Unlicensed Work Does Not Void Contract With Condos, Florida Appeals Court Says

Being unlicensed as a contractor in Florida does not necessarily void a storm-remediation contract, a Florida appeals court said in a decision that could affect insurance defense strategy in hurricane claims.

“This shows that it’s really important to know the scope of work being performed,” said Josh Beck, an insurance defense attorney in Boca Raton.

Florida’s 3^rd District Court of Appeals last week reversed a Monroe County circuit judge’s decision in three lawsuits brought by mold remediation contractor Incident365 Florida against Ocean Pointe Condominium Associations. The circuit judge had agreed with the condo associations that Incident365 was not a licensed contractor, which voided a repair contract.

But the appellate judges said the situation was not so cut-and-dried.

The cases stemmed from damage incurred at a group of Upper Keys condos in Hurricane Irma in 2017. These were not assignments-of-benefits disputes but could impact some AOB litigation that remains after 2022 Florida legislative changes, as well as more recent claims involving directives-to-pay, said Beck. He was not associated with the Ocean Pointe case but has handled AOB and other insurance claims disputes.

The decision does not take away the defense that work by an unlicensed contractor is an unenforceable contract in all cases, Beck said. But it makes it more important “to figure out if the contractor was licensed for the type of work done and if they have to meet statutory requirements,” he said. Similar cases are likely to arise after damage from Hurricanes Helene and Milton become clear.

Incident365 was hired by the condos for $1.4 million to dry the buildings and mitigate mold that had spread after water intrusion from the storm. The condo association paid about $400,000 but refused to pay more, the appeals court explained. Incident360, with offices in St. Petersburg and in Pennsylvania, filed suit, claiming breach of contract.

Ocean Pointe argued that Incident365 was not a licensed contractor as required by Florida statutes. The remediation company had engaged in significant demolition and remodeling-type work at the condo buildings, along with drying and mold work. But it was not licensed to perform construction work, which makes the contract unenforceable, the condos’ attorneys argued.

The lower court agreed, and entered summary judgment in favor of the condo associations. The wording of the Florida statute is a little contradictory, and the lower court relied on dictionary definitions of “repair,” “improvement” and “contractor.”

But looking at bigger picture, the appellate judges found that Florida law does not specify that mold removal firms have to be licensed as building contractors.

“In considering the terms in their ‘specific context’ and not in ‘isolation,’ we disagree with the trial court’s determination that a building contractor’s license is necessary for the undisputed scope of work completed in six of the seven ‘Disaster Recovery Tasks’ labeled here between the parties as: water damage mitigation; general dehumidification; structural dehumidification; disposal of materials off property location; anti-microbial application; and mold remediation, as necessary,” Judge Monica Gordo wrote for the 3^rd DCA panel.

The judges explained that following the lower court’s logic would mean that practically any work done for a homeowner would require a contractor’s license.

“For example, if a homeowner hired someone for compensation to clean their home, and during the cleaning process, the individual scrubbed the toilets and vacuumed and cleaned the floors, the first prong of section 489.105(3) (the contractor license statute) would be satisfied because this process resulted in the “subtract[ion]” of dirt and dust from the building,” the appeals court wrote.

Citing a 2016 Florida appeals court decision, the judges said that courts should avoid a statutory interpretation that leads to an absurd result.

The mold contractor had asked that the mold remediation work be separated, to allow payment at least for the non-structural work done on the condos. The appellate judges did not address that question directly but remanded the case to the Monroe Circuit Court for further proceedings.

The full opinion in the condo cases can be seen here.