This article discusses the circumstances under which a purchaser of a new home, including condominium unit, may be entitled to recover treble damages, attorney’s fees and litigation expenses incurred in pursuing a DC construction defect case against a developer or builder.
The DC Consumer Protection Procedures Act Allows for the Recovery of Attorney’s Fees, Treble Damages and Litigation Costs in Construction Defect Claims Involving Misrepresentation, Omission and other Unfair or Deceptive Trade Practices
The District of Columbia (“DC”) Consumer Protection Procedures Act (“DC CPPA”) § 28-3905(k)(1)(A) creates a private legal claim (a/k/a “cause of action”) which can be asserted by a home purchaser who is misled by a developer or builder regarding the condition of a defectively constructed home. A successful construction defect plaintiff in DC may be entitled to “treble damages” (i.e., three times the amount of damages it proves), plus recovery of “reasonable attorney’s fees” incurred in prosecuting the DC construction defect claim and “[a]ny other relief the court determines proper,” including non-attorney fee litigation expenses. DC CPPA § 28-3905(k)(2)(A), (B) and (F).
The DC CPPA is a consumer-oriented statute designed to, among other things, protect consumers in DC who are misled in connection with the purchase of consumer “real estate,” including transactions involving the purchase of a single family home or condominium unit. Typically, these cases involve the sale of a newly constructed home containing latent construction defects or an older building that has been renovated and offered for sale to the pubic.
The DC CPPA is a “remedial statute,” intended to be “applied liberally” by the courts protect purchasers of consumer real estate in DC by establishing “an enforceable right to truthful information.” DC CPPA § 28-3901(c). One way in which the DC CPPA protects DC consumers is by allowing for the recovery of treble damages, reasonable attorney’s fees and litigation costs so as to encourage private attorneys to take on consumer misrepresentation cases that otherwise might go unprosecuted, including misleading consumers about the existence of construction defects in newly constructed or renovated homes . District Cablevision Limited Partnership v. Bassin, 828 A.2d 714, 728 (D.C.2003). Another way in which the DC CPPA protects DC consumers is by creating a statutory claim for misrepresentation and omission in the sale of consumer real estate that does not require proof of “intent to deceive” or “duty to disclose” on the part of the selling developer or builder. Saucier v. Countrywide Home Loans, 64 A3d. 428, 442 (D.C.2012); Wetzel v. Capital City Real Estate, LLC, 73 A.3d 1000, 1004-05 (D.C.2013); Grayson v AT&T, 15 A.2d 129, 251 (D.C.2011). For example, to prevail on a claim under the DC CPPA, a consumer need only allege and prove that they suffered damages as a result of being misled by an untruthful or misleading representation of, or failure to state, a material fact. See, e.g., DC CPPA § 28-3904(e) and (f). Thus, there can be liability for misleading a unit owner in the sale of consumer realty, even if the misrepresentation or omission by the developer, builder or their representatives was unintentional.
Factual Scenarios Giving Rise to Consumer Protection Procedures Act Claims in DC Condominium Construction Defect Cases
When a newly constructed residential home contains latent construction defects and other undiscovered conditions that are at odds with what the developer/builder represented about the condition and quality of the home and an unsuspecting home purchaser suffers damage as a result, such as repair costs and property damage, there exists a potential DC CPPA claim against a developer / builder and other responsible parties who made untrue or misleading statements (misrepresentations), or who failed to disclose material facts (omissions), about the true condition of the home. Significantly, is not necessary for a DC CPPA claimant to be in a contractual relationship with the person or entity who made the misrepresentation or omission of material fact in order to bring a claim for violation of the CCPA. Wetzel v. Capital City Real Estate, LLC, 73 A.3d 1000, 1004-06 (D.C.2013).
The representations or omissions of fact must be “material,” such that it would have would be expected to impact the decision of an average consumer in their decision to purchase. See, Saucier v. Countrywide Home Loans, 64 A3d. 428, 440-446 (D.C.2012) (discussing “materiality” under the DC CPPA). For example, if it was represented that a home was constructed in accordance with plans approved by the Department of Consumer and Regulatory Affairs, that representation would be a material representation because it would reasonably be expected to impact a consumer purchasing decision. Likewise, if a developer failed to disclose that the home was not constructed in accordance with the plans approved by the Department of Consumer and Regulatory Affairs, as required by law, that would be a material omission likely to impact a consumer purchasing decision.
Misrepresentations and omissions are examples of “unfair or deceptive trade practices” (discussed below) which are prohibited by the DC CPPA and give rise to a private cause of action or legal claim under DC Code § 28-3905(k)(1)(A). Other forms of conduct which deceive consumers in connection with the purchase of a residential home containing latent construction defects can also constitute “unfair or deceptive trade practices” under the DC CPPA.
