Superior Court of Pennsylvania Holds Homebuilder Personally Liable

The Superior Court of Pennsylvania recently upheld a York County jury verdict that found a homebuilder personally liable for defective construction work.  In Bennett et al. v. A.T. Masterpiece Homes at BroadSprings, LLC et al., two sets of homeowners who purchased new residential homes from A.T. Masterpiece Homes at Broadsprings, LLC (“A.T. Masterpiece”), sued the limited liability company and its managing member, Grant Colledge, in his individual capacity, for breach of contract, breach of warranty, and violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) alleging that the defendants engaged in deceptive and dishonest practices during the construction process.

The homeowners alleged that during the construction of their homes they noticed numerous building deficiencies and that Colledge, who was the homeowners’ primary contact during the construction process, made certain assurances to them in the form of statements akin to: “I guarantee it” or “I will take care of it.”  For example, when one of the homeowners noticed that the dormer above his garage did not correspond to building plans and structural design, Colledge assured the homeowner that the dormer had been redesigned and the final product would work fine.  In another instance, a homeowner visited her home to check on its progress and noticed a crack in the foundation.  When the homeowner reported the crack to Colledge, he stated that he “will take care of it and will take care of you.”  Colledge made other guarantees regarding issues with the flooring and repeated his intention to take care of both the specific problem and the homeowner’s general concerns.

After construction finished, the homeowners discovered that their new homes were in various states of disrepair and structural failure.  The dormer that had been an issue on one of the homes was in such bad structural shape that the homeowner had to install temporary bracing to avoid collapse.  There were other alleged deficiencies including nails protruding from sections of drywall, cracked tiles, and floors being so poorly laid that a person could feel the joints move while walking.

The homeowners retained an engineering expert who found similar construction defects and housing code violations in each home.  The deficiencies included:  using poor grade lumber, improperly installing the floor joists, and housing code violations related to the insulation, height clearances, ventilation, plumbing, and electrical systems.

At trial, the jury found Colledge and his company liable for breach of contract, breach of warranty, and violations of the UTPCPL.  The jury further concluded that Colledge’s representations and guarantees regarding the homes exposed him to personal liability and awarded the homeowners double the damages under their UTPCL claims.

Colledge appealed his case to the Superior Court of Pennsylvania arguing that the trial court erred: (1) by permitting the jury to hold him personally liable to the homeowners when he did not specifically agree to assume liability; (2) by holding him personally liable when there was no evidence of fraudulent conduct by him; and (3) by doubling the jury’s award under the UTPCPL when the Court itself did not view Colledge as an absolute crook.

Colledge argued that he should be shielded from personal liability because he was at all times acting only as an agent on behalf of a limited liability company.  Colledge claimed that any statements attributed to him (where he said “I will take care of it” or “I guarantee it”) were simply figures of speech and did not amount to express assumptions of personal liability.  The Superior Court disagreed and found that there was ample evidence presented at trial to lead the jury to find that Colledge had assumed personal liability.

The Court noted that the several occasions where Colledge had reassured the homeowners that he would take care of their concerns and made express promises guaranteeing the quality of their homes did not take place in a vacuum but in the context of recurring building deficiencies which arose during construction of the homes.  The court stated that although the homeowners officially contracted with A.T. Masterpiece, Colledge voluntarily assumed personal liability on the building contract when he guaranteed the final quality of the home because the statements were intended to calm the homeowners about the building deficiencies and to maintain their contracts.

Moreover, the Superior Court found that there was sufficient evidence to support the jury’s finding of liability under the UTPCPL because the jury was not required to find proof of common law fraud to find that Colledge had engaged in misleading conduct under the UTPCPL.  Again, the facts presented at trial showed that Colledge made numerous specific representations to the homeowners regarding the construction and ultimate quality of their homes.  Despite such guarantees, Colledge failed to deliver the quality he promised to the homeowners and the homeowners received brand new homes in need of many thousands of dollars in repairs.  The jury heard this evidence and concluded Colledge’s conduct was deceptive or misleading.  Thus, the court found that the evidence at trial was sufficient to support the jury’s finding.

This case is concerning not only for contractors, but for any business owners who make statements such as “I guarantee it.”  In light of this decision, Pennsylvania small business owners should be particularly careful about the assures that they give to clients or else they may find themselves personally liable.

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice.  Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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