Opinion
No. CV 01-0811770
May 10, 2005
MEMORANDUM OF DECISION
This is an action brought in two counts by Sergio Deoliveira, a contractor. The action is brought against the defendant, Sonia Illescas, a home owner. In the first count the plaintiff alleges the breach of a contract and in the second count, unjust enrichment. The plaintiff claims to have performed certain remodeling and repair work on the defendant's premises known as 522 Broadview Terrace, Hartford, Connecticut. The plaintiff alleges that in accordance with the contract he performed and provided materials for the total value of $16,082; that the defendant unilaterally terminated the contract and that the defendant paid $5,000 pursuant to the contract but has refused to pay the balance of $11,082. The defendant has filed an answer, special defense and counterclaim.
In the answer the defendant denies all essential allegations of the complaint. In the special defense the defendant alleges that the contract relied on by the plaintiff fails to conform to the provisions of the "Connecticut Home Improvement Act," Gen. Stat. § 40-18, et seq. and therefore said document is not valid or enforceable.
I. COMPLAINT AND SPECIAL DEFENSE
On or about December 19, 2000, the plaintiff and the defendant executed a contract, a copy of which is attached to the complaint and marked Exhibit A. This contact is also in evidence as Plaintiff's Exhibit 2. It is undisputed in the facts stipulated by the parties in a former proceeding involving this case that the document relied upon by the plaintiff does not comply with the provisions of the Home Improvement Act (hereinafter "HIA"). An examination of the document executed by the parties would disclose the violations of subsections 6 and 7. The evidence in this case also indicates a violation of section 3. The defendant maintains in her special defense that because of these violations the agreement between the parties is unenforceable. The plaintiff, however maintains that even though the agreement violates the HIA, it is still enforceable because federal law and regulations governing the 203(k) program under which the homeowner was obtaining her mortgage money preempts application of the Connecticut Home Improvement Act. The plaintiff provides considerable information regarding the 203(k) program through Exhibits 5 and 6 and a detailed analysis of same in his brief. The 203(k) program is authorized by the National Housing Act, 12 U.S.C. 1709(k), which states in Section 1 that the Secretary of the Department of Housing and Urban Development (hereinafter referred to as "HUD") may, in order to assist in the rehabilitation of one to four family structures used primarily for residential purposes, ensure and make commitments to ensure rehabilitation loans. The plaintiff relies to some extent on the fact that the contract drawn between the parties was put on a HUD form by a Mr. Rizzo who acted as a rehabilitation specialist governed by 24 C.F.R. 200.190, et seq. and 24 C.F.R. 203.50(1). HUD recommends that the homeowner have a consultant help prepare the exhibits to expedite the loan process and HUD required that inspections of the work be performed by a HUD approved fee inspector, a function which was to be provided by Mr. Rizzo who in fact made three inspections before leaving the premises on the ground that the work was not conforming to the contract. The plaintiff cites the supremacy clause of the Constitution of the United States, U.S. Constitution Article 6 C.L. 2 and several cases for the proposition that state law will be preempted if it stands as an obstacle to the accomplishment and execution of the full purpose and objective of Congress. He maintains that Congress's intent to supercede state law altogether may be inferred because the theme of federal regulations may be so pervasive as to make reasonable the inference that Congress left no room for the state to supplement it and Federal regulations have the same preemptive effect as federal statutes. The plaintiff maintains further that the comprehensive provisions established by the federal government for the 203(k) program indicates that Congress meant to preempt any state regulation of the HUD initiative to provide financing for the purchase and rehabilitation of run down residential housing. He claims that the Connecticut Home Improvement Act directly conflicts with the 203(k) program; that the act requires that the contractor shall provide and deliver to the owner the home improvement contract, while the HUD program states that it is the homeowner who is responsible for preparing the documents specifying the work to be completed and that where as here the homeowner employs a consultant, it is the consultant who is to prepare the cost estimate, work write-up and architectural exhibits required for the rehabilitation of the property.
