Pennsylvania’s Home Improvement Consumer Protection Act (“HICPA”), which went into effect in 2009, generally requires that home improvement contracts be in writing and contain thirteen specific items (including the contractor’s home improvement contractor registration number, the date of the transaction and the name, address and telephone number of the contractor). Absent inclusion of all items, the contract is not valid or enforceable against the owner. This means that the contractor cannot assert a claim for breach of contract if the owner fails to pay for work performed.
However, in the recent case of Shafer Electric & Construction v. Mantia, the Pennsylvania Supreme Court ruled that even if a contract fails to comply with HICPA, the contractor may still be able to recover the reasonable value for its services under the equitable theory of quantum meruit, or unjust enrichment. What this means is that a homeowner is not excused from its obligation to pay the contractor simply because the home improvement contract does not comply with HICPA.
In Shafer, the homeowners engaged the contractor to build a garage addition onto their home. The contract, however, did not comply with most of the requirements of HICPA. After the contractor had performed work, a dispute arose and the parties agreed that the contractor would 1) invoice the homeowners for the work completed and 2) thereafter, discontinue its efforts. Nevertheless, the homeowners refused to pay and the contractor filed suit for breach of contract and quantum meruit. The homeowners moved to dismiss the action pursuant to HICPA. The trial court granted the motion. On appeal, the Pennsylvania Superior Court reversed as to the quantum meruit claim. The homeowners then took a further appeal to the Pennsylvania Supreme Court.
The Supreme Court determined that HICPA does not preclude a non-compliant contractor from pursuing an action in quantum meruit. Instead, HICPA only speaks to the enforceability and validity of home improvement contracts. Further, under common law principles, a party is not precluded from bringing a quantum meruit action when one for breach of contract is unavailable. Significantly, the court noted that the language of HICPA does not make any reference to a claim for quantum meruit being precluded and that it would be improper to insert words into HICPA that would extinguish a claim for quantum meruit.
Shafer is helpful for contractors in the event of noncompliance with HICPA. However, it remains our strong recommendation to contractors that your home improvement contracts comply with HICPA. Under quantum meruit, you can only recover the reasonable value of the services rendered and not necessarily the profit under the contract. Additionally, a violation of any aspect of HICPA is also considered a violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, which could subject you to enhanced damages and attorney’s fees in the event that a homeowner asserts a claim against you.
If you are unsure about whether your home improvement contract complies with HICPA, please do not hesitate to contact us.
Jennifer M. Horn is a Partner at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.
Matthew L. Erlanger is an Associate in the Construction Group.