Keystone Floor and More L.L.C. v. Registrar of Contractors, Kang (CA1 7/2/09)

The issue here concerns an award of attorney’s fees in an appeal from an administrative decision.

Keystone installed tile in Kang’s house. Kang complained to the Registrar of Contractors that Keystone did a bad job. The Registrar investigated the claim and revoked Keystone’s contractor’s license. Keystone sought judicial review of that decision; the Superior Court upheld it. Kang then successfully moved for his attorney’s fees in the Superior Court, arguing that the action arose out his tile-installation contract with Keystone. Keystone appealed the award of attorney’s fees. The Court of Appeals reversed.

The opinion first points out that, while an administrative proceeding before the Registrar has been held not to be an “action” under 12-341.01, Kang was asking only for his fees in the Superior Court review, which is an “action.”

The question then becomes whether the action arose out of contract.

The court held that it did not. The “basis for the action is purely statutory.” The Registrar had acted under 32-1154(A), which specifies when the Registrar can revoke a contractor’s license. The issue in the Superior Court was whether the Registrar’s action under that statute was valid. The Keystone-Kang contract, said the appellate court, was not the “cause or origin” of the matter and was peripheral to whether Keystone had violated its contractual duties as a contractor.

Kang argued that the problem here was bad workmanship,  that the statutory duty to perform in a workmanlike manner  is taken from implied warranty rules (as the court hints but does not actually point out, the duty is stated not in the statute but in the Administrative Code), that he would get fees under implied warranty, so he should get fees here. But the Registrar sanctioned Keystone under the statute, not the contract. (For reasons not stated in the opinion, Kang didn’t sue Keystone for breach of contract.)

The opinion is just a trifle flabby but is otherwise nicely written. It does not, though, address one question that probably occurs to you: in a statutory dispute between the Registrar of Contractors and Keystone, why was Kang even a party? Perhaps because an appeal from an administrative agency determination must include as defendants all other parties to the administrative proceeding; if so, Kang was presumably there because the Registrar included him in its administrative Complaint, not because Keystone wanted to sue him.

And what, you ask, was the Registrar’s position in this appeal? The Registrar – that zealous protector, that tireless civil servant, that stalwart defender of the common homeowner against rapacious and incompetent tradesmen – punted. The Registrar appeared only as a “nominal party,” a maneuver by which the State lets the homeowner bear the burden – at the homeowner’s expense – of trying to uphold the Registrar’s decision so as to escape its own liability for attorney’s fees (under a separate statute) if the homeowner loses.