Idaho couple paid $305,000 to build their dream home. Construction company allegedly left it unfinished with leaks and mould; Supreme Court revives lawsuit

The Idaho Supreme Court has revived a couple’s breach-of-contract lawsuit against a construction company after ruling that homeowners can still take legal action against an unregistered contractor, even when the contract violates state registration laws. The ruling came in a dispute involving John and Cheryl Kumm, who hired The Work Shop & Sons Ltd to build a wooden-frame house on their property in Elk River, Idaho, in July 2021.

As per the court document shared by The Justia, the couple alleged that the construction work was defective and incomplete, citing problems including water leaking beneath the foundation, mould in the subfloor, improper grading and the house being left exposed to the elements over winter.

Between August 2021 and January 2022, the homeowners paid the company $305,033.57 through several invoices. They later alleged that some of the invoices were fraudulent because the company had not started the work listed in them. The company, however, maintained that the payments were advances permitted under their agreement. The homeowners also obtained an independent estimate in April 2024, which put the cost of repairs and completing the house at $331,034.30.

Claims and Counterclaims

The legal battle involved claims and counterclaims from both sides. John and Cheryl Kumm sued The Work Shop & Sons Ltd and its owners, Kyle and Jessica Cromer, alleging breach of contract, breach of implied warranty and fraudulent, wrongful and malicious billing. The couple claimed that the construction work was defective and incomplete despite payments of more than $305,000. They also alleged that the company's invoices included work that had not yet been started. The company denied the allegations, maintaining that the payments were advance payments allowed under the agreement.

The construction company, in turn, filed counterclaims against the homeowners, alleging that they had prevented it from completing the project and terminated the agreement without justification. It also accused the couple of breaching the contractual obligation to act in good faith and fair dealing. The company maintained that it had been willing to complete the construction but was unable to return to the property after disagreements over inspections and repair work.

Why was the construction company not allowed to enforce the contract?

The legal dispute also centred on the company's contractor registration. The Work Shop's registration had expired on April 11, 2021, around 100 days before it signed the agreement with the couple. The company said the lapse happened because it mistakenly failed to pay its annual administrative fee. Its registration was reinstated on October 22, 2021, around three months after the agreement was signed.

Under Idaho's Contractor Registration Act, an unregistered contractor cannot file a lawsuit to recover payment for work covered by the registration requirement.

The construction company acknowledged that it was not registered when it entered into the agreement. It argued that it had substantially complied with the law because it continued to maintain other requirements, including liability and workers' compensation insurance.

The homeowners, meanwhile, argued that the company should not be allowed to enforce the agreement because it was unregistered when the contract was signed.

Why did the homeowners' lawsuit get dismissed?

The dispute reached the district court after the couple sued the company and its owners, alleging breach of contract, construction-related warranty violations and fraudulent billing. The company filed counterclaims, arguing that the homeowners had prevented it from completing the construction and terminated the agreement without justification.

The district court ruled that the agreement was void because the company was not registered when it was signed. It consequently dismissed the construction company's counterclaims.

However, the court later used the same reasoning to dismiss the homeowners' breach-of-contract lawsuit, ruling that they could not enforce an agreement that was legally void.

The homeowners challenged that decision before the Idaho Supreme Court.

What did the Idaho Supreme Court say?

In its November 12 ruling, the state's highest court drew a distinction between an unregistered contractor and the homeowner who hires it.

The court said Idaho law specifically prevents an unregistered contractor from filing a lawsuit to recover compensation under such an agreement. It does not impose the same restriction on homeowners.

The justices ruled that contracts signed with unregistered contractors are not automatically void for both parties. Instead, they are voidable at the homeowner's option.

In simple terms, this means the contractor cannot use the agreement to demand payment through a lawsuit, but the homeowner can still choose to enforce the agreement and seek legal remedies.

The court said interpreting the law otherwise could leave homeowners who are harmed by unregistered contractors without a contractual remedy, undermining the legislation's purpose of protecting the public.

The Supreme Court therefore reversed the district court's dismissal of the couple's breach-of-contract claim and sent the case back for further proceedings.

However, the justices did not rule that the construction company was responsible for the alleged defects or fraudulent billing. Those issues remain to be addressed in further proceedings.

The court also declined to consider the couple's implied warranty claim and their effort to hold the company's owners personally liable, finding that they had not adequately argued those issues on appeal.

The ruling was delivered by the Idaho Supreme Court on November 12, 2026.