Michelle VanAuken hired Michael Maxim, Jr., to remove her old deck and build a new one. They signed a written contract for the work in April, 2022. The contract price was $9,000. Pursuant to the terms of the contract, VanAuken paid Maxim an initial down payment of $6,000 with the balance of $3,000 to be paid upon completion. The deck still has not been built and VanAuken filed this claim for $5,000 which is the monetary limit in small claims court. A trial was held on August 25, 2022, where the parties were the only witnesses. The contract in this case states that Maxim would deliver the materials for the job within two days of when VanAuken’s check for the initial down payment cleared and would start construction within four days after the materials were delivered. VanAuken testified that she hired Maxim because he said he could complete the work by May 20, 2022, which was important to her because she had major surgery scheduled at the end of May. She testified that her check for the down payment cleared on May 2, 2022, and that Maxim did not begin work until May 9, 2022. She testified that he worked about fourteen hours between Monday, May 9th and Friday, May 13th, and has not worked on the job since. She testified that Maxim had dug out the footers and left four-feet-deep holes in the yard. VanAuken testified that on May 18, 2022, Maxim told her that the work was on hold for one week because he found out he had to get a building permit. She testified that Maxim told her that he had applied for a building permit and blamed the Code’s office for not having approved the permit. She testified that Maxim stopped responding to her text messages and that she eventually contacted an attorney. She testified that Maxim only responded to her after he received a certified letter dated June 27, 2022. At that point he told her he could do some of the work without the building permit, but that he could only work on her deck on weekends because he had returned to his previous full-time job. VanAuken testified that based upon prices listed on Home Depot’s webpage, the value of the materials that Maxim left at her house was approximately $944.92, but that some of those materials had been ruined due to them sitting in her yard for the last few months. Maxim testified that he was just starting his own construction company and that he signed up with Home Depot to get work referrals from them. Home Depot referred him to VanAuken for her deck replacement project. He testified that he was just starting to learn about “codes and stuff” and that during the job he realized that a building permit was required. He testified that he was in touch with the Codes Officer and paid $72.00 to apply for a building permit online. Maxim also testified that there was a death in his family that he was attending to during that time. Maxim testified that because VanAuken complained to Home Depot about his failure to do the work, that Home Depot stopped referring him to other customers, so he had to go back to doing work for the carpenter’s union. He testified that he told VanAuken that he could do the work on her deck on weekends and still wanted to do the job. He testified that VanAuken told him that he couldn’t come back to do work without a building permit. Maxim also testified that the contract doesn’t say that he was responsible for obtaining a building permit. He testified that the office where he would have to go to get a building permit was only open two days a week and that he couldn’t leave his job for a half day to get a building permit because his family needed his wages. Maxim testified that he tried many times to get a building permit but there was an unspecified “computer issue” so he asked VanAuken to get the building permit, which she refused to do. Maxim also disputed VanAuken’s testimony that he told her that the job could be completed in five days, and that at most it would take two weeks. He testified that even though he revised the contract several times at VanAuken’s request, there were no deadlines in the contract for the completion of the work. Maxim testified that he would never tell someone that he could complete that job in five days, because that type of job generally takes two weeks. Maxim also testified that rain interfered with him doing the work, and that VanAuken’s deck was not his only job. Maxim testified that he made multiple trips for materials and that he had spent about $2,953.86 for materials for the job. He testified that some of the materials for the job were still in his truck, but that he had left a lot of the materials at VanAuken’s house. He also testified that he had spent between twenty and twenty-five hours working on VanAuken’s job, but that some of that time was spent obtaining and transporting materials, rather than at VanAuken’s house. The court’s duty in a small claims case is to do substantial justice between the parties according to the rules of substantive law (UCCA §1804). In this case, article 36-a of the General Business Law applies. VanAuken testified that Maxim stopped showing up to do the work, and was not responding to her communications. Maxim testified that he was willing to complete the work on the weekends, but that VanAuken wouldn’t let him continue without a building permit, even though the contract did not make him responsible for obtaining one. The law allows a party to a contract to terminate the contract only when there is a material breach of the contract. A party is not allowed to terminate a contract for a slight or technical breach of the contract. Rather, the breach must be so substantial and fundamental that it tends to defeat the object of the contract. For a minor breach, the non-breaching party may be entitled to damages