Wood Bros. Homes, Inc. v. Walker Adjustment Bureau

Fred Gagnon, a California resident, agreed to perform carpentry work for Wood Bros. Homes, Inc. (Wood) (defendant), a Delaware corporation with its principal place of business in Colorado. The agreement was signed in Colorado; the work was to be performed in New Mexico. After Gagnon began work, he was shut down by authorities because he lacked a New Mexico contractor’s license. The failure to procure a license required by the New Mexico Construction Industries Licensing Act (N.M. Licensing Act) triggered a potential criminal sanction and denial of the right to seek legal recovery for work performed. Wood cancelled the contract with Gagnon and refused to pay him for the work performed. Walker Adjustment Bureau (Walker) (plaintiff), acting as Gagnon’s assignee, sued Wood in a Colorado court for its failure to pay Gagnon. Walker sought recovery on the basis of breach of contract or, in the alternative, quantum meruit. Applying New Mexico law, the trial court granted summary judgment to Wood. The court of appeals held that Colorado law applied and reversed. The court of appeals reasoned that if it followed the approach of the Restatement (Second) of Conflict of Laws (Second Restatement), Colorado would have the most significant relationship to the contract because of its interest that agreements be validated and that the parties’ expectations be protected. The court of appeals also held that Wood was estopped from arguing that Gagnon was unlicensed because Wood indicated that Gagnon could work in New Mexico despite knowing that he was not licensed. The Colorado Supreme Court granted Wood’s petition for certiorari.