On June 27, 2013, the Ohio Court of Appeals decided the matter of Patrick Garber v. STS Concrete Co., LLC. The appellants claim the trial court erred in awarding the Appellee treble damages and attorney fees when he was also allowed to rescind the contract. They also claimed that holding Mr. Suglio individually liable was an error.
In the original case, the trial court awarded damages to Patrick Garber in the amount of $18,600 (three times the amount of the damages of $6,200) as well as granted a partial summary judgment for violations of the Ohio Home Solicitation Sales Act (“HSSA”) and the Ohio Consumer Sales Practices Act (“CSPA”) holding Frank Suglio, owner of STS Concrete, individually liable for those violations.
Under the HSSA, a home solicitation sale must include a written agreement that indicates the buyer’s right to cancel the contract until midnight of the third business day after the contract is signed. The HSSA was designed to offset the high-pressure sales tactics sometimes applied during in-house solicitations. It allows for a cooling-off period for the consumer to re-evaluate their decision to enter into the transaction. If, however, that provision is not present in the contract, the buyer’s right to cancel does not expire. The appellate court found that HSSA applied and because the contract failed to contain the required language, even after a ten month period, Garber’s notification rescinding the contract was valid.
With regard to damages, the Court of Appeals found that the trial court erred in awarding the treble damages to the Appellee. The HSSA, pursuant to division (A)(3) of section 1345.05 of the Revised Code, the buyer may rescind the transaction or recover damages, but not both. Clearly, Garber’s notice of cancellation that was received by the Appellants on May 6, 2009, qualifies as a rescission of the contract. Therefore, Garber was allowed to rescind, but could not also receive damages. With regard to attorney fees, the court found that since Garber canceled the contract pursuant to R.C. 1345.23, attorney fees are not available under RC 1345.09. He could only receive one or the other.
The Court of Appeals affirmed the lower court’s ruling that Suglio should be held individually liable for violations of the HSSA and CSPA. Typically, employees are not held accountable for the debts or responsibilities of their companies. However, the CSPA allows that where officers or shareholders of a company participate in or direct others in actions that constitute a violation of the CSPA, that person may be held individually liable.
The court held that Suglio was correctly notified of the statutory provisions he was accused of by the cancellation letter which cited relevant sections of the Ohio Revised Code. The letter provided specific references to the HSSA which put Suglio on notice that he should investigate its applicability. This along with providing a contract without a cancellation notice are violations of the HSSA and therefore subject Suglio to individual liability.
In conclusion, the Court of Appeals found that granting of summary judgment was appropriate, and that since Garber cancelled the contract, he is entitled to only $6,200 as opposed to the $18,600 originally awarded by the lower court.
The Full Text of the Opinion May Be Found At:
Many thanks to Kim Goldwasser for her contributions to this article. Kim is a paralegal with Slovin & Associates Co., L.P.A.