Pennsylvania Supreme Court to Decide Whether HICPA Allows Recovery under a Theory of Unjust Enrichment

By Kevin Cornish, Esq.
June 1, 2014

HICPA Background

In 2009, the Pennsylvania Home Improvement Consumer Protection Act (“HICPA”) went into effect (73 P.S. 517.1 et seq.).  HICPA requires all home improvement contractors to register with the Bureau of Consumer Protection.  Additionally, HICPA sets forth numerous requirements that must be followed in order for a home improvement contract to be valid and enforceable.  For example, HICPA requires, among other things, that all home improvement contracts be in writing, include the contractor’s registration number, address, and phone number, include the date of the transaction and approximate start and finish date of the work, and include a description of the work to be performed and materials to be used.  HICPA also outlines various clauses that, if contained in a home improvement contract, are voidable by the owner.

If a home improvement contract does not comply with HICPA, it is not valid or enforceable against a homeowner.  This means that a home improvement contractor would not be able to assert a breach of contract claim against a homeowner to recover monetary damages for work that a homeowner did not pay for.  Likewise, it provides homeowners with additional defenses to avoid paying for a home improvement contractor’s negligent or improper work.

HICPA and Unjust Enrichment

However, HICPA was not clear as to whether a home improvement contractor could recover against a homeowner under the theory of unjust enrichment or quantum meruit for work performed in the absence of a valid home improvement contract.  Unjust enrichment is an equitable doctrine allowing a party to recover on the basis of a quasi-contract, or contract implied in law, when one party is enriched unjustly at the expense of another.  Essentially, unjust enrichment provides an alternate means of recovery when a contract does not exist between the parties.

Shafer Electric & Construction v. Mantia

The Pennsylvania Supreme Court will soon decide this issue in the case of Shafer Electric & Construction v. Mantia (Docket no. 28 WAP 2013).  In Shafer Electric, the Mantias contracted with Shafer Electric whereby Shafer Electric would construct an addition to the Mantias’ garage.  Certain disputes arose between the parties relating to changes to the scope of work.  Shafer Electric alleged that the Mantias owed in excess of $37,000 for labor and materials provided.  Shafter Electric filed a lawsuit seeking to recover under theories of breach of contract and unjust enrichment.

To Shafer Electric’s detriment, it was not registered as a home improvement contractor under HICPA.  Therefore, it did not have a valid and enforceable contract under HICPA with the Mantias.  The Washington County Court of Common Pleas dismissed Shafer Electric’s complaint holding that it could not maintain a breach of contract action and that HICPA bars recovery under the theory of unjust enrichment.  On appeal, the Pennsylvania Superior Court reversed and held a home improvement contractor could maintain an action for unjust enrichment even though the contractor did not comply with HICPA’s contract requirements.

The Supreme Court granted an appeal to determine whether HICPA bars a contractor from recovery for unjust enrichment in the absence of a valid and enforceable home improvement contract.   The Court heard oral argument on April 8, 2014.  Contractors and homeowners are awaiting the Supreme Court’s decision.

Importance of Decision

The Supreme Court’s decision will affect home improvement contractors and homeowners alike.  If the Court rules that home improvement contractors can recover under the theory of unjust enrichment without complying with HICPA, then HICPA’s force will be greatly reduced.  Home improvement contractors that have not complied with HICPA will still be able to pursue certain claims.

On the other hand, if the Supreme Court holds that home improvement contractors cannot recover under unjust enrichment, then homeowners will have greater protection against claims by unregistered contractors and contractors that do not comply with HICPA’s requirements.  Likewise, it will be even more important for home improvement contractors to comply with all of HICPA’s registration and contract requirements.

[Updated March 11, 2015] - Click here to read.

If you are a homeowner or home improvement contractor with questions regarding HICPA, feel free to contact Kevin Cornish at 610-275-0700 or kcornish@highswartz.com.

 

The information above is general: we recommend that you consult an attorney regarding your specific circumstances.  The content of this information is not meant to be considered as legal advice or a substitute for legal representation.

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