UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

SETH CUTLER, et al.,

Plaintiffs,

v. Civil Action No. 23-2377

KBR LUXURY, INC., Judge Beryl A. Howell

Defendant.

MEMORANDUM OPINION

Plaintiffs Seth Cutler and Raffaele Viglianti contracted with defendant KBR Luxury, Inc.,

to perform construction and renovation work on a residential townhome plaintiffs own in

Washington, D.C., for which work plaintiffs allegedly paid, in total over $96,000. Compl. ¶¶ 6–

7, 15, ECF No. 1. Fifty-seven weeks after the project began, plaintiffs served defendant with a

demand letter insisting on return of the more than $96,000 they had paid by that date, citing

defendant’s “deceitful and dishonest conduct” and an unenforceable contract, because defendant,

though holding a D.C. general contractor license, was not properly licensed as a home

improvement contractor or salesperson, as required by District of Columbia Municipal

Regulation (“DCMR”) § 16-800.1. See Compl., Ex. 1, Demand Letter at 1–2, ECF No. 1-1.

Citing another Municipal Regulation, DCMR § 17-3900.7, which exempts licensed general

contractors from compliance with most sections of the regulations applicable to licensed home

improvement contractors—including DCMR § 16-800.1, which is relied upon by plaintiffs for

their claims—defendant has now moved to dismiss the complaint for failure to state a claim,

pursuant to Federal Rule of Civil Procedure 12(b)(6). Def.’s Motion to Dismiss (“Def.’s Mot.”)

at 1, ECF No. 14. For the following reasons, defendant’s motion is granted.

1 I. BACKGROUND

The factual background, as alleged in the complaint, and procedural history of this case

are briefly summarized below.

A. Factual Background

Plaintiffs are residents of the District of Columbia and own a townhome on 13th St. NW,

Washington, DC, 20011 (“the Property”). Compl. ¶¶ 1–2, 6. In January 2022, plaintiffs

contracted with defendant, a Maryland corporation that operates out of Bethesda, Maryland, for

construction and renovation work at the Property. Id. ¶¶ 3, 7. 1 The parties’ contract provided for

progress payments as follows: “30% of payment at contract signing ($33,930), 30% on the first

day that labor, materials, equipment or services are provided ($33,930), 30% upon installation of

cabinet or countertop ($33,930) and 10% at substantial completion ($11,290),” for a total of

$113,080. Id. ¶¶ 7, 14 (internal quotation marks omitted). At the time of filing of plaintiffs’ suit,

they had paid defendant over $96,000, in accordance with the contract. Id. ¶ 15.

Plaintiffs do not dispute and affirmatively allege that defendant maintains a Basic

Business License in the category of General Contractor-Construction Manager with the District

of Columbia. Id. ¶ 8. They allege, however, that defendant neither has a current home

improvement contractor license nor had their contract signed by a licensed home improvement

salesperson. Id. ¶¶ 9–13. Consequently, in July 2023, plaintiffs served defendant with a demand

letter seeking a return of all funds paid so far in relation to the Property. Id. ¶ 18. Plaintiffs’

demand letter expressed frustration with the pace of work, stating that the renovation work “was

to take six (6) weeks to complete, but yet fifty-seven (57) weeks later, much remains to be done.”

Demand Letter at 1. Further, the letter accused defendant of “deceitful and dishonest conduct,”

1 The requirements for diversity jurisdiction under

are met in this case, as the parties are completely diverse and the amount in controversy exceeds $75,000.

2 to include lying about work being completed and passing inspection, and forging plaintiffs’

signature on an order.

at 1–2. In addition, the demand letter alleged that some of the

contracted work was deficiently performed, which required work to be redone.

. Finally,

plaintiffs’ demand letter alleged that defendant’s receipt of payment before completion of the

underlying work “violate[d] the home improvement regulations and render[ed] the contract void

and unenforceable” because the “contract they entered into with KBR was not executed by a

licensed salesperson on KBR’s behalf.”

Plaintiffs demanded that defendant, within a period

of seven days, return the full amount of payment, or plaintiffs would “institute disgorgement

proceedings against KBR for the return of all funds paid under the void and unlawful contract.”

