The Indiana Court of Appeals has affirmed in an interlocutory appeal a Boone County property owner’s cancelation of an agreement with a contractor, finding that his cancelation was timely under the replacement cure contract.
A property owned by Jason Jenkins was damaged by a severe storm in 2017, prompting him to call McGraw Property Solutions, a general contractor, to complete storm remediation.
The two entered into an agreement whereby McGraw promised to complete all storm remediation work to the property for the price approved by Jenkins’ insurer, requiring Jenkins to pay McGraw 20% of the replacement cost value as liquidated damages if Jenkins refused to allow McGraw to finish the work.
After the execution of the agreement, a representative of McGraw surveyed and documented the storm damage and concluded that a total replacement cost value was $170,559.63. But shortly thereafter, Jenkins decided to instead sell the property and not repair it. Jenkins’ insurer subsequently approved Jenkins’ claim with a replacement cost value of $109,371.97 and issued a total payment to Jenkins in the amount of $64,597.37.
McGraw filed a complaint against Jenkins, raising claims for breach of contract, unjust enrichment, and promissory estoppel, causing Jenkins to respond with a Notice of Violations under the Home Improvements Contracts Act and a demand that McGraw submit a replacement cure contract.
After accepting McGraw’s provided replacement cure contract on Aug. 27, 2017, Jenkins also submitted a notice to McGraw cancelling the replacement cure contract on the same day. Jenkins filed his answer, affirmative defenses, and counterclaim sounding in breach of contract, later moving for summary judgment on all counts.
The trial court ruled on the cross-motions for summary judgment, entering judgment against Jenkins on his counterclaim for breach of contract and against McGraw on its breach of contract claim.
The trial court then certified McGraw’s motion for interlocutory appeal, in which McGraw argued that the trial court erred by not construing the cancellation clause in the replacement cure contract to relate back to the execution date of the original contract, thereby erroneously allowing Jenkins “a springing right to cancel in a manner that will lead to absurd results.”
Affirming the trial court’s “sound reasoning that adopting McGraw’s position would be meaningless and not cure the original contract,” the Indiana Court of Appeals found that Jenkins timely cancelled the agreement entered into with McGraw.
“The main focus of the right to cure was to remedy the deficiencies of the original contract and to grant Jenkins the rights he was not awarded originally despite the provisions enumerated in the HICA. These cured deficiencies only become meaningful if a possibility to exercise these rights exists. By relating the replacement cure contract back to the effective date of the original contract, McGraw attempted to circumvent granting Jenkins an effective remedy. As the
HICA is instrumental in protecting consumers with contractors held to a strict standard, the protection can only be effective if the consumer has knowledge of the right,” Judge Patricia Riley wrote for the appellate court.
“Jenkins received knowledge of his rights on October 27, 2017 when McGraw offered the replacement cure contract which included a dual right to cancel the contract — either within three business days of the effective date of the contract or within three business days of receiving notice from the insurance company that the claim is partially or completely rejected. Therefore, we conclude that the replacement cure contract is effective from the date of its execution on October 27, 2017, and Jenkins timely exercised his right to cancel the contract,” it concluded.
The case is McGraw Property Solutions, LLC v. Jason Jenkins, 20A-PL-630.