Construction litigation is almost always premised on allegations of breach of contract, but it has now become commonplace also to see claims of “unfair or deceptive acts or practices” under the so-called Consumer Protection Act, RSA 358-A. This comes as no surprise. While “[a]n ordinary breach of contract claim does not present an occasion for the remedies under the Consumer Protection Act,” Barrows v. Boles, 141 N.H. 382, 390 (1996), those remedies are impressive – potential double or triple damages with a statutory minimum award of $1,000, plus attorneys’ fees. This naturally entices litigants to assert some additional element of unfairness or deception in connection with the contract.
Despite its name, the Consumer Protection Act applies to disputes between businesses as well, so both residential and commercial construction transactions are covered. RSA 358-A:2 lists a number of examples of unfair or deceptive acts and practices – none of which are likely to arise in the context of a construction dispute. But the list is not exclusive. If the challenged act or practice is not listed, courts apply a “rascality” test, under which “the objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce.” George v. Al Hoyt & Sons, Inc., 162 N.H. 123, 129 (2011). This is an exceedingly imprecise standard. (Massachusetts courts, which originated the “rascality” test, have subsequently abandoned it as “uninstructive.” Massachusetts Employers Insurance Exchange v. Propac-Mass, Inc., 420 Mass. 39, 43 (1995).)
Sometimes it is easy to spot the requisite unfairness or deceptiveness, such as where a contractor takes a deposit from a customer without ever intending to do the work. State v. Moran, 151 N.H. 450, 454 (2004) (holding that the CPA is violated where a defendant taking a deposit from a customer “had no intention to purchase the materials for her job or to perform the work”). Most cases are not so clear. I often see claims in construction defect cases alleging that a contractor induced a customer to hire him by misrepresenting his ability to construct the project properly. Suppose the contractor making the representation intended to use a subcontractor with the requisite skills, but the sub became unavailable and the contractor did his best to perform the work himself; is there a CPA violation? We’d need to consider what the contractor reasonably believed he could achieve at the time of contracting. Androscoggin Valley Regional Refuse Disposal District v. R.H. White Construction Co., Inc., 2017 WL 1906612, at *4 (D.N.H. May 8, 2017), is instructive:
“Though the amended complaint alleges in support of the CPA claim that R.H. White represented that it could build the LFG Facility in accordance with the terms of the Agreement and that it failed to do so, it does not allege that R.H. White knew or was reckless in not knowing that it could not do so at the outset of the Agreement. Thus, those allegations fail to give rise to a CPA claim.”
Overbilling claims tend to be another fertile ground for asserting CPA violations. Because “some element of knowledge on the part of the defendant is required,” Kelton v. Hollis Ranch, LLC, 155 N.H. 666, 668 (2007), inadvertent or merely mistaken overbilling won’t nudge a breach of contract claim over the CPA threshold; the invoices must be knowingly or at least recklessly inflated. Whether knowingly inflated invoicing is a CPA violation even if the invoices aren’t paid is an interesting question; RSA 358-A:10 limits recovery to those “injured by” the practice, but our Supreme Court has held that “RSA 358-A:10 does not require a showing of actual damages for the claimant to be awarded the statutory minimum of $1,000 in damages and attorneys’ fees,” Becksted v. Nadeau, 155 N.H. 615, 621 (2007).
The presence of the requisite “rascality” in a given scenario is for the court to decide, and with such a fuzzy standard, predicting the outcome can be difficult. But with the stakes so high, imaginative lawyers can be expected to plead that almost any conduct with a hint of unfairness triggers a violation of the statute.
Despite its name, the Consumer Protection Act applies to disputes between businesses as well, so both residential and commercial construction transactions are covered. RSA 358-A:2 lists a number of examples of unfair or deceptive acts and practices – none of which are likely to arise in the context of a construction dispute. But the list is not exclusive. If the challenged act or practice is not listed, courts apply a “rascality” test, under which “the objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce.” George v. Al Hoyt & Sons, Inc., 162 N.H. 123, 129 (2011). This is an exceedingly imprecise standard. (Massachusetts courts, which originated the “rascality” test, have subsequently abandoned it as “uninstructive.” Massachusetts Employers Insurance Exchange v. Propac-Mass, Inc., 420 Mass. 39, 43 (1995).)
Sometimes it is easy to spot the requisite unfairness or deceptiveness, such as where a contractor takes a deposit from a customer without ever intending to do the work. State v. Moran, 151 N.H. 450, 454 (2004) (holding that the CPA is violated where a defendant taking a deposit from a customer “had no intention to purchase the materials for her job or to perform the work”). Most cases are not so clear. I often see claims in construction defect cases alleging that a contractor induced a customer to hire him by misrepresenting his ability to construct the project properly. Suppose the contractor making the representation intended to use a subcontractor with the requisite skills, but the sub became unavailable and the contractor did his best to perform the work himself; is there a CPA violation? We’d need to consider what the contractor reasonably believed he could achieve at the time of contracting. Androscoggin Valley Regional Refuse Disposal District v. R.H. White Construction Co., Inc., 2017 WL 1906612, at *4 (D.N.H. May 8, 2017), is instructive:
“Though the amended complaint alleges in support of the CPA claim that R.H. White represented that it could build the LFG Facility in accordance with the terms of the Agreement and that it failed to do so, it does not allege that R.H. White knew or was reckless in not knowing that it could not do so at the outset of the Agreement. Thus, those allegations fail to give rise to a CPA claim.”
Overbilling claims tend to be another fertile ground for asserting CPA violations. Because “some element of knowledge on the part of the defendant is required,” Kelton v. Hollis Ranch, LLC, 155 N.H. 666, 668 (2007), inadvertent or merely mistaken overbilling won’t nudge a breach of contract claim over the CPA threshold; the invoices must be knowingly or at least recklessly inflated. Whether knowingly inflated invoicing is a CPA violation even if the invoices aren’t paid is an interesting question; RSA 358-A:10 limits recovery to those “injured by” the practice, but our Supreme Court has held that “RSA 358-A:10 does not require a showing of actual damages for the claimant to be awarded the statutory minimum of $1,000 in damages and attorneys’ fees,” Becksted v. Nadeau, 155 N.H. 615, 621 (2007).
The presence of the requisite “rascality” in a given scenario is for the court to decide, and with such a fuzzy standard, predicting the outcome can be difficult. But with the stakes so high, imaginative lawyers can be expected to plead that almost any conduct with a hint of unfairness triggers a violation of the statute.
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