Home Improvement Contractors Target Of State Enforcement Actions
As part of an ongoing effort to combat unscrupulous practices in the home improvement contracting industry, Attorney General Spitzer today announced a series of enforcement actions throughout upstate New York.
"Defective and incomplete home improvements and repairs are high on the list of consumer complaints and frustrations," Spitzer said. "My office will attack the problem with all the tools we have - criminal prosecutions, where appropriate, civil lawsuits and aggressive mediation and education efforts."
Today's home improvement contractor "sweep" includes ten enforcement actions, including one guilty plea to a criminal charge, five civil lawsuits seeking restitution, civil penalties and injunctive relief, two settlements, and two final judgments for the award of refunds to aggrieved consumers. In total, the enforcement efforts are seeking or have obtained more than $340,000 in refunds and repairs for nearly 100 consumers across the state.
Since 1999, Spitzer's office has received 7,335 complaints regarding home construction and repair. Many have been successfully mediated: in the past 3 ? years, the office has obtained over $950,000 in refunds and repairs through mediation. Ten cases against repairmen and contractors have been criminally prosecuted. Civil judgments or civil lawsuits have been filed in another 26 cases. Restitution obtained to date in those cases amounted to more than $1.85 million.
State law regulates the sale of home improvement goods and services and applies to most improvements of more than $500. Some important provisions of the law are:
- Home improvement contracts must be in writing and must contain:
- the contractor's name, address and telephone number;
- the approximate start and completion dates, including any contingencies which would change the completion date;
- a specific description of the work and materials, including brands, model numbers and other identifying information, along with the price;
- a consumer notice regarding: a three day right to cancel a contract; explanation of Lien Law implications if subcontractors are not paid; and the legal requirement that deposits be placed in escrow.
- Any schedule of payments agreed to in the contract must bear a "reasonable relationship" to the work done, materials purchased or other project-related costs;
- Any contract payments received by a contractor from a customer prior to substantial completion of the job must be put into a trust (escrow) account in a bank or as an alternative, the contractor may deliver a "bond" or "contract of indemnity" guaranteeing the customer's money will be properly used.
Individuals with complaints about home contractors or repairpersons are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.
SUMMARY OF CASES
ERIE COUNTY: John Weeks, the owner of J&J Construction and JW & Sons Roofing of Angola, pleaded guilty in Buffalo City Court to one count of Scheme to Defraud in the second degree, a class A misdemeanor which is punishable by up to one year in prison. Weeks will be placed on probation for three years and, as a condition of probation, will pay restitution totaling $21,162 to 13 victims and must comply with consumer protection laws related to home improvements. Sentencing was set by Judge Thomas Amodeo of Buffalo City Court for December 19, 2002.
Weeks, who did roofing and general contracting work, took advance payments from customers, but failed to do any work.
ERIE COUNTY: A civil action was filed in State Supreme Court in Erie County against AGD Construction of Depew and its principals, John Dennis and Peter Billi. They are alleged to have preyed upon senior citizens in Western New York by accepting large deposits for projects, at a time when their business was in deep financial trouble, and then using the money for other purposes. The aggrieved consumers, many of them widows, complained that AGD Construction failed to complete the projects for which they had made significant down payments; failed to place those monies in escrow accounts; performed shoddy workmanship; and used contracts which were not in compliance with state consumer protection laws.
The lawsuit seeks restitution of approximately $34,000, civil penalties, costs and injunctive relief, including a ban on acting as a home improvement contractor unless the defendants post a $100,000 performance bond.
MONROE COUNTY: After receiving 16 complaints, a civil suit was filed by Spitzer's office in State Supreme Court in Monroe County against James Quagliata d/b/a Home Sweet Home for: demanding large up-front payments for projects from consumers that were never performed; shoddy workmanship; failing to place deposits in escrow accounts and using escrow monies for personal expenses; failing to honor express and implied warranties; failing to keep appointments with customers; and failing to give refunds.
