Our Interior Design firm wound up going to court over unpaid invoices to a builder. I know I’m on the “wrong side of the fence” posting here, but the lessons we learned could prove valuable to Breaktime readers too
We worked for this firm for April and were paid. Worked in May and did not get paid. Did a bit of work in June and also did not get paid. When we went to collect, they, all of a sudden, had lots of complaints about the services provided and said they had no intention of paying.
I tried negotiating but no dice. So I sent out some “pre-lien” informational letters to the clients.
Finally we decided not to lien and go to small claims court.
The first problem we had was that we didn’t have a contract. The judge was quite clear that in her view, “a verbal contract isn’t worth the paper it’s written on”. She lectured us for a few minutes, and then lectured the other side for a few and then some. Why didn’t we have a contract? No good reason. Most of our work is done on a specific, defined project. This was “ongoing work” from month to month. We need to get a new contract that deals with that.
Then the “other side” make a lot of accusations for their “counter suit”. They claimed a wrong order cost them $3000 for a tub that really only cost them $1000 for restocking fee. They accused us of losing them a client because of our lien letter which I know for a fact dropped them for other reasons. They made enough accusations that in the end, they convinced the judge that they had enough complaints to balance our claim for unpaid services. The judge awarded each side zero. (The original suit and counter suit were $5000.00).
What I found and did not expect was that the judge looked at NO actual evidence. Everything was verbal. If you were a good liar, you could win. Who knew? We both brough plenty of paperwork and the judge had no interest in seeing any of it.
The bottom line, three lessons learned.
1. Always have a contract.
2. Always use PO’s and if you’re buying something that has a restocking fee, get the customer to sign off on the order BEFORE it’s placed.
3. If you’re going to go to small claims court, have a very good story and be prepared to take good notes — carefully refute each and every point the opposite side makes. If it isn’t countered, its true.
Edited 10/12/2008 12:04 am ET by geoffhazel
Edited 10/12/2008 12:05 am ET by geoffhazel
Replies
sorrry for your pain.
If I had a dime for everytime I've been screwed, #### and cheated by 'Interior Design" firms, I guess we could have a better connect.
skipj
I've been to small claims a coupla times and have always had good luck.
detailed notes are key.
some magistrates look at the info, some don't.
even the ones that do don't want to spend much time reading, so it better be laid out short and sweet.
One think to keep in mind, at least here in PA ... if U don't like the magistrates ruling you can always appeal and get a full hearing downtown.
U can also appeal that hearing.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Jeff, When I worked in PA there was a "theft of services" law which was very favorable to small contractors and subs. Is that law still on the books? Have you ever used it?
Edit: For those unfamiliar with this kind of law, it makes non-payment for contracted services a criminal misdemeanor. So besides the civil judgement, the possibility exists that anyone not paying on time for services provided might be prosecuted by the state or local DA as a thief, with potential jail time and/or heavy fines.
Edited 10/12/2008 9:29 am by Hudson Valley Carpenter
I believe it still works that way.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
That's interesting.
The one thing I've found is there's no cash register at the courthouse. We've (I'm an architect as well as a sometime builder) gone to court and have been succesful every time. Of course collecting is a whole different matter. some of our claioms weren't backed up by a contract either. Usually that's just the small stuff done on an hourly basis. Often it's more hassle getting a contract ratified fo 5 hours of work then just going ahead and doing it.
I have discovered that judges don't look very favorably on after the fact counter claims. The questions of "Why didn't pick upthe phone and alert the architects that the plan was incorrect?" are always there.
Runnerguy
Awarding each side zero was easy because there was no written (provable) contract.
Before becoming a GC I was a cop. Practically lived in court because I was a white collar crime detective. After becoming a GC a friend asked if I could help him with his wifes business. I filed cases in all counties around the Denver metro area. Small claims is conducted with relaxed rules and no lawyers. If any party wants an attorney the case is moved to County Court. All collection agencies go to County Court--(Next level up in CO is District Court). The ruling CAN be appealed from small claims to County Court (called a court of record) BUT there is a time limit--often 45 days--a lot of paper.
