The Michigan Court of Appeals recently decided a case that for the first time applied the protection of the Michigan Consumer Protection Act to a licensed residential builder. Fortran v Laszar , 2000 WL 217491 (Mich App, decided February 22, 2000). The Michigan Consumer Protection Act (MCPA) was enacted in 1977 and has not, until this decision, been applied to a Licensed Residential Builder. The MCPA has most frequently been utilized in commercial transactions for the protection of consumers in traditional retail marketplaces. The Act prohibits over 30 types of conduct described as "unfair, unconscionable or deceptive" trade practices. MCLA 445.903. The MCPA allows consumers to get declaratory judgments, injunctions, or monetary damages. It also allows consumers to collect damages for attorney fees incurred in bringing suit.
In the Fortran case, the Michigan Court of Appeals affirmed the trial court's determination that a licensed residential builder was liable under the MCPA for actual costs of repair plus attorney fees spent by the home owner in bringing the lawsuit against the builder. The courts concluded that the builder had unilaterally decided to deviate from the home's blue prints without consulting the homeowner. The builder had increased the spanning for the floor joists from what was indicated in the blue prints. This deviation resulted in the homes developing sagging floors, distorted doorways, and cracking drywall. Additionally, the trial court found that the builder had improperly installed the truss system and improperly ventilated the home's crawl space. The courts found that the blue print deviations were unfair and deceptive practices and held the builder accountable for both damages and attorney fees.
This case dramatically changes the liability of builders in Michigan because now litigants and courts have case precedent to apply the MCPA to the contractual relationship between builders and home owners. Now that a crack has formed in the dam of builder liability, future cases could see the court's applying the MCPA to situations beyond a simple blue print deviation. The MCPA has very broad language in terms of what is a prohibited practice. Builders must be now be extremely cautious in making representations either in writing or verbally that could later be construed as unfair, unconscionable, or deceptive. A thorough review of contracts used by builders and change order practices would be advisable in light of this recent case.
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