Friday, May 21, 2010

Good Try, But No Cigar!

Creativity among attorneys is a critical component of the profession. Attorneys have an ethical obligation to represent their clients zealously and within the bounds of the law. One recent attempt at creativity, albeit an unsuccessful one, occurred in Capital Construction Management of NY LLC v. East 81st St. LLC, NYS Supreme Court, New York County (Decided: April 30, 2010).

In Capital Construction, a construction manager lacking a requisite New York City home improvement contractor's license, performed work or caused work to be performed for the rehabilitation and redevelopment of a condominium project. When the project owner had trouble paying the balance due for the work (i.e., approximately $700,000.00), the contractor and the project owner entered into a loan repayment agreement providing for additional interest.

Three checks issued to the contractor bounced, and the contractor sued to recover on the uncollected checks, but not for the work performed or on the loan repayment agreement. Instead, it moved for summary judgment in lieu of complaint based on the fact that the checks were instruments for the payment of money only. It's important to note that the existence of a valid home improvement license must be plead as an allegation since, in New York, the failure to possess a valid home improvement license required by the State or locality at the time of contract and performance of the work is an absolute bar to recovery. By moving for summary judgment in lieu of complaint on the checks rather than for the work or on the loan agreement, the contractor attempted to "end run" the requirement of a home improvement license, a claim on which it was unlikely to recover based on the facts of the matter.

The Court didn't buy the argument and held that allowing the contractor to circumvent licensing and related requirements in this instance would violate public policy. The Court stated: "[A] home improvement contractor must comply with two separate tests to advance a claim: (1) a valid license at the time of pleading, and (2) a valid license at the time of the contract and work. If the contractor cannot meet both tests its claim must be dismissed" [citation omitted]. Here, the contractor admitted that the checks were issued for work performed, and the Court simply would not permit itself to be misdirected by focusing on the uncollected checks rather than the lack of a requisite license. The contractor's Motion was denied.

I agree with the Court's decision here. However, I think this is a good example of an attorney being creative by pushing the envelope. While the argument failed to win the day, in many instances creative lawyering can broaden legal horizons and remedy injustice.

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