Value of Services, Not Amount Billed, Governs Application of HICA; Kluger v. J.J.P. Enterprises, Inc.

Indiana’s Home Improvement Contracts Act (HICA) protects homeowners by requiring that contractors doing home improvements give the homeowner certain information. But the Act does not apply to de minimis improvements—when the contract price is below $150. The question posed in this case is whether HICA’s contractual value requirement is based on the amount billed or the value of the job.

A tornado tore the roof off of the Klugers’ home. They filed a claim with their insurer, who hired Servpro to do cleanup and restoration work. A Servpro representative met with the Klugers and presented an electronic contract. Mr. Kluger could not see the contract on the iPad because of the bright light, and the representative told him where to sign. The contact did not provide many of the things required by HICA, including a description of the work to be done, an estimated cost, and an estimated date of completion.

Servpro did some cleanup work, but did not cover the home with a tarp. Heavy rainfall occurred a few days later, and Servpro provided no water extraction services to the Klugers’ home or personal property. Servpro never sent a bill to the Klugers, explaining that the project had “slipped through the cracks.”

The Klugers sued Servpro, arguing that their home was no longer salvageable do to Servpro’s shoddy work and various HICA violations. Servpro filed a counterclaim, asserting that the Klugers owed it for the services it provided.

The Klugers moved for summary judgment on whether Servpro violated HICA. Servpro argued that HICA did not apply to “temporary or emergency services” and that HICA’s $150 contract-price threshold was not satisfied because it never billed the Klugers for the work. The trial court denied the Klugers’ motion.

The Klugers amended their complaint to assert that Servro’s HICA violations were also violations under the Indiana Deceptive Consumer Sales Act (DCSA). Servpro’s answer did not reassert its counterclaim for payment for its services. The Klugers again moved for summary judgment, and the trial court again denied that motion. The Klugers then appealed.

On appeal, Servpro continued to argue that HICA did not apply because Servpro never billed the Klugers. The Court did not agree.

While this court has not previously addressed the definition of “contract price” under HICA, Servpro and the trial court interpret those terms to mean the amount of the invoice, if any, that is sent by the supplier after the work is completed. In our view, the HICA provisions do not support such an interpretation. More specifically, I.C. §24-5-11-10 (a)(B)(4) and (5) under HICA provide that there must be a “reasonably detailed description of the proposed home improvements,” and “if the description . . . does not include the specifications for the home improvement, … the specifications will be provided to the consumer before commencing any work. …” The “to be performed” language certainly contemplates an agreed-upon contract price prior to the commencement of the work, i.e., at the time the contract is executed. Moreover, as explained above, HICA directs the “improvement supplier” to provide the consumer with a conforming written contract before commencing work, and the contract must include certain information, including the contract price, before the consumer signs.

Thus, it is “readily apparent” that the contract price means the price contemplated at the beginning of the contract, not what the contractor eventually decides to bill.

 

In sum, to construe HICA’s contract price requirements as the trial court did, would lead to unjust results and not hold improvement industry contractors accountable to consumers. HICA was enacted in response to deceptive practices that were occurring in the home improvement industry. Because Servpro had already violated HICA when it commenced work, it cannot evade potential liability by simply withdrawing its demand for payment during litigation. To do so would undermine HICA’s broad remedial and deterrent purposes.

Thus, the trial court erred when denying the Klugers’s motion for summary judgment. Servpro violated HICA, and the litigation continues.

Lessons:
1. HICA applies to contracts to do residential improvements when the anticipated value of the services exceeds $150.
2. Contractors cannot avoid HICA by failing to invoice a customer after work is completed.
3. A violation of HICA is a violation of the Indiana Deceptive Consumer Sales Act, even if the contractor was not intentionally or actually deceptive.

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