Claimants in DC who prove that they were damaged as a result of an “unfair or deceptive trade practice” in connection with the purchase of a defectively constructed or renovated home can seek damages consisting of three times the cost of repairing the construction defects and property damage caused thereby (treble damages), plus reasonable attorney’s fees and litigation costs in a DC construction defect case..
Unfair or Deceptive Trade Practices that Violate the DC Consumer Protection Procedures Act in Construction Defect Cases
A violation of the DC CPPA occurs when a person engages in an “unfair or deceptive trade practice.” The DC CPPA contains a non-exclusive list of conduct that constitutes an “unfair or deceptive trade practice.” This conduct includes making a misrepresentation about the condition, or quality of construction or other features of a of a residential home or failing to disclose material facts regarding problems with the home. For example, if a builder or developer represents that it is offering a home for sale that is built according to applicable building codes, and it is not, that is an “unfair or deceptive trade practice.” Likewise, if a builder or developer represents that it has made certain repairs or replacements in connection with a home renovation which it does not make, that is also an unfair or deceptive trade practice.” If a home purchaser suffers actual damages as a result of relying upon such misrepresentations or omissions about the true condition of the property, they may bring a private cause of action under DC CPPA § 28-3905(k)(1)(A) of the DC CPPA. Grayson v. AT&T, 15 A.3d 219, 244 (D.C.2011) (claimant asserting a private cause of action under the DC CPPA must shows an “injury-in-fact” to themselves resulting from the unfair trade practice).
Quoted below are some of the specified unfair or deceptive trade practices under the DC CPPA that experienced construction defect attorneys utilize as a legal basis for asserting a claim for treble damages, attorney’s fees and litigation costs under the DC CPPA in cases where builders or developers have misled home purchasers about the condition of a newly constructed or renovated residential home that contains latent construction defects:
It shall be a violation of this chapter for any person to engage in an unfair or deceptive trade practice, …including to:
(a) represent that [newly constructed or renovated home or portions thereof] … have … approval, certification, accessories, characteristics, ingredients, uses, benefits, or quantities that they do not have;
* * * * * *
c) represent that [newly constructed or renovated home or portions thereof] are … new if in fact they are deteriorated, altered, reconditioned, reclaimed, or second hand, or have been used;
(d) represent that [newly constructed or renovated home or portions thereof] are of particular standard, quality, grade, style, or model, if in fact they are of another;
(e) misrepresent … a material fact [concerning a newly constructed or renovated home] which has a tendency to mislead;
(e-1) [r]epresent that a transaction [to purchase a newly constructed or renovated home] confers or involves rights … which it does not have or involve… ;
(f) fail to state a material fact [concerning newly constructed or renovated home] if such failure tends to mislead;
(f-1) [u]se innuendo or ambiguity as to a material fact [concerning newly constructed or renovated home], which has a tendency to mislead;
(h) advertise or offer [newly constructed or renovated home] without intent to… sell [them] as advertised or offered;
* * * * * *
(p) falsely state or represent that repairs, alterations, modifications, or servicing have been made [in connection with the renovation / rehabilitation of an existing residential home] and receiving remuneration therefor when they have not been made….”
DC CPPA § 28-3904
Note that some of the above quoted unfair or deceptive trade practices do require proof of intent, while others do not. Compare DC CPPA §28-3904(h) with DC CPPA§28-3904(e) and (f). Note also that the use of the term “including” means that the list of “unfair or deceptive trade practice” enumerated in DC CPPA § 28-3904 (quoted in part above) are examples only and not exclusive. Therefore, other conduct that misleads consumers, not specifically described in the statute, may constitute an “unfair or deceptive trade practice” in violation of the CPPA, including any practices prohibited by other DC statutes and common law. Atwater v. District of Columbia Dep’t of Consumer Regulatory Affairs, 566 A.2d 462, 465-467 (D.C.1989); Osbourne v. Capital City Mortgage Corp., 727 A.2d 322, 325 (D.C.1999); District Cablevision Limited partnership v. Bassin, 828 A.2d 714, 722-23 (D.C.2003). In determining what non specified conduct may constitute an “unfair or deceptive trade practice,” the statute requires DC Courts to give “due consideration and weight … to … interpretation by the Federal Trade Commission and the federal courts.” CCPA § 28-3901(d).
