. Moreover, Restatement (Second) of Contracts § 178 cmt. b (1979) itself states that “[ojnly infrequently does legislation, on grounds of public policy, provide that a [promise or other term of an agreement] is unenforceable. When a court reaches that conclusion, it usually does so ... although it [the legislation] says nothing explicitly about unenforceability.” In other words, the fact that the legislature did not address whether failure to obtain a license precludes maintaining an action on the contract creates no inference either way. If anything, the fact that “the Council of the District of Columbia has not seen fit to modify the [home improvement] statutes or regulations^] in light of our longstanding interpretation[ ] thereof’ prohibiting such recovery, Marzullo, 651 A.2d at 810 n. 3, suggests that the Council approves this interpretation.
B.
 Appellant’s more sympathetic argument is that, even though acceptance of an advance payment rendered the contract void, Cevern should be able to recover on a theory of unjust enrichment for the work performed after it obtained the license, when its qualification to do the work could no longer be questioned. The court has not yet considered this variation on the theme that quantum meruit should relieve the contractor of at least part of the consequences of accepting payment without a license before completing the job. And rejecting appellant’s argument does convey somewhat the sense of branding the contractor thereafter with the mark of its original sin. However, the court has been insistent that quantum meruit recovery for performance in return for a promise unenforceable on public policy grounds is forbidden.10 Accepting Cevern’s argument would run directly across the grain of these decisions.11 Moreover, the trial court aptly de*23scribed this as a “straddle” argument by Cevern, a term that highlights the potential mischief of an exception that would let a contractor attempt to prove that the bulk (or a substantial portion) of the work was done on one side of the line rather than the other.12
The dissent cites Hoffheins v. Heslop, 210 A.2d 841 (D.C.1965), and Thompson v. Wolfrey, supra note 8, 483 A.2d 636, as support for its view that one who, during contractual performance, obtains a home improvement license may recover quantum meruit for work performed after the licensure. But Hoffheins and Thompson each held only that a person who lacks a home improvement license on the date he enters into.a contract, but who accepts no advance payment, may enforce the contract. See Hoffheins, 210 A.2d at 843 (“[The predecessor regulation of 16 DCMR § 800.1] do[es] not apply where the contractor finances himself during the progress of the work. The absence of a license is relevant only where the contractor requires or accepts payment in advance of full completion of the contracted work”); Thompson, supra note 8, 483 A.2d at 637 (since the contractor did not require or accept an advance payment, the trial court correctly ruled that the predecessor regulation of 16 DCMR § 800.1 “did not bar [the] appellee[’s] ... recovery of the balance due under the oral contract”). The difference is between a contractor who never violates the regulation and one who, like Cevern, does so but later attempts to purge himself of the violation and so collect progress payments. That may be a harsh but it is not an unreasonable distinction.
Finally, the dissent invokes two putative exceptions from the rule against quantum meruit recovery in this context. First, it points out analogously that in William J. Davis, Inc. v. Slade, 271 A.2d 412, 416 (D.C. 1970), the court held that a landlord whose contract with a tenant is void because of violations of the housing regulations may still recover the reasonable value of the occupation of the premises. But the relation between Cevern and appellees is that of contractor and customer, not landlord and tenant; and Cevern violated the regulations governing home improvement work, not the housing regulations. This court has never applied Davis beyond the context of the housing code, and — given our consistent denial of recovery for quantum meruit to unlicensed contractors — we are unpersuaded to do so here.
The dissent also believes the general rule should not apply where “denial of restitution would cause a disproportionate forfeiture.” Post at 28 (citing Restatement (Second) of Contracts § 197). The $24,295.61 which Ce-vern asserts it is being denied for the reasonable value of its services is no doubt a substantial sum, but the court has held that denial of $60,000 to a contractor “is not, as a matter of law, too severe” for the contractor’s failure to obtain a license as in this case. Truitt, 407 A.2d at 1080. And the dissent concedes that even under its disproportionality theory Cevern could recover only the still smaller sum (smaller than $24,295.61) attributable to its work after September 5, 1990. Whatever the remaining harshness of the result dictated by our decisions, “we have determined that it effectuates the statutory purpose of ‘protecting homeowners from fraudulent and unscrupulous practices in the home improvement industry.’ ” Marzullo, 651 A.2d at 810 n. 3 (quoting Capital Constr. Co., supra, 604 A.2d at 430).13 Here, we are convinced, letting hard facts induce relax*24ation of the forfeiture rule would simply be to make bad law.
The judgment of the Superior Court is

Affirmed.

