Al and Deb Poller enjoyed driving their 1931 Chevrolet in vintage-car events, but it showed its age. It was time to restore it, so the New Jersey residents searched for a restoration shop. They settled on Okoboji Classic Cars LLC (OCC) in Iowa. In 2013, Mrs. Poller sent an email with photos of the car, which OCC noted looked like a “pretty nice car.” She pressed for an estimate, but OCC explained that they never give one because it is too hard to predict what is going to come up once you start the restoration process. They would do the work […]
Al and Deb Poller enjoyed driving their 1931 Chevrolet in vintage-car events, but it showed its age. It was time to restore it, so the New Jersey residents searched for a restoration shop. They settled on Okoboji Classic Cars LLC (OCC) in Iowa.
In 2013, Mrs. Poller sent an email with photos of the car, which OCC noted looked like a “pretty nice car.” She pressed for an estimate, but OCC explained that they never give one because it is too hard to predict what is going to come up once you start the restoration process. They would do the work only on a time and materials basis, with the time charged at $65 per hour. The Pollers insist they were told the restoration would cost “between $35,000 and $40,000, with an additional $5,000 to $10,000 cost depending on choices the Pollers made.” OCC denies that conversation took place.
The couple gave OCC a $10,000 down payment. They disassembled the Chevy and sent it to Iowa. Upon delivery, OCC noted that the car was “really nice” and started work on the car right away.
Over the next several months, the parties communicated many times in a typical fashion about the restoration and decisions that needed to be made. All communications were cordial and satisfactory to both parties, and the Pollers seemed to always select the higher-priced options.
Trouble at first bill
After seven months, the Pollers reminded OCC that it had promised monthly invoices. OCC sent six invoices, cumulatively showing that the $10,000 deposit had been exhausted and an additional almost $40,000 was owed. The Pollers requested an itemization. While that was being prepared, OCC sent a seventh invoice adding another $25,000 to the bill. The Pollers did not object to the bills and paid a further $15,000.
The restoration shop raised an issue over the shortage in payment and suggested it could stop work and put the Chevy in storage if the Pollers wanted them to. In response, the Pollers sent an additional $10,000, and a few weeks later another $10,000. That brought their total payments to $45,000.
Apparently, that was enough for OCC to complete the restoration. When the Chevy was done, OCC claimed the Pollers still needed to pay about $67,000 more. That brought the total restoration cost to $113,000.
The Pollers then, for the first time, objected to the bills because they exceeded the earlier estimate. OCC moved the Chevy to storage, asserted a lien for unpaid work and storage charges, and the parties headed to court.
OCC did eventually allow the Pollers’ appraiser to inspect the Chevy. The appraiser testified in court that the restoration work was excellent, and that the type of restoration performed would ordinarily cost about $100,000. However, even in its fully restored condition, the Chevy was worth only about $38,000.
Estimate requirement
The most important legal issue in the litigation was whether the Iowa Motor Vehicle Service Trade Practices Act applied to the restoration. All states have some similar statute or auto repair law. They differ in specifics, but generally require that collision repair shops provide estimates of the requested work and impose limitations on a shop’s ability to exceed the estimate.
The Pollers claimed that either no estimate was given at all, or the discussion about the $30k–$40k cost was an oral estimate that could not be exceeded without their consent. OCC claimed that Iowa’s auto repair law did not apply because a restoration is not a “repair.” But if it did, it fit into an exception that allowed an hourly rate to be used when the nature of the work was such that an estimate could not be given.
Litigation trail
After a two-day trial in 2018, the judge ruled that the auto repair law did not apply, and the Pollers owed the full amount. Unhappy with that result, the Pollers appealed. The Court of Appeals agreed with the trial court in a split decision. The Pollers then appealed to the Iowa Supreme Court, which issued the final decision in mid-2021, reversing the ruling of the lower court.
That was about eight years from the start of the restoration. Through all that time, the Chevy was held by OCC, depriving the Pollers of its use. The car was in storage for the last seven of those years, racking up storage charges and, as we can surmise, quietly deteriorating while it sat unattended and unused.
Restoration vs. repair
Unless you are a lawyer, it may be hard to believe that the law could be unclear about whether a restoration is different from a repair. From a policy standpoint, these laws are intended to protect consumers from unscrupulous repair shops that surprise them with higher repair bills than expected.
In a restoration, the car is disassembled into its individual components, with some repaired and others replaced, refurbished or remanufactured. Further, each restoration is different, with unknown problems to resolve, limited parts availability, and individual owner preferences, all of which can add considerable unanticipated expense.
That is essentially what was recognized in two Massachusetts court decisions that OCC brought to the court’s attention — restorations of classic cars “customarily require several months, if not years, to complete and routinely cost twenty to thirty thousand dollars.”
But the court was more persuaded by the cases that the Pollers cited from California, Maryland, Wisconsin, Washington and a federal bankruptcy court. The court thought that the precise wording of Iowa’s auto repair law covered restorations, and saw no reason to craft an exception where the legislature didn’t create one itself. Consequently, OCC violated the law by not complying with the estimate procedures. This is the key point of the case: In many states, there is no exception for restorations, and consumer-protection statutes can apply.
The Iowa Supreme Court addressed the unfairness of the decision to OCC. Even though the restoration shop acted responsibly at all times, and it may seem like it got hung on a technicality, compliance with the statute could have been fairly simple.
OCC could have asked for a written authorization from the Pollers to proceed with the work, which would have given OCC the right to require that charges would be based on an hourly rate. That, in turn, would have given the Pollers the opportunity to set a maximum price that could not be exceeded without further approval. If that approval was not given, OCC could stop and get paid for the work done to that point.
Who pays whom for what?
Although some states provide that a shop that violates the estimate rules is still able to recover the reasonable value of the work performed, the Iowa statute did not have such a provision. OCC argued that it should still be paid, and the Pollers argued that they should get a refund of the $45,000 they already paid. The court agreed with the Pollers that there should be some real consequence to a violation, and ruled that OCC was not entitled to collect anything more, including the unpaid storage charges. But since the Pollers did receive value for the money they had already paid, the court ruled that they were not entitled to any refund from OCC. The Iowa statute also allows for the recovery of attorney fees by a plaintiff who “is awarded actual damages.” But since the Pollers did not recover any money in the litigation, they were not entitled to reimbursement of their attorney fees.
That may have been the biggest economic issue in the case. We don’t know what the parties actually spent on this litigation, but it could easily have exceeded the amount at stake. Litigation that ends in a two-day trial with expert witnesses involved could easily cost $50,000 per party, or even $100,000 or more. Since this was the first time an Iowa appellate court had addressed this question, extensive research into other states’ laws and court cases would have been necessary, and legal fees for the first appeal of $50,000 for each party would seem to be at the low end. Then add another $25k–$35k per party for the Supreme Court appeal.
Let’s recall that the dispute began over $67,000. Obviously, both parties would have been better off if they had just split that difference, with the Pollers paying an additional $33,500 to settle the dispute. But emotions can run high, and parties to a dispute don’t assume the case is going to go all the way to the state Supreme Court. They can get to where they’ve put so much into the litigation, they can’t just stop.
This case presents a rule that is not common knowledge. If you own a restoration company, you should ask your attorney if you comply with your state’s law. If you are an unhappy customer of a restoration shop, you should ask your attorney if the analysis in this case might give you some leverage in your dispute. ♦