for the breach, but may not just treat the contract as ended. As the law applies to this case, if Maxim’s conduct was a substantial and fundamental breach of the contract, then VanAuken was entitled to terminate the contract; if not, then she was not entitled to terminate the contract. VanAuken testified that it was very important to her that the deck be finished prior to her having surgery at the end of May. As Maxim pointed out, the contract does not require that the deck be finished by any particular date. Maxim’s testimony suggested that if the completion date was so important to VanAuken, she should have put that date in the contract. As part of the State’s consumer protection efforts, in 1988 the Legislature enacted article 36-A which mandates that home improvement contractors put home improvement contracts in writing and that certain provisions be included in the contract. Other courts have discussed the fact that the legislative concern underlying GBL Section 771 is a legislative concern that the problems which might arise in home construction work need to be clearly spelled out in a written contract signed by the homeowner to avoid unrealized expectations by parties which can lead to legal battles such as the one in this case. The Legislature put the burden solely upon the contractor to ensure that the material terms of a contract are spelled out in the contract. GBL §771(1)(b) requires that a home improvement contract state the “approximate dates, or estimated dates, when the work will begin and be substantially completed, including a statement of any contingencies that would materially change the approximate or estimated completion date. In addition to the estimated or approximate dates, the contract shall also specify whether or not the contractor and the owner have determined a definite completion date to be of the essence.” It should be clear from the foregoing, that contrary to Maxim’s suggestion at trial that if it was important to VanAuken that the deck be completed by May 20, 2022, then she should have put it in the contract. Rather, the law places the burden of preventing disputes over the time for completion of work squarely on the contractor. Although the contract has a date for the work to begin, it does not state a date for completion. Neither does it state whether the date for completion was “of the essence.” Because Maxim’s contract did not include this required term, there is now a dispute over whether there was, as VanAuken testified, an understanding that the work would be completed before her surgery at the end of May. Since the law puts the burden on the contractor to ensure that the home owner clearly understands the time for completion of the work, the court finds it appropriate to resolve any dispute arising from Maxim’s delays in doing to the work against Maxim. Accordingly, the court finds that the work on the deck was supposed to be completed by May 20, 2022. The court also notes that nowhere in the contract does it state that the failure to obtain a building permit would be a contingency that might change the date for completion of the contract. Maxim’s testimony suggested that because the contract did not state that he was responsible for obtaining the building permit, and VanAuken did not obtain the permit, that he was not responsible for the delay in proceeding with the work. However, as previously noted, the law required that the contract contain a date for completion and any contingencies that might affect the date for completion. Had Maxim included a date for completion, and listed a delay in obtaining a building permit as a contingency that might alter the date of completion, the court would conclude that any delay in doing the work due to the lack of a building permit, would not constitute a breach of the contract. Even in the absence of a firm date for completion of the contract, the court would not find a minor delay in the completion of the work to be a material breach of the contract. However, the credible proof in this case was that Maxim did minimal work between May 9th and May 13th, and that as of May 18th advised VanAuken that there would be a one week delay due to the need to obtain a building permit. If Maxim had obtained a building permit and resumed work by May 25th or so, the court would probably still be inclined to find that there was not a material breach of the contract. But Maxim did not obtain the building permit in that time frame nor did he take any steps to acquire the permit after using it as an excuse for the delay. Rather, his own testimony established that he was not willing to miss work to go get the building permit because he would lose income from his other job. In addition, he was no longer available to work during the week, so the job would have to be completed only on weekends. Under these circumstances, the court finds that the breach was material because it was unclear when, if ever, Maxim was going to obtain the building permit and complete the work. Therefore, not only was VanAuken not obtaining the benefit she contracted for — a new deck — but she was left without her old deck and with four-feet-deep holes and construction materials in her back yard. Accordingly, the court finds that the law allowed VanAuken to terminate the contract. Having determined that VanAuken was entitled to terminate the contract, the court must determine what amount of money she is entitled to as a result of Maxim’s breach of the contract. “[I]n this state the sanctity of contracts in this respect at least, has been steadily maintained, and no encouragement has ever been given to that loose and dangerous doctrine which allows a person to violate his most solemn engagements and then to draw the injured