Residential Builders Exempt from Michigan Consumer Protection Act, Michigan Supreme Court Rules

A residential home builder is exempt from the Michigan Consumer Protection Act under MCL 445.904(1)(a) because the general transaction of residential home building, including contracting to perform such a transaction, is "specifically authorized" by the Michigan Occupational Code, MCL 339.101 et seq. This was the recent ruling of the Michigan Supreme Court in Liss v Lewiston-Richards, Inc, 478 Mich 203; 732 NW2d 514 (Mich Sup Ct, June 6, 2007).

In reaching its decision, the Supreme Court overruled two earlier decisions of the Michigan Court of Appeals -- Forton v Laszar, 239 Mich App 711, 609 NW2d 850 (2000), and Hartman & Eichhorn Bldg Co, Inc v Dailey, 266 Mich App 545, 701 NW2d 749 (2005) -- which had permitted homeowners to sue home builders under the Michigan Consumer Protection Act.

The full text of Liss v Lewiston-Richards, Inc can be found here.

Comment: The Michigan Consumer Protection Act was used to pursue claims against residential builders because it provided a statutory basis to recovery attorney fees. As a practical matter, the Liss decision will make it more difficult for homeowners to pursue claims against their builders. At common law, under the "American Rule," every party pays their own attorney fees. Unless the parties agree by contract that the prevailing party can recover their attorney fees (rare in contracts for residential construction), the only other way to recover attorney fees is by statute.

For More Information

Since the facts of each case are unique, this update cannot be taken as legal advice. For more information about the Liss decision or how it might affect you or your business, please contact Peter Cavanaugh.