Contract – Construction Project – Subcontractor — Completion Certification – Interest & Attorney’s Fees

Miller & Long, Inc. v. Intracoastal Living, LLC (Lawyers Weekly No. 11-15-0661, 15 pp.) (John R. Jolly Jr., Ch.J.) N.C. Bus. Ct.

Holding: The plaintiff-subcontractor and the defendant-contractor built four buildings in the project at issue. As to the first two buildings, the contractor’s project manager certified to the project owner that the subcontractor’s work on the buildings was 100 percent complete on June 1, 2007, and the project architect made the same certification. The contractor cannot change its position at this late date and has waived any challenges to the subcontractor’s work on the first two buildings.

The subcontractor’s motion for partial summary judgment against the contractor is granted in part.

The subcontractor has settled with the contractor’s surety as to payments withheld under the subcontracts for the first two buildings. Pursuant to the provisions of the subcontract as to the first two buildings and G.S. Chapters 24 and 44A, the subcontractor is entitled to recover interest from the contractor in the amount of $30,308, plus attorney’s fees in an amount to be determined by the court.

As to the third building, the contractor has failed to pay the subcontract balance of $199,584. The project manager and architect certified to the owner that the subcontractor’s work was 100 percent complete.

Even though the subcontractor never returned a signed copy of the subcontract as to the third building, the course of conduct between the parties establishes that they intended that a contract exist between them with regard to the third building. The lack of a signed formal contract is not fatal to the subcontractor’s claim.

If the subcontractor’s work on the third building was not complete or was defective, the contractor should have informed the owner of that when the subcontractor submitted its application and certification for payment.

The certifications provided by the project manager and architect in June 2007 contradict the project manager’s later-submitted affidavit, which challenges the quality and completeness of the subcontractor’s work. If the work was in fact not complete, the project manager should not have certified that it was. The contractor has waived any such challenges and cannot change its position at this late date.

There exist no genuine issues of material fact as to whether (1) there existed a contract between the parties with regard to the third building and (2) the contractor breached the subcontract by failing to pay the subcontractor the balance due as to the third building. The subcontractor is entitled to summary judgment on its claim relating to the third building.

There is no written contract pursuant to which the subcontractor performed its work on the fourth building. However, there are a bid, letters of intent, work performed, and bills submitted, which demonstrate the existence of a contract between the parties. The parties’ intent, where not clear from their writings, may be inferred from their actions. The court concludes that a valid agreement exists between the parties with respect to the fourth building.

However, there exist genuine issues of material fact as to whether the contractor breached this agreement by failing to pay the subcontractor the balance due.

The court also concludes that, because the subcontractor is entitled to recover under the subcontracts relatives to three of the four buildings, the subcontractor is the prevailing party under G.S. ¤ 44A-35 and therefore is entitled to reasonable attorney’s fees in an amount to be determined by the court.

The subcontractor’s motion for partial summary judgment is denied as to its fourth-building claim but is otherwise granted.