1. An advance payment is a "payment ... in advance of the full completion of all work required to be performed under the contract ...” 16 DCMR § 800.1 (1993).

2. See 16 DCMR § 800.2 ("The fee for a license as a home improvement contractor or home improvement salesperson shall be as that prescribed in the District license fee schedule approved by the Mayor”).

3. The parties disputed the extent of work performed prior to September 5. Cevern contended that it merely dug a ditch for some footings which later had to be changed due to the fault of the appellees; appellees maintained that Cevern erected a wall.

.16 DCMR § 800.1 provides:
No person shall require or accept any payment for a home improvement contract in advance of the full completion of all work required to be performed under the contract, unless that person is licensed as a home improvement contractor or as a licensed salesperson employed by a licensed contractor in accordance with the provisions of this chapter.

. The dissent reminds us that our task is "not to lay down unyielding rules but to decide individual cases on their own merits." Post at 24. Of course we decide only the case before us, but given the rule established by our past decisions, we are not justified in sleuthing out tiny distinctions between cases to avoid a result we find unpalatable.

. The contractor’s license expired on December 31, 1988, and it continued to perform renovations until May or June of 1989, receiving progress payments in the meantime. See Capital Constr. Co., 604 A.2d at 429, 430 n. 3.

7. Comment a to Restatement (Second) of Contracts § 178 points out that “[t]he term 'legislation’ is used here in the broadest sense to include any fixed text enacted by a body with authority to promulgate rules, including not only statutes, but constitutions and local ordinances, as well as administrative regulations issued pursuant to them.”

. This order was Commissioners’ Order No. 61-563, 7 D.C.Reg. 225 (1961), reprinted in 5Y DCRR §§ 1.1-4.15 (1970). See Thompson v. Wolfrey, 483 A.2d 636, 636 n. 1 (D.C.1984).

. "Complaints about this industry ranked second among all complaints filed with Better Business Bureaus throughout the country and the National Better Business Bureau estimated that fraudulent practices in the industry cost consumers *22from 500 million to 1 billion dollars annually.” Bathroom Design Inst., 317 A.2d at 529 n. 8.

. See Mantillo, 651 A.2d at 810 n. 3 (where an "unlicensed contractor[ ] ... vio!ate[s] the regulations by accepting payment before the completion of a construction project," "[ajny moneys paid may be recovered from the contractor, and no quantum meruit may be awarded”); Truitt, 407 A.2d at 1079 (where "a contract [is] made in violation of a licensing statute that is designed to protect the public ... the party violating the statute cannot collect monies due on a quasi-contractual basis”); Bathroom Design Inst., 317 A.2d at 528 ("[B]ecause the work was performed in contravention of [the predecessor regulation of 16 DCMR § 800.1, which was] designed for regulatory purposes in exercise of the police power, there was no equitable base upon which quasi-contractual recovery could be predicated"); Miller, 257 A.2d at 478 ("[S]ince ... appellee violated the [predecessor regulation of 16 DCMR § 800.1,] which w[as] designed for police or regulatory purposes," it "cannot sue in quasi-contract for the value of its services”).

. See also Restatement (Second) of Contracts § 197 cmt. a (1979) ("In general, if a court will not, on grounds of public policy, aid a promisee by enforcing the promise, it will not aid him by granting him restitution for performance that he has rendered in return for the unenforceable promise”).

. Here, as pointed out, supra note 3, the parties dispute how much work Cevern performed before September 5.

. Cevern makes the procedural argument that the trial court entered summary judgment in violation of the ten-day notice provision of Super.Ct.Civ.R. 56(c) (1995). Even if this is so, in Tompkins v. Washington Hosp. Ctr., 433 A.2d 1093 (D.C.1981), we allowed for “sparing!] and careful[]” application of harmless error analysis to such violations. Id. at 1101. Here Cevern has never contended that it was unable to introduce by stipulation all of the relevant facts. As it has not shown prejudice to its substantial rights, we may not reverse on this ground. D.C.Code § 11 — 721 (e) (1995). For the same reason, we reject the argument that the untimeliness of ap-pellees' motion for summary judgment (filed well after the deadline established by the trial court for dispositive motions) precluded entry of summary judgment.