I've appealed a case all the way to the Court of Appeals--and won. There is a reason lawyers charge what they do. It not only takes a lot of education but experience too. Magistrates in small claims act as the attorney for both sides so you should have been under a contract and used change orders. I had my friend change procedure to include two things. Make a photocopy of any check received as a downpayment. When/if you win in court you know where to go to attach any money. Second, at the bottom of the contract include a phrase that any collection costs, attorney costs, plus an interest (compoundly monthly) charge. It was an expensive lesson but you should learn from it and change your methods. Keep Smiling Tyr
Thanks for sharing all that good information and experience. Lots of lessons in that post.
Years ago a man told me that a friend is not afraid to put his name on the dotted line.
I'd just throw out that even if someone actually won a judgement, getting your money out of them is another matter.
I worked for a family-owned corporation with no assets, who leased all equipment from another related corporation, was paid from another corporation, and the management worked under yet another corporation. Working capital was provided as credit supplied by, you guessed it, yet another corporation.
Essentially if any portion of the business was to get sued it mattered little since no assets were available to pay a judgement.
I was stiffed by a gal who I later found out stiffed 12 carpenters before me. It was her way of getting back at the construction industry for a bad GC that did some bad things to her in the rebuilding of her house.
Even if someone had a judgement against her, the county that we lived in had enough exemptions to personal property (many of her assets were owned by other family members and leased back to her) that can be taken by the sherifs department that we couldn't touch her. A lien wouldn't do much until her heirs took the property and I wouldn't dout that she was working another angle to drain value from the property so nothing would be left to the lein holders.
Beer was created so carpenters wouldn't rule the world.
Tough to translate your experience to other cases.
Small claims judges are sometimes lawyers that volunteer to take care of these cases. Sometimes they are actually trained judges. (I sat as a small claims judge for a couple years in NY.) Like other trades or professions, it depends who you get that day. I've seen good, bad and ugly in court.
You are correct about having a contract - at least a confirmatory letter agreement. That's good business practice, and it's becoming a requirement in some states. Likewise, follow up letters need to be done as time goes on to prevent later misunderstandings. Sometimes they will make it into evidence, sometimes not.
Don't let one experience determine your feelings forever. Keep trying. If you really feel like the decision was a "split the baby" decision, then appeal. It will get before a new judge, with a new point of view.
Good luck.
Don K.
Well, you've identified the pitfalls .... consider your experience as tuition in the "College of Life." Don't be shy about posting here, either - you've run into something we deal with all the time!
The "Good Book" is pretty clear is telling us: Stay out of court at all costs. There's no guarantee as to the results - you might come out worse than had you capitulated. Don't look to the courts for fairness, justice, or logic. Truly an absolute last resort only.
Otherwise, documentation is the key. A 'contract' is little more than a piece of paper where you define just what it is you've agreed on. A 'change order' is but another contract, defining the new state of affairs.
Other paperwork that can help is a detailed job log, pictures, and the testimony of others (preferably not directly involved). For example, I was able to help resolve a tenant / landlord dispute, as I happened to have been on site when the plumber was working, and could describe what the plumber had done.
The one problem with agreements is that they're not worth any more or less than the integrity of the folks making them. You'll never come out ahead with a scoundrel. I've lost count of the folks who have simply loved my work ... up to the moment that the bill is presented. These folks have it down to a song ... they know six months ahead just exactly what games they're going to play; they never plan to pay in full.
As far as these scoundrels are concerned .... there are certain 'warning signs' to look for. Sometimes, making clear that you didn't just fall off the turnip truck will prevent problems from starting. Often, the best thing is to shun these bums. How to know? Listen. Those who have been burned will be quite vocal. One of this towns' "major businesses" has to import contractors from hundreds of miles away, as no one here will work with the bum.
When I first got my contractors' license, it was simply amazing the critters who wanted to play games. All they saw was a new license number; that I was simply continuing an existing business after the principal had retired was something they didn't appreciate. That is, I had the advantages of an existing customer base, and experience in how things were really done.
Other folks, who had been eager to employ me, lost interest as soon as my license was issued. All of a sudden, they were not interested. Why? Because they were looking for a sucker ... no license, they don't have to pay.
