Overview
In Carson v. Bishop Company, LLC et al., the Cumberland County Superior Court recently ruled in favor of a homeowner applying the Maine Home Construction Contracts Act (“HCCA”) and Maine’s Unfair Trade Practices Act (“UTPA”) that resulted in an award of damages and attorney fees against the contractor. Notably, the decision followed a default judgment after the defendants failed to appear and defend the case. Although the court’s findings were, therefore, based largely on the homeowner’s unrebutted evidence, the case still provides useful insight into the importance of abiding by the Maine HCCA and how Maine courts may evaluate contractor abandonment and related HCCA and UTPA claims.
Legal background
The HCCA, 10 M.R.S.A. § 1487 et seq., is a consumer protection statute that applies to any residential construction contract for more than $3,000. The HCCA requires a written contract signed by both the contractor and the homeowner that includes several key elements and terms specified in the statute, including for example the contract price, a selection of a dispute resolution process, and a clear and conspicuous notice advising the homeowner of the Act and to visit the Attorney General’s website for more information. The parties can exempt themselves from the requirements of the HCCA or diverge from its requirements by contract or through a change order, if the contractor has provided the homeowner with notice of their rights under the Act.
Failure to meet the HCCA’s requirements constitutes a violation of the law and serves as sufficient evidence to establish a violation of the UTPA, 5 M.R.S.A. § 205, et seq., unless the evidence is rebutted. A homeowner who prevails on a UTPA claim may recover attorney’s fees and costs, creating significant additional exposure beyond traditional contract damages. 5 M.R.S.A. § 213(2). Sometimes the attorney’s fees can far exceed the damages themselves.
Factual background
In Carson v. Bishop Company, LLC et al., the homeowner contracted for the construction of a home and related improvements for approximately $199,000 and ultimately paid the contract price in full. After receiving payment, however, the contractor stopped work before completing the project, forcing the homeowner to hire other contractors to finish the project.
The homeowner brought claims for breach of contract and violations of Maine’s HCCA and UTPA.
Holding
Because the homeowner had already paid the contract price in full, the court measured his damages by the cost of completing the work through substitute contractors. The homeowner was awarded $74,000, representing the amounts paid or owed to finish the project. The court also found that the contractor’s conduct, including demanding full payment despite incomplete performance and then abandoning the project, constituted unfair and deceptive conduct under the UTPA. As a result, the homeowner was also entitled to recover attorney fees.
Though the court did not reach the issue, it should be noted that requesting full payment as a deposit violates the HCCA, which states that a deposit cannot exceed 1/3 of the contract price,
Key takeaways
Substitute performance as the measure of damages
- When a contractor abandons a project after receiving full payment, the homeowner’s damages may be measured by the reasonable cost of hiring others to complete the work.
- The award covered the costs the homeowner incurred, or could incur, to receive the work promised under the breached contract.
Contractor abandonment may support a UTPA claim
- Not every breach of contract gives rise to a UTPA claim. However, demanding and accepting full payment without completing the work, particularly when there appears to be no intention to return and finish the project, may constitute unfair and deceptive conduct under Maine law.
Attorney fees available under the UTPA
- Because the contractor’s unfair and deceptive conduct caused the homeowner’s financial loss, the court held that homeowner was entitled to recover attorney’s fees in addition to his damages.
Recovery under the Home Construction Contracts Act
- The court declined to award additional damages under the HCCA, finding that the homeowner’s losses were fully addressed through the breach of contract and UTPA claims and that further recovery would be duplicative, but it should be noted that violation of the HCCA by requesting full payment as a deposit could have also been used as evidence to support the UTPA claim and resulted in the court awarding attorney’s fees. Here the court seems to have just skipped the path through the HCCA and gone directly to the UTPA.
How we can help
Given the technical requirements of Maine’s Home Construction Contracts Act, contractors and homeowners alike should consider having construction contracts reviewed by experienced counsel before work begins. A properly drafted contract can help ensure compliance with statutory requirements, reduce the risk of disputes, and provide important protections if a project does not proceed as planned.
Maggie Shields is a construction and commercial litigation attorney who advises owners, developers, and contractors on contract drafting and negotiation, risk mitigation, and dispute resolution, representing clients in litigation and alternative dispute proceedings with a practical, detail-oriented approach focused on efficient outcomes. She can be reached at [email protected].
Bernstein Shur’s Construction Group helps developers, contractors, and construction professionals manage risk and keep projects on track at every stage of the project lifecycle. The group provides sophisticated legal solutions spanning contract negotiation, project administration, dispute avoidance, and litigation, drawing on deep experience in the construction industry.