LOUIS v. TRUONG (2025)

ORDERED that the judgment is reversed, without costs, and the matter is remitted to the Civil Court for the entry of a judgment dismissing plaintiffs’ causes of action and awarding defendant the principal sum of $1,734 on her counterclaim.

Plaintiffs commenced this small claims action for breach of contract and, in effect, for quantum meruit for home improvement work completed on defendant's home over the course of two months in 2021. Defendant counterclaimed, alleging failure to provide proper repairs and services. At a nonjury trial, the parties’ testimony established that defendant hired plaintiffs for a home improvement project, plaintiffs completed portions of the project, defendant paid plaintiffs in installments via PayPal for certain portions of the project as they were completed, defendant fired plaintiffs before the project was fully finished, defendant disputed her installment payments with PayPal, and PayPal “charged back” to defendant a portion of the money she had paid to PayPal. At trial, it was uncontested that plaintiffs lack a home improvement contractor license. Following the trial, the court found in favor of plaintiffs on their causes of action in the principal sum of $7,663 and in favor of defendant on her counterclaim in the principal sum of $1,734. Judgment was entered on October 28, 2022 in favor of plaintiffs in the net principal sum of $5,929. On appeal, defendant contends that plaintiffs were not entitled to a return of any money.

In a small claims action, our review is limited to a determination of whether “substantial justice has ․ been done between the parties according to the rules and principles of substantive law” (CCA 1807; see CCA 1804; Ross v Friedman, 269 AD2d 584 [2000]; Williams v Roper, 269 AD2d 125, 126 [2000]).

It is uncontested that plaintiffs are not licensed to do home improvements. While it is true that a homeowner is not entitled to recover sums already paid to a home improvement contractor who lacks a license (see Krasnoff v J. Tuman Assoc., Inc., 63 Misc 3d 148[A], 2019 NY Slip Op 50703[U], *2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2019]; see also Voo Doo Contr. Corp. v L & J Plumbing & Heating Co., 264 AD2d 361 [1999]; Segrete v Zimmerman, 67 AD2d 999 [1979]), here plaintiffs are affirmatively suing for damages. It is well settled that “[w]here a home improvement contractor is not properly licensed in the municipality where the work is performed at the time the work is performed, the contractor forfeits the right to recover for the work performed, both under the contract and on a quantum meruit basis” (Brightside Home Improvements, Inc. v Northeast Home Improvement Servs., 208 AD3d 446, 449 [2022]; see B & F Bldg. Corp. v Liebig, 76 NY2d 689 [1990]; Orchid Constr. Corp. v Gottbetter, 89 AD3d 708 [2011]; see generally CPLR 3015 [e]). Consequently, the award in favor of plaintiffs on their causes of action for breach of contract and, in effect, for quantum meruit failed to render substantial justice according to the rules and principles of substantive law (see CCA 1804, 1807).

Accordingly, the judgment is reversed and the matter is remitted to the Civil Court for the entry of a judgment dismissing plaintiffs’ causes of action and awarding defendant the principal sum of $1,734 on her counterclaim.

BUGGS, J.P., TOUSSAINT and QUIÑONES, JJ., concur.