I wanted to thank everyone for your kind and encouraging words. I was little hesitant at first to log back in and view the thread, fearing some "blame the poster" replies (not that I wouldn't have deserved them) but the response has been very uplifting, and added some perspective that helps quite a bit.We do have a provision to appeal the judgement, but it costs $200 (non refundable) plus you have to post a bond twice the size of your suit, so that would be a $10,000 bond. This time around, we'd want to enagage an attorney also, and that would add up fast at $200-250/hr. and quickly erode our settlement, if any. And aide from those hurdles, the prospect of having to be in the same room with the opposition, and listen one more time to their exaggerations, is really the deal killer.I look at the stock market and realize some people surely have lost far more than our $5000.00 and just chalk it up to picking a bad "CHANCE" card off the deck in the Monopoly game of life.Anyway, again, thanks to everyone who has been a source of encouragement.
I thought I had mentioned the use of an escrow agent in my first post to you but maybe it was edited out. Given the economy (and now your bad experience) I work on retainer only. Lawyers do that and many other professionals. The easiest way to do it on a remodel is to set up an escrow agent. Title companies handle that for house purchases and lawyers have a seperate "trust account". If you normally do work for another company it would be worth your while to research the matter and set it up. When people have to deposit 10K someplace they want to have confidence that the outfit will not disappear with their money or hand it to you without authorization.
Start with some consideration to redirect your work efforts (work crew, designer, self, whatever) Always have pay points in the contract and identify the responsibilities of both parties. It may not apply to you but I've had homeowers (non-resident) not pay the utilities so they were shut off. All work stopped. They had to pay a weekly charge and my contract states that they lose any priority so the crew was reassigned to another job. When the power was turned on and job #2 was done we returned. In case anyone else wonders how I did that I use a non-disclosure agreement with penalties set forth before ANYTHING gets done on the work of a detailed estimate which is attached to and made a part of the contract. Have had no problem or complaint with anyone really wanting work done. TyrBTW--I got a dandy book years ago titled something like "How to Win Big in Small Claims Court" Best thing is to take the time to set things up so you don't have to go.
Edited 10/14/2008 3:08 am by Tyr
Don't worry about posting as a designer. I'm a kitchen designer and sometimes an interior designer , and I've only encountered one negative response from this great group of posters.
Been in this situation, but did not go to court on the advice of my attorney for exactly the reasons you discovered. Here in AL many subs work from job to job without contracts, which I also did without any problems. I did some work for a builder who refused to pay for a completed project because of some made-up #### concerning another job. I later found out that this is standard operating procedure for this group of losers, and that they've done the same thing to their trim guys and others.
Missed the deadline for filing a lien, so my only option was court. Contacted an attorney who looked over all the correspondence and told me that he could sue, but that the builder would counter-sue, get up in court and lie and have all his employees repeat the lies. The owners would probably not get involved, so I'd be on my own, trying to convince a judge, who wouldn't be overly concerned about the lack of a contract, but would most likely side with the builder. I would also have to pay hourly attorney's fees to defend the suit, not just provide the third of the amount the attorney collected.
With my husband due for prostate surgery and unable to pay bills, let alone the attorney, I dropped it.
I'm done trusting people. No contract, no cabinets. No check waiting for me when the cabinets are delivered, nothing comes off the truck. Don't expect all your cabinets to have drawers; they'll all be there the day you sign off on the project and make the final payment. Trust me...
Sorry you have had to go through this also. Just be careful in future!
SusieKitchen, I read your post to my wife and she told me to tell you it made her feel much better. She's been a little down lately when she's thought about it. Thanks for the word of encouragement. PS: Her nickname was Susie when she was little - has no relation to her real name.
I'm so glad that the post made your wife feel better. I've been pretty down myself over that incident, plus a few others over this past year, so I completely understand how it affects your confidence, your ability to trust, your sense of commitment, etc.
I try to focus on doing better and take satisfaction from the jobs that went well. I also don't work with builders any longer, which suits me fine as I'd rather design for individuals who actively participate in the project.
Good to hear from you!
You've kind of found the heart of the problem ....
Honorable folks can work on less than a handshake.
No paper will help when you're working with a scoundrel.
To know which is which, you need to know your customer. For example, when I worked for a guy, there was another contractor with whom there were always 'issues.' When I went solo, I was very careful to never deal with the bum - no point continuing the pattern. Sure, he went on to 'talk trash' about me later - but, coming from him, his condemnation was received by the listeners as praise.
