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CONTRACTORS IGNORE THE CONNECTICUT HOME IMPROVEMENT ACT AT THEIR PERIL

Last month the Connecticut Supreme Court issued a decision in favor of a fencing contractor who had failed strictly to comply with the terms of the Connecticut Home Improvement Act which provides a checklist which must be followed if a home improvement contract is to be enforceable in court.

In this case, the contractor was allowed to collect the last $11.000 or so the homeowner had originally agreed to pay for construction of a fence in 2004.  Almost from the beginning of the collection dispute, it had become clear that the construction contract was unenforceable because it lacked a beginning and ending date — one item on the short statutory checklist.  Walpole Woodworker’s only hope was that a court would find that fairness required that it be paid under a theory of fairness known as quantum meruit.

Before anyone in the business gets comfortable with the idea that the courts can and will step in to protect contractors who have been careless about their contracts, they should consider that it took almost 8 years  including a trial and two levels of appeals for the contractor finally to get the help he wanted from the courts.

Here’s what really happened: In 2004, Walpole Woodworkers, Inc. signed a contract with homewner, Sid Manning, to build a fence for $22,318. As soon as Walpole Woodworkers received a deposit of $11,000 the work was done.  When collection of the balance became a problem, they first tried to appease the homeowner by modifying the fence so it would better contain  his small dog.  Next came the lawsuit.  Now, almost 8 years from the signing of the defective contract — after the expenses of a trial in Superior Court, an appeal to the Connecticut Appellate Court and a review by the Connecticut Supreme Court —  the contractor has finally been awarded the “fair value” of the work completed in 2004 and 2005.  Faced with a number of tests for determining what fair value was, the Court chose a simple one — the balance that the parties had originally agreed to under the faulty contract.

The Supreme Court makes no mention of  interest or costs of collection probably because collection costs must be included in the contract, and, absent an enforceable contract, cannot be charged to the losing party.  We wonder whether the Plaintiff now believes that the “win” was worth the costs and efforts involved — costs and efforts that could have been avoided by simply checking his contract against the statute.


NAVIGATING THE CONNECTICUT HOME IMPROVEMENT ACT — A NEW CASE IS GOOD NEWS FOR SUBCONTRACTORS AND BAD NEWS FOR HOMEOWNERS

A decision to be released this week by the Connecticut Appellate Court — Probuild East LLC vs Poffenberger —  tells a cautionary tale of the perils and pitfalls of home improvement contracting  for everyone involved in the process including owners, general contractors, and subcontractors.

The facts of the case were relatively simple:  A homeowner hired a general contractor  who failed to make sure the contract complied with the Connecticut Home Improvement Act — a statutory scheme designed to protect homeowners.  Once the job — which included  completed change orders — was finished, the general contractor was still owed $10,800.

Enter the plaintiff,  a materials supplier  who recorded  a timely mechanic’s lien for $15,275 to cover materials for which he had not been paid by the general contractor.  The plainiff bypassed the general contractor and instead sued the homeowner seeking foreclosure of the mechanic’s lien.

At trial, the homeowner who knew nothing of the subcontractor  raised the defense that, based on flaws in the contract between the homeowner and the general contractor, the general contractor could not have collected the balance of money he was owed.  Since the homeowner’s only contract was with the general contractor, it followed, he argued, the the Home Improvement Act also protected him from claims by subcontractors on the job.

The trial court rejected the owner’s defense and ordered a sale of the property to satisfy the subcontractor’s claim, or at least that portion of it that would otherwise have been owed to the general contractor.

On appeal, the Appellate Court agreed with the trial court holding that the general contractor’s failure to protect its own rights did not affect the right of the subcontractor to collect its debt as long as the homeowner had not paid for the job in full.

Here are the lessons:

FOR THE GENERAL CONTRACTOR – Take care that each and every contract you present to a homeowner complies with each and every requirement of the Home Improvement Act.  If it does not, you may never be able to collect your money regardless of the quality of your work and regardless of any windfall this creates for the non-paying homeowner.

FOR THE HOMEOWNER – Pay attention to the job.  Find out who your general contractor is bringing on board.  Ask to see materials invoices and subcontracts.  Demand  lien wavers from subcontractors each time you make partial payments on the job.  Remember that you may be forced to pay subcontractors with whom you had no direct dealings even if you couldn’t also be forced to pay the general contractor for the same services.

FOR THE SUBCONTRACTOR – Keep on top of collections making sure to document all dealings with the general contractor and follow the rules for filing mechanics liens when payment is late.

Especially in this difficult economy everyone is watching the bottom line closer than ever and anyone who chooses to do business on a handshake does so at his own peril.  In the end — at least when the judicial system becomes involved in the process — he who exercises the greatest caution wins.