In Epps v 4 Quarters Restoration, LLC et al, No 147727, 2015 WL 5684196 (Mich Sept 28, 2015), the Michigan Supreme Court had occasion to provide additional guidance upon the application of MCL 339.2412(1), which limits an unlicensed builder's ability to sue to collect compensation for work performed. Our Supreme Court held that the statute does not prohibit an unlicensed residential builder from defending itself against a suit for damages, yet reinforced the statutory prohibition that an unlicensed residential builder cannot sue to collect compensation for such work. Thus, an unlicensed builder may not sue for payment, but can defend itself against allegations of improper performance.
The Michigan Court of Appeals recently affirmed personal liability for violations under the Michigan Builders Trust Fund Act, MCL 570.151 et seq. ("MBTFA") in Windrush, Inc, v Lee Van Poppering, Shagbark Development, Inc, and Northland Management, Inc, unpublished opinion per curiam of the Court of Appeals, issued September 10, 2015 (Docket No. 315958). The building contractor's sole shareholder was responsible for financial decisions, and regardless of his "subjective intent to defraud or obtain personal financial benefit," the individual was held personally liable for the debt due his subcontractor. The building contractor received funds due to the subcontractor for proper work performed and materials supplied, but utilized those funds for purposes other than to pay the subcontractor. The sole shareholder was held personally liable because "he managed all of the relevant transactions and accounts," and he was responsible for the building contractor's "financial decisions and actions."
Subcontractors could face protracted liability for work performed on prior projects according to a recent decision of the Michigan Supreme Court, where a contractor sought and obtained indemnification from its subcontractor, even though the court held the statute of limitations barred recovery on the subcontract itself.
The Michigan Court of Appeals recently issued an unpublished opinion that gives guidance to construction law practitioners and contractors.
Contractors faced with the common dilemma of accelerating performance at additional cost versus facing liquidated damages due to late delivery must adhere to their construction contract's change order clause according to the Michigan Court of Appeals.