When defendant did not return funds in compliance with this demand, plaintiffs brought this

action in August 2023.

B. Procedural Background

The complaint asserts two claims, for disgorgement of the funds allegedly unlawfully

received by defendant due to defendant’s violation of DCMR § 16-800.1 (Count One), and for

violating the District of Columbia Consumer Protection Procedures Act (“CPPA”),

(v), (d)(d), and 28-3905, by violating DCMR § 16-800.1 and misrepresenting “the

authority of a salesman, representative or agent” (Count Two). Compl. ¶¶ 21–32 (quoting

(v)). For the CPPA claim, plaintiffs seek treble damages under

-

3905(k)(2).

.

Defendant failed to respond to plaintiffs’ complaint within the procedurally required

timeframe, at which point plaintiffs moved for default judgment and the Clerk of the Court

entered default on October 19, 2023. See Pls.’ Aff. for Default, ECF No. 7; Clerk’s Entry of

Default, ECF No. 8. Defendant’s subsequent motion to set aside the default judgment was

3 granted over the plaintiffs’ opposition. See Minute Order (Dec. 14, 2023). Now pending is

defendant’s motion to dismiss both claims, which is ripe for consideration. See Pls.’ Opp’n

Def.’s Mot. to Dismiss (“Pls.’ Opp’n”), ECF No. 17; Def.’s Reply to Pls.’ Opp’n to Mot. to

Dismiss (“Def.’s Reply”), ECF No. 18.

II. LEGAL STANDARD

To survive a Rule 12(b)(6) motion to dismiss, “the complaint must contain sufficient

factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Wood v.

Moss,

, 757–58 (2014) (citation omitted). A claim is facially plausible when the

plaintiff pleads factual content that is more than “‘merely consistent with’ a defendant’s liability”

and “allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly,

(2007)); see also Banneker Ventures, LLC v. Graham,

(D.C. Cir. 2015)

(“Plausibility requires more than a sheer possibility that a defendant has acted unlawfully.”

(citation omitted)).

In deciding a motion under Rule 12(b)(6), the plaintiff bears the burden of showing that

the complaint “contain[s] sufficient factual matter, accepted as true, to state a claim to relief that

is plausible on its face,” Zukerman v. U.S. Postal Serv.,

(D.C. Cir. 2020)

(quoting Iqbal, 556 U.S. at 678), and the court is required to construe all reasonable inferences in

the plaintiff’s favor, Twombly,

; see also Atchley v. AstraZeneca UK Ltd.,

(D.C. Cir. 2022). A court, however, does not “accept inferences drawn by a

plaintiff if such inferences are unsupported by the facts set out in the complaint.” Nurriddin v.

Bolden,

(D.C. Cir. 2016) (alterations in original accepted and citation

omitted); see also Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the framework of

4 a complaint, they must be supported by factual allegations.”). In determining whether a

complaint fails to state a claim, a court may consider only the facts alleged in the complaint and

“any documents either attached to or incorporated in the complaint and matters of which the

court may take judicial notice.” N. Am. Butterfly Ass’n v. Wolf,

(D.C. Cir.

2020) (alterations in original accepted and citation omitted).

III. DISCUSSION

Defendant seeks dismissal of the complaint for failing to state a claim on the grounds that

plaintiffs’ two claims rest “solely” on defendant’s alleged violation of DCMR § 16-800.1, by

accepting partial payments, as work on the Property progressed, but “in advance of the full

completion of all work required to be performed under the contract,” DCMR § 16-800.1, without

holding a home improvement contractor license, Def.’s Mot. at 1. According to defendant,

plaintiffs “fail to state a claim” because no violation of DCMR § 16-800.1 occurred as defendant

has a D.C. general contractor license and, therefore, under DCMR § 17-3900.7, is “exempt from

having to obtain a home improvement license as required under § 800.1,” id.

