COA rules on home improvement fraud

When two parties knowingly enter into a contract for home improvements that will not be done, the contractor cannot be charged with home improvement fraud under Indiana Code 35-43-6-12(a)(4), the Court of Appeals ruled today.

In Lawrence Golladay v. State of Indiana, 08A02-0701-CR-93, the court reversed Golladay’s conviction for home improvement fraud under subsection (4)(a), which states, “A home improvement supplier who enters into a home improvement contract and knowingly: uses or employs any deception, false pretense, or false promise to cause a consumer to enter into a home improvement contract … commits home improvement fraud[.]”

Max Starkey signed a contract with Golladay to replace the roofs on Starkey’s house and barn, replace siding on the house, and move an electrical box from outside to inside the house. Weeks after Golladay began working on the house, Starkey told him that his insurer was telling him to sue Golladay for not completing the work fast enough. Golladay eventually walked off the job, citing the threat of a lawsuit from Starkey as the reason.

After he walked off, Starkey and his wife did sue Golladay; Golladay failed to respond to the lawsuit and default judgment was entered against him. He was charged with home improvement fraud as a Class C felony under I.C. 35-43-6-12(a)(3), which states: “A home improvement supplier who enters into a home improvement contract and knowingly promises performance that the home improvement supplier does not intend to perform or knows will not be performed” commits home improvement fraud.

Golladay claimed that Starkey asked Golladay to include siding in the contract but because he had already spent a portion of the insurance money, asked that Golladay paint the house instead. Starkey denied the claim. The trial court found Golladay guilty of violating subsection (a)(4) of the Indiana Code, not (a)(3), the statute under which he was charged.

The Court of Appeals reversed Golladay’s conviction under subsection (a)(4) for two reasons. Judge Ezra Friedlander wrote that in order for someone to be charged under subsection (a)(4), the homeowner had to have been deceived by the home improvement supplier. In this case, Starkey and Golladay discussed including new siding in the contract even though Starkey only wanted the house painted because he had already spent some of the insurance money.

The goal of the statute is to protect homeowners; if one knowingly enters a contract where work will not be completed, then the homeowner is not deceived.

Golladay’s conviction also violates his due process rights because he was charged under subsection (a)(3) but convicted under subsection (a)(4). Subsection (a)(4) is not inherently included under subsection (a)(3), because (a)(4) requires the defendant to use deception to get a consumer to sign a contract, wrote Judge Friedlander.

The court reversed the conviction and remanded with instructions to enter a judgment of acquittal.