Indiana Home Improvement Fraud: Give Notice or Hope to Prove Actual Fraud

The Court of Appeals makes clear that under Indiana's home improvement fraud statute the homeowner can lose their case even before they know they have a case. Pay close attention to this from Hayes v. Chapman (PDF format):

HICA explicitly provides that a supplier’s failure to provide a written contract is a deceptive act and brings that deceptive act under the purview of the remedies and penalties of Indiana Code chapter 24-5-0.5. I.C. § 24-5-11-14. But to establish entitlement to those remedies, the consumer must show that the deceptive act was either uncured—meaning that notice was given and the deceptive act was not cured—or incurable—meaning that the supplier acted with an intent to defraud or mislead the consumer. I.C. § 24-5-0.5-4(a).

This means if the contract is defective and the homeowner does not give the proper notice, then the homeowner has no case against the contractor.

I worry that the statute creates a laxness for contractors who may face an unnecessary lawsuit.

Contractors need to get to their lawyers for a contract that complies with the HICA and homeowners need to a lawyer to review their home improvement contracts.

Home Improvement Fraud: Gaston man arrested

I saw Gaston man arrested for home improvement fraud in the The Muncie Star Press and had to pass this along:

"UNION CITY — A Gaston man has been arrested on home-improvement-fraud charges — again.
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John Henry Stanley, 28, was arrested by Union City police last week after a senior citizen in the 900 block of West Division Street reported three men had offered to clean her gutters for $10 — then asked for up to $200 to repair damage they claimed to have found on her roof."

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Authorities said they determined Stanley did not have a vendor’s permit or contractor’s license to do home repair work in Randolph County, and also had no driver’s license.

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Stanley was sentenced to six years in prison by Delaware Circuit Court 2 Judge Richard Dailey in 1999 after he was convicted of home improvement fraud. In that case, a 81-year-old Delaware County man who was legally blind paid Stanley and a co-defendant $5,600 for work that was never done.

The criminal statute is here. The civil statute is here.

Consumers and contractors both need to be aware of these statutes.

Indiana Home Improvement Fraud

The time is coming for home repairs, do not fall victim to. home improvement fraud. Most home improvement contracts fail to meet the requirements of Indiana’s Home Improvement Fraud Statute.

If you contact for any alteration, repair, or other modification of your residential property that costs more than $150.00, then this statute applies to that contract.

The law generally requires:

1. The telephone numbers and names of any person for handling consumer problems.
2. Any time limitation on the consumer's acceptance of the home improvement contract.
3. A reasonably detailed description of the proposed home improvements.
4. The approximate starting and ending dates.
5. A statement of any contingencies that would materially change the approximate completion date
6. Be in a form that each consumer who is a party to it can reasonably read and understand.
7. The contract price.

The law has additional details required when insurance pays to repair damages to the residence.

The Home Improvements Statute falls within Indiana's Deceptive Consumer Sales Act (see my article on that statute starting here) . For a successful suit, you must also follow that statute.

The Deceptive Consumer Sales Act allows for the following remedies:

1. The actual money damages or $500.00, whichever is greater.
   
2. For willful deceptive acts, the court may increase damages to: 3 times the actual damages of the consumer suffering the loss but not more than $1,000.00.
3. Attorney fees.

What I can do for you:

1. Read any contracts before you sign off on them to make sure that you are not going to be a victim of home improvement fraud.
2. If you have a contract that is bad, I can go to court for you.
   

Mechanic's Liens and Permits: A New Court of Appeals Case

An Evansville area contractor lost its lien and its appeal by not getting the building permit in the proper way. Hopper Resources Inc., Construction Div. v. Wendell Webster (PDF format) decided yesterday turned on the way that the contractor obtained the building permit:

On November 25, 2003, Shamo went to the Building Commission office and obtained an Improvement Location Permit for the addition of a bathroom and a porch to Webster’s residence. Shamo completed a “Homeowner Affidavit” stating that “Wendel [sic] Webster” thereby swore that “either [he] or a member of [his] immediate family” would “perform the . . . work” of adding the room and porch at his residence, “for which Building Permit #106771E” was being issued, and that he would not be “subcontracting out any of the work” thereon. (Ex. A). Shamo signed Webster’s name on the affidavit....

Contractor filed suit to foreclose the lien. Contractor lost at the trial court level and appealed. The Indiana Court of Appeals noted that foreclosure is an equitable action and listed several equity maxims: One who seeks equity must do equity, One who comes into equity must come with clean hands, and equity follows the law ( see page 7 of the opinion).

But losing the foreclosure was not all that the contractor lost - the contractor also lost on the breach of contract claim. The Court of Appeals sank the breach of contract claim in this paragraph:

Next, Hopper argues that it “was entitled to recover on breach of contract,” citing “unrefuted evidence” that it “was owed and ha[d] incurred damages” in the amount of $7,500.00 “as a result of Webster breaching the parties’ contract by running Hopper off the job and refusing to pay.” Hopper’s Br. at 29, 30. The evidence was that Webster refused to allow further work by Webster after the inspector found that the work failed to comply with Code. The Homeowner Affidavit expressly provides that “if the Inspector should find the work in the violation of the Code, then [the homeowner] shall employ a master installer of the required trade or craft to change, alter, or repair the work that is in violation.” (Ex. A). Hopper offered no evidence to establish that it held such credentials...Absent a showing that Hopper held credentials to perform the corrective work required by the Homeowner Affidavit, the circumstances here did not require that Webster allow Hopper workers to perform further work. Therefore, Hopper’s breach of contract claims must fail.

Reading the case, I was surprised that the homeowner did not file a counterclaim based on Indiana's home improvement fraud statute. The homeowner filed a counterclaim and asserted an affirmative defense of fraud, but the counterclaim was struck by the trial court. The Home improvement statute says the following about permits:

IC 24-5-11-9
License or permit as prerequisite
Sec. 9. Where a license or permit is necessary for any part of a home improvement, the home improvement contract shall be subject to obtaining the necessary licenses or permits prior to any work commencing.

Considering how the contractor obtained the permit in this case and the type of permit, I think the contractor got lucky in escaping a home improvement fraud suit.