Suing A Builder For Fraudulent Practices
Can I sue a builder for deceitful and fraudulent business practices?
Property owners can sue a builder/contractor for fraudulent or deceitful practices to collect damages suffered using one or more of the following theories of liability (this list is not exhaustive):
1. Breach of Contract.
2. Fraud or deceit.
3. Consumer Protection Act Violation (ch. 93A)
Each of the foregoing theories of liability carry with them benefits as well as potential issues, which I will briefly address below.
Breach of Contract:
Generally, to maintain a breach of contract claim against a contractor, the property owner must first establish that there was a valid and enforceable contact between the parties.
Second, the property owner must establish that the contractor failed to comply with a contractual provision. Third, the property owner must establish that as a result of the contractor’s failure to comply with the agreement and failure to timely “cure” the breach, he/she suffered damages. In these types of cases the damages usually are the difference between the monies you would have paid to the breaching contractor if it completed the job (For example, $100,000) and the total cost you ultimately paid to complete the working using a replacement contractor. (For example, $150,000). Based on my sample costs, your base damages claim would be $50,000.
Fraud or deceit:
Generally, to maintain a fraud claim against a contractor the property owner must establish that:
1. the contractor made a misrepresentation as to a material fact (that is, a false statement as to an “important” fact);
2. the contractor knew its representation was false or the contractor should have known its statement was false;
3. the contractor made the false statement for the purpose of inducing the property owner to act upon it; and
4. the property owner reasonably relied to the contractor’s false statement to his/her detriment.
Here, if your builder intentionally underestimated the cost of the project (using false estimate costs/information) for the purpose of “luring” you into the deal, that woul appear to be sufficient to establish a fraud claim. Moreover, contracts procured by fraud are invalid. If that is the case here, you could potentially seek to have your deposit returned.
Consumer Protection Act Violation (ch. 93A):
A contractor violates Ch. 93A by engaging in unfair or deceptive business practices (for example, fraud.)
When a contractor is found to have violated Ch. 93A, thay may potentially be liable to the property owner for double or treble (triple) damages plus attorneys fees. From experience I can tell you that this severe penalty is a powerful tool that attorneys representing property owners like yourself can use if you are seeking to negotiate a favorable settlement with a contractor or builder who has violated Ch. 93A.