Whether having a general contractor license exempts a company performing home

improvement work from complying with DCMR § 16-800.1 is thus key to resolving the pending

motion, a point plaintiffs concede. Pls.’ Opp’n at 2. Defendant’s exemption argument turns on

the proper interpretation of, and interplay between, DCMR §§ 16-800.1 and 17-3900.7. As with

any exercise in statutory construction, the analysis must begin with “the tools of statutory

interpretation, including ‘text, structure, purpose, and legislative history.’” Loving v. I.R.S.,

(D.C. Cir. 2014) (quoting Pharm. Rsch. & Mfrs. of Am. v. Thompson,

(D.C. Cir. 2001)); see also King v. Burwell,

(2015) (“Reliance on

5 context and structure in statutory business is a ‘subtle business’” (quoting Palmer v.

Massachusetts,

(1939))).

A. Two Municipal Regulations At Issue

The most recent iterations of the two Municipal Regulations at issue—DCMR § 16-800.1

and § 17-3900.7—were adopted by the D.C. Department of Consumer and Regulatory Affairs

(“DCRA”) on the same day, April 24, 2009. See

;

. The

relevant regulations are reviewed below.

1. DCMR § 16-800.1

DCMR § 16-800.1 appears in the title of Municipal Regulations governing “Consumers,

Commercial Practices, and Civil Infractions,” in the stand-alone chapter for “Home

Improvements,” that sets out requirements for licensing home improvement contractors or

salespersons, including insurance requirements (§ 16-803), advertising restrictions (§ 16-807),

and permit compliance (§ 16-812), and definitions for terms used in this chapter (§ 16-899).

DCMR § 16-800.1 is included in Chapter 16-8’s first section of “General Provisions,” and

provides, in full, that:

No person shall require or accept any payment for a home improvement contract to be undertaken in the District in advance of the full completion of all work required to be performed under the contract, unless that person is licensed as a home improvement contractor or as a licensed salesperson employed by a licensed contractor in accordance with the provisions of this chapter.

DCMR § 16-800.1.

Chapter 16-8’s definition section limits the types of businesses and work covered by this

chapter on home improvements. To begin, “home improvement work” is defined to restrict such

work to residential properties. DCMR § 16-899.1. Specifically, such work includes “the

addition to or alteration, conversion, improvement, modernization, remodeling, repair, or

6 replacement of a residential property, or a structure adjacent to the residential property, including

a driveway, fence, garage, porch, deck, or swimming pool.” Id. This definition emphasizes this

definitional limitation by stating, “[a]ny construction work outside the scope of ‘home

improvement work’ shall be considered either general contracting or construction management,

as those terms are defined in Title 17 of the District of Columbia Municipal Regulations, Chapter

39.” Id. Four types of work are also explicitly exempted from “home improvement work”: (1)

“construction of a new building to be used as a residential property,” (2) “sale or installation of

any appliance, materials, household furnishings, or equipment, if not made a part of the realty,”

(3) “work performed by licensed electricians, plumbers and gasfitters, or refrigeration and air

conditioning mechanics, so long as the work performed by them is limited to that of their

licensed occupation,” and (4) “work performed by a homeowner on his or her own residential

property.” Id.

The other definitions in DCMR § 16-899.1 are largely tied to the definition of “home

improvement work.” For example, a home improvement contract is defined as “an agreement

for the performance of home improvement work in the District for a contract price of three

hundred dollars ($ 300) or more.” Id. A home improvement contractor is “any person who

enters, or offers to enter, into a home improvement contract with a homeowner.” Id.

To obtain a home improvement contractor license requires submission of certain

information to the Director of the DCRA to assess the applicant’s “trustworth[iness] and inten[t]

to act as a bona fide home improvement contractor or salesperson,” id. § 16-801.2, plus

satisfaction of requirements for a bond or other security in the amount of $25,000, id. § 16-

802.1–11, and liability insurance (setting minimum amounts at $50,000 or $100,000 and for self-

insurance), id. § 16-803.1–4.

7 Finally, penalties for violation of the provisions in Chapter 16-8 include fines “not

exceeding $ 300” or “not more than ninety (90) days” imprisonment, or both, DCMR § 16-800.7,

as well alternative sanctions of “civil fines, penalties, and fees,” id. § 16-800.6.

