Court of Appeals Rules that Illegality Defense Cannot Be Waived

On February 28, 2019, the District of Columbia Court of Appeals decided HVAC Specialist, Inc. v Dominion Mechanical Contractors, Inc., Nos. 2016-CV-1220 & 16-CV-1278, slip op. (D.C. Feb. 28, 2019), in which it considered, inter alia, whether a defending party had waived the affirmative defense of illegality by not timely raising the defense.

By way of background, the appellee, a subcontractor, brought various claims against the appellant, a general contractor, for breach of contract and related causes of action. Slip op. at 2-5. The general contractor raised the defense of illegality arguing that its contract with the subcontractor was void on the grounds of public policy because the subcontractor at all relevant times did not have a contractor’s license required by District of Columbia law. Id. The trial court agreed and dismissed the subcontractor’s claims notwithstanding that the general contractor belatedly raised the defense. Id.

On appeal, the subcontractor argued that the general contractor waived the defense of illegality by not timely raising it. Id. at 9. The Court discussed the principles of waiver and the defense of illegality. It noted, inter alia, that “the rule is well-established in the District of Columbia that a contract made in violation of a licensing statute that is designed to protect the public will usually be considered void and unenforceable . . . .” Id. at 8 (quotation marks omitted). It then held that “the affirmative defense of illegality is not waivable in the context of a contract entered into in contravention of a District of Columbia law, such as a licensing requirement, that is designed to protect the public and that affords significant protections to the public.” Id. at 11 (quotation marks and citations omitted).

Accordingly, the Court affirmed the trial court’s decision dismissing the subcontractor’s claims. Id. at 18.