SINTON (Legal Newsline) - Texas Attorney General Greg Abbott announced on Friday that a Rosenberg-based roofing contractor has agreed to reimburse all homeowners who improperly paid the company's "liquidated damages" contracts.
Abbott's office charged Holden Roofing Inc. in June with subjecting homeowners to unlawful penalties if they did not hire the defendant to do the work. HRI allegedly used unlawful coercion of homeowners into using their services for roof repairs after severe weather events.
Under the terms of the 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 Brett Holden, its president, were named as defendants in the state's enforcement action. HRI's principal office is located on Rosenberg near Houston, but it also has branch offices in Corpus Christi, Tyler, Dallas, Brownsville, San Antonio and Austin.
HRI's sales representatives allegedly targeted communities that experienced severe weather events such as hail storms or hurricanes. The defendant's sales representatives allegedly visited individual homeowners - including senior citizens - and marketed themselves as roof repair consultants.
The defendant's sales personnel allegedly approached homeowners under the auspices of offering consulting experience for customers seeking help with claims with adjusters and insurance carriers. Many homeowners who signed the defendant's consultation and assistance agreement believed that they were only consenting to a free roof inspection and roof estimate, while others believed that HRI was independently acting on their behalf to facilitate roof repairs or replacementd under the terms of their homeowner insurance policies.
The HRI contract, however, 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, imposing a charge totaling 20 percent of the total roof replacement cost.
Abbott's office alleged that HRI failed to properly inform homeowners about their three-day cancellation rights under the Texas Home Solicitation Act. This is a requirement when services are solicited in person at prospective customers' residences.
Abbott's office alleged that HRI's sales personnel also failed to clearly communicate homeowners' three day right of cancellation under its roofing contract and an invalid penalty for liquidated damages against customers who cancelled outside the three day window. Homeowners who attempted to cancel their sales transactions allegedly received letters from the defendant demanding that the liquidated damages be paid and 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.