Interior Designers’ Unauthorized Markups May Be Grounds for Legal Action

For homeowners, it can be overwhelming to furnish and accessorize a home without the assistance of a professional interior designer. Trying to pick paint colors, wallpaper, flooring, lighting, and furniture without professional assistance is not for the faint of heart. Unfortunately, there are some unscrupulous interior designers out there who prey on well-to-do homeowners having the means of affording their services. Some interior designers will use deception to convince their clients that furnishings and other materials cost more than they really do, knowing that their customers are trusting them to design their home with their best interests in mind and that they will likely pay whatever invoice presented to them, no questions asked. On occasion, though, a homeowner will question the charges reflected on an interior designer’s invoice. Recent case law establishes that deceptive behavior like marking up the cost of goods can lead to liability for both breach of contract and violation of the Virginia Consumer Protection Act.

Consider the case filed against Robert Shields Interiors by Dr. Tanya M. Johnson. Johnson hired Robert Shields to provide professional interior design, space planning, and decorating services (including purchasing furniture) for her home in McLean, Virginia. Although the contract allowed Shields to charge Johnson 10% extra on shipping and handling charges, the contract did not allow for any other markups. Johnson alleged that Shields breached their agreement in many ways, including: (a) he charged her for some furniture that was never delivered; (b) he sent her some items in the wrong color; and (c) he charged her unauthorized and undisclosed markups on various items. Discovery revealed that Shields was secretly marking up most of the furniture sourced for Johnson by anywhere from 35 to 100 percent. He charged $4800 for a chaise lounge that only cost him $2481. He charged his customer $11,000 for a table that only cost him $5999.40.

Secret markups like these are probably a more common practice than people realize. Another recent example comes from a case filed against Middleburg designer Marlene Dennis. According to the plaintiffs, Greg and Jaime Marcus, they hired Dennis to help design their dream home and procure the items necessary to furnish it. They were very aware of the tendency of some designers to try to mark up prices, so they insisted on a contractual provision that required Dennis to share copies of third-party invoices with them. It was to no avail. Dennis convinced them that the project would go more smoothly if the Marcuses just gave her a big pile of money (roughly $250,000) to pay vendors on their behalf. The Marcuses claimed that Dennis used this agency structure to conceal the true cost of the items they were paying for.

As in the Johnson v. Shields case, the contract between the Marcuses and Marlene Dennis said nothing that would allow Dennis to mark up vendor expenses before charging them to the Marcuses. Nevertheless, according to the complaint, Dennis charged the Marcuses $4750 for a table that actually cost $2878.80. She charged them $18,000 for some artwork that she was able to acquire for just $14,000. “This pattern of behavior conclusively demonstrates that Dennis intended to deceive the Marcuses into believing that she was only charging them what the underlying items actually cost, while secretly overinflating the prices–by whatever arbitrary amount she thought she could get away with–and pocketing the difference,” they alleged.

In both of these cases, the court found that the alleged conduct was sufficient to state legal claims for both calculator-428294_960_720-300x198breach of contract as well as violation of the Virginia Consumer Protection Act.

If an interior designer’s contract is silent as to any ability to mark up a vendor’s charges, it’s implied that the designer cannot do this. The elements of a breach of contract action are (1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant’s violation or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach of obligation. An implied contractual term is that the designer will not rip the customer off by secretly inflating prices. When a designer breaches this duty and the customer pays for the unauthorized markups, all the elements of a breach-of-contract action are present.

Marlene Dennis tried to argue that because the contract was silent as to markups, she did not breach any contractual obligation. The court noted, however, that contracting parties are also held to an implied duty of “good faith and fair dealing.” Dennis’ alleged conduct violated this duty, the court held, reasoning that the behavior “far surpassed the arbitrary and creeped waywardly into the dishonest.”

This kind of surreptitious and dishonest behavior by an interior designer may also give rise to a claim under the Virginia Consumer Protection Act (“VCPA”). This is significant because in cases of willful violations, a plaintiff can recover triple damages as well as attorneys’ fees. (See Va. Code § 59.1-204).

The VCPA applies to dealings between suppliers and the consuming public. “Supplier” is defined as, among other things, a seller, lessor or licensor who advertises, solicits or engages in consumer transactions. (See Va. Code § 59.1-198). “Consumer transaction” is defined to include the advertisement, sale, lease, license or offering for sale, lease or license, of goods or services to be used primarily for personal, family or household purposes. Therefore, if an interior designer provides goods and services in connection with a consumer transaction such as the purchase of furniture and interior design services, the designer will likely be deemed subject to the requirements of the VCPA.

The VCPA expressly prohibits “using…deception, fraud, false pretense, false promise, or misrepresentation in connection with a consumer transaction.” (See Va. Code § 59.1-200(14)). On multiple occasions now, Virginia courts have found that an interior designer’s secret, unauthorized markups is a fraudulent and/or deceptive practice that violates the provisions of the VCPA.

 

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