In 2009, Pennsylvania enacted the Home Improvement Consumer Protection Act (“HICPA”), which act mandated, among other things, that residential contractors enter into written home improvement contracts with homeowners in order to protect homeowners from contractors taking their money and leaving town without doing the work. Under the statutory language of the HIPCA if a contractor does not enter into a written contract with a homeowner, the contractor is barred from pursuing a breach of contract action against the homeowner because the statute states that no home improvement contract shall be valid or enforceable against an owner unless it is in writing, legible, and contains the home improvement contractor registration number of the contractor performing the work. [Disclaimer: there are also other requirements that a home improvement contract needs to meet].
Many people who read the HICPA reasonably interpreted it to mean that if a residential contractor did not enter into a written home improvement contract with the homeowner, it was not possible for the residential contractor to recover money owed as a result of the contractor’s work. Thus, it seemed like the HIPCA imposed a particularly harsh penalty on contractors who performed work on a property without a written home improvement contract. Many of our clients lamented that this new statute was simply unfair to contractors.
Fortunately, our legal system is structured in such a way that courts can sculpt the effect of statutes via interpretive opinions that shed light on grey areas. This is precisely what happened late this summer when the Superior Court of Pennsylvania issued an opinion in Durst v. Milroy General Contracting, Inc. In this case, the homeowners contracted a residential contractor to perform home improvements and the parties entered into an oral contract. After the residential contractor completed the work, he submitted a written invoice to the homeowners and a dispute arose. The homeowners refused to pay the residential contractor any money.
The contractor decided to sue, but the lack of a written contract complicated matters. Initially, the contractor’s lawyer filed a complaint against the homeowners alleging counts of breach of contract and quantum meruit, but the attorney smartly amended the complaint to allege only a count for quantum meruit because, as discussed above, the lack of a written contract would have made any breach of contract action dismissible.
By way of background, quantum meruit, a Latin phrase meaning “what one has earned” is an equitable remedy to provide restitution for unjust enrichment in the amount of the reasonable value of one’s services. Where unjust enrichment is found, the law implies a contract, which requires the defendant to pay to the plaintiff the value of the benefit conferred.
The homeowner’s attorney then sought to dismiss the contractor’s complaint on the grounds that it was an attempt to collect on an oral home improvement contract, which attempt is strictly prohibited by the HICPA. The homeowner’s lawyer further argued that the HICPA also precludes residential contractors from collecting on a quantum meruit theory. The trial court refused to dismiss the contractor’s case ruling that the HIPCA was silent regarding whether a contractor could pursue a quantum meruit claim where a contractor performed services with no written contract and was left completely uncompensated. Upset with that ruling, the homeowners essentially got the trial court’s permission to appeal the decision to the Superior Court of Pennsylvania on the grounds that the HICPA is a new statute with no interpretative precedent.
On appeal, the Superior Court of Pennsylvania considered whether the HICPA precludes lawsuits where home improvement work was conducted, but no written contract exists and the contractor is seeking to recover under a quantum meruit theory. In agreeing with the trial court’s decision, the Superior Court noted that the contractor’s complaint alleged that the contractor conferred a benefit on the homeowners in the form of home improvements and that the homeowners accepted and retained at least some of those home improvements under circumstances that would make it inequitable for the homeowners to retain the home improvements without compensating the contractor.
Under such circumstances, the PA Superior Court concluded that the homeowner’s reliance upon the HICPA as a defense in its action was misplaced because the contractor was not pursuing a contract theory; rather the contractor’s lawsuit was based on a quantum meruit theory. The court noted that although the HICPA requires a written home improvement contract in order to maintain a breach of contract action, the HICPA is silent as to actions in quasi-contract, such as unjust enrichment and quantum meruit, which by definition implicate that for whatever reason, no written contract existed between the parties. Thus, the Court held that quasi-contract theories of recovery survive the HICPA and the trial court did not err in allowing the contractor to move forward with his claims.
This case is a win for residential contractors. If you or your company need assistance with the preparation of a home improvement contractor or any other construction law related matter, the attorneys at Harmon & Davies, P.C. are here to serve you.
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.
Tags: "HICPA", "home improvement contract", "Pennsylvania Home Improvement Consumer Protection Act", "quantum meruit", "quasi-contract", "residential contractor", "unjust enrichment", breach of contract, construction, contractor, homeowner, residential
