July 17, 2015 Practice Points

Unlicensed Contractors Not Entitled to Statutory Protections

The New Mexico Court of Appeals held that the strong public policy against unlicensed contractors not only prevents unlicensed contractors from using the court system to collect for work performed, but also denies them the benefit of statutory protections such as statutes of limitation

by Sean R. Calvert

The New Mexico Court of Appeals held that the strong public policy against unlicensed contractors not only prevents unlicensed contractors from using the court system to collect for work performed, but also denies them the benefit of statutory protections such as statutes of limitation or repose. S. Louis Little v. Paulette Jacobs, 2014-NMCA-105, 336 P.3d 398. In this case involving a 13-year-old deck, the Court of Appeals reversed the trial courts grant of summary judgment based on application of the 10 year statute of repose applicable to all construction projects.

In 2000, the appellant unlicensed contractor constructed a deck on rental property owned by defendant Jacobs. In 2009, the plaintiff stayed at the rental property and was injured when he fell off the deck and into a ditch. The plaintiff brought suit against the landlord in 2011 and upon learning in 2013 of the appellant’s involvement in the construction of the deck, amended the complaint to name the appellant as a party.

At the trial court, the appellant argued that New Mexico’s statute of repose applicable to construction projects, N.M.S.A. 1978, §37-1-27, barred the cause of action as it was brought more than ten years after substantial completion. The trial court agreed and granted summary judgment.

On appeal the Court of Appeals reversed the grant of summary judgment even though as noted by the Court the statute of repose does not specifically limit its application to licensed contractors. While not supported by the language of the statute itself the Court of Appeals found that it was a legislative policy to require licensing and that the statute of repose would apply only to those legitimately involved in the construction industry.

This case represents an entirely new approach to preventing unlicensed contracting. New Mexico, like some other states, has always prevented an unlicensed contractor from seeking affirmative relief in court. The Court of Appeals decision however goes further in limiting how an unlicensed contractor may defend itself in court. One issue not specifically reached in this decision is whether on remand the defendant may seek recovery of all amounts paid to the unlicensed contractor. In New Mexico an owner is entitled to recovery of all amounts paid to an unlicensed contractor, even for work properly performed and when the owner has knowledge of the unlicensed status, but this decision may mean that there is no time limit on when an owner may seek recovery against an unlicensed contractor.

Keywords: unlicensed contractors, statute of limitations, statue of repose

Sean R. Calvert is with Calvert Menicucci, PC, Albuquerque, New Mexico.


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