Some months back I blogged (#59) on the effect of New Hampshire’s “Right to Repair” statute, RSA 359-G, and I noted its limitations and lack of teeth. It applies only to residential construction, and it provides little more than a temporary delay in a homeowner’s ability to sue. It does not address whether, once an owner sues, the contractor’s rejected offer to repair defective work will be a defense to claims for damages measured by the cost of having a third party do the repairs.
There are few safer bets than that the cost of third party repair will exceed what it would cost the defendant contractor to make things right. Since plaintiffs have a duty to mitigate their damages where reasonably possible, you might think that refusing to afford the contractor a repair opportunity is risky business for the owner. Well, not so much. Our courts generally take a “once burned, twice shy” approach to the question, and usually support an owner’s lack of confidence that the original contractor will improve its performance if given a second bite at the apple. Wrobleski v. Constellation Corp., 118 N.H. 532, 533 (1978), is the leading authority for this approach. I’ll let the Supreme Court’s words speak for themselves here:
“[D]efendant asserts that it had offered to remedy the plaintiffs’ septic system problem for a cost of approximately $500 and that it was improper for plaintiffs to hire someone else to reconstruct the leach field at a cost of $1,200. Plaintiffs were not compelled to solve their problem only by the use of employees of the defendant, and the master could conclude that based on the past performance of the defendant, plaintiffs need not further repose confidence in its ability to correctly solve the leach field problem.”
Wrobleski suggests that the conclusion that lack of trust is justified based on past performance is not compelled; it is merely permissible. The circumstances of the particular defect and the complexity of its repair will determine whether that conclusion is sound in any given case -- and that will almost always be a question for the jury. Something more than merely leaving a job before applying the final coat of paint will need to be in play; the circumstances must suggest a lack of skill rather than a lack of attention to detail.
Most contractors facing a plausible claim for defective work will want to make the offer of repairs right away, for two reasons. First, not putting the owner on notice of the option may doom any mitigation of damages defense down the road. See Berkshire Medical Center, Inc. v. U.W. Marx, Inc., 644 F.3d 71, 78 (1st Cir. 2011) (“As for giving Marx the option of doing the replacement job itself, Berkshire had little reason to think that Marx either could be trusted to do it or would have any interest in doing so”). Second, the offer, if rejected, will not be admissible in court as evidence that the contractor admitted liability. Rule of Evidence 408 provides that “evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount.”
The wiser course is for the parties’ contract to address the issue up front, by providing both a right to repair and a duty to repair defects discovered during the warranty period. The popular AIA form A201, General Conditions of the Contract for Construction, takes this approach in Section 12.2.2.1 (“During the one-year period for correction of Work, if the Owner fails to notify the Contractor and give the Contractor an opportunity to make the correction, the Owner waives the rights to require correction by the Contractor and to make a claim for breach of warranty.").
There are few safer bets than that the cost of third party repair will exceed what it would cost the defendant contractor to make things right. Since plaintiffs have a duty to mitigate their damages where reasonably possible, you might think that refusing to afford the contractor a repair opportunity is risky business for the owner. Well, not so much. Our courts generally take a “once burned, twice shy” approach to the question, and usually support an owner’s lack of confidence that the original contractor will improve its performance if given a second bite at the apple. Wrobleski v. Constellation Corp., 118 N.H. 532, 533 (1978), is the leading authority for this approach. I’ll let the Supreme Court’s words speak for themselves here:
“[D]efendant asserts that it had offered to remedy the plaintiffs’ septic system problem for a cost of approximately $500 and that it was improper for plaintiffs to hire someone else to reconstruct the leach field at a cost of $1,200. Plaintiffs were not compelled to solve their problem only by the use of employees of the defendant, and the master could conclude that based on the past performance of the defendant, plaintiffs need not further repose confidence in its ability to correctly solve the leach field problem.”
Wrobleski suggests that the conclusion that lack of trust is justified based on past performance is not compelled; it is merely permissible. The circumstances of the particular defect and the complexity of its repair will determine whether that conclusion is sound in any given case -- and that will almost always be a question for the jury. Something more than merely leaving a job before applying the final coat of paint will need to be in play; the circumstances must suggest a lack of skill rather than a lack of attention to detail.
Most contractors facing a plausible claim for defective work will want to make the offer of repairs right away, for two reasons. First, not putting the owner on notice of the option may doom any mitigation of damages defense down the road. See Berkshire Medical Center, Inc. v. U.W. Marx, Inc., 644 F.3d 71, 78 (1st Cir. 2011) (“As for giving Marx the option of doing the replacement job itself, Berkshire had little reason to think that Marx either could be trusted to do it or would have any interest in doing so”). Second, the offer, if rejected, will not be admissible in court as evidence that the contractor admitted liability. Rule of Evidence 408 provides that “evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount.”
The wiser course is for the parties’ contract to address the issue up front, by providing both a right to repair and a duty to repair defects discovered during the warranty period. The popular AIA form A201, General Conditions of the Contract for Construction, takes this approach in Section 12.2.2.1 (“During the one-year period for correction of Work, if the Owner fails to notify the Contractor and give the Contractor an opportunity to make the correction, the Owner waives the rights to require correction by the Contractor and to make a claim for breach of warranty.").
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