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My Day In Court

PaulBinCT | Posted in Business on April 22, 2008 10:57am

I know I see a lot of questions here about what if scenarios if you get stiffed so I thought I’d let you all know about my recent experience and the lessons I learned from it.

Last summer, we built (essentially) a architect designed gorgeous 3 season cottage on the CT shore.  We took the job over after the original builder really jerked these people around.  As we all knew there would be many surprises lurking, I agreed to do the work only on T&M, to be invoiced weekly and paid the following week with a 20% markup on all materials. I used the contract found in “The Contractor’s Legal Kit” with a few minor modifications.

Everything went quite well for 3 months.  In spite of the fact that we found, repaired and billed for tens of thousands in repairs to the original work, the clients seemed comfortable and even grateful that we were doing things the right way.  We received many thanks from them verbally and in emails.  We were being well paid and things couldn’t be better.

Then we moved to the inside… and things went awry instantly.  The interior was entirely to be done in MDF beadboard and the architect spec’d trim that was very intricate and demanding.  So when the clients got the first week’s interior invoice they went ballistic and refused to pay.  We had several very long heated discussions where I explained to them why it seemed to be disproportionately expensive. They seeeeemeeeedddddddddd OK. But the next day, they still refused payment.  I advised them that they had many options, including letting us go if they were unhappy but that withholding payment just wasn’t gonna fly.  They paid… we worked another week and they went on the gong show again over that invoice.  Paid it after making some petty deductions which I told them again wasn’t gonna happen.  The third week into the interior they just refused to pay.  Made a lot of noise insinuating that they were being bilked, and they flat out weren’t going to pay period.  They sent me an ultimatum essentially demanding concessions in order to “consider negotiating” the invoice but otherwise reiterating that they refused to pay.

I waited the 10 days without replying and then sent them a final demand and advising them that they were negating our warrantee by nonpayment as well as risking legal action.  My attorney immediately filed a mechanic’s lien and we sent the town building dept a notice asking them to close out the permit. This all happened last July.

The contract has a clause requiring binding arbitration so my attorney exchanged the usual barrage of claims and counter claims with their attorney and both parties agreed to mediation wherein a mediator tries to hammer out a compromise between the parties.  It isn’t binding but it’s faster and cheaper than full blown arbitration.  It relies on the assumption that both parties are willing to meet somewhere that will give them some satisfaction… but as the mediator said “you’ll both likely leave here a little pissed off”.

Today was the mediation.  We all met in one room at first and gave our initial statements.  My attorney advised me to be clear and brief, leave any expansion for later.  I went first and did the “just the facts, Ma’am” kind of thing.  They went next and made some statements that were demonstrably false as I had emails that contradicted them, as well as photos showing my points.  Then both parties and their attorneys went to separate rooms and the arbitrator shuttled back and forth listening to more detailed claims and rebuttals from each side, sometimes with the parties present, sometimes just between the attorneys. Apparently they were prettyyyyyyyyyyy dramatic (as I know is their style).  The arbitator told my attorney “your client seems pretty detached about this, you don’t even want to see what’s going on in the other room”.  Evidentally they didn’t want to pay a penny (which begs the question of why they agreed to arbitration). I made it a point to write notes of everything they said that was in error, along with a summary of why to remind myself and address every claim they made.

After about 3 hours of back and forth, we had a settlement that represented about 75% of my claim. Both parties split the fee to the mediator (250/hr)

I think we did pretty well, in large part because: A) I documented everything, even before the job started going bad.  Shoot digital photos, dump em on your HD and back em up, just in case. And label em so that a year from now you can remember WHY you took a photo of that crown detail. B) Get it in writing, even if it’s email. Nothing says “gotcha” like…”gee whiz, in this email just a week before you acknowledge such and such”. C) Be organized (which isn’t always my style). I printed out every photo and document last week and reviewed them several times so I knew what I had, and where I had it.

Hope this helps if it happens to you 😉

PaulB

 

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Replies

  1. stevent1 | Apr 22, 2008 11:24pm | #1

    Paul,

    Glad you got your 75%.

    How come the owner had no idea as to the interior trim costs? Seems to me the archi should know basic costs. e.g. 3 peice base, plinths 5 peice jack and header trim is about 10 time the cost of leaner(speed) base and DC98 worked casing.

    I always give a ballpark on T&M jobs, but I prefer stipulated price contracts and get all COs in writting.

