After Tesla increased the price of a Solar Roof project by more than $30,000, the customers explain why they have filed a lawsuit alleging breach of contract

• A Pennsylvania lawsuit said Tesla was in breach of its contract after raising a Solar Roof price.
• The suit, filed by Philip Dahlin and Mary Arndtsen, said it would seek federal class-action status.
• The increase "was a significant disappointment," Dahlin told Insider.
• See more stories on Insider's business page.

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 their price would now be $78,352.66, up from the $46,084.80 price they'd agreed upon.

"Our budget was based on the contract that we had, so it was not something that we had prepared for," Dahlin told Insider this week via phone.

Dahlin and Arndsten in late April filed a lawsuit against Tesla in US District Court for the Eastern District of Pennsylvania. The suit said the tech giant was in breach of its contract. It also said the company violated consumer protection acts covering home improvement and trade practices.

The lawsuit was filed amid a growing chorus of customers speaking up about Tesla unilaterally increasing their prices - some by as much as 70% - after they'd signed contracts for Solar Roofs and energy-storage batteries called Powerwalls.

An article in the Uniform Commercial Code allows buyers and sellers to modify agreements after they're signed, said D. A. Jeremy Telman, a contracts professor at Oklahoma City University School of Law, after reviewing the Pennsylvania complaint and a lightly redacted Tesla contract.

"However, both parties must consent to the changes. That seems here not to have been the case," Telman said.

Tesla was issued a summons on May 3, according to the Pennsylvania court. The company had not filed a response as of Saturday afternoon. An email from Insider wasn't returned.

Elon Musk, chief executive, addressed customer concerns during the company's Q1 earnings call in late April, saying, "We did find that we basically made some significant mistakes in assessment of difficulty of certain roofs."

The lawsuit seeks class-action status

The Pennsylvania couple's complaint said it would seek class-action status.

Their attorney, Peter Muhic, of LeVan Muhic Stapleton, said he'd heard from "numerous" homeowners in situations similar to Dahlin and Arndtsen. He declined to give a specific number.

"They advertise a very unique product that they claim is much better than other competing products," Muhic told Insider on Thursday. "And we believe that they need to honor their contracts, and they have to perform as they had promised and agreed."

Muhic would have to file a motion to have the case formally certified as a class action. The complaint said there are more than 100 potential class members who had signed contracts totalling more than $5 million.

A copy of a Tesla Solar Roof contact filed alongside the complaint included an arbitration agreement between the parties. That clause could be a roadblock for the case to gain class-action status, said Gregory Klass, associate dean and professor at Georgetown University Law Center.

"Tesla's arbitration clause almost certainly forestalls this class action under current Supreme Court precedent," he said on Friday, citing a 2011 case, AT&T v. Concepcion.

In the legal complaint, Muhic wrote that the arbitration clause would be struck down as invalid under Pennsylvania law, in part because of the way it had been formatted on the page. He wrote that the clause also "does not contain a separate line for each party to indicate assent."

Connecticut homeowners say Tesla also raised their price

In Weston, Connecticut, Jay and Robin Fortin signed a contract in January to install a Solar Roof on their 1955 colonial home. They agreed on a price of about $62,000 in their contract, Jay Fortin told Insider on Friday. His wife signed the contract.

When a tech came to study their home, the price jumped up about $6,600, because Tesla would have to change the type of wood beneath their shingles, he said. Then, in April, the couple received a message from Tesla, letting them know the price had gone up to about $91,000.

"I'm not going to pay the new price," Fortin said on Friday. "We can't. The whole thing made sense for us because we needed a new roof anyway, and we wanted backup power."

He later added: "I wish we hadn't gotten involved with the whole thing, tell you the truth."

Fortin said he reached out to Muhic after learning of the complaint. Fortin hasn't taken legal action, but said he'd consider joining a class-action lawsuit.

In Pennsylvania, Dahlin signed the contract with Tesla for a total price of $46,919.20 on September 17, 2020, according to a copy filed with the court. The couple paid a $100 deposit. After subtracting the deposit and an energy rebate, they would owe $46,084.80 after the installation, according to the contract.

The couple refinanced their home, where they've lived since 2006, to pay for the project. The contract said the roof would be installed within 180 days.

"We were pretty excited about the prospects," said Dahlin, who works in sustainability. "Also, just generating our own energy to charge the Tesla we already had, the car."

During the following 180 days, the couple heard little from Tesla.

On March 24, the couple received an email from Tesla, saying: "We have increased the price of Solar Roof and have added adjustments for individual roof complexity."

On April 23, they learned that the price had been increased to $78,352.66, according to their complaint.

Said Dahlin, "And then when we did get the email, it was a significant disappointment, obviously."