Pelletier v. Johnson - 188 Ariz. 478, 937 P.2d 668 (Ct. App. 1996)

Rule:

Ariz. Rev. Stat. § 44-5004(B) provides in part that no agreement of the buyer in a home solicitation sale shall be effective unless it is dated, signed by the buyer and contains a conspicuous notice to the buyer containing language set forth in that subsection, including a provision that the buyer may cancel this agreement any time prior to midnight of the third business day after the date of this transaction. Similarly, Ariz. Rev. Stat. § 44-5004(C) provides in part that no agreement of the buyer in a home solicitation sale shall be effective unless a completed notice of cancellation form, the language of which is set forth in that subsection, is attached to the contract or receipt. An agreement of sale is not valid under Ariz. Rev. Stat. § 44-5004 unless it contains a conspicuous notice of various matters, including the buyer's right to cancel.

Facts:

Pursuant to a written contract, defendant spouses Douglas and Terri-Lynn Johnson agreed to purchase and plaintiff/appellee G&B Design Builders (G&B), an Arizona licensed contractor, agreed to install vinyl siding on the Johnsons’ home for $ 5,475. Although the contract provided that the Johnsons could cancel the transaction within three business days, they never attempted to do so. G&B installed the siding approximately one week after the contract was executed. When the Johnsons refused to pay, G&B sued them for breach of contract and later added claims for quantum meruit and unjust enrichment. After a bench trial, on appeal from arbitration, the trial court entered findings of fact and dismissed G&B's contract claim, concluding that the parties' transaction constituted a "home solicitation sale" within the meaning of § 44-5001(1) and that the parties' contract was "ineffective" because it lacked language required by § 44-5004(B). The court also ruled, however, that G&B was entitled to recover the reasonable value of the improvements (siding and installation).

Issue:

Is G&B entitled to equitable relief despite the violation of Arizona’s Home Solicitations and Referral Sales Act?

Answer:

Yes.

Conclusion:

The words of the Act do not specifically preclude equitable relief if a seller violates any provision of the Act, nor do the legislature's declarations of the Act's purpose support such a blanket prohibition. When the Arizona legislature originally passed the Act in 1970, it declared its purpose was "to regulate, not prohibit, home solicitations sales by, [inter alia], granting the buyer a statutory period during which time the contract may be canceled.” Similarly, in amending the Act in 1973 the legislature declared its purpose was "to make void any attempt to waive buyer cancellation rights in home solicitation sales." Those express legislative purposes underlying the Act would not be furthered or achieved by automatically depriving the seller of equitable recourse and relief for material and labor it has furnished to a buyer under the circumstances of this case. In this case, G&B's contract was dated, signed by and furnished to the Johnsons. In language almost identical to that required by § 44-5004(B), the contract provided immediately above the Johnsons’ signatures that they "may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction." It is undisputed that the Johnsons were aware of that provision and never sought to cancel the transaction. Although the contract did not fully comply with the requirements of § 44-5004, it fulfilled the basic legislative purpose of "granting the buyer a [three business day] period during which time the contract may be canceled." There was no evidence that the Johnsons would have acted differently had the contract fully complied with § 44-5004; nor was there evidence that the Johnsons were harmed by the noncomplying contract. As for the 1973 legislative declaration of the Act's purpose, there was no evidence or contention that G&B attempted to induce the Johnsons to waive their cancellation rights.