Supreme Court Affirms Dismissal of Builder’s Claims Even Though Partnership Licensed at the Time of Contracting
The Supreme Court recently issued an opinion affirming the dismissal of a builder and his partnership’s complaint against homeowners even though his partnership was licensed at the time of the contract with the homeowners. In Ron Medlin v. Harris, the Supreme Court determined the issue of whether a partnership could recover in quantum meruit for the reasonable value of the services provided to the homeowners in building a home. Ron Medlin, an unlicensed contractor, signed the contract with the homeowners. However, a separate entity, Ron Medlin Construction (a Partnership), performed all the work under the contract. The Partnership was a duly licensed general contractor. When the lawsuit was filed, the homeowners moved for summary judgment, in part, on the basis Medlin was not a licensed general contractor when he signed the contract. The trial court dismissed the complaint and the Court of Appeals, in a divided decision, entered an opinion affirming summary judgment for the defendant homeowners. At the Supreme Court, the Plaintiffs argued that the Partnership was an entirely distinct legal entity from Medlin (the person who signed the contract) and the Partnership, not Medlin, was the entity seeking to recover from the homeowners. Since the Partnership had no contract, the Plaintiffs reasoned, quantum meruit was an appropriate remedy. And, the Plaintiffs argued, since the Partnership was a licensed general contractor at the time the contract with Medlin was signed, it should not be barred from recovering from the homeowners.
The Supreme Court sidestepped the licensure issue in its ruling and rejected the Plaintiff’s arguments holding “a contract executed by a partner in a licensed partnership engaged in the construction business is the contract of the Partnership unless the remaining partners can show that the partner was not authorized to act on behalf of the partnership.” In the end, despite the fact that both sides took the position in their pleadings that there was no contract between the Partnership and the homeowners, the Supreme Court held that since the Partnership had a “contractual relationship” with defendants, they could not recover in quantum meruit.