Home Repair & Remodeling

If anyone had a doubt about the punitive nature of the Home Repair and Remodeling Act (815ILCS 513/1 through 999) (that or which) became effective in 2000 (amended 2006), I suggest reading Smith v. Bogard, 316 IL Dec 476, 879 NE 2d 543 (4th Dist. 2007). Dan R. Smith d/b/a Dan R. Smith Building Services “contracted” to construct a 26×20 living room addition for an estimated $20,000.00. When Bogard failed to pay the final $10,515.85 (having previously paid $15,000.00) Smith sued; first for “breach of contract” and then amending to add counts for “unjust enrichment” and “quantum meruit.” Bogard defended citing non-compliance with the Act i.e., no written contract and failure to furnish a consumers rights pamphlet. The trial court granted Bogard’s motion to dismiss all counts.

An appeal was taken on two issues:(1) was Smith a subcontractor and thus exempt from the Act and (2) even if not exempt, his equitable counts should prevail. The appellate court cited to the “only two Illinois appellate opinions interpreting the Act”: Central Illinois Electrical Services, L.L.C. v. Slepian, 358 Ill.App.3d 545, 294 Ill.Dec. 844, 831 N.E.2d. 1169 (3rd Dist 2005), and MD Electrical Contractors, Inc. v. Abrams, 369 Ill.App.3d 309, 307 Ill.Dec.393, 859 N.E.2d 1070 (2nd Dist. 2006), appeal allowed, 223 Ill.2d 636, 310 IllDec. 249, 865 N.E.2D 969 (2007).

Briefly, Slepian held that, even though the plaintiff was the replacement electrical contractor and did not “initiate” the work, the Act “clearly and unambiguously” applied to a successor contractor and remanded the case “to proceed in accordance with the Act” (mechanics’ lien, unjust enrichment and quantum meriut claims were pending). In Abrams, a Second District case on appeal to the Supreme Court, the appellate court agreed with the trial court and found that the Act did not apply to the plaintiff since plaintiff was an electrical subcontractor, which had signed a contract for a remodeling project with a general contractor. There was no decision on the trial court’s other finding that even if the Act applied it did not preclude recovery under quantum meruit.

After summarizing these cases the Smith court said Smith was not a subcontractor since he “performed a variety of general construction duties,” and there was no general contractor employed. Thus, the court avoided deciding the ultimate issue as to whether the Act applied at all to subcontractors. Finally, the court upheld the dismissal of the equitable claims since to allow them “would run afoul of the legislature’s intent of protecting consumers, would reward deceptive practices, ¹ and would be violative of public policy.” Therefore, the plaintiff/contractor cannot recover if the act applies and is not followed.
As the attorney for the defending homeowner, are you negligent if you do not advise the defendant of potential counter-suit for recovery of the monies paid to date? But consider, can the home owner lure the unsuspecting contractor into doing the work with advanced or periodic payments and then turn around and recover the same using the Act as a sword instead of a shield? Should not equitable principles prevent such a miscarriage of justice? Finally, beware of the possible award of attorneys fees to the prevailing party under the Consumer Fraud and Deceptive Practices Act.
¹ Presumably, this is a reference to the Illinois Consumer Fraud and Deceptive Practices Act (815 ILCS 513/35(b)) which is also violated if the Home Repair Act is not followed; otherwise, this author cannot see how the court can presume a contractor who preforms the work for a fair price can be considered to be improperly rewarded for his “deceptive practice” when seeking to recover the fair value of his efforts.