If you as a consumer get defrauded or harmed in dealing with a business, you have some peace of mind in knowing that you are safeguarded by a number of consumer protection laws. You also have allies in various state agencies that can help fight for your rights.
But if you as a small-business person get defrauded or harmed by another business, you have to fend for yourself. State consumer laws don't cover business-to-business transactions.
This hard truth whacked Diane Geslois after she tried to open an indoor flea market in a building that once housed Seidel's Bowling Center in Baltimore's Gardenville community.
When the general contractor Geslois hired closed down his business without finishing the renovation, Geslois said she lost $12,263.66.
"I then filed complaints with every office available to me," said Geslois, 46, an Anne Arundel County resident who works in sales. "What I discovered is that you will be held accountable if you do this to a homeowner. If you're a business owner, though, you're on your own."
Simply put, it's imperative for anyone with an entrepreneurial spirit to double-, triple- and quadruple-check every move and decision you make. Starting a business and signing contracts without doing proper research or hiring a skilled attorney to guide you is like walking alone into heavy traffic blindfolded.
Geslois did just that when she began looking in January for a contractor to convert the former bowling alley.
Based on advice from a friend, Geslois said she hired Brian C. Vaeth's Pelham Construction Associates. In a contract dated Jan. 10, Vaeth agreed to demolish and remove debris from the site, replace and patch damaged acoustical ceiling tiles, build a partition wall, paint and ensure the building was inspected and up to code.
Geslois signed on the dotted line to pay Pelham three installments of $3,911.33.
The contract contained no set dates for completion.
To use a line we hear all too often here, the job quickly went downhill from there and devolved into a bitter he said/she said row with dueling lawsuits.
Geslois' claims: Vaeth misled her. He told her he had a Maryland Home Improvement Commission license. He implied that he was a lawyer. He said he would handle all necessary permits and inspections. He took more than $12,000 of her money. He abruptly closed his business without finishing the work.
Vaeth's claims: Geslois breached the contract. She hired him to renovate a building and forced his employees to work in unheated conditions in the middle of winter. She wrote bad checks. He had no funds to keep working.
Without witnessing any of these dealings personally, we can only go by the documentation each provided to conclude that both were seriously at fault.
Geslois failed to get bids from other companies, relying on Vaeth to obtain bids for her. She did no research on Vaeth's background. Had she done so, she would have found that he had no MHIC license or current state commercial contractor's license, which is what he needed to do her job.
She also would have discovered court records showing that the former city firefighter pleaded guilty in 2005 to acting as a contractor without a license and, in a 2004 case, was placed on probation and ordered to pay a fine and restitution for operating without a license.
Geslois relied only on Vaeth to guide her through all financial, legal and construction aspects of the project.
Vaeth, for his part, was misleading about his credentials, referring to himself as lead counsel, senior consultant or president in separate documents that both parties provided me. While the last two titles aren't problematic, "lead counsel" often refers to attorneys. His contractor's license expired in 2007. Instead of opening a business account, he said he was cashing Geslois' checks. The receipts he showed me to account for the money Geslois paid him added up to only $780.13.
"I never told her I had an MHIC license," Vaeth said. "I have been charged twice for operating without a license. I am guilty of two violations. I've learned my lesson. I don't want any part of that. This wasn't even a home improvement job. I completed about 90 percent of the work, so I'm just flabbergasted that she said I ran off with her money."
Vaeth said he didn't realize that "lead counsel" usually means attorney. He said he's never told anyone he's an attorney - although, in e-mail to Geslois, he implied that he could help her with hurdles ranging from starting a corporation to tax law, licensing and permits.
"I want to work this out with her, but she keeps filing cases against me in court," he said.
Geslois says the situation has deteriorated too much to work things out between them.
Were she just a consumer, Geslois might have found remedy through the attorney general's Consumer Protection Division or the state Department of Labor, Licensing and Regulation's (DLLR) Home Improvement Commission. As a business owner, Geslois had no legroom to make such egregious mistakes.
"Our jurisdiction is uniquely situated to protect homeowners," said Steven Smitson, executive director of the Home Improvement Commission. "The risk for a business is less than a risk for a homeowner. It is expected that businesses don't face the same vulnerabilities because they have access to counsel and legal resources."
That may be true if you're a large business with a matching bankroll. But what of the entrepreneur who has sunk his or her life savings into a venture?
Your only recourse is a private lawsuit, unless you can convince the authorities that criminal acts have taken place. For such would-be entrepreneurs, there is no legal advocate to turn to and there is no clear or easy way to seek help from the government, said Ellen Valentino, state director of the National Federation of Independent Business.
That's why it's all on you to research all the steps it takes to start a business and consult an expert when you're unsure.
Whether you're a consumer or business owner, it's also vital to verify the background of all potential business partners. Check online and with the Better Business Bureau, the attorney general's office and DLLR for complaints. Search for criminal and civil cases. In Maryland, the public has access to case records online at http:--casesearch.courts.state.md.us/inq uiry/processDisclaimer.jis
Failure to do so could cost you time, money and peace of mind. In Geslois' case, she's out $12,000-plus, she still can't open her flea market and she's preparing herself for a May court date.
Confessing her naivete from start to finish, Geslois said, "I know I am the poster child for what not to do."
Reach Consuming Interests by e-mail at consuminginterests@baltsun .com or by phone at 410-332-6151. Find an archive of Consuming Interest columns at baltimoresun.com/consuming