Proving Treble Damages Under the DC Consumer Protection Procedures Act
Treble damages are recoverable in order to encourage private attorneys to take consumer protection act cases. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 745 (D.C. Cir. 2000); District Cablevision Limited partnership v. Bassin, 828 A.2d 714, 728(D.C.2003). As such, treble damages under the CPPA have a remedial purpose and are not designed to punish. Id., at 725-729., Therefore, unlike punitive damages, a claimant is entitled to an award treble damages without having to make a showing of egregious conduct. District Cablevision Limited partnership v. Bassin, 828 A.2d 714, 728 (D.C.2003). Once it is established that a consumer has suffered any monetary damage, such as the cost of repairing defective construction and property damage caused thereby, the DC CPPA authorizes courts to treble those damages without any further findings. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 745 (D.C. Cir. 2000); Byrd v. Jackson, 902 A.2d 778, 782 (D.C.2006); District Cablevision Limited partnership v. Bassin, 828 A.2d 714, 729 (D.C.2003).
Proving Attorney’s Fees and Litigation Costs under the DC Consumer Protection Procedures
Generally, parties are not entitled to recover their attorney’s fees and other litigation expenses in a DC construction defect case absent a contractual agreement or statute which specifically allows for the recovery of attorneys fees and expenses. The DC CPPA is a statute that permits a person seeking relief from an unfair or deceptive trade practice to recover their “reasonable attorney’s fees” and “any other relief which the court deems proper.” DC CPPA § 28-3905(k)(2)(B) and (F). To the extent that a person seeking redress under the DC CPPA has litigation expenses, other than attorney’s fees (e.g., court filing fees, expert witness fees, process server fees, deposition expenses), the court may award such expenses under the provision of the DC CPPA that permits a claimant to recover “[a]ny other relief which the court determines proper.” CPPA § 28-3905(k)(2) (F) ; In Re Inphonic, Inc., Wireless Phone Rebate Litigation, United States District Court for the District of Columbia, No. 06-0507 (ESH), Memorandum Opinion and Order, 5-6 (MDL docket number 1792).
Allowing for the recovery of reasonable attorney’s fees is designed to encourage private attorneys to take consumer protection act cases. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 745 (D.C. Cir. 2000). Therefore, to ensure that this purpose is not defeated, DC Courts have rejected the argument that the amount of a claimant’s “reasonable attorneys fee” claim can be attacked as unreasonable solely because the attorney fee in question is disproportionate to, or even far greater than, the amount of compensatory damages actually awarded. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 747 (D.C. Cir. 2000) (rejecting the “rule of proportionality” with regard to attorney’s fees awarded under the DC CPPA). Allowing attorney fees awards to be defeated or reduced on grounds that they are disproportionate to the damages recovered, would discourage, not encourage, private attorneys from taking consumer protection cases, making it “‘difficult, if not impossible for individuals with meritorious … claims but relatively small potential damages to obtain redress from the courts.’” Id.; In Re Inphonic, Inc., Wireless Phone Rebate Litigation, United States District Court for the District of Columbia, No. 06-0507 (ESH), Memorandum Opinion and Order, 15-16 (MDL docket number 1792).
It is also not a ground for reducing the amount of reasonable attorney’s that a claimant’s attorney’s fees are attributable to proving other, non-DC CPPA claims in a DC construction defect case, such as negligent misrepresentation, breach of contract, negligent construction, breach of implied warranty, breach of the statutory condominium warranty against structural defects. Rather, all reasonable attorney’s fees pursuing a case are recoverable so long as the other claims sufficiently overlap the DC CPPA claim and arise out of a common core of facts such as the defective construction or renovation of a condominium. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 746-747 (D.C. Cir. 2000); In Re Inphonic, Inc., Wireless Phone Rebate Litigation, United States District Court for the District of Columbia, No. 06-0507 (ESH), Memorandum Opinion and Order, 15-16 (MDL docket number 1792). This applies even if the claimant is not successful on the other, non-DC CPPA claims. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 746 (D.C. Cir. 2000) ( “‘fees for time spent on claims that ultimately were unsuccessful should be excluded only when the claims are distinctly different in all respects, both legal and factual from plaintiffs successful claims’”).
Proving Punitive Damages Under the DC Consumer Protection Procedures Act
If it can be proven with “clear and convincing evidence that an unfair or deceptive trade practice was perpetrated on a purchaser of a defectively constructed home, and the conduct involved constituted “outrageous or egregious” wrongdoing in which a builder or developer or its representatives acted with “evil motive, actual malice or willful disregard for [the home purchaser’s] rights,” then a court may award punitive damages under DC CPPA § 28-3905(k)(2)(C), in addition to treble damages. District Cablevision Limited partnership v. Bassin, 828 A.2d 714, 725 -729 (D.C.2003) (under the CPPA, punitive damages are designed to punish intentional wrongdoers and thus cannot be awarded without the requisite evidentiary showing, whereas treble damages are remedial in nature and require no evidentiary showing).
