## Facts

- Wood Bros. Homes, Inc., a developer based in Colorado, hired Fred J. Gagnon, a California contractor, to perform rough carpentry on an apartment project in Albuquerque, New Mexico.
- Negotiations occurred in California, New Mexico, and Colorado; the contract was signed at Wood’s office in Colorado.
- The work contemplated by the contract was to be performed in New Mexico.
- Gagnon did not hold a New Mexico contractor’s license; Wood’s managers told him he could work as a subcontractor under Wood’s supervision without a separate license.
- After performance began, New Mexico authorities stopped the job because Gagnon was unlicensed under New Mexico’s construction licensing law.
- Wood terminated Gagnon, prevented completion, and refused to pay Gagnon; Wood paid about $27,000 directly to Gagnon’s employees for labor.
- Walker Adjustment Bureau, as Gagnon’s assignee, sued Wood in Colorado for the contract price or, alternatively, quantum meruit/restitution.
- The trial court applied New Mexico law and entered summary judgment for Wood, holding the licensing statute barred recovery; the court of appeals reversed, applying Colorado law and estoppel; the Colorado Supreme Court granted certiorari.

## Issues

1. Under Restatement (Second) of Conflict of Laws, which state’s law governs enforceability of a multistate services contract: Colorado or New Mexico?
2. If New Mexico law governs, does New Mexico’s contractor licensing statute bar an unlicensed contractor (and its assignee) from recovering compensation in contract or quantum meruit?
3. Can the owner be estopped from asserting the licensing bar based on its agents’ statements that the contractor could work without a New Mexico license?

## Decision

- The Colorado Supreme Court reversed the court of appeals and reinstated summary judgment for Wood.
- The court adopted the Restatement (Second) “most significant relationship” approach for contract choice-of-law questions.
- Applying Restatement § 196, the court held New Mexico law presumptively governed because the contract was for services to be performed in New Mexico, and the presumption was not overcome.
- Under New Mexico law, the licensing statute barred recovery by an unlicensed contractor and therefore also barred recovery by the contractor’s assignee.
- The statutory bar applied to both breach-of-contract and quantum meruit/restitution theories, and could not be avoided by estoppel in light of the statute’s protective policy.

## Legal Principles

- Contract choice-of-law questions are resolved by applying the law of the state with the most significant relationship to the issue presented, consistent with the Restatement (Second) of Conflict of Laws.
- For contracts for the rendition of services, Restatement (Second) § 196 creates a rebuttable presumption that the law of the state where the services are to be performed governs issues of contract validity and enforceability.
- A strong regulatory policy of the place of performance—such as a contractor licensing regime designed to protect the public—may outweigh the forum’s interest in enforcing contracts made or signed in the forum.
- An assignee acquires no greater right to recover than the assignor would have under the governing substantive law.
- Where the governing state’s licensing statute denies unlicensed contractors the right to recover compensation, courts may apply that bar to both contract and restitution claims to prevent circumvention of the statute’s deterrent purpose.

## Conclusion

Colorado applied New Mexico law to a New Mexico performance contract and enforced New Mexico’s statutory prohibition on compensation suits by unlicensed contractors, barring both contract and restitution recovery by the contractor’s assignee despite alleged assurances by the owner’s agents.


Wood Bros. Homes, Inc. v. Walker Adjustment Bureau, 198 Colo. 444, 601 P.2d 1369 (1979)