Thursday, February 19, 2015

Making A Viable Claim Under The Home Improvement Practice Code

Last week, the Wisconsin Court of Appeals filed its decision in Masterclean, Inc. v. Butler.  In Butler, a Waukesha County jury awarded the homeowners $29,407.37 in damages against a home restoration and remodeling contractor.  The trial court interpreted the jury's verdict as a finding that the homeowners suffered those damages as a result of the contractor's failure to put all material terms and conditions of the contract in writing in violation of the Home Improvement Practices Code, thus entitling the homeowners to double damages and reasonable attorneys' fees and costs pursuant to Wis. Stat. s. 100.20(5).  After doubling the jury's damages award and tacking on reasonable attorneys' fees and costs, the trial court entered a $89,165.67 judgment against the contractor.  The Court of Appeals reversed the judgment, holding that there was no credible evidence supporting a finding that the contractor's failure to put all material terms and conditions of the contract in writing caused the homeowners' damages.  Since the jury also found that the contractor breached its contract and that this breach caused damage to the homeowners, the homeowners will still get a judgment against the contractor.  Unfortunately for them, this judgment will be a lot closer to $30,000 than $90,000.

I've written about the Home Improvement Practices Code before, including the basic requirement that the contractor "put it in writing."  For some reason, the contractor in this case brought a breach of contract claim against the homeowners for nonpayment even though its workmanship was shoddy and its contract violated the Home Improvement Practice Code.  To be clear, a contract that violates a statute or consumer protection regulation cannot be enforced by the contractor under most circumstances.  See Baierl v. McTaggart, 2001 WI 107, 245 Wis. 2d 632, 629 N.W.2d 207.  Contractors that sue homeowners for nonpayment based on a contract that does not perfectly comply with the Home Improvement Practices Code are playing with fire.  Their contract claims will be dismissed and their customers may even countersue them for the damages caused by their shoddy workmanship and Home Improvement Practices Code violations.

While a contractor's failure to "put it in writing" is a good defense for homeowners, the Butler decision shows how difficult it is for homeowners to prove that this Home Improvement Practices Code violation caused them damages.  The Court of Appeals noted that the homeowners' damages were the estimated cost of correcting poor workmanship and also noted the lack of evidence that the contractor had performed unauthorized work.  Essentially, the homeowners would have suffered almost $30,000 in damages even if the contractor had crossed all of its Ts and dotted all of its Is.  Conversely, the homeowners would not have suffered almost $30,000 in damages had the contractor completed its work in a competent and professional manner.

In contrast, it is much easier to prove that a contractor's misrepresentations caused a homeowner's damages.  The Home Improvement Practices Code specifically prohibits contractors from making "any false, deceptive, or misleading representation in order to induce any person to enter into a home improvement contract, to obtain or keep any payment under a home improvement contract, or to delay performance under a home improvement contract."  Wis. Admin. Code s. ATCP 110.02(11).  The homeowner's straightforward argument is that he or she only hired this contractor because he said that he had experience making such improvements, that his work was guaranteed to prevent the basement from leaking, or that he was certified to install EPDM roofs.  The homeowner suffered damages in the amount that he or she had to pay the contractor or in the amount that he or she must pay to correct the contractor's work as a direct result of the contractor's misrepresentations.

Other Home Improvement Practices Code violations that may cause a homeowner to suffer damages include the following:

  • Failing to disclose the identity of any other person assuming responsibility for the performance of the contract, such as when a credentialed contractor farms out his work to anyone with a truck, Wis. Admin. Code s. ATCP 110.05(5)
  • Starting work without obtaining the required permits, especially when the building inspector would have stopped the work, Wis. Admin. Code s. ATCP 110.03(1)
  • Failing to provide notice of an impending delay in contract performance, especially when the contractor leaves a roofing job to go deer hunting without protecting the exposed areas and does not warn the homeowner.

Please contact me at rudolphkuss@stevensandkuss.com if your contractor has abandoned you, has performed improper work, or is threatening to sue you for nonpayment.