Nineteen years after the Michigan Supreme Court ruled in Liss v Lewiston-Richards, Inc., 478 Mich 203; 732 NW2d 514 (2007), that residential builders were exempt from the Michigan Consumer Protection Act under MCL 445.904(1)(a) because the general transaction of residential home building was "specifically authorized," a decision we reported on here, the same Supreme Court reversed course and overruled the Liss decision and and a related case, Smith v Globe Life Ins Co, 460 Mich 446; 597 NW2d 28 (1999).
On July 31, 2026, the Michigan Supreme Court decided Attorney General v Eli Lilly and Company, Docket No. 165961. The case was about insulin pricing. But its most immediate practical consequence may be residential construction.
The defense that just disappeared
The Michigan Consumer Protection Act, MCL 445.901 et seq., makes unlawful “[u]nfair, unconscionable, or deceptive methods, acts, or practices in the conduct of trade or commerce.” MCL 445.903(1). It also contains an exemption for “[a] transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state or the United States.” MCL 445.904(1)(a).
In Liss, the homeowners sued their builder, alleging the work was finished late and was not performed in a workmanlike manner. The Supreme Court held the exemption applied — because the builder was licensed, and building homes is what licensed residential builders are permitted to do. The exemption, the Liss Court said, “applies to residential home builders who engage in the type of activities that define a residential home builder.”
The practical effect over the next nineteen years was straightforward. A builder facing a Consumer Protection Act count could plead the license, move for summary disposition under MCR 2.116(C)(8), and have the count dismissed — without any court ever examining what the builder had actually done.
What replaced it
The Court held that Smith and Liss misread the MCPA statute in two ways. They inserted the word “general” into a provision that does not contain it, turning “[a] transaction” into “general transaction.” And they read the phrase “specifically authorized” out of the statute altogether, so that the existence of a license did all the work.
The new test has two steps. First, identify the specific transaction or conduct the plaintiff alleges violated the act. Second, determine whether that transaction or conduct is specifically authorized under laws administered by a regulatory board or officer.
Applied to construction, the difference is stark. Michigan's Occupational Code licenses residential builders. It does not specifically authorize finishing six months late, installing a defective roof assembly, or telling an owner that a change order was required by code when it was not. Under the new standard, the exemption does not reach that conduct.
As the Court put it, describing the body of decisions it was overturning:
“These cases do not consider whether the conduct or transaction alleged is related to the licensure or regulation; the mere existence of the licensure or regulation is sufficient to immunize the defendant. Neither the text nor the purpose of the MCPA supports such a result.”Residential builders were not the only beneficiaries of the old rule, and the opinion says so. It collects decisions that had immunized car dealers, automobile manufacturers, mortgage lenders and servicers, real estate agents, plumbers, physicians, grocery stores, casinos, and pesticide application services — and cites them as evidence of how far the error had spread. Those exemption holdings should no longer be treated as reliable.
Four points that matter for builders
1. Early dismissal is gone. An MCPA count attached to a defect or delay complaint will now survive the motion for summary disposition that used to end it, unless the builder can identify a specific regulatory authorization for the specific act complained of. For defective work and misstatements, that authorization will rarely exist.
2. The residential–commercial line now carries the weight the exemption used to. The Act reaches goods and services provided “primarily for personal, family, or household purposes.” MCL 445.902(1)(g). Commercial, industrial, and most institutional work falls outside the statute on that basis, and this decision does not change that. The impact is concentrated on the residential side of a construction practice. Projects near the line — spec homes, rental and investment properties, purchases made through an entity, mixed-use — will now be contested in cases where the characterization never mattered before.
3. Contract language is exposed in a way it was not. MCL 445.903(1)(t) makes it unlawful to enter a consumer transaction in which the consumer waives a right, benefit, or immunity provided by law “unless the waiver is clearly stated and the consumer has specifically consented to it.” Warranty disclaimers, limitations of remedy, and damages-limitation clauses in residential agreements were effectively insulated from that provision while Liss stood. They are not now.
4. Sales and marketing conduct counts, even without a sale. The Court drew a deliberate distinction between “transaction” and “conduct,” explaining that “conduct” reaches activity before or after a transaction — or where no transaction ever occurs. Advertising, model-home representations, allowance and upgrade pricing, and stated reasons for price changes are all within reach.
What the Eli Lilly decision does not resolve
5. Retroactivity. The Supreme Court's opinion is silent on whether the new construction applies to conduct predating July 31, 2026, to pending cases, or to matters dismissed on the exemption that remain within an appeal period. This will be litigated, and it is the single most consequential open question for builders with active disputes.
6. The merits. An exemption ruling is not a merits ruling. The Court did not hold that Eli Lilly violated the Consumer Protection Act; it held only that the exemption did not bar the Attorney General's investigation, and returned the case to the Ingham Circuit Court. A defendant still has every element-based defense the statute affords.
7. The limits of the new test. The Court reaffirmed Attorney General v Diamond Mtg Co, 414 Mich 603; 327 NW2d 805 (1982), including its caveat that a plaintiff cannot evade the exemption by attaching labels like “misrepresentation” to conduct that a regulator specifically sanctioned. How far that caveat extends — whether, for example, a regulation prescribing the content of a required disclosure specifically authorizes the use of that disclosure — is not answered by this opinion. Lower courts will have to work it out.
Where this leaves residential builders
The prospective items are the ones worth paying attention to first, because they are inexpensive relative to defending a single claim and they do not depend on how the retroactivity question resolves: (i) reviewing residential contract forms against MCL 445.903(1)(t); (ii)reviewing sales, advertising, and change-order practices for statements that could be characterized as deceptive; and (iii) confirming with a carrier whether a general liability policy will respond to a statutory consumer-protection count, which is a policy-specific question and should not be assumed from the fact that the carrier is defending an accompanying defect claim.
Builders and developers with residential disputes currently pending, or recently resolved on the exemption, have a more time-sensitive question, and it is worth raising with counsel promptly.
For more information about the Eli Lilly decision and how it might impact your residential building business, contact Peter Cavanaugh or Gary Quesada at (248) 543-8320. Or visit our website - www.MichiganConstructionLaw.com
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