    Chuck S

    live, work, build, ...better with wood
    1. User avater
      PaulBinCT | Apr 22, 2008 11:29pm | #2

      I agree...the architect should have given them the heads up that the beadboard and trim that he was proposing was gonna be pricy but frankly I think the reality is that they just decided they had spent as much as they intended to. For instance this was a 450 ish/sq ft summer house, that had over 20 windows, very high end custom.  I think that alone cost them 15 thou and they were fine with it. Oh... and this is their third house, the second one on the shoreline.

      Hard to get too choked up for them...PaulB

       

  2. Piffin | Apr 22, 2008 11:55pm | #3

    Congrats for getting out with more than 50%

    I just settled a $4700 bill for two grand 'negotiated'

    I have not in my whole life lost more than about six hundred bucks total, now people are suddenly slowing the money and fighting over nickels and pennies...

    I remember that job when you took it over, and wondered how it had gone for you.

     

     

    Welcome to the
    Taunton University of
    Knowledge FHB Campus at Breaktime.
     where ...
    Excellence is its own reward!

    1. User avater
      PaulBinCT | Apr 22, 2008 11:58pm | #4

      I oughta post some pics... it's really a shame it ended badly. I was very very proud of what we did there.PaulB

       

      1. Piffin | Apr 23, 2008 12:02am | #5

        Post away - It'll be a good salve and way to have a memorial service for that job....;) 

         

        Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!

        1. User avater
          PaulBinCT | Apr 23, 2008 12:09am | #8

          I'll wait till their check clears ;)PaulB

           

      2. User avater
        FatRoman | Apr 23, 2008 12:03am | #6

        Do you have a website? That sounds like a great spot for those photos:)Congrats on the outcome! Sounds like you made out reasonably well. And make sure to celebrate with a good drink.'Man who say it cannot be done should not interrupt man doing it' ~ Chinese proverb

        1. User avater
          PaulBinCT | Apr 23, 2008 12:09am | #7

          Actually... I was planning on just that.  Maybe an "Under Construction" section?PaulB

           

          1. User avater
            FatRoman | Apr 23, 2008 12:16am | #10

            That'll work. Email them to me along with any circles and arrows and a paragraph on the back of each one and I'll take it from there.Best,
            Steve'Man who say it cannot be done should not interrupt man doing it' ~ Chinese proverb

          2. splintergroupie | Apr 23, 2008 12:30am | #11

            I click on your website in your profile and get sent to an advert for "Craftstylish", Taunton's new foray into sub-mediocrity. Fix it? I want to see "The Seaside Cottage from Hell". This could be a series...

          3. User avater
            PaulBinCT | Apr 23, 2008 12:35am | #12

            Yeah, I think that has something to do with taunton's system. I don't appear able to fix it at my end...nice

            I hope they pay me for the hits ;)

             PaulB

             

          4. User avater
            PaulBinCT | Apr 23, 2008 12:38am | #13

            OOops...figured it out.  You have to include "http://" in front of your web address.PaulB

             

          5. splintergroupie | Apr 23, 2008 01:17am | #14

            I knew i'd accessed it from your profile before. Glad to be of service. <G>

            I'll look forward to Steve's additions to it. Glad you got some satisfaction from that job.

          6. Treetalk | Apr 23, 2008 02:48am | #16

            Paul /Uve just confirmed what Ive found out the last few years. I had 3 diffrent jobs where clients or friends begged me to take a job where the owners were being "screwed "by the existing contractors. Cursed I guess to be the "go to guy" and hoping to really help these "poor" folk after various forms of coup de tat I took them on.

            Oh yes the white knight comes to save us were so lucky to have you! Well this last for a few months until they have to start pumping out checks again and then the the first notes of the party's over start up.I think there is just something about people who think they got screwed over cant lose that feeling and soon starts to corrupt a fine on going relationship. Thats the time to sit down and reiterate why your there and for u to really start wondering what really went wrong initally.Darn rite..catalog everything..soon u'll be burdened with the last idiot or poor fools problems.

            In two cases it turnes out interesting enuf the woman in the house was the one really in charge and they were drunks! I have very low tolerance for drunks since theres no rationale plane to communicate with them.A lil legalese threatening and luckily i got out of there in one piece but a lil battered. The other guy was just a dunghead and u could just see how things got to point whre I came in.

            And If i hear one more time about the big bonus or party thats coming my way for being such a hero......!