2. DCMR § 17-3900.7

DCMR § 17-3900.7, the exemption relied upon by defendant in this case, is placed in the

title of Municipal Regulations governing “Business, Occupations, and Professionals,” which is

separate from the title containing the chapter for “Home Improvements.” Title 17, Chapter 39

governs “General Contractor/Construction Manager” and requires persons engaged in general

contracting or construction management in the District to apply to the DCRA “for a basic

business license with a General Contractor/Construction Manager endorsement (license),”

DCMR § 17-3900.1, and to obtain such a license before engaging in business “as a General

Contractor/Construction Manager,” id. § 17-3900.4. DCMR § 17-3900.7 is included in Chapter

17-39’s first section of “General Provisions,” and provides, in full, that:

A person who obtains a license under this chapter shall not be required to obtain a home improvement contractor license to engage in home improvement work, as that term is defined in 16 DCMR § 899.1; Provided, that the person engaging in such work complies with the requirements of 16 DCMR §§ 808, 810, and 811.”

DCMR § 17-3900.7.

Notably, this provision expressly excludes from the exemption certain sections of Title

16, namely, “16 DCMR §§ 808, 810, and 811,” which, in turn, set out the requirements for

certain terms and disclosures in home improvement contracts, home improvement payment

receipts, and approval of contract and receipt forms by the Director of the DCRA, respectively.

This exemption thus ensures that licensed general contractors performing home improvement

8 work in the District use contracts and receipt forms with the terms and disclosures approved by

the DCRA Director.

Following the “General Provisions” section, Chapter 39 sets out requirements for General

Contractors and Construction Managers, including licensing application requirements (§ 17-

3901), insurance requirements (§ 17-3902), advertising and records (§ 17-3904), contract and

receipt requirements (§§ 17-3905, -3906), permit compliance (§17-3907), enforcement

provisions for denial, suspension or revocation of a general contractor license (§§ 17-3908–

3911), and pertinent definitions (§17-3999).

Chapter 39 defines a “general contractor” as “any person who, for a fee, is contracted to

do construction on real property owned, controlled, or leased by another person of commercial,

industrial, institutional, governmental, residential or accessory use buildings or structures.”

DCMR § 17-3999.1 (emphasis supplied). Not only does this general contractor definition cover

work on “residential” property, this definition goes on expressly to “include[] the remodeling,

repair, improvement or demolition of these buildings or structures,” id., and thereby overlaps in

part with definitions in DCMR § 16-899.1 (covering, in definition of “residential property,” “any

structure or grounds appurtenant to the single-family or two-family dwelling,” and covering, in

definition of “home improvement work,” “improvement, modernization, remodeling, repair, or

replacement of a residential property, or a structure adjacent to the residential property”). Id. 2

2 Though not relevant here, the definition of “general contractor” “also include[s] persons engaged in heavy construction (including highway, street, bridge, transmission line, marine facilities, and oil and gas structures construction, and dredging); land development (including blasting, test drilling, landfill, leveling, earthmoving, excavating, land drainage, and other land preparation); and the construction of new buildings.” DCMR § 17-3999.1. Chapter 17-39’s definition section excludes from the “general contractor” definition several types of other licensed person and types of work, none of which are applicable here, excluding, for example, a subcontractor, employee, or agent working for or under the supervision of a licensed general contractor, suppliers of materials for use at a construction site for “the work of a general contractor,” licensed engineers, architects, electricians, plumbers, gasfitters, and refrigeration and air conditioning mechanics working within the scope of their licenses; and persons doing general contracting work on their own primary residence. DCMR § 17-3999.1.