(a) No home improvement contract shall be valid or enforceable against an owner unless it: (1) Is in writing, (2) is signed by the owner and the contractor, (3) contains the entire agreement between the owner and the contractor, (4) contains the date of the transaction, (5) contains the name and address of the contractor, (6) contains a notice of the owner's cancellation rights in accordance with the provisions of chapter 740,[1] (7) contains a starting date and completion date, and (8) is entered into by a registered salesman or registered contractor. Each change in the terms and conditions of a contract shall be in writing and shall be signed by the owner and contractor, except that the commissioner may, by regulation, dispense with the necessity for complying with the requirement that each change in a home improvement contract shall be in writing and signed by the owner and contractor. (emphasis supplied).
The contractor further maintains that to require a HUD contractor to qualify under the HIA would necessitate making a second contract, one under the provisions of the 203(k) plan and the other to qualify under HIA and that this would penalize the contractor.
The contractor also maintains that applying the HIA to a case such as this does not accord with the legislature's intent in passing the act. He says the act protects the homeowner by invalidating any contract that did not adhere to the act's requirements but that no purpose is served by applying the act to construction work performed pursuant to the 203(k) program where the program has its own safeguards for protecting the consumer, since the work must be inspected and approved by a HUD consultant and the final payment of the contract cannot be made unless the homeowner states in writing that the work is complete and the consultant agrees. It is the plaintiff's position that to hold him to the HIA would be a great injustice when the plaintiff is not even being faulted for drafting an improper contract but for signing a contract that was presented to him by a homeowner acting through a federally approved consultant.
It is the opinion of this court that the federal government, acting through the HUD program, does not preempt application of the Connecticut Home Improvement Act. The HIA "is a remedial statute that was enacted for the purpose of providing the public with a form of consumer protection against unscrupulous home improvement contractors." Wright Brothers Builders, Inc. v. Dowling, 247 Conn. 218, 231 (1998). The HUD 203(k) program is an insurance program which provides protection for the lender not the borrower. This insurance is provided to induce lenders to loan money for the rehabilitation and construction of older property within certain limitations. Each program stands alone. One does not conflict with the other. While not directly on point it is notable that the HUD regulations state, with respect to minimum property standards, that its requirements "do not preempt local or state standards, or do they alter or affect the builder's obligations to comply with any local or state requirements." 24 C.F.R. 200.926(b). If HUD does not allow a home improvement contractor to shrug off local and state requirements concerning property standards, it is very unlikely that it would give a contractor leave to ignore a state's HIA mandates.
"Under the Supremacy Clause, U.S. Const., Art. VI, cl. 2, the enforcement of a state regulation may be pre-empted by federal law in several circumstances: first, when Congress, in enacting a federal statute, has expressed a clear intent to pre-empt state law . . . second, when it is clear, despite the absence of explicit pre-emptive language, that Congress has intended, by legislating comprehensively, to occupy an entire field of regulation and has thereby left no room for the States to supplement federal law . . . and, finally, when compliance with both state and federal law is impossible . . . or when the state law is an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." (Citations omitted; internal quotation marks omitted.) Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 698-99, 104 S.Ct. 2694, 81 L.Ed.2d 580 (1984).
None of the three conditions expressed in this opinion applies to the instant case.
"[P]re-emption of state law by federal statute or regulation is not favored in the absence of persuasive reasons — either that the nature of the regulated subject matter permits no other conclusions, or that the Congress has unmistakably so ordained." (Internal quotation marks omitted.) Commonwealth Edison Co. v. Montana, 453 U.S. 609, 634, 101 S.Ct. 2946, 69 L.Ed.2d 884, rehearing denied, 453 U.S. 927, 102 S.Ct. 889, 69 L.Ed.2d 1023 (1981). Neither of the conditions outlined by the Supreme Court in this decision indicate preemption.
