Recovery under Pennsylvania’s Home Improvement Consumer Protection Act

Recovery under Pennsylvania’s Home Improvement Consumer Protection Act

The Pennsylvania Supreme Court, in Shafer Electric & Construction v. Mantia, recently held that a contractor’s could still recover under a theory of quantum meruit (also known as unjust enrichment) despite the contractor’s failure to comply with the Pennsylvania Home Improvement Consumer Protection Act (HICPA).  In relevant part, the HICPA requires that all contractors register with the Pennsylvania Office of the Attorney General (OAG) as well as enter into written contracts for the performance of improvements.  Both of these requirements were designed to protect purchasers of home improvement services from contractors engaging in deceitful practices.  A violation of one of HICPA’s requirements results in the contract being deemed invalid and unenforceable against the homeowner.

In Shafer, the contractor’s written contract with the homeowner was deemed invalid for its failure to register with the OAG.  In holding that the contractor could still recover, the Court reasoned that contractors should still be entitled to recover the reasonable value of the services provided even if they violated the HICPA, otherwise the homeowner would receive a complete windfall.

Pennsylvania Contractors May Recover on Unjust Enrichment Claim When No Enforceable Contract Exists under the Home Improvement Consumer Protection Act.

Pennsylvania Contractors May Recover on Unjust Enrichment Claim When No Enforceable Contract Exists under the Home Improvement Consumer Protection Act.

Recently, in Shafer Elec. & Const. v. Mantia, 2013 PA Super 111 (Pa. Super. Ct. May 10, 2013), the Pennsylvania Superior Court held that a contractor subject to the provisions of the Pennsylvania Home Improvement Consumer Protection Act (“HICPA”), 73 P.S. §§ 517.1 et seq., may recover on a theory of quantum meruit (meaning that the homeowner should be required to pay for the benefit the homeowner received from the contractor) when a written contract is invalidated by HICPA.

The court noted that HICPA confusingly permits quantum meruit under § 517.7(g) only when the contractor complies with the requirements of § 517.7(a), which mandates that the home improvement contract be in writing.  However, when a written, enforceable contract exists, it is well-settled that recovery on quantum meruit is precluded.  The Shafer Court reasoned that the plain language of § 517.7(g) produces an absurd result by making recovery under a quasi-contract theory impossible.  The court explained that when a statute is ambiguous, such as here, it is permitted to construe the statute in a manner that effects the obvious intent of the General Assembly.  Thus, the court concluded that when a written contract is unenforceable because it fails to comply with § 517.7(a) of HICPA, the contractor may seek recovery under theories of quantum meruit or unjust enrichment.

This decision is consistent with the Pennsylvania Superior Court’s holding last year in Durst v. Milroy General Contracting, Inc., 52 A.3d 357 (Pa. Super. Ct. 2012), which found that HICPA was silent on quasi-contract theories and permitted a quantum meruit claim to proceed in light of an unenforceable oral agreement.