The Complaint and the Missing File
A homeowner filed a complaint with the North Dakota Secretary of State against Cedar Ridge Renovations. The complaint alleged that the contractor took a $7,500 deposit, demolished a kitchen, and then stopped work for three weeks. It also alleged there was no written contract and no building permit. The Secretary of State sent Cedar Ridge a written request for a response and copies of the contract, change orders, license, and proof of insurance within 15 days. The owner did not respond until day 25, then called the homeowner and said, "If you don't withdraw the complaint, I'll sue you for defamation." The owner says his records are in a locked truck and he cannot find the contract. The homeowner's photos show exposed wiring and no permit posted.
1. What are Cedar Ridge's obligations in responding to the Secretary of State's complaint inquiry?
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Cedar Ridge must respond promptly, completely, and truthfully. The Secretary of State's request is part of the regulatory complaint process, and a licensee is expected to cooperate with the investigation. Ignoring the 15-day deadline and responding on day 25 is itself a compliance problem that can support discipline separate from the homeowner's allegations. Cedar Ridge should provide the contract, change orders, license information, insurance certificate, permit records, and a factual response to each allegation. If records are missing, the contractor should say so in writing and explain what efforts were made to locate them rather than simply failing to answer. Missing records can be treated as an aggravating factor because contractors are expected to maintain project documentation.
2. What risks arise from the owner's direct call to the homeowner and the threat to sue for defamation?
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The call creates a serious risk of being viewed as intimidation or retaliation against a complainant. A contractor should not contact a complainant directly to pressure withdrawal of a regulatory complaint. The threat of a defamation lawsuit can be seen as an attempt to chill the homeowner's participation in the complaint process, which may lead to an additional allegation or disciplinary finding. The proper channel is to respond to the Secretary of State in writing and, if needed, communicate through counsel. Cedar Ridge should document the call, avoid further contact, and preserve all records relating to the project and the complaint.
3. What records should Cedar Ridge have kept, and how does the missing contract affect its defense?
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Cedar Ridge should have kept the signed contract, change orders, deposit receipts, invoices, payment records, permit applications and inspections, insurance certificates, subcontractor information, and daily job logs. These records should be retained at least through the applicable statute of limitations and during any complaint or litigation. The missing contract weakens the contractor's defense because it cannot show the agreed scope, price, or payment schedule. The absence of a written contract also supports the homeowner's allegation of a documentation violation. The contractor should reconstruct the file from bank records, texts, emails, and supplier invoices, but it should not create or backdate documents. A candid explanation plus reconstructed records is better than an unsupported denial.