After Tesla increased the price of a Solar Roof project by more than $30,000, homeowners explain why they have filed a lawsuit alleging breach of contract
Tesla boss Elon Musk presented the Powerwall in 2015. Ringo HW Chiu / AP Photo
A lawsuit in Pennsylvania said Tesla breached its contract after increasing the price of a solar roof.
The lawsuit filed by Philip Dahlin and Mary Arndtsen said they would seek class action status at the federal level.
The surge “was a significant disappointment,” Dahlin told Insider.
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More than half a year after Philip Dahlin and Mary Arndtsen signed a contract with Tesla to install a solar roof on their home in New Hope, Pennsylvania, the couple received a message from the company.
Tesla said its price would now be $ 78,352.66, up from the agreed price of $ 46,084.80.
“Our budget was based on the contract we had, so we hadn’t prepared for it,” Dahlin told Insider this week by phone.
Dahlin and Arndsten filed a lawsuit against Tesla in the U.S. District Court for the Eastern District of Pennsylvania in late April. The lawsuit said the tech giant had breached its contract. It also said the company violated consumer protection laws related to home improvement and trading practices.
The lawsuit was filed amid a growing number of customers talking about Tesla unilaterally increasing their prices – some by as much as 70% – after signing contracts for solar roofs and energy storage batteries called Powerwalls.
An article in the Uniform Commercial Code allows buyers and sellers to amend agreements after they are signed, said DA Jeremy Telman, contract professor at Oklahoma City University School of Law, after examining the Pennsylvania complaint and an easily edited Tesla contract.
“However, both parties have to agree to the changes. That does not seem to have been the case here,” said Telman.
Tesla was issued a subpoena on May 3, according to the Pennsylvania court. The company hadn’t submitted a response by Saturday afternoon. An email from Insider was not returned.
Addressing customer concerns during the company’s first quarter conference call in late April, Elon Musk, CEO said, “We discovered that we generally made some significant mistakes in assessing the difficulty of certain roofs.”
The story goes on
The lawsuit seeks class action status
A Tesla representative explains Powerwall technology. Jason Reed / Reuters
The Pennsylvania couple’s complaint said they would apply for class action status.
Her attorney, Peter Muhic of LeVan Muhic Stapleton, said he had heard of “numerous” homeowners in similar situations to Dahlin and Arndtsen. He did not want to give a specific number.
“They are promoting a very unique product that they claim is much better than other competing products,” Muhic told Insider on Thursday. “And we believe that they have to keep their contracts and fulfill their promises and agreements.”
Muhic would have to file a motion to formally confirm the case as a class action lawsuit. The complaint states that there are more than 100 potential class members who have signed contracts totaling more than $ 5 million.
A copy of a Tesla Solar Roof contact that was filed with the lawsuit contained an arbitration agreement between the parties. That clause could be a barrier to class action lawsuit status, said Gregory Klass, assistant dean and professor at Georgetown University Law Center.
“Tesla’s arbitration clause almost certainly prevents this class action suit under current Supreme Court precedent,” he said Friday, citing a 2011 case, AT&T v Concepcion.
In the lawsuit, Muhic wrote that Pennsylvania law would remove the arbitration clause as invalid, in part because of the way it was formatted on the page. He wrote that the clause also “does not contain a separate line for each party to signal approval”.
Connecticut homeowners say Tesla raised the price too
A solar roof and Tesla Powerwall. Nichola Groom / Reuters
In Weston, Connecticut, Jay and Robin Fortin signed a contract in January to install a solar roof on their 1955 colonial home. They agreed in their contract for about $ 62,000, Jay Fortin told Fortin on Friday Insider. His wife signed the contract.
When a technician came to study their home, the price went up about $ 6,600 because Tesla had to change the type of wood under their clapboards, he said. Then, in April, the couple received a message from Tesla telling them that the price had jumped to about $ 91,000.
“I will not pay the new price,” said Fortin on Friday. “We can’t do that. The whole thing made sense to us because we needed a new roof anyway and we wanted backup power.”
He later added, “I wish we hadn’t gotten into the whole thing, tell you the truth.”
Fortin said he reached out to Muhic after learning of the complaint. Fortin has not taken legal action but said it would consider joining a class action lawsuit.
In Pennsylvania, according to a copy filed with the court, Dahlin signed the contract with Tesla on September 17, 2020 for a total price of $ 46,919.20. The couple paid a $ 100 security deposit. After subtracting the security deposit and an energy discount, once installed, according to the contract, you would owe $ 46,084.80.
In order to finance the project, the couple refinanced their house, in which they have lived since 2006. According to the contract, the roof should be installed within 180 days.
“We were pretty excited about the prospects,” said Dahlin, who works in sustainability. “Plus, we only generate our own energy to charge the Tesla that we already had, the car.”
For the next 180 days, the couple heard little from Tesla.
On March 24th, the couple received an email from Tesla saying, “We have raised the price of the solar roof and made adjustments to suit the individual roof complexity.”
On April 23, they learned that the price had increased to $ 78,352.66 according to their complaint.
Dahlin said, “And when we got the email, of course, it was a big disappointment.”
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