In Rowe v. Pierce, 622 F.Sup. 1030, 1033 (D.C.D.C. 1985), HUD attempted to preempt a Washington, D.C. housing law. In that case the plaintiffs were tenants of a single-family dwelling located in the District of Columbia. They entered into an agreement with the landlord to set their rent at $300 per month for the next three years and it would be binding on all future owners of the property. The owners of the property had a mortgage with a private lender and the mortgage was insured by the Department of Housing and Urban Development pursuant to the National Housing Act. 12 U.S.C. Section 1707-1750g. The mortgage was sold to the mortgagee at a foreclosure sale. The mortgagee transferred the property to HUD in order to receive the benefits of the HUD insurance. HUD notified the plaintiff that HUD regulations require that they sign a HUD lease as a condition of continued occupancy. This lease provided for a rent of $300 per month only through the end of 1985. Plaintiff, citing their settlement agreement with the prior owner, refused to execute a lease. HUD issued a thirty-day notice that required the plaintiffs to sign the lease or vacate the property and plaintiffs promptly brought action against HUD's efforts to evict them. If HUD were a private party and local laws were the only relevant law, HUD could not evict plaintiff for refusing to sign the lease. HUD claimed that its regulations governing the conveyance of occupied property preempt this local law. The court cites the several circumstances for preemption by federal law cited in Capital Cities Cable, supra. The court states: "[T]he federal housing laws do not constitute a comprehensive federal regulatory scheme. Housing is an area where Congress intended, and the Secretary permits, two complimentary systems of regulations to supplement each other with local law providing the general background law and federal law intervening only where federal involvement is deemed necessary. Federal preemption is not to be lightly assumed and the two schemes should be interpreted to allow both to operate. See New York State Department of Social Services v. Dublino, 413 U.S. 405, 92 S.Ct. 2507, 37 L.Ed.2d 688 (1973)." Rowe v. Pierce, 622 F.Sup. 1030, 1033 (D.C.D.C 1985).
"Far from compelling preemption, the nature of the HUD insurance program suggests a presumption against preemption. Through HUD mortgages and insurance the federal government acts within existing housing markets and existing state law to promote the development of housing through private business. [W]hen an agency of the federal government insinuates itself into the local business world, as HUD does . . . under the mortgage insurance and foreclosure provisions of the NHA, it should, as a general rule, be held to the same legal obligations as a private property owner." (Internal quotation marks omitted.) Id., 1032.
The homeowner maintains that since the parties do not dispute and, in fact, have stipulated that the agreement in question does not strictly conform to the HIA the plaintiff is not in a position to enforce the various terms of the agreement. The contractor has offered no argument to the contrary beyond the claim of preemption. The homeowner has in fact provided in its brief substantial background material for a holding by the Connecticut courts that the violation of the HIA on the three basis provided above, precludes the enforcement of the agreement. The court is in agreement. It is the judgment of this court that the 203(k) program of HUD does not preclude enforcement of the HIA and the plaintiff is in violation of the terms of HIA and that the terms of the agreement cannot be enforced.
Judgment may enter for the defendant on the complaint.
II. COUNTERCLAIM
The defendant has filed an amended counterclaim in four counts.
In the first count the defendant alleges that the plaintiff, now counterclaim defendant, was negligent, unskillful and careless in the manner of the design, construction and installation of the work to be done in the contract.
In the second count the homeowner states that the contractor represented that he was an experienced home improvement contractor who had designed, constructed and installed many jobs similar to that alleged in this case, that she relied on said representations and that in fact the contractor was not experienced in such design, construction, etc. and that the foregoing constitutes a violation of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110a, et seq.
In the third count the homeowner alleges that the agreement between the parties did not comply with the provisions of Conn. Gen. Stat. § 20-14, et seq. and thus it constituted a violation of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110a, et seq., by the contractor.
In the fourth count the homeowner seeks a discharge of the mechanics lien filed by the contractor.
