United States: RE&C In Review: Unfair And Deceptive Practices May Lead To A Residential Remodeling Contractor's "Corporate Death Sentence"

Ohio's Consumer Sales Practices Act (the "CSPA") is meant to protect consumers, including homeowners, from unfair and deceptive practices.¹ Under the CSPA, either the consumer or the Ohio Attorney General can bring a suit against a contractor if they believe that the contractor has engaged in unfair or deceptive practices.² A consumer can ask the court for different kinds of remedies, including rescission or revocation of the contract, monetary damages, or an injunction that limits the acts and rights of the contractor.³ These injunctions may simply require the company to change its practices to comply with the CSPA.⁴ However, in some severe cases, courts can give a "corporate death sentence" and issue an injunction shutting down a company entirely.⁵

Recently, a northeast Ohio home improvement contractor ran into difficulty with the CSPA after homeowners complained that he collected "excessive" down payments, abandoned his work sites, and stopped responding to phone calls.⁶ The contractor also used contracts that included unfair one-sided liquidated damages clauses but left out required information such as the company's contact information, the anticipated start and completion dates, and the dated signatures of the parties. Lastly, the contractor repeatedly failed to obtain the required permits and registrations.⁷

In order to prevent the contractor from continuing his deceptive practices, a Common Pleas Court judge issued a preliminary injunction in October 2021 that placed a receiver in charge of the company's operation and ordered the contractor to change his contract terms and practices to align with the CSPA.⁸ However, in January 2022 the contractor ignored the injunction, began a new job without obtaining permits and lied to his consumers about the permits, his qualifications, and the time the project would take.⁹

In March 2022, the judge held the contractor in contempt of court and ordered him to turn over his business, liquidate his assets, and reimburse aggrieved consumers.¹⁰ The judge also indefinitely enjoined the contractor from working in any construction or renovation transactions in Ohio.¹¹

As this case shows, a court has the power to shut down a company and prevent a contractor from working in construction if the contractor has a history of deceptive or unfair practices, including excessive charges, unfinished work, failure to obtain permits, and misrepresentations to consumers.

If you have questions about what constitutes unfair and deceptive practices under the CSPA, our team is here to help. Please contact us if you would like more information.

Footnotes

1 R.C. 1345.02 et seq.

2 R.C. 1345.07, 1345.09.

3 R.C. 1345.09.

4 Compoli v. Providence, Cuyahoga C.P. No. 505876 (March 25, 2004) (enjoining defendant from sending unsolicited advertisements to prevent future CSPA violations).

5 State ex rel. Fisher v. Warren Star Theater, 84 Ohio App.3d 435, 616 N.E.2d 1192 (11th Dist.1992) (Permanently enjoining theater president from doing any theatrical business in the state of Ohio until full restitution was made to consumers).

6 News Release, Dave Yost, Ohio Attorney General, Judge Puts the Screws to Northeast Ohio Home-Improvement Contractor (Apr. 4, 2022) https://www.ohioattorneygeneral.gov/Media/News-Releases/April-2022/Judge-Puts-the-Screws-to-Northeast-Ohio-Home-Impro; Preliminary Injunction Order at 1-2, State of Ohio, ex rel. v. Neil Wolfe, et al., Cuyahoga No. CV-21-944245; Complaint at ¶20, State of Ohio, ex rel. v. Neil Wolfe, et al., Cuyahoga No. CV-21-944245; see also Chris Anderson, Contractor accused of stealing $150,000 from Portage County Homeowner arrested, 19 News (Mar. 24, 2022 at 6:23 AM) https://www.cleveland19.com/2022/03/24/contractor-arrested-alleged-theft-approximately-150000-portage-county-homeowner/ (stating that the contractor also faces criminal charges for his actions).

7 Id.

8 Preliminary Injunction Order at 1-2, State of Ohio, ex rel. v. Neil Wolfe, et al., Cuyahoga No. CV-21-944245.

9 Order in Contempt at 2-4, State of Ohio, ex rel. v. Neil Wolfe, et al., Cuyahoga No. CV-21-944245.

10 Id; Jeff Saunders, Jury trial set for Hudson contractor accused of $150,000 theft from Rootstown homeowner, Record-Courier (Apr. 7, 2022 at 5:01 AM) https://www.record-courier.com/story/news/2022/04/07/hudson-mans-trial-set-alleged-150-000-theft-rootstown-man/9469838002/.

11 Order in Contempt at 2-4, State of Ohio, ex rel. v. Neil Wolfe, et al., Cuyahoga No. CV-21-944245.

Originally Published 15 August 2022

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