More from the Legal
Texas Business reports: SINTON – A Rosenberg-based roofing contractor today agreed to reimburse all homeowners who improperly paid the company’s “liquidated damages” contracts. In June, the Attorney General’s Office charged Holden Roofing Inc. (HRI) with subjecting homeowners to unlawful penalties if they did not hire the defendant to perform the work.
According to court documents filed by the Texas Attorney General’s Office, HRI unlawfully coerced homeowners into using their services for roof repairs after severe weather events.
Under the terms of today’s agreed judgment, homeowners who paid the liquidated damages assessed by HRI on or after Jan. 1, 2009, will be eligible for restitution. HRI must also pay $25,000 in civil penalties and $10,000 in attorneys’ fees to resolve the State’s enforcement action.
HRI and its president Brett Holden were named as defendants in the state’s June 23 enforcement action. The defendant’s principal office is located in Rosenberg near Houston, but HRI also maintains branch offices in Corpus Christi, Dallas, San Antonio, Austin, Brownsville and Tyler.
According to state investigators, HRI’s sales representatives targeted communities that experienced severe weather events such as hail storms or hurricanes. The defendant’s sales representatives visited individual homeowners – including senior citizens – and marketed themselves as roof repair consultants.
When the defendant’s sales personnel approached homeowners, they did so under the auspices of offering consulting expertise for customers seeking help with claims against adjusters and insurance carriers.
As a result, many homeowners who signed the defendant’s “consultation and assistance agreement” believed they were only consenting to a free roof inspection and work estimate. Others believed HRI was independently acting on their behalf to facilitate roof repairs or replacement under the terms of their homeowner insurance policies.
However, contrary to the sales staff’s in-person statements, the HRI contract obligated homeowners to hire the defendant to actually repair their damaged roofs – or pay a penalty if homeowners did not select the company to perform the roofing repairs. In an apparent effort to coerce homeowners, HRI imposed a charge totaling 20 percent of the total roof replacement cost if homeowners retained another roofing contractor to perform the repair work.
An investigation by the Texas Attorney General’s Office revealed that HRI failed to properly inform homeowners about their three-day cancellation rights under the Texas Home Solicitation Act. This requirement applies when services are solicited in person at prospective customers’ residences.
In addition to its “consulting” services, HRI is a traditional contractor that also independently offers roof repair and replacement services. State investigators revealed that HRI’s sales personnel also failed to clearly communicate homeowners’ three-day right of cancellation under its roofing contract. Then, the contract imposed a so-called 15 percent “liquidated damages” payment against customers who canceled contracts outside the three-day window. The Attorney General’s Office alleged this forced payment under the contract was an invalid penalty, not “liquidated damages.”
According to investigators, homeowners who attempted to cancel their sales transactions received letters from the defendant demanding that the liquidated damages be paid. HRI warned homeowners that failure to pay the liquidated damages would result in a lawsuit. The state alleged that because the debts accrued under an invalid penalty provision, the defendant could not threaten litigation to collect on debts that accrued under such a provision.