Despite the fact that there was much conflicting evidence in this case and complications caused by substitution in the contract as well as some problems of credibility, it is the opinion of this court that the evidence preponderates that the counterclaim defendant (contractor) was negligent, unskillful and careless as to the design, construction and installation of the work to be done under the contract as alleged by the counterclaim plaintiff. While new aluminum gutters were installed, they were placed too far from the edge of the roof so that water leaked down between them which caused damage by leaking into a window beneath the gutter and also caused large puddles near the foundation of the house. In installing sheetrock the joints were improperly filled and bulged in many places. The painting was improperly completed such that patches underneath would show through the paint. Work on bathrooms on the first floor and second floor was not completed even though called for by the contract and over two months had elapsed, as a result of which the plaintiff who moved in the first week of March did not have the use of a toilet and sink. There were several incidents where the electricity was improperly installed for example: the on-off switches were placed behind the door; wires were left uncovered and on some occasions the problems didn't pass inspection and, while probably fixed thereafter, this was clear evidence of the plaintiff's lack of skill and understanding of the contact. A new boiler was installed in such a way that the inspector would not pass it, also a connecting pipe passed across a doorway. Even though later moved, this also indicates a lack of skill.
All this applies equally to the second count and indicates that the contractor was not an experienced home improvement contractor who had designed and constructed and installed jobs similar to that alleged in this case as represented. Though the conduct of the contractor which was negligent, unskillful and careless and not completed because of the time spent redoing same, the counterclaim plaintiff suffered damage.
This lack of skill, etc. outlined above also leads the court to the conclusion that the contractor misrepresented and was in violation of Conn. Gen. Stat. § 42-110(a), et seq.
In addition to the above, the court, having found that the contractor was in violation of the provisions of Conn. Gen. Stat. § 20-14 et seq. is, by statute, in violation of Section 42-110a as claimed in count three.
The counterclaim plaintiff seeks money damages, punitive damages and attorneys fees. Assessing money damages presents a problem. As stated above, in the opinion of the court the counterclaim plaintiff suffered as a result of the defalcations of the counterclaim defendant. The problem comes in setting a dollar value on the damages. Since some of the work was incomplete by the time the owner moved in, she received less than what she bargained for. The court also believes that she had to pay extra to have subcontractors come in to take care of the bathroom situation. And, of course, she suffered by not having available a bathroom for a period of time in cold weather after she moved in. The original estimate for the property for completion of the contract was $17,031.90. The plaintiff presented a bill for what he felt he was entitled to which was $16,082.00 less the $5,000.00 which he had received from the counterclaim plaintiff thus seeking a net of $11,082.00. The difficulty for the court is that no evidence was presented to the court as to a dollar amount on the work that was not complete, the dollar amount of work that would have to be done over and no evidence was presented as to the amount that the owner had to pay to have work corrected or completed. It is doubtful that these potential subtractions from the original value of the work would amount to the full value of the work performed by the contractor. The difference between the deductions and the value of the complete work will in fact leave the owner with a windfall. That being the case, the court need not assess any actual money damages.
Because of the unnecessary delays which the court feels probably led to the lack of completion of the jobs which also caused suffering to the owner and the necessity for this litigation, the court will assess punitive damages of $5,000.00.
Because the conduct of the contractor necessitated this litigation the court will also award attorneys fees to the owner. The attorneys fees shall be the time actually spent by the owner's counsel in preparing for and litigating this case. This shall be arrived at by multiplying the number of these hours by counsel's standard hourly fee which the court will expect to be substantiated by counsel. If there is a disagreement as to the fee submitted by counsel, the same will be heard by the court on motions to be filed in accordance with the Practice Book. Judgment may enter in favor of the counterclaim plaintiff in the amount of $5,000 in punitive damages and attorneys fees to be calculated in accordance with this opinion.
Plaintiff is ordered to discharge the mechanics lien.
Hale, JTR