Or, to use another example .... there is a certain gent in town, who is a scoundrel. I won't work one of his jobs. Period. Yet, when I once had a problematic job ... it came as no surprise when it turned out that this man was the 'silent' partner. Fool me once ....
Lies .... funny how the liar is so consistant. He'll lie about big things. He'll lie about little things. He'll lie when there is no reason to do so. One guy that comes to mind is a guy who would show up an hour late, park out of sight, and claim to have been back there, waiting for you, all along! Consider this sort of nonsense as 'fair warning' of just what you can expect.
What's at the root of this sort of behavior? Often, a lack of respect. With their lying, they're expressing their contempt for you. This attitude will translate into many other problems, such as 'poor' scheduling, RFI's not getting answered, etc.
Honorable folks can work on less than a handshake.
You said a mouthful there! I try to always do the right thing for my clients, even if the particular "right thing" is not called for in the contract. I've had contracts with people who have still stiffed the showroom I worked for on completed projects. Some people are just crooks, period. They have no respect for themselves or others, and no interest in anything except seeing what they can get away with.
In this area you have to really search to find anyone who is professional and business-like, and that includes kitchen folks, builders, trades, etc. We also have your "I've been waiting here for you all along" type, and those that find ways to delay payment, trying to play you along past the deadline for filing a lien. I keep hoping they're in the minority, but...
The last cabinet/trim installer I worked with(he's from VA) commented on the lack of professional courtesy and respect here. Don't know what accounts for it, but I'm sure that this isn't the only area affected. We just seem to have lots of fly-by-nights.
Right now I'm trying to decide if I'm staying in design at all. I never wanted to be out on my own, but this is a poor market for design jobs, and I don't know that we'll be able to move when my husband retires next Sept. I'd love to find work with some of the people who post on this website. I see so many here who take their profession and their obligations to heart. I'd love to find that "kindred spirit" to work for.
We live, we learn, we figure out how to miss the potholes in the road...
I'd love to find that "kindred spirit" to work for
If I may get a bit spiritual for a moment...the key to finding a kindred spirit is to be in touch with your own inner Self, first and always.
When I'm feeling that inner connection, my mind is just a minor background noise and it's desires are not a distraction. Then I can "feel" my way through the day, moment by moment.
As I manuver along, flowing with the energy stream rather than struggling with conflicting thoughts and desires, working to achieve a level of excellence rather than to complete a desired result, I'm in a balanced place which allows me to live in a state of Grace, at peace with myself and in harmony with everything around me.
In that state it's easy to recognize kindred spirits, even people with whom I share bonds from other lifetimes. This level of recognition comes to me as gentle impressions, feelings which would not register in my mind if I were not quietly connected within.
I don't often recognize friends from other lifetimes, just a few times over sixty-five years that I'm sure of, but I do experience real kinship with people who I meet for a passing moment, every day.
The trick to seeing and finding kindred spirits in others is to greet them with respect, not desiring any outcome from the encounter, just looking for and seeing the Self within them as you feel it inside you.
Another key is the realization that when we are in tune with our inner Self, the level of being which arises within will open up the possibility, even probability, that we will encounter others of a similar spiritual level.
Like when you're in a luthier's shop, among some fine stringed instuments, and someone plucks a particular note on one instrument, all the other instruments will quietly resound with the same sound.
"We are all One Being, being many." Neale Donald Walsch
Edited 11/1/2008 4:09 pm by Hudson Valley Carpenter
What an interesting post!
Actually, I meant "kindred spirit" in a business sense, but it's really not possible to segregate that connection to only one aspect of one's life. A kindred spirit is so through all the permutations of our life.
I've been fortunate to find that connection is several people thoughout my life, and unfortunate enough to lose all but a very few. I remember my very first real interior design job and my last one for a local architect, and how I loved going to work every day, even if it was just going to be a day producing working drawings. I grew my skills and did really good design until that work just faded away. I'd like to find that again, but it seems to be getting rarer all the time.
Anyway, thanks for the perspective!
You're quite welcome. Thank you for providing an opportunity for that contemplation and it's outcome.
Before I even opened the thread I knew what the #1 problem was, and guess what? I was right.
It's usually the case in small claims.
Any good judge & lawyer will tell you that your case is built on sand unless it's signed & sealed.