Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—W.D.N.C.: Demands for additional payments for construction were unlawful business practices, (Jul 2, 2013)

By Jody Coultas, J.D.

Home owners stated a North Carolina Unfair and Deceptive Trade Practices Act (UDTPA) claim against construction company Earthlog Equity Group, Inc. for unfair and deceptive business practices that went beyond a mere breach of contract, according to the federal district court in Statesville, North Carolina (Rezapour v. Earthlog Equity Group, Inc., July 1, 2013, Voorhees, R.).

The home owners contracted with the CEO of Earthlog for the construction of a bomb shelter and earth shelter home. After paying for consulting services and a down payment, the relationship fell apart and the home owners terminated the contract.

Earthlog allegedly violated the UDTPA by demanding additional payments for blue prints, failing to credit the cost of the blue prints to the construction price, demanding additional payments in excess of the 30% down payment agreed upon in the contract, refusing to proceed with work until the home owners paid him the additional money, and failing to return any of the down payment.

The home owners stated a UDTPA claim against Earthlog, according to the court. Earthlog argued the claim failed because there were no substantial aggravating factors that elevated the claim above a breach of contract claim, and that because the contract provided for changes to the contract price, requesting adherence to these terms did not constitute a UDTPA claim. The home owners alleged that Earthlog holding their $200,000 down payment and their project hostage while demanding more up-front money was aggravating and unfair.

Use of superior bargaining power to coerce a party is sufficient to state a UDTPA claim, the court explained. As alleged, Earthlog’s extraction of as much up-front money as possible without performing any work and refusal to perform any work until the extra money was received was unethical, unscrupulous, and oppressive. In addition, the home owners sufficiently alleged that a promise to move the project to “the front of the line” in exchange for a deposit well above the required 30% of the total was misleading because no construction was ever started.

The case is No. 5:12CV105-RLV.

Attorneys: Anthony T. Lathrop (Moore & Van Allen) for Kamron Rezapour. James W. Kilbourne, Jr. (Dungan Law Firm, P.A.) for Earthlog Equity Group, Inc.

Companies: Earthlog Equity Group, Inc.

Cases: StateUnfairTradePractices NorthCarolinaNews