Where’s the Contract?

Paul and Andrea Bradford met with Michael Matott of Matott, Inc. to discuss an addition to the Bradford’s Penn Valley, Pennsylvania home. That was April 2019. Matott offered an estimate of between $102,000 and $136,000 for construction of a 750 square foot garage with storage above and a vestibule connecting the garage to the house. The Bradfords hired an architect to draw plans. The Bradfords and Matott signed a preliminary agreement and Matott applied for the permit. So far, so good.

Next Came the Surprises

The Township advised that a stormwater management plan would be required for the site. Plus, the Bradfords asked Matott. to replace old windows in the existing house with modern windows. Matott said stormwater management and new windows would add $26,000 to the job, bringing the total cost to $126,000. None of these changes were in writing.

Matott collected $88,000 to cover the cost of materials and started work on the foundation. A week into the job, Bradford and Matott met on site to discuss costs. After the meeting, Bradford added up what Matott expected to be paid for his work. It came to $296,112, more than double their original oral agreement. That was too much. Bradford told Matott to stop work and restore his property to original condition.

Matott came back with three options:

1. Build a smaller garage on the same foundation. Total cost $165,500.00.
2. Remove and bury the foundation. Total cost $108,000.00 plus additional labor and material costs.
3. Complete the job for an additional $140,500, bringing the Bradford’s total cost to $218,500.

In any case, Matott claimed an additional $33,345 for work completed so far. Bradford didn’t agree to anything Matott offered. So Matott abandoned the site.

While negotiations went on and on, water seeped into the Bradford’s basement, causing a mold problem. Eventually the Bradfords filed suit against both Micheal Matott and his corporation, claiming violation of Pennsylvania’s Home Improvement Consumer Protection Act (HICPA). Matott filed a counterclaim against the Bradfords for breach of contract.

Meanwhile, Bradford had another contractor complete a scaled-back version of the project – at a cost of $265,000.

At trial, the court concluded there was no valid and enforceable contract. Still, the Bradfords were awarded $128,982 in damages, costs, interest and attorney fees, The award was against Matott, Inc., not Micheal Matott as an individual. The trial court declined to award treble damages under HICPA.

The Bradfords appealed the trial court decision, insisting there was a valid contract. If so, they would be entitled to the benefit of their bargain – their cost of finishing the project.

The appellate court didn’t agree. In the opinion of the court, the job never had a firm contract price and had no clear scope of work. Matott’s estimate offered a range of prices for a smaller, simpler garage. The architectural plans showed a larger, more complete project. Under HICPA, an enforceable contract must include a description of the work, the materials to be used and a set of specifications that can’t be changed without a signed change order.

In a 43-page opinion, the appellate court sent the case back to the trial court with instructions to restore $30,000 in damages that should have been awarded to the Bradfords.

Takeaway from Bradford v. Matott

Elapse time from initial discussion of this project to appellate decision was 7 years, April 2019 to April 2026. Don’t let the same happen with your next project. Nearly everything that went wrong on the Bradford job could be traced to a single mistake: No valid contract. To be sure you have iron-clad agreements, get Construction Contract Writer. The trial version is free.

Who Pays After a Loss?

The August 2026 floods in Indiana, Ohio and Kentucky inundated thousands of homes – and damaged hundreds of construction projects. On many projects, work will have to be torn out and replaced. After a loss like that, the question will always be, Who pays? The owner or the contractor? My October 11, 2024 blog sketched the general rule: Any portion of the work completed belongs to the owner. If damaged, it’s the owner’s loss. My blog post suggested good ways to protect yourself when the cause of damage is obvious.

But what if cause of the damage isn’t obvious? Say a fire of suspicious origin destroys the project. Contractors are usually considered to have control of the job site during construction. Would that make a contractor liable for any damage? That was the claim in a recent Florida case: Berman Construction v. Carnaval Home LLC.

Case in Point

The owner sued the contractor and several subcontractors for damage caused by fire. Source of the fire was not certain. Counsel for the owner claimed faulty wiring by a sub ignited a fire in the attic. The fire started shortly after electrical work was completed. A carpenter testified that lights in the kitchen and family room stopped working some time between 5:00 p.m. and 8:00 p.m. The fire started later that night.

The contractor had a different suggestion: arson. Traces of gasoline were detected in the ashes. An unusual burn pattern on the first floor was consistent with use of an accelerant. Expert opinion was that the fire had multiple points of origin. That’s a sign of arson.

After a jury verdict, the owner was awarded $928,850.