The lawsuit seeks: to permanently bar the firm and its owner from the home improvement business unless the defendants post a $100,000 performance bond; to direct the firm to turn over to the Attorney General's office a full accounting of all monies received for projects, including contracts and customer names; full restitution of approximately $50,000 to aggrieved consumers and payment of all Small Claims Court judgments; civil penalties for the defendant's violations of law and court costs; and an additional $10,000 fine against Quagliata for violating a law that prohibits fraudulent schemes directed at the elderly.
In a coordinated effort with the Rochester Police Department, Quagliata was arrested on October 25th and charged with: one count of Grand Larceny in the Third Degree, a class D felony; one count of Grand Larceny in the Fourth Degree, a class E felony; one count of Scheme to Defraud in the First Degree, a class E felony; and two counts of Petit Larceny, a class A misdemeanor.
ONONDAGA COUNTY: A Syracuse-based home improvement contractor, KAF Home Improvements also known as Paul Warner Home Improvements, was sued by Spitzer's office seeking an order to pay restitution to six consumers totaling more than $18,000. Warner is accused of: shoddy workmanship and failure to fix poor quality work; failure to complete projects at all or in a timely manner; failure to respond to consumer complaints; failure to pay Small Claims Court judgments obtained by aggrieved consumers; failure to comply with the Home Improvement Contract Law that requires certain provisions in contracts; and failure to place deposits and down payments in escrow accounts.
The lawsuit also seeks: civil penalties for the defendant's violations of the law and court costs; an order banning Warner from the home improvement business unless he posts a $50,000 performance bond; an order enjoining Warner from further deceptive and fraudulent acts, including failing to use contracts that comply with the law; and an order requiring him to provide a full accounting to the Attorney General's office, including all contracts and customer names.
ONEIDA COUNTY: Spitzer's office entered into a settlement with T. Stanley Paving and Russell Kirk and Tina Stanley. The contractors were accused of failing to maintain escrow accounts in which to place consumer advance payments for projects. Pursuant to the settlement, the contractors must reform their contracts. The new contracts must provide statutorily required information such as the project start/completion dates and the schedule of work to be done. The defendants also are required to provide consumers notice of, both orally and in writing, their three-day right to cancel a contract. In addition, the settlement requires the contractors to perform all work in a workmanlike manner, in conformity with generally acceptable construction standards and to secure all building permits and approvals required by law prior to beginning a project.
MONTGOMERY COUNTY: A civil lawsuit was filed in State Supreme Court in Albany County against Low Cost Home Improvement, Inc. and Robert and Linda Decker accusing the Amsterdam-based home improvement contractor of violations of consumer protection laws. Specifically, Low Cost Home Improvement repeatedly induced consumers to enter into contracts and demanded advance payments by falsely representing that it would commence and complete jobs within a specific time period; repeatedly represented that it would perform work in a workmanlike manner; made false promises to consumers who complained about shoddy or incomplete work; failed to pay Small Claims Court judgments; failed to make disclosures required by the Home Improvement Contract Law; and violated the Lien Law by: (1) failing to place consumer deposits in escrow accounts; and (2) failing to pay subcontractors/ suppliers with the money they received from consumers.
Spitzer's office received 13 complaints from consumers in Albany, Schenectady and Montgomery Counties who paid Low Cost thousands of dollars for home improvements.
The lawsuit seeks: a permanent injunction prohibiting the defendants from engaging in fraudulent, deceptive and illegal practices; an order requiring the defendants to post a $100,000 performance bond; a full accounting of all monies received from consumers; copies of all contracts and list of consumers; and an order to pay full restitution and damages, civil penalties and costs.
SCHENECTADY COUNTY: Christopher Ludovici a/k/a Christopher Lucas, doing business as Lucas and Associates, C. Ludovici & Son, and Ameri-Clene Co., of Schenectady was served with a civil lawsuit filed in State Supreme Court in Albany County. Eight consumers contacted Spitzer's office to complain that Ludovici failed to perform or complete work after receiving payments, did shoddy work, failed to make repairs or refunds, failed to pay Small Claims Court judgments, and failed to include legally required provisions in contracts.
