Let’s face it - some professions get picked on more than others (heard any good lawyer jokes lately?). And while lawyers take the brunt of the bad jokes, we keep some interesting company. Look up any list of least-liked professions and you are likely to find that politicians usually top the list. Well a few years ago, Tennessee’s lawmakers decided to use their power to pick on someone else – home improvement contractors.

In 2010, Tennessee lawmakers enacted Tenn. Code Ann. § 39-14-154 making it a crime for a licensed or unlicensed home improvement contractor to breach a contract under some circumstances. The law was intended to protect homeowners from the deceptive practices of “storm chasers”, these out-of-state companies that follow storms, take large down payments for roof repair, then skip town. These folks deserve to be punished. However, I have seen this law used extensively by prosecutors and every time it has been used against local businesses that had simply made basic management errors.

There are two primary ways in which a contractor can break the law just by breaching contract. The first is the most difficult for the prosecutors to prove. It involves failure to complete a substantial portion of the contract/scope of work but requires the prosecution to prove an intent to defraud the homeowner.

We defended one of the first companies to be prosecuted under this new law. We were able to show the prosecution that it was very difficult to prove intent to deceive at the time of entering into a contract verses breach of contract due to business woes. Lawmakers then expanded the law to make it easier for prosecutors to win and contractors to be convicted.

The second way in which a contractor can be found to violate this statute is to “deviate from or disregard plans or specifications in any material respect that are contained in a contract for home improvement services”

The above offenses are punished as theft but may additionally include payment of monetary restitution to the injured residential owner and forfeiture of vehicles used by the contractor. Also, upon conviction, the court will forward notice of the conviction to the state board of licensing contractors for revocation of the home improvement service provider’s license. In practice, law enforcement officers tend to charge these offenses along with alternate crimes such as theft. Close reading of the elements of the statutes defining the offenses charged and careful investigation of evidence can determine which laws are applicable and may considerably narrow potential criminal liability. Criminal liability under this statute is separate from civil liability for deceptive trade practices or breach of contract.

If you are a contractor, subcontractor, or handyman, you are at risk of prosecution under this law. The business law attorneys at Patton | Pittman can help you safeguard your business and your livelihood to best manage this risk by creating new systems for you to adopt and follow to minimize risk; having a business entity such as a corporation or L.L.C. is simply not enough under this law. Further, if you find yourself having to defend criminal charges, our criminal law attorneys have the experience you need to best defend you and your company.