Counsel for the contractor appealed. Grounds? Instructions to the jury were defective. The jury should have been required to consider contract language on risk of loss:

Owner shall bear the risk of loss, costs and damage to the Work caused by natural disasters, vandalism, arson, insect infestation and perils beyond Contractor’s reasonable control.

Counsel for owner didn’t object to owner liability if arson caused the fire. But the contractor did not mount an arson-specific defense. The jury did not conclude that arson was the cause. Counsel for owner argued the doctrine of negative implication (expressio unius est exclusio alterius). Mention of one thing in a contract implies exclusion of others. If the cause wasn’t arson, a jury verdict on the risk of loss clause wasn’t essential.

Court Decision

The appellate court didn’t agree. Negative implication depends on context. Not every positive statement of rights or obligations carries a negative implication on other rights or obligations. The Ninth Amendment to the U.S. Constitution is an example. “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.”

Plus, the final clause in the risk of loss paragraph (“and perils beyond Contractor’s reasonable control”) is expansive. Where the text contains a broad catchall provision at the end of a list of specific items, expressio unius cannot be applied without rendering the catchall mere surplusage. The appellate court returned the case for a new trial.

This is a perfect example. Thoughtful contract drafting pays dividends. There’s no better contract drafting tool than Construction Contract Writer. The trial version is free.

 

“Lending” a License in Indiana

Sharon Leibengood-Chavez wanted to add a sunroom and deck to her Cedar Lake, Indiana home. Filip Zivkovic of Ark Supplies, Inc. agreed to do the work. There was no written contract. Worse, Ark Supplies wasn’t registered to do construction in Cedar Lake. That meant Ark couldn’t apply for a building permit. No problem. Ark got Michael Vaidik of Castle Construction to apply for the permit. Castle had a license in Cedar Lake. Vaidik listed Castle as contractor on the job and certified his application as true and correct. But Ark did all the work.

Sharon, the owner, knew nothing about Castle’s role in her job. If that seems deceptive to you, I agree.

When finished, Ark’s work passed inspection. But Sharon wasn’t happy. She filed a complaint for damages against Ark – and Castle. Her attorney claimed both Castle and Ark violated Indiana’s Home Improvement Contractor Act (HICA) and Indiana’s Deceptive Consumer Sales Act (DCSA). Sharon claimed treble damages and attorney fees. The trial court granted Sharon’s request for a summary judgment. Arc and Castle appealed.

I should add, nothing in this case suggests Castle got paid for "lending" their license. Ark reimbursed Castle for cost of the permit. But that was all. I’m going to assume the loan was gratis, not part of a business deal. If Castle was paid to take out the permit, I believe that changes everything.

How would you decide this case?

Does “lending” a license make a contractor liable for defective work? Does “lending” a license give a contractor an interest in the job?

Not according to the May 29, 2026 opinion in Castle Construction Corp v. Leibengood Chavez. Writing for the majority, Judge Foley concluded that Castle was not a “supplier” under Indiana’s HICA. Because Castle was not a supplier under HICA, Castle could not be held liable as a supplier under the DCSA. The Court reversed the summary judgment and directed that judgment be entered in favor of Castle.

Even though identified as the “contractor” on the permit, Castle never contracted with Sharon, never communicated with her and never did any work on the job. Sharon was entirely unaware of Castle's involvement. On that basis, Castle should get a free pass under both HICA and DCSA, at least according to Judge Foley.

OK. Are we to understand? Indiana’s Home Improvement Contractor Act and Indiana’s Deceptive Consumer Sales Act don’t apply if your role in the job is kept secret. Don’t solicit the job. Don’t sign anything. Don’t let the owner know what you’re doing. Think of the possibilities.

Is this what the Indiana Legislature intended when enacting HICA and DCSA? You decide.

I like the dissent by Chief Judge Tavitas. Castle became a “supplier” under HICA when Castle supplied the building permit. Without that, the project wasn’t going anywhere. If Castle was a supplier, Sharon was entitled to an award of damages and attorney fees.

I don’t recommend “loan” of a license. If you have little or no role on a job, don’t go on record as the contractor. In most counties and cities, any misrepresentation about who will do the work earns penalties. In Cedar Lake:

• A fine of $300 to $2,500 per violation per day.
• Stop‑work authority.
• Permit revocation.

One more point.

Every good construction project starts with a good contract. If Sharon had insisted on a written contract, that agreement would show the contractor’s name and license number. That would have saved Sharon thousands in legal fees and several years in Indiana courts. No matter the site, no matter the type of work, you won’t find a better contract drafting tool than Construction Contract Writer. The trial version is free.