Statute of Limitations for Violation of the DC Consumer Protection Procedures Act in a Construction Defect Case
The statute of limitations is the time within which a legal claim must be brought in a court of law or it will be forever barred. A claim under the DC CPPA has a 3-year statute of limitations under DC Code §12-301(8), which runs from the date that the claim “accrues.” Under the “discovery rule,” a claim generally “accrues” when the claimant knows or should know that that she/he has suffered injury or damage as a result of an unfair trade practice. Bradford v. George Washington University, 249 F.Supp.3d 325, 334-335 (D.C.2017). Unless an exception to the statue limitations applies, suit for violation of the DC CPPA must be filed within three years of the date the claim accrues or it will be time-barred. Plenzac v. Equity Residential Management, L.L.C., 320 F. Supp.3d 99, 103 (2018). Thus, in the absence of an exception to the statute of limitations, or other facts making non-discovery reasonable, such as purported repairs by the builder, if a purchaser of a new home experiences severe flooding or roof leaks following the first rain event after moving in, it can be argued that the home purchaser has three years from that date to file suite. Parties can enter into tolling agreement to stop the statute of limitations from running while they negotiate. Talking agreemeParties can enter into a tolling agreement to stop the statute of limitations from running while they attempt to negotiate. A resolution of their dispute. Tolling Agreements are private agreements between parties that courts will enforce among those who are signatories.
Note about CPPA Definition of “Goods and Services”
Where the statutory language quoted above refers “goods and services,” I have inserted in brackets, the terms “newly constructed or renovated home” which is the subject matter of this article. The definition of “goods and services,” under DC CPPA §28-3901(a)(7), includes “real estate transactions, and consumer services of all types,” thereby including the sale of newly constructed or renovated residential homes, including residential condominiums. See Saucier v. Countrywide Home Loans, 64 A3d. 428, 442 (D.C.2012) (suit by condominium association for violation of DC CPPA arising out of construction defects); Wetzel v. Capital City Real Estate, LLC, 73 A.3d 1000, 1004-05 (D.C.2013) (suit by condominium unit owner for violation of CPPA arising out of construction defects).
Note about 2018 Amendment to the District of Columbia Consumer Protection Procedures Act: New terminology (“Unfair and Deceptive Trade Practices”) and Federal Trade Commission Precedent
Effective July 17, 2018, the DC CPPA was amended to make it consistent with similar statutes in other states and federal trade commission law. Under the amendment phrase “unlawful trade practices” was replaced with “unfair and deceptive trade practices.” This amendment was intended to make the CPP a consistent with similar statutes in other jurisdictions, such as Maryland, and federal trade commission law. The amendment also provides that that courts should consider interpretations by the Federal Trade Commission and federal courts when interpreting or deciding what action to take with regard to “unfair or deceptive act or practice.” DC CPPA §28-3901(d).
This is the terminology and interpretation guidance used in many state consumer protection acts, including Maryland’s Consumer Protection Act, Maryland Commercial Law Article §§ 13-105 and 13-301. For example, The Maryland Court of Appeals, relying upon “the interpretations of the Federal Trade Commission Act by the Federal Trade Commission and the federal courts,” held that “[i]mplicit in any advertisement and rental of an apartment is the representation that the leasing of the apartment is lawful” and in compliance with licensing laws. Golt v. Phillips, 308 Md. 1, 9-10, fn. 3 and accompanying text (Md. 1986) (“[f]or consumer protection purposes, the meaning of any statement or representation is determined not only by what is explicitly stated, but also by what is reasonably implied”). Likewise, it is implicit in the sale of a newly constructed home in the District of Columbia that the condominium complies with applicable building codes and laws requiring compliance with approved plans and specifications submitted to the Department of Consumer and Regulatory Affairs. For an article discussing the Maryland Consumer Protection Act, See “Condominium Association’s Right to Recover Attorney’s Fees in Construction Defect Cases,” by Nicholas D. Cowie.
Note About Author
Nicholas D. Cowie is a construction lawyer and construction defect litigation attorney practicing law throughout Washington DC and the State of Maryland. Mr. Cowie established the “Construction Law” course at the University of Baltimore School of Law where he served as an adjunct professor of construction law. Mr. Cowie is highly regarded for his knowledge and practice of construction law and construction defect litigation. The law firm of Cowie Law Group, P.C. is known for handling construction law and construction litigation matters as well as complex commercial litigation, products liability claims and complex commercial / business law and litigation matters.
Contact Construction Defect Attorney Nicholas D. Cowie:
For more information about the DC Consumer Protection Procedures Act, construction defect claims and recovering treble damages, reasonable attorney’s fees and litigation costs in DC construction defect claims, use our contact form or contact Nicholas D. Cowie directly at ndcowie@cowielawgroup.com
301-830-8315 * 202-670-6289 * 410-327-3800
# DCConsumerProtectionProceduresAct
#DCConstructionDefects
#DCConstructionDefectAttorney
#UnfairOrDeceptiveTrade Practices
#CPPA
#DCConstructionLawyers