9 General contractor licenses are more onerous to obtain under DCMR § 17.3901 than

home improvement contractor licenses under DCMR § 16-801 in several respects. First, an

application for a general contractor’s license, for example, must “list all jurisdictions where the

applicant is licensed to engage in the business of general contracting or construction

management and if any disciplinary actions have been taken against the applicant in any other

jurisdiction” and “include a credit report from a credit reporting agency that is subject to

oversight by the Federal Trade Commission and a statement of all outstanding judgments against

the applicant,” while no analogous requirements exist in the application for a home improvement

contractor license. DCMR § 17-3901.4. Second, general contractor licenses fall into five

separate categories authorizing engagement in projects at different contract values, ranging from

$500,000 to over $10,000,000, DCMR § 17-3901.2, while no such differentiation is provided for

home improvement contractor licenses. Further, the general contractor license categories require

different levels of insurance and bond coverage, ranging, at the low end, from $500,000 in

coverage to, for the highest class of license, $2,500,000 in coverage. Id. § 17-3902.1. By

comparison, a home improvement contractor license is required for any project valued at over

$300, with no classes of licenses for more valuable or complex projects. DCMR § 16-801. A

home improvement contractor license also requires that the licensee carry insurance for only

“one hundred thousand dollars ($ 100,000) in the aggregate for more than one (1) person in any

single accident, and ten thousand dollars ($ 10,000) property damage in any single accident.” Id.

§ 16-803.

Finally, similarly to Chapter 8 of Title 16, penalties for violation of provisions in Chapter

39 of Title 17 include suspension or revocation of the license, see DCMR §§ 17-3902.3, 3908.3,

3908.4, fines “not exceeding $300” or “not more than ninety (90) days” imprisonment, or both,

10 DCMR § 17-3909.2, as well alternative sanctions of “civil fines, penalties, and fees,” id. § 17-

3909.3.

B. Analysis

As noted, the parties agree that defendant is licensed as a general contractor in the

District and, thus, the exemption provided by DCMR § 17-3900.1 relieving defendant from

having “to obtain a home improvement contractor license to engage in home improvement

work,” DCMR § 17-3900.7, applies to defendant’s home improvement work. See Compl. ¶ 8.

The parties disagree, however, on whether the general provision in DCMR § 16-800.1

nonetheless applies to defendant and bars collection of progress payments for home

improvement work in advance of all work being completed on the project, absent a home

improvement contractor license “in accordance with the provisions of this chapter [8. Home

Improvements].” DCMR § 16-800.1.

While more clarity in these Municipal Regulations could devoutly be wished—

particularly given that the penalties for violation include not only livelihood threats with license

revocation and, even more seriously, criminal penalties authorizing incarceration, see DCMR

§§ 16-813, 17-3909—defendant’s position is more persuasive. As explained in more detail

below, the exemption provided for licensed general contractors in DCMR § 17-3900.1 provides

an exemption from each and every requirement in Title 16’s Chapter 8, except for DCMR §§ 16-

808, 810, and 811, which DCMR § 17-3900.1 expressly excludes.

Caselaw consideration is limited regarding the scope of the exemption in DCMR § 17-

3900.7 in relation to the general provision set out in DCMR § 16-800.1 for home improvement

11 work in the District. 3 The law is well-settled that an unlicensed business performing home

improvement work and receiving progress payments violates DCMR§ 16-800.1, making that

business subject to disgorgement, C.A. Harrison Companies LLC v. Evans,

, 983

(D.C. 2022), and to repayment of any partial payments received from the homeowner, see, e.g.,

Bathroom Design Inst. v. Parker,

(D.C. 1974); Marzullo v. Molineaux,

, 810 n.3 (D.C. 1994); see also Djourabchi v. Self,

, 46–47

(D.D.C. 2008) (“There is no exception within the statute for unlicensed contractors who are

under the supervision of architects or engineers, and defendant cannot mitigate the licensing

requirement of the statute by claiming mistake.”). This case differs significantly from those

cases, however, because here defendant is licensed as a general contractor in the District. As

another Judge on this Court has observed in reviewing these regulations, “municipal policy []

permits general contractors . . . to perform home improvement work without obtaining a specific

home improvement license.” Kelleher v. Dream Catcher, LLC,

(D.D.C. 2016) (quoting District’s DCRA policy guidance stating that “[i]f a General Contractor

performs work on existing residential properties, a Basic Business License for the Home

Improvement Contractor category is not required in addition to the Basic Business License for

the General Contractor category.” DCRA, Get a General Contractor/Construction Manager

License, Special Instructions, http://dcra.dc.gov/service/get-general-contractorconstruction-

manager-license (last visited Dec. 22, 2016)).

