Baltimore Street Builders v. Stewart, 186 Md.App. 684, 975 A.2d 271(Md. Ct. Spec. App 2009), involves an interesting twist on pre-formation contracts. Lenkey and Kunkel were contractors, with separate businesses, each conducted through separate LLCs. Apparently, Lenkey and Kunkel also conducted business as partners under the name Baltimore Street Builders. Lenkey signed a construction contract in the name of Baltimore Street Builders, LLC. Work under the contract began in January 2006. The LLC was not organized until March 2007, shortly before the completion of the work in June 2007. When the homeowner refused to pay for the work as performed, the LLC sued to establish and enforce a mechanic’s lien on the property. The problem? Neither Lenky, who signed the conttract, nor the LLC, nor its predecessor partnership, had a home improvement license, either at the time of contracting, or before starting or completing work. No license, no lien.
The Court rejected the argument that the licensing requirement was met because work under the contract was done by Kunkel’s LLC, which did have a home improvement license. The court reasoned that the statute required “persons” acting as contractors to be licensed, and defined person to include any “partnership, firm, association, corporation, or other entity.” Slip Op., at 8-9.
Inasmuch as neither Robert Lenkey or BSB [the LLC?] of the informal partnership known as BSB ever had a home improvement contractor’s license, it cannot be said that the “person” with whom appellee contracted complied with [the licensing statute]. (sic).
Slip Op., at 9. The Court also rejected a substantial compliance argument
Because BSB’s counsel admitted at oral argument before us that it was Mr. Kunkel’s company … that had the license, we interpret the appellant’s argument to be that BSB substantially complied with the statute because at the time the contract … was signed, BSB was a partnership and Mr. Kunkel was one of BSB’s partners, and an entity controlled by Mr. Kunkel had a license. Such an attenuated relationship with a license holder can scarcely be considered “substantial compliance” in light of the requirement that the partnership [BSB] that contracts to do the home improvement work must be licensed.
Slip Op., at 12-13.
And, the mere fact that [Kunkel’s LLC], a sub contractor, was licensed does not fulfill the purpose of the Home Improvement Law insofar as [the homeowner] s concerned. After all, [the homeowner] never contracted with that entity and thus could not have successfully brought a breach contract action against [it.]
Slip Op., at 20.
Gary Rosin