          7. Jim_Allen | Apr 23, 2008 02:57am | #17

            I think the adage "no good deed goes unpunished" comes to mind. Bob's next test date: 12/10/07

          8. DanT | Apr 23, 2008 02:24am | #15

            Thanks for sharing.  Sometimes it is tough to share an emotional negative experience.  I really appreciate any real world information that comes across this board.  Thanks again! DanT

          9. MikeHennessy | Apr 23, 2008 03:02am | #18

            Depending on whether or not you left the mediation session on good terms with the HOs, you might wanna re-think putting this job on your website. Future potential customers may see it, like it, and want to speak with the owners for a reference. You may not wanna go there.

            That said, we'd all like to see it here. ;-)

            Mike HennessyPittsburgh, PA

  3. Hudson Valley Carpenter | Apr 23, 2008 12:14am | #9

    Great explanation of what happened, beginning to end.  Shows how important it can be, both financially and for your sanity, to make the effort to document everything completely and in a timely fashion. 

  4. FNbenthayer | Apr 23, 2008 03:44am | #19

    Glad it worked out for you Paul.

    We're batting .500 on the T&M "White Knight" jobs, the boss walked away from a unpaid invoice on the first. The second went great and I still do small stuff for clients.

    I think one key might be, on day one putting the client in the frame of mind that they probably won't get their money back from the guy they fired.

    Jim

     

     

     

     

    The awful thing is that beauty is mysterious as well as terrible. God and the devil are fighting there, and the battlefield is the heart of man.
    - Fyodor Dostoyevski

  5. User avater
    hammer1 | Apr 23, 2008 04:05am | #20

    Way to go, Paul. You did everything right. Contracting is a whole different ball game than it was ten years ago. If you don't have every little detail in writing, and backed up, you're headed for trouble. There are still plenty of good customers but handshakes aren't enough anymore, for either party. You were smart enough to make a deal on material mark ups, too. It doesn't amount to much on many jobs but it helps cushion the fall when a situation like yours develops. The arbitration clause probably saved you a ton of lawyers fees, as well. This is a great lesson for all of us in the business. If we are playing by the old rules, it's just a matter of time before we get burned, and it can be a bad one. Imagine if you had waited months before billing and had charged thousands on your lumber account. You acted like a professional and that's a credit to contractors every where.

    Beat it to fit / Paint it to match

  6. DougU | Apr 23, 2008 05:22am | #21

    Paul

    Thanks for sharing that with us. Glad the outcome was as good as it was.

    Doug

  7. Hudson Valley Carpenter | Apr 23, 2008 04:54pm | #22

    Maybe we should start a "White Knight" thread.  I'd never heard other contractors say anything about this kind of client before so I thought that it didn't happen that often. 

    From my experience, and apparently most of the rest of youse guys, any client who says that they're getting screwed by another contractor is just as likely to say the same thing about me...after I help them out of the situation and want to get paid.

    Don't youse guys know?  A white knight rides in, saves the faint-hearted, embattled victim, slaps the bad guys up side the head until they swear to straighten up and fly right, fixes the hole in the roof, then rides out of town looking straight ahead, having taken no reward from anyone.

    1. User avater
      Mongo | Apr 23, 2008 05:58pm | #23

      Paul, This wasn't in Madison, was it?A while ago a realtor friend in Madison told me of "friends of a friend" who were having trouble with a beach house. She asked if I'd go take a look-see and conversationally get between the "f-o-a-f" and the contractor.I declined.Congrats to you, though. 75% seems pretty good in cases like this.

    2. rasconc | Apr 23, 2008 05:59pm | #24

      Instead of White Knight maybe "no good deed goes unpunished".

      1. Hudson Valley Carpenter | Apr 23, 2008 06:17pm | #25

        Instead of White Knight maybe "no good deed goes unpunished".

        Too true, multiple times if allowed to happen.  Another sad fact about people who pretend to be victims in order to manipulate the situation...they see anyone who comes to their aid as a likely "hero" who can be taken advantage of repeatedly.

        Of course it takes two to make this plan work...them and anyone who's needy enough and so intuitively out-of-touch to take their faint praise as genuine.

        "Beware of Greeks bearing gifts"

         

           

        Edited 4/23/2008 11:19 am by Hudson Valley Carpenter

  8. timkline | Apr 23, 2008 09:43pm | #26

    just curious

    did the house ever get finished ?

     

    carpenter in transition

    1. User avater
      PaulBinCT | Apr 23, 2008 10:17pm | #27

      Not yet...PaulB

       

  9. atrident | Apr 23, 2008 11:51pm | #28

     Ever notice how the wealthier they are the cheeper they are. You won. Maybe not as much as you  should have, thats mediation. Non carborundum illigitimi-dont let the bastards wear you down.

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