3 Plaintiffs point to no supportive caselaw for their interpretation of the interplay between DCMR §§ 16- 800.1 and 17-3900.7, and defendant discusses, in its motion to set aside default judgment rather than its pending motion, a single decision, in which the D.C. Superior Court briefly considered this issue, holding that because “[p]laintiff has not provided—and the court is not aware of— any authority for the proposition that the acceptance of an advance payment by a licensed general contractor voids a contract,” plaintiff in a similar home improvement contract dispute was not entitled to partial summary judgment on the pleadings. See Sereno Oscar Grassi v. AGC General Contractors, et al., 2020 CA 002553 B (D.C. Super. Ct. Nov. 5, 2020). This decision accords with the conclusion reached in this memorandum opinion.

12 The question raised in this case is more specific than that in Kelleher, as to the precise

scope of the DCMR § 17-3900.7 exemption and whether that scope exempts licensed general

contractors in the District from compliance with the progress payment bar in DCMR § 16-800.1,

without a home improvement contractor license. Close analysis of the regulatory licensing

schemes pertaining to general and home improvement contractors, including their structure, text,

policies, and purposes, confirm that licensed general contractors are exempt from compliance

with DCMR § 16-800.1.

1. Regulatory Structure For Licensing Schemes

The DCMR chapters on home improvement and general contractors, Chapters 16-8 and

17-39, respectively, are in separate titles and yet cross-reference each other, reflecting where the

regulatory schemes defining the requirements for each license are intended to differ or to apply

to licensees under both schemes. As described supra, in Part III.A, these two chapters outline

separate requirements for obtaining a home improvement contractor license and a general

contractor license, in addition to separate insurance limits and other requirements to carry out

work associated under each type of license. See DCMR §§ 16-8, 17-39. Current iterations of

both chapters were adopted on the same day by the District’s DCRA, a strong indication that

these two separate licensing schemes and the separate requirements for each were meant to work

in tandem, as confirmed by express cross references in Chapter 17-39 to Chapter 16-8, and vice

versa. See, e.g., DCMR § 17-3900.7 (cross-referencing DCMR §§ 16-808, 810, 811); DCMR

§ 16-899 (cross-referencing, in definition of “Home improvement work,” “general contracting or

construction management, as those terms are defined in Title 17 of the District of Columbia

Municipal Regulations, Chapter 39.”).

13 2. Textual Review

Recall that the exemption in § 17-3900.7 provides that “[a] person who obtains a license

under this chapter shall not be required to obtain a home improvement contractor license to

engage in home improvement work . . . [p]rovided, that the person engaging in such work

complies with the requirements of 16 DCMR §§ 808, 810, and 811.” As defendant correctly

posits, DCMR § 17-3900.7 “expressly exempts a licensed general contractor from all provisions

of the D.C. Home Improvement regulations (§§ 16-800 to 16.899) except for §§ 808, 810, and

811.” Def.’s Reply at 4. Against the backdrop of the most recent version of each chapter being

adopted on the same day by the same regulatory body and the cross-references between chapters

being best understood as an indication that regulators were aware of the contents of each chapter,

the specific text in DCMR § 17-3900.7 further confirms that the DCRA knew how to require

compliance with certain provisions when such compliance was intended. By expressly requiring

compliance with three enumerated sections in Chapter 16-8 to regulate home improvement

contracts, receipts, and forms for contracts and receipts, the text can plainly be understood to

exempt general contractors from the other requirements of the Home Improvement Chapter 16-8.

This textual interpretation is consistent with the well-settled interpretive canon expressio

unius est exclusion alterius, which instructs that the express inclusion of one item in a group

implies purposeful exclusion of the other items. See Bittner v. United States,

(2023); N.L.R.B. v. SW General, Inc.,

(2017) (“expressing one item of [an]

associated group or series excludes another left unmentioned.”). This canon applies here to

exempt defendant, as a licensed general contractor, from complying with the remainder of

DCMR §§ 16-800–815.

