The Site Report - Construction Law Insights, Issue 8, 2022

JCG & Assocs., LLC v. Disaster Am. USA, LLC -

"North Carolina general contractor licensing issue highlights unique claims."

Why this is important: North Carolina has been cracking down on general contractor licensing, in particular license borrowing/lending situations in which an unlicensed contractor uses a licensed contractor's license number to secure work and pull permits for jobs. Often, these cases involve the licensing board taking action against the contractor that lent out its license in violation of the North Carolina general contractor licensing statute. This case involves a different scenario. JCG, the licensed contractor, denies any relationship with the unlicensed contractor, Disaster America, and alleges that Disaster America used its name and license number to secure work without JCG knowing or consenting. As a result, JCG is pursing claims against Disaster America for trademark infringement and unfair and deceptive trade practices. One basis for JCG's claims is that JCG alleges its license number issued by the North Carolina Licensing Board for General Contractors constitutes a common law trademark. This is a unique, creative claim that has not previously been considered. The North Carolina Business Court denied JCG's motion for partial summary judgment on its trademark claim, because it determined there were genuine issues of material fact as to whether JCG's use of the license number qualified it for trademark protection. In doing so, the court expressed severe skepticism that "the number took on the characteristics of a trademark rather than merely those of a license number." This suggests that license numbers could become trademarks, but that it is extremely unlikely. Despite JCG's lack of success, its claims do highlight the potential diversity of claims that can come into play in construction project litigation, and parties should be prepared to defend and pursue unique (and sometimes unorthodox) claims when a project falls apart.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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