DPOR Must Consider Full Record When Considering Homeowner Claim

Virginia General Assembly

Virginia General Assembly (Photo credit: Wikipedia)

One issue for homeowners who seek to recover for poor residential construction is the issue of whether a judgment will be collectible should they get one through the litigation process in Virginia. Lack of the ability to collect can be particularly damaging to a homeowner when a particularly dishonest, or more likely cash strapped, contractor takes a deposit or a payment and then takes off for parts unknown. Such a situation can lead to a homeowner having a partially constructed home and no way to recoup the money based upon this dishonest conduct, even in the instance where the homeowner gets a default judgment for fraud.

As a hedge against such an issue, the Virginia General Assembly and the Virginia Department of Professional and Occupational Regulation (DPOR) created the contractor recovery fund from which a homeowner who is the subject of dishonest conduct by a contractor can recovery up to $20,000.00. This is a great thing, right?

The issue, and one that I’ve run into, is that some courts, particularly the General District Courts here in Virginia, do not always put the basis of the judgment in the order. Couple this with a recent trend whereby DPOR made an unwritten policy decision to only pay out of the fund when the order itself has the magic words “improper or dishonest conduct.” DPOR seems to have made this decision despite the lack of any regulation or Virginia statute that states that such a policy is acceptable.

Thankfully, the Norfolk, Virginia Circuit Court has stepped in and determined that such a strict policy cannot be sustained. In Hill v. DPOR, the Court considered the appeal of a denial of a fund claim that was based solely upon the Motion for Judgment and a default judgment order. It also considered the fact that the homeowner, Hill, had testified before DPOR regarding the conduct of the contractor. In reviewing DPOR’s actions, the Court was fairly straightforward in its response to the Board’s failure to consider all of the evidence before it, stating:

The first sentence of Code § 54.1-1120(A)(7) provides that a claimant will not be denied recovery if the judgment does not contain a specific finding of “improper or dishonest conduct.” That, however, is exactly what the board did in this case. . . . By what authority does the board limit the other evidence to a claimant’s pleading in the action against a regulant? None that the court can discern.

In short, the Court ordered DPOR to consider the entire record before it, and not just the complaint and order.

Hopefully more courts in Virginia will follow Norfolk’s lead and force DPOR to act as it should under Virginia statute. The Norfolk court’s action is particularly helpful given the fact that the jurisdictional limit in General District Court. A Warrant in Debt (the most common method for bringing an action in these courts) does not have much room for any analysis whatsoever and likely will have no analysis or reasoning for a default judgment. Without more courts enforcing the letter of the law, most General District Court judgments will not have enough reasoning to allow homeowners to recover.

Of course, consultation with a Virginia construction attorney will be of great help.

What are your thoughts? Do you have any experiences to share in the comments below?

As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.

Print Friendly
Send to Kindle
6 Responses to DPOR Must Consider Full Record When Considering Homeowner Claim
  1. Mark Cobb Law Group
    January 8, 2013 | 11:55 AM

    Ever since law school (in VA!), I have been intrigued when the administrative branch of government conflicts with one of the big three branches of government. From your article, it seems as though the keeps of the compensation fund disregard the judiciary. I am never ceased to be amazed. Thank you for sharing this interesting nugget of information!
    Mark Cobb Law Group recently posted..Comment on Mark A. Cobb by GEORGIA CONSTRUCTION, BOND & LIEN LAW BLOG » Cobb Selected to Co-Author ABA Book on Subcontractor & Supplier LawMy Profile

  2. Christopher G. Hill
    January 8, 2013 | 12:39 PM

    Thanks for checking in Mark. I was shocked to hear about the policy regarding one of my clients years ago. To the credit of the DPOR person I spoke to, they were apologetic about it and the situation worked out, but the policy is clearly incorrect.
    Christopher G. Hill recently posted..Don’t Let Receivership Kill Your Miller Act ClaimMy Profile

  3. Kenneth Williams
    May 11, 2013 | 2:09 AM

    I was a victim of contractor fraud and thought I was doing what the order informed me to do. I called the Richmond office to verify what the policy stated and was told not to worry about it I didn’t fall under that category. I submitted my claim and 2 months received a letter stating I was denied because I didn’t do what the office told me I didn’t have too. My claim was returned after the expiration date to submit and the strange thing about it was I responded to their denial and received a response back in a week. I went to the courts and did everything I was informed that I was missing and even informed the Judge of my intentions. Sent the claim back in and was told the Judge didn’t put the correct wording on my claim. I went back to court to have it corrected and the Judge said he couldn’t do anything with a closed case. I submitted all documentation again and was denied. After court cost and numerous request to process my claim I was spending money that I will never see. I went the the Governor’s complaint page to inform him of the lack of support I was receiving from the DPOR and the DPOR sent me a reply on his behalf still denying my claim. If this is how the system works I see why I’m out of over 5K. This system needs to be corrected

  4. […] and even a clarification or two to everything from the process for filing and recovering from the Contractor’s Recovery Fund to some of the procurement procedures under the Virginia Public Procurement Act. Additionally, […]

  5. Tara Chadbourn
    May 1, 2015 | 9:39 AM

    Thanks for the post, Chris. For General District Court claims, I add a claim for “Improper and Dishonest Conduct” to the Warrant in Debt. A DPOR investigator actually suggested this approach to me and so far it has resulted in successful recovery from the Transaction Recovery Fund for two clients.

  6. Christopher G. Hill
    May 1, 2015 | 10:00 AM

    Great thoughts Tara. I appreciate the note. This is a good idea to avoid issues.
    Christopher G. Hill recently posted..When is Mediation Appropriate for Your Construction Case?My Profile

Leave a Reply

Wanting to leave an <em>phasis on your comment?

CommentLuv badge

About Musings

I am a construction lawyer in Richmond, Virginia, a LEED AP, and have been nominated by my peers to Virginia's Legal Elite in Construction Law on multiple occasions. I provide advice and assistance with mechanic's liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals.

Please join the conversation!

More About Musings
Creative Commons License