14 This reading of the scope of the exemption in DCMR § 17-3900.7 is further corroborated

by the definition of “general contractor” in DCMR § 17-3999, which plainly contemplates a

licensed general contractor doing home improvement work. The general definition includes

“any person who, for a fee, is contracted to do construction on real property owned, controlled,

or leased by another person of … residential or accessory use buildings or structures” and “also

includes the remodeling, repair, improvement or demolition of these buildings or structures.”

DCMR § 17-3999.1. While the definition of general contractor excludes individuals such as

subcontractors, suppliers and other types of licensed professional, see supra n.2, this definition

does not exclude work that would be considered home improvement work. Although the

requirements to obtain and maintain a license as a general contractor under Chapter 17-39 of the

DCMR are considerably more arduous than the requirements set out to obtain a home

improvement license in Chapter 16-8, nothing in these chapters indicates that a general

contractor could not perform such home improvement work. The opposite is, in fact, true. The

more onerous requirements to obtain a general contractor’s license provide assurance that these

licensees are more than capable of meeting the qualifications for a home improvement contractor

license and to perform the work of the latter type of licensee.

For example, obtaining a home improvement license requires submission of a form

prescribed by the Director of DCRA. DCMR § 16-801.1. The information and requirements

included on such form are not outlined in the regulations, but instead are up to the Director’s

discretion. Id. By contrast, an application for a general contractor license has multiple

enumerated requirements in DCMR § 17-3901, including that the application shall list the

jurisdictions in which the applicant is licensed and any disciplinary actions taken against the

applicant in those jurisdictions, and the applicant shall provide a credit report to the Department

15 along with the application. DCMR § 17-3901. A general contractor’s license may only be valid

for two years at a time, whereas a home improvement license has no enumerated time limit. Id.

In addition, a general contractor licensee must comply with significantly more onerous insurance

requirements to maintain the license, with coverage requirements ranging up to $2,500,000, as

opposed to the $100,000 maximum required for home improvement work. DCMR §§ 17-902,

16-803.

3. Policies Served By Licensing Schemes

As outlined supra in Part III.A, the regulatory licensing schemes for licensed general

contractors and licensed home improvement contractors have generally parallel but differing

requirements. In other words, many of the regulations in Chapter 16-8 of the DCMR covering

requirements for home improvement contractors—such as permit and insurance requirements—

have analogous regulations in Chapter 17-39 applying to licensed general contractors. See 17

DCMR §§ 3900-3999. Requiring licensed general contractors to comply with the home

improvement regulations not expressly enumerated in § 17-3900.7, when these contractors must

already comply with the regulations that apply specifically to their business, would be

superfluous, particularly since the licensed general contractor requirements are generally more

onerous than those that apply to licensed home improvement contractors.

In contrast, as a policy matter, plaintiffs’ reading would force all general contractors to go

through a dual licensing process of obtaining a home improvement license to accept any progress

payments for home improvement work done in the District. This could discourage licensed

general contractors from bidding for or accepting home improvement work with the obvious

potential downside to competition from licensed general contractors for such work and

concomitant reduction in choice of contractors for residential property owners in the District.

16 Construing the scope of DCMR § 17-3900.7 to limit the home improvement licensing

requirements applicable to licensed general contractors to those expressly enumerated, i.e., “16

DCMR §§ 808, 810, and 811,” DCMR § 17-3900.7, would avoid such a result and enable

licensed general contractors to compete for such home improvement work and to contract for

progress payments, without having to obtain a dual license.

4. Regulatory Purposes

The interpretation of DCMR § 17-3900.7 advanced by defendant and adopted here is also

a more appropriate understanding of the purpose of DCMR § 16-800.1 “because no license is

required merely to engage in home improvement work if a person is not going to accept advance

payment.” Def.’s Reply at 2 (emphasis in original). DCMR § 16-800.1 does not prevent an

unlicensed person from engaging in home improvement work “if that person is willing to wait

until the entire project is complete to accept payment.” Id. Thus, in order for DCMR § 17-

3900.7 to confer some benefit upon licensed general contractors, it must necessarily allow them

to accept payment for home improvement work prior to completion of the project, as would be

allowed by a licensed home improvement contractor.