Consumers also claimed that Ludovici, who also sells and repairs refurbished home appliances such as stoves, refrigerators and heaters, failed to provide or fix appliances after receiving payment, misrepresented the quality and condition of appliances, and failed to honor 30 and 90-day warranties.
The lawsuit seeks over $3,000 in restitution, plus civil penalties and court costs. It also seeks a court order requiring Ludovici to post a $10,000 performance bond.
SCHENECTADY COUNTY: Judge Thomas McNamara of State Supreme Court in Albany County permanently enjoined David P. Tessitore, Sr., d/b/a David Tessitore and Son Masonry/David Tessitore Masonry, Inc., a masonry contractor from operating as a home improvement contractor.
In January 2001, Tessitore had consented to a court-approved settlement with the Attorney General's office and was required to pay restitution, Small Claims Court judgments, civil penalties and costs totaling in excess of $7,000 and also provide warranty repairs for other projects.
Since the settlement, an additional twelve consumers complained that Tessitore failed to complete projects or provided shoddy workmanship, eleven of which the Attorney General's Office and the Court determined required restitution. These complaints were calculated to total approximately $14,600. In addition to his continued violation of the law and the court order, Tessitore failed to pay the original promised restitution and to provide promised warranty repairs. The judge issued a money judgment against Tessitore for approximately $24,000, including the estimated cost of undone repairs and interest on unpaid restitution and penalties.
BROOME COUNTY: John Hardy d/b/a J&W Construction was accused of demanding large up-front payments for home improvement projects, failing to complete projects and failing to deliver merchandise. Hardy also was alleged to have repeatedly made false representations about the dates by which he could complete work and also failed to provide refunds and return phone calls from customers. Hardy failed to provide required consumer disclosures or to place consumer deposits in escrow as required by law.
State Supreme Court Justice Walter Relihan of Broome County entered an order to which Hardy consented that: bars him from further deceptive, fraudulent acts; requires him to post a $100,000 performance bond; directs him to pay full monetary restitution and damages to his aggrieved customers of approximately $10,000 plus refunds to other individuals who file legitimate complaints against him with the Attorney General's office by the end of January; and requires that he pay $4,000 in civil penalties and costs.
PUTNAM COUNTY: Spitzer's office won an order and judgment against Ramjet Homes, Inc. and Martin Laurent for fraudulent and illegal business practices that included taking large up-front payments for the construction of new homes and then abandoning the construction projects, leaving behind partially built homes in poor condition.
The order, signed by Judge S. Barrett Hickman, requires that Laurent pay more than $133,000 to four consumers and allows six months for additional consumers to file complaints seeking restitution. Ramjet Homes and Laurent, its owner, were barred from the home improvement industry unless they post a $500,000 bond and were ordered to pay $8,000 in civil penalties and costs.
These cases are being handled by Assistant Attorneys General Dennis Rosen and James Morrissey of the Buffalo Regional Office, Assistant Attorney General Carlos Rodriguez of the Rochester Regional Office, Assistant Attorney General Judith Malkin of the Syracuse Regional Office, Assistant Attorney General In Charge Joel Marmelstein of the Utica Regional Office, Assistant Attorneys General Mark Fleischer and Matthew Barbaro of the Consumer Frauds and Protection Bureau, Assistant Attorney General Michael Danaher of the Binghamton Regional Office, and Assistant Attorney General Doris Morin of the White Plains Regional Office. These cases are being supervised by Assistant Attorney General Leslie B. Neustadt, Regional Coordinator for the Consumer Frauds and Protection Bureau.
The criminal case against James Quagliata is being handled by Investigator Robert Kerr of the Rochester Police Department with the assistance of Investigators Christopher Holland and Michael Hagley of the Attorney General's Investigations Bureau.