In the early 1990s, Jesse Derr created a corporation, JCDER, Inc., to operate his construction business. At some point, Derr began referring to the corporation as J.D. Construction Co., Inc., but no corporation by that name was ever created. JCDER, Inc., remained the official name for purposes of organization and filing with Maine's Secretary of State. Derr never filed with the Secretary of State a statement of intention to do business under the assumed name J.D. Construction Co., Inc.

In 2003, when Leah and William Treadwell decided to build a home, they were referred to Derr. The Treadwells brought their home plans to Derr's office to get a quote and left the plans with an employee, Jane Veinot. They did not meet with Derr, but received a quote from him in the mail. Soon after, the Treadwells signed a contract with J.D. Construction, with work to start in May 2003. Derr signed the contract, and his signature appeared on the contract as follows:

J.D. Construction Co., Inc.

By: Jesse Derr

The name JCDER, Inc., was nowhere in the contract, and the Treadwells were unaware of the existence of JCDER, Inc., when they signed the agreement. None of the documents the Treadwells received from J.D. Construction indicated that the company's real name was JCDER, Inc.
Mr. Treadwell testified that he spoke with Derr twice at the worksite, just as they were breaking ground. The Treadwells, who visited the site almost daily, never saw Derr again, even though they tried many times to contact him. They spoke to Veinot often, but she would tell them that Derr was at another construction site. Derr had hired subcontractors to do the work on the Treadwells' property. Around Thanksgiving 2003, the Treadwells visited the site and found that Derr had abandoned the job with the house unfinished because the company was not making any money on the job. The Treadwells had paid Derr approxi- mately $91,000 before construction halted.

The Treadwells found many problems with the structure, including twisted studs and other lumber that had to be replaced. The Treadwells hired new contractors to fix and finish the project, for which they paid a significant sum.

To recover the additional costs, the Treadwells sued J.D. Construction Co., JCDER, Inc., and Derr for breach of contract and other grounds. The trial court awarded the Treadwells damages against J.D. Construction Co., Inc., and JCDER, Inc., but found that Derr was not personally liable for the damages. The Treadwells appealed to the Supreme Judicial Court of Maine, asking that Derr also be held liable.