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Pennsylvania Contractor Held Personally Liable for Defective Construction

5/17/2012 | Construction Blog

In a very recent case, the Pennsylvania Superior Court has held that a residential construction contractor who personally guaranteed that defective work would be corrected could be held personally responsible for the cost of repairs required to correct defective construction. The case, Bennett, et al. v. A.P. Masterpiece Homes offers an object lesson to contractors on how not to communicate with their customers.

In the case, two separate homeowners contracted with a homebuilder to construct homes in a development in York County, Pennsylvania. The individual who owned the construction company was the contact person for each of the homeowners. Each home had significant structural and construction problems. A dormer on one home was structurally compromised, requiring supplemental bracing. Nails protruded through floor boards, windows leaked air, and the smell of gas emanated from the basement. On the other home, cracks developed in the foundation, water penetrated into the basement, floor boards were warped, and floor joists were improperly installed causing sagging and bounce. Plumbing, electrical and HVAC systems were in violation of relevant housing codes.

In each case, the owner of the homebuilder specifically and personally told the homeowners that “I will take care of it” or “I guarantee it.” Despite the statements, the appropriate repairs were not made and each homeowner sued for the respective costs to fix the deficiencies in their homes, $64,000 for one home and $122,000 for the other.

A jury found that both the individual owner of the construction company and the company were responsible for the homeowners’ damages. In addition, the jury found the individual contractor/owner and the contractor responsible to the homeowners under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”). This is a consumer protection statute which allows the court to award triple the amount of actual damages, plus attorneys’ fees where fraud or misrepresentation is proven. All told, the contractor and his company were held collectively responsible to the homeowners in the amount of $228,500.

This case is important because: (1) the contractor owner was held personally liable; and (2) the Court held that UTPCPL liability can be based on a mere misrepresentation. It does not require proof of actual fraud. Although it was easy to conclude in this case that the contractor had misrepresented given the severity of the deficiencies of its work and his “promises” to “make things right,” it stands as an lesson to contractors in how not to communicate with their customers. Such use of loose language, which can be understood by a customer as a personal guarantee, may be used as a basis to assess personal liability in certain circumstances. The significance of personal liability exposure can be compounded when that same loose language is offered to prove a pattern of misrepresentation to support treble damages and attorneys’ fees under the UTPCPL.

It is likely that this case will be used by homeowners in future cases where construction work failed to meet minimum standards. Contractors should be careful about the promises they make on a residential construction project.