party into a controversy concerning the amount and value of the benefits received…. To hold a different doctrine would be simply to make another contract, and would be giving to parties an encouragement to violate their engagements, which the just policy of the law does not permit” (Knobel v. Manuche, 137 Misc 2d 320, 324 [Sup Ct, NY County 1987], affd, 146 AD2d 528, [1st Dept 1989], citing Smith v. Brady, 17 NY 173 [1858]). This means that a contractor who materially breaches a contract may not be entitled to any compensation for his partial performance. The proof showed that Maxim intentionally stopped performing work under the contract and took another job. There was no proof that he took any steps to obtain the building permit that he claimed was necessary to continue with the work after the time that he told VanAuken that there would be a one week delay in continuing the work due to the need for a building permit. He specifically testified that he had no intention of taking time off from work at his other job to obtain the building permit. In other words, he intentionally abandoned his obligations under the contract because it benefitted him to do so. If this Court were to allow him to keep the benefits of the hours of labor he put in on VanAuken’s deck and, and allowed him to be reimbursed for all of the materials he purchased for the job, he would not suffer any loss from abandoning the contract. Such an outcome would encourage contractors to leave their contracted work unfinished whenever a better opportunity comes along, knowing that they would be fully compensated for the work that they have performed. In short, it would undermine the sanctity of a contract. However, there is another legal principal that allows a contractor to be compensated even though he has breached his obligations under a contract, provided that he can show that he had substantially performed its obligations under the contract. To show that, the contractor must establish that the breach is trivial in nature compared to the performance that has occurred, that failure to perform was inadvertent or unintentional, that the primary purpose of the contract has been fulfilled, and that the breaching party proceeded in good faith. It should be evident that the proof at trial did not establish that Maxim substantially performed his obligations under the contract. Although he tore out VanAuken’s old deck, he left large holes in the yard and did not even start to build the new deck. As such, the breach was not trivial compared to the work that was done. As previously noted, he intentionally failed to perform the balance of the contract, deciding that he was better off returning to his old job. Not only did Maxim not achieve the primary purpose of the contract, he left VanAuken in a worse position than she was in before he started the work. It is also clear from Maxim’s failure to pursue a building permit — which he claims was the reason he stopped working on the deck after less than a week — that Maxim did not proceed in good faith. The court credits VanAuken’s testimony to the effect that Maxim did not offer to complete the work until she threatened legal action, which also negates any claim that Maxim was proceeding in good faith. Accordingly, Maxim has not met his burden of proving that, despite his breach, he is entitled to compensation under the legal theory of substantial performance. Therefore, although there was proof at trial about the value of the materials and work Maxim provided to VanAuken, having intentionally elected not to perform his obligations under the contract, he is not entitled to any benefit from the contract and the court will not allow him to draw VanAuken and the court into a controversy concerning the amount and value of the benefits received. In light of the foregoing, the court finds that VanAuken met her burden of proving that she is entitled to a return of the $6,000 that she paid to Maxim less $944.92 for the value of the materials that she received, for a net judgment in the amount of $5,055.08. However, the court’s monetary limit is $5,000 so a judgment in that amount, plus the costs of the action, is the appropriate amount of damages. As previously noted, Maxim’s contract did not comply with the provisions of the General Business Law regarding home improvement contracts. For example not including a date for completion of the contract is considered a technical violation which would allow a fine of up to $100 (GBL §773[1]). The contract also required payment of $6,000 in advance which is a violation of GBL section 771(1)(f), which requires that progress payments “bear a reasonable relationship to the amount of work to be performed, materials to be purchased, or expenses for which the contractor would be obligated at the time of payment.” This is considered a substantial violation which allows for a penalty for the greater of $250 or five percent of the contract price (GBL §773[2]). In addition to these two violations which were raised by the facts of this case, Maxim’s contract appears not to comply with other requirements of the GBL. The court is not imposing fines for the violations in this case, due to mitigating factors in GBL section 773(3) such as the fact that Maxim appears not to have a large volume of contracting work. However, having been put on notice that contractors must comply with the GBL, if Maxim should engage in future violations of the GBL requirements, the court may reconsider the appropriateness of imposing fines. Therefore it is hereby ordered that judgment be entered in favor of Michelle VanAuken against Michael Maxim, Jr. in the amount of $5,000 plus costs. This constitutes the decision and order of the court. Dated: September 9, 2022
