Litigation in Construction I: Issues that Are Often Misunderstood

How many of you like watching lawyer movies and series? The Lincoln Lawyer, Conviction, Making a Murderer. They’re all so fascinating. But no matter how entertaining they may be, it’s never fun to have to deal with a legal case where you’re either the Plaintiff or the Defendant.

In the interest of helping people avoid an ugly battle, we’re doing a two-part series about Litigation in Construction. This installment discusses the issues that often lend themselves to misunderstandings. Next week, we’ll address alternatives to litigation.

What could go wrong in construction?

In every project, there are a lot of hands in the pot: The owner, architects, engineers, the project manager, the construction contractor, the subcontractors, HVAC, so it would be easy for the main objective to be lost in translation. This results in a long list of versions of: “That’s not what we agreed on.”

So, before you even get started, do everything you can to ensure that all parties are clear about:

Scope of work.

You think Acme Construction will build you a nice, shiny building and set up a gorgeous landscape to go with it, to boot. Except that nobody told them anything about landscape (or so they say). What happens now? You already paid, they said they’re done, and you are pretty sure that they owe you work. It is never a good idea to collaborate on a project where the contract does not clearly specify who’s going to do what.

Contract modifications.

So you agree on all specifications and everything’s going smoothly. You then go grab a beer with Joe the plumber and while chit chatting about life, you both agree on modifying one of the contract terms. Joe works as agreed. You don’t remember what he’s talking about (or vice versa). Now one of you is pissed off and the other one allegedly owes money. Now what?

Unforeseen events.

Let’s say you start working on a remodeling project, and it turns out that the building is infested with termites. Well, now that issue has to be taken care of before you can continue. Timelines will be delayed, maybe additional materials or labor will be required. Or maybe a hurricane floods everything and you have to redo what’s already been done. Who’s taking care of that? If it’s addressed in the contract, a judge will look at what the contract says. If it isn’t and you agreed to pay for work done, you might be on the hook for what was originally done and the rebuilding of it.

Mistakes.

Hey, they do happen. And the range is wide: from someone installing something improperly, to failing to take something into account when budgeting, these can end up being costly.

Failure to pay.

Ok. It’s obnoxious to even have to bring this one up. Everyone, listen up! You have to pay people for work they’ve done for you, and you have to do it on time. No, you’re not too busy, or the email reminders got sent to your spam folder, or you forgot, or this gets to fall to the bottom of your list of priorities. If you signed a contract agreeing to pay X amount by X date, either do it, or have fun spending additional money in court battling it out.

This list is by no means exhaustive, but only a glimpse of events that have ended up in a lawsuit more often than what is necessary. And while sometimes going to court is your only option, there are times when it’s more cost effective to look at other alternatives. To read about those, stay tuned for next week’s blog.

Oh, and here’s a common sense disclaimer, just to cover our bases: This is not legal advice. If you have in depth doubts about any of these items, consult with an attorney.

See you next week!