A recent New Jersey Appeals Court case called Woodstone LLC v. Treacy found that a builder who substantially performed the work in a contract can recover all money due. A trial court judge awarded the builders $33,323.20 for the work they did for homeowners, who appealed and lost again.
The homeowners hired the contractor to make improvements to their home. In March 2012, they signed a written contract to remove part of the back of their house, rebuild the foundation, and build a new eat-in kitchen, pantry, deck and bathroom. They later agreed on additional work to the home, including an upgraded electrical system and a stone veneer on the new foundation. The homeowners were to pay the contractor an initial deposit of $29,580, four subsequent installments of $29,000 and a final payment of $2,320 once the project was completed.
After the homeowners made the initial deposit and got the required building permits from the town, the contractor started work in April 2012. It continued working through July 2012 and the homeowners paid three of the four $29,000 installments. The testified at trial that the 4th installment was due after a delivery of cabinets – but it was not paid and there was no reimbursement for the cost of the new cabinets.
In September 2012, another payment of $10,000 was made, but the full remaining balance had not been paid. The work on Defendant’s came to a halt in October 2012, when a municipal official came to inspect the work on the home and issued a notice of violation for removal of the chimney without a permit and various other violations. The homeowners said to stop work, believing that unsafe conditions were created by the violations mentioned in the notice of violation.
At trial, the judge found that the homeowners breached the contract by not making the 4th installment, since the contractors had substantially performed all of the work. The judge also concluded that the claims that the work was not completed and that the completed work was defective were untrue, since the remaining work and alleged defects were only” cosmetic” The judge also found that the removal of the chimney did not, in fact, create dangerous conditions in the home and the municipal notice was only issued because the work was done without a permit. He awarded $33,323.20 and dismissed the homeowner’s countersuit claiming violations of the New Jersey Consumer Fraud Act.
The homeowner’s appeal was focused on their Consumer Fraud Act claim and the judge’s supposed error in dismissing it. To successfully bring that claim, they would have had to show that the contractor acted unlawfully and caused a real loss to them. The unlawful conduct was supposedly the unpermitted removal of the chimney, which they said caused ventilation problems in the home. But as the trial judge noted, they denied the contractor any chance to fix the problem.
Rachael Newcomb is in her 2nd year at Rutgers Law School in Newark, New Jersey. We welcome her as a new contributor.
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