FARGO - The North Dakota Attorney General's Office is suing a former Fargo home remodeling contractor in Cass County District Court on behalf of nine customers who were left with unfinished projects after making advance payments ranging from about $6,000 to $80,000, according to court documents.
The lawsuit, filed on Friday, March 16, against Studs to Rugs and owner Tim Rosene, claims 43 violations of consumer protection laws, with monetary damages totalling nearly $300,000.
Rosene abruptly closed Studs to Rugs last fall. The business was experiencing financial difficulties as early as 2015, according to court documents.
The documents say Rosene tried to keep the business going by withdrawing money from his retirement account and fell behind in payments to suppliers. He also unsuccessfully sought funds through investors and loans.
Rosene also went against professional advice to buy the Studs to Rugs location at 5289 51st Ave. S., Suite A, in Fargo, a purchase that exacerbated the financial troubles of the business.
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Court documents say Rosene and Studs to Rugs owe "significant amounts" to suppliers and contractors and didn't pay the last half of employee payroll.
In addition to paying back the amounts owed to homeowners, sanctions Rosene and Studs to Rugs may face include possible civil penalties of up to $5,000 for each of the 43 violations alleged in the lawsuit, plus the expenses and attorneys' fees of the attorney general's office.
In one instance, according to the state's lawsuit, a Fargo couple contracted with Studs to Rugs and Rosene to build an $105,000 addition to their home.
After the couple made advance payments totaling $80,000, work on the addition was not completed and money from the advance payments was used for other contract obligations or to defraud the couple, according to the suit.
The suit alleges a similar pattern occurred with other consumers, including a couple that paid Studs to Rugs and Rosene a total of $74,317 toward a basement project that was anticipated to cost $92,534.
That couple is seeking a refund of $70,000. Rosene, on behalf of Studs to Rugs, acknowledged that the couple is owed $54,000, court documents say.
The attorney general's office advises consumers to take steps to minimize the chance of running into trouble when hiring someone to do home renovation, they include:
• Checking with the North Dakota secretary of state's office to make sure the contractor is licensed. The fact someone is licensed does not guarantee they will operate in a lawful manner, though the absence of a license should be a big red flag.
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• Asking the contractor for the names and phone numbers of recent clients to use them as references.
• Checking with the attorney general's office to see if any complaints have been lodged against the contractor.
Other steps that can help to avoid problems include limiting the amount of advance payments by tying payments to progress and not paying more than 50 percent of a project's costs up front.
The attorney general's office said another good idea is to include anticipated start dates and completion dates in the wording of contracts, which will help authorities determine whether a job has been abandoned.
Attempts to reach Rosene for comment Monday, March 19, were not successful.
