Court Case Reversals General and Subcontractors

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Contracting and Construction

The case of White-Spunner Constr., Inc. v. Constr. Completion Co., 103 So. 3D 781; 2012 Ala. was about a general contractor's right to challenge an illegal subcontract. In this case, the Supreme Court saw fit to reverse the decision of the lower courts, which had previously awarded the subcontractor $1.2 million by ruling against the general contractor. With the Supreme Court's decision, the general contractor's argument was validated and the lower court's decision reversed in the general contractor's favor. Essentially, the illegal subcontract was deemed invalid due to its illegality and therefore had no standing and the subcontractor was not entitled to any payment. The Court also stated that licenses are needed by construction labor brokers -- otherwise they are not allowed to represent clients or perform construction work. The Court had to define what was meant by labor brokers in this instance and it even pointed out that the subcontractor's defense that labor brokers were exempt from the Licensing Statute (i.e., did not have to be licensed because they were only labor brokers) was incorrect and that no such exemption existed. Thus, the Court essentially pointed out that the subcontractor was attempting to make money off the general contractor by hiring out the work to unlicensed workers, which the general contractor became aware of (and because he felt that the subcontractor was price gouging him) he refused to pay.

The essence of this case was that a general contractor and a subcontractor had agreed that the subcontractor would bring workers to build portions of student houses at Auburn University.

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While both of these parties were licensed, the subcontractor hired unlicensed individuals to do the construction. Over the duration of the construction, the general contractor made complaints about excess charges from the subcontractor. The general contractor refused to pay the total amount charged him by the subcontractor.

The general contractor's defense in this case was that the subcontractor is not permitted by law to hire out work to persons who do not have a construction license. The subcontractor attempted to assert that his hired workers were simply labor brokers and were not therefore under the application of this law. Because the workers however were doing significant work (framing, etc.) the Court judged that they were not labor brokers in the sense of doing menial tasks and therefore the law did apply to them.

Thus the court reversed the lower court's ruling that the subcontractor's hires were labor brokers and upheld the argument of the general contractor that because the contract between the subcontractor and his workers was illegal, the general contractor was under no legal obligation to respect its validity since to do so would be to recognize a criminal….....

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