In Earth Trades, Inc., et al. v. T & G Corporation, the Florida Supreme Court revisited the doctrine of in pari delicto, which generally provides that a plaintiff may not recover damages resulting from any wrongdoing that the plaintiff took part in.

T&G was a general contractor engaged to construct a parking garage. It subcontracted with Earth Trades to perform certain work on the project. Earth Trades at no time had the contractor’s license required to perform the work. Following a dispute between T&G and Earth Trades, Earth Trades filed suit, alleging nonpayment for work it had performed. T&G filed a counterclaim, alleging that Earth Fares breached its contract and failed to perform as agreed.

The crux of the litigation revolved around section 489.128, Florida Statutes, which provides in pertinent part that “contracts entered into on or after October 1, 1990, by an unlicensed contractor shall be unenforceable in law or in equity by the unlicensed contractor.” T & G raised the unenforceability provision as a defense to Earth Fares’ claims; Earth Fares countered that T & G was barred from enforcing its counterclaims because the parties were in pari delicto by virtue of the fact that T & G knew or had reason to know that Earth Fares was unlicensed. As a result, argued Earth Fares, T & G should not be able to rely on section 489.128, Florida Statutes, to its advantage.

The Supreme Court pointed out that the in pari delicto doctrine does not apply merely because a plaintiff might have engaged in some sort of wrongdoing. Rather, the level of wrongdoing has to be relatively equal among the plaintiff and defendant. The justices applied this crucial aspect of the in pari delicto doctrine to the case at hand, and noted that section 489.128, Florida Statutes was amended in 2003 to explicitly provide that the any contract entered into by an unlicensed contractor would be unenforceable by the contractor specifically. The Court also took into account that the penalties for hiring an unlicensed contractor and for engaging in contracting work without a license are different; the former is an administrative violation that carries only a monetary penalty, while the latter is a crime. As a result, contracting with an unlicensed contractor, even if there is knowledge of the unlicensed status, is not equal to the wrong committed by the unlicensed contractor when it enters into an agreement to perform work for which a license is required.

The opinion in Earth Trades, Inc., et al. v. T & G Corporation establishes essentially that the in pari delicto doctrine does not preclude enforcement of a contract against an unlicensed contractor merely because the party seeking enforcement may have known of the contractor’s unlicensed status, and that section 489.128, Florida Statutes precludes unlicensed contractors from seeking any remedy under their contract even if the contract was entered into with a party that had knowledge of the contractor’s unlicensed status.

In Pari Delicto and Unenforceable Contracts

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