This reading is supported by the D.C. Court of Appeals’ decision in Shalom v. Smith,

(D.C. 2023), where the court explained that “an action for disgorgement under Section

800.1 cannot lie against a party who has not personally accepted payment,” and that “a cause of

action under Section 800.1 does not accrue until the contractor has actually accepted a payment.”

. Indeed, “[t]he regulations do not apply where the contractor finances himself during

the progress of the work. The absence of a license is relevant only where the contractor requires

or accepts payment in advance of full completion of the contracted work.” Hoffheins v. Heslop,

(D.C. 1965). Shalom confirms that DCMR § 16-800.1 serves only to prohibit

17 the acceptance of progress payments for unlicensed home improvement work and not the actual

performance of such work, and thus substantiates defendant’s claim that DCMR § 16-800.1 must

confer some other benefit upon licensed general contractors. This reading would give meaning

to the exemption set out in DCMR § 17-3900.7, which otherwise would convey little purpose or

benefit for licensed general contractors.

“[T]he D.C. Court of Appeals has held that D.C. Municipal Regulation § 16-800.1

nullifies home improvement contracts made in violation of the regulation” and “[s]uch contracts

are unenforceable on a contract or even quasi contract basis.” In re El Rafaei, No. 20-12583

(KHK),

, at *12 (E.D. Va. July 22, 2022) (citing C.A. Harrison Companies

LLC, 266 A.3d at 983). This draconian remedy formulated in DCMR § 16-800.1 was

purposefully fashioned as a strict rule to deter unlicensed individuals from performing home

improvement work in the District. See Authentic Home Improvements v. Mayo, No. 90-05,

, at *3 (D.C. Super. Ct. June 2, 2006) (“If this ironclad rule is not respected, the

consequences have been held to be equally draconian”). Indeed, DCMR § 16-800.1 is a strict

liability regulation and does not take into account the intent of the parties or the quality of the

work performed, and does not allow for compensation under a theory of quantum meruit. See

Djourabchi, 571 F. Supp. at 47 (collecting cases).

The D.C. Court of Appeals has justified such a draconian result on two grounds. C.A.

Harrison Companies, LLC, 266 A.3d at 983. “First, the regulation is not a blanket prohibition

against contractors accepting progress payments, but requires only that a contractor be licensed

before accepting such payments—‘a simple administrative matter’ for the qualified contractor.’”

Id. (quoting Cevern, Inc. v. Ferbish,

(D.C. 1995)). Such “[l]icensure provides

‘simple and sufficient proof’ of the contractor’s qualifications to perform the work of a general

18 contractor.”

(quoting Cevern,

). Notably, even though C.A. Harrison

Companies, LLC involved only a home improvement contract, the court referenced the

qualifications of a general contractor in reasoning that the defendant owed repayment of funds,

suggesting that licensure as a general contractor is sufficient to confer all the benefits of a home

improvement license, as defendant argues in this case. See

Second, the regulation serves “to

protect consumers against unscrupulous dealings by home improvement contractors.” Truitt v.

Miller,

, 1077–78 (D.C. 1979). Each of these grounds is aimed at avoiding the

risks associated with unlicensed businesses performing home improvement work, which is not an

issue when the work is performed by a licensed general contractor. Thus, this draconian remedy

is unnecessary in scenarios such as this case where defendant was a licensed general contractor

performing home improvement work. This lends further support to the conclusion that DCMR

§ 17-3900.7 indeed exempts defendant and other general contractors from complying with

DCMR § 16-800.1, and confirms that defendant’s motion to dismiss should be granted.

IV. CONCLUSION

Defendant is correct that DCMR § 17-3900.7 exempts licensed general contractors from

complying with DCMR § 16-800.1. Given the parties’ agreement that defendant has a valid

general contractor license, defendant did not violate DCMR § 16-800.1, which alleged violation

undergirds plaintiffs’ claims. Accordingly, defendant’s Motion to Dismiss, ECF No. 14, is

granted, and plaintiffs’ complaint against defendant is dismissed.

An order consistent with this Memorandum Opinion will be entered contemporaneously.

DATE: June 10, 2024.

__________________________ BERYL A. HOWELL United States District Judge

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