Thursday, February 18, 2010

The Illinois Home Repair and Remodeling Act - The 3rd District

This is part eight in a series of posts on the Illinois Home Repair and Remodeling Act (HRRA), and the final post looking at the law in each of the Illinois appellate districts.  The previous posts:

1) Introduction
2) Statute
3) Illinois Supreme Court opinion
4) The 5th District
5) The 4th District
6) The 1st District

7)  The 2nd District

Once again, here's the map of the Illinois Appellate Districts.  The Third District extends across the north central part of the state, and includes Will County, Kankakee County, Peoria County, and Rock Island County, among others.  I saved the Third District for last in this series because this district has issued the last two HRRA appellate opinions, both in January 2010.  The Third District also was the first district to issue an HRRA opinion, so I'll start there.

In the 2005 case of Central Illinois Electrical Services, LLC v. Slepian,1 the Third District became the first appellate court in Illinois to consider the HRRA.  In Slepian the contractor sued the homeowner to foreclose on a mechanics lien pursuant to an oral contract for electrical work.  The homeowners asserted that the contractor had violated the HRRA by not providing a written contract, and that therefore the oral contract was void and could not form the basis of a mechanics lien claim.  The contractor argued that, since it was the second electrical contractor on the job, it did not "initiate" the work, and therefore the HRRA did not apply.  It also argued that because the homeowner kept changing the scope of work it would be impossible to have provided an estimate of the total costs.  The court held that the HRRA did apply to this contractor and that there was no exception under the HRRA for time and materials contracts, but that the HRRA did not preclude the contractor from providing an updated estimate or work order as warranted.

Fast forward now to 2010.  The Fourth District issued the Smith v. Bogard opinion in 2007.2  The First District recently chose not to follow Bogard in K. Miller Construction Co, Inc. v. McGinnis,3 a case that the Illinois Supreme Court has granted leave to appeal.  The Third District issued two opinions within a week of each other - Roberts v. Adkins filed on January 7, 2010; and Fandel v. Allen filed on January 14, 2010 - reaching very different conclusions, and not referencing the other case in either opinion.4,5

In Roberts, the contractor sued the homeowners to foreclose on a mechanics lien for work painting a fence and refinishing a deck, and the homeowners raised the HRRA as an affirmative defense.  It was undisputed that the contractor did not provide any written agreement or work order, nor did he give the homeowners the HRRA-required consumer rights brochure.  The original estimate (verbal) for the work was $750, but with changes the total cost exceeded $1,000; the contractor's lien claim was for approximately $2,000.  The deck exhibited problems and the homeowner hired a different contractor to fix it.  The trial court granted a judgment for the contractor, specifically finding that the HRRA did not apply.  The Third District Appellate Court found that the contractor was required to obtain a written contract in compliance with the HRRA "when [he] became aware that the anticipated costs would exceed $1,000."  As a result, the court further found that since the contract did not comply with the HRRA it was invalid and could not form the basis of a breach of contract or mechanics lien foreclosure claim.  Finally, the court found that the homeowners had established a potential claim for breach of contract by the contractor, but had not established a Consumer Fraud and Deceptive Business Practices Act (CFDBPA) claim, since they did not show that the contractor's failure to supply a written agreement and the consumer rights brochure caused them damages.

In Fandel, similar to Roberts, the contractor performed repair and remodeling work (a roof replacement) for the homeowner without obtaining a signed contract and without giving the homeowner the HRRA consumer rights brochure.  The difference is that the contractor in Fandel did prepare a written, itemized work order, gave it to the homeowner, and the homeowner verbally authorized the contractor to proceed (as opposed to the Roberts contractor, where there was nothing in writing to document the oral contract).  As in Roberts, the contractor sued to foreclose its mechanics lien, and the homeowner sought to dismiss the case due to the contractor's noncompliance with the HRRA.  The trial court granted the homeowner's motion and the contractor appealed.  The Third District Appellate Court held that the contractors violations of the HRRA did not invalidate the agreement between the parties and thus did not bar the contractor from recovering on its mechanics lien claim.  The court rejected the Fourth District's holding from Bogard and also disagreed with the First District holding in McGinnis, and noted that the homeowner's private remedy in the HRRA is to pursue an action under the CFDBPA.

As noted above, the facts in the Roberts and Fandel cases differ to an extent, but unfortunately in neither case does the court refer to the other case.  Therefore, it is not clear where exactly is the line between a contractor's valid contract and thus no HRRA defense for the homeowner pursuant to Fandel and a contractor's invalid contract and thus an HRRA defense for the homeowner pursuant to Roberts. I believe the fact that the contractor in Fandel at least had a written, "reasonably particular" work order, while the contractor in Roberts had nothing in writing, is an important differentiating factor, but the court does not explicitly say this in either opinion.   It is interesting to note that Justice Lytton, who wrote the majority opinion in Roberts, wrote a dissenting opinion in Fandel, which appears consistent with Roberts (but again, the Fandel opinion contains no reference to Roberts, so it is not clear).

1.  Central Ill. Elect. Srvcs, LLC v. Slepian, 831 N.E.2d 1169 (3rd Dist. 2005).
2.  Smith v. Bogard, 879 N.E.2d 543 (4th Dist. 2007).
3.  K. Miller Constr. Co, Inc. v. McGinnis, 913 N.E.2d 1147 (1st Dist. 2009).
4.  Roberts v. Adkins, No. 3-09-0187, __ N.E.2d __, 2010 WL _____ (3rd Dist. 2010).
5.  Fandel v. Allen, No. 3-08-0237, __ N.E.2d __, 2010 WL ____ (3rd Dist. 2010).

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