North Carolina Lawyers Weekly
A masonry subcontractor who successfully defended a lawsuit brought by a general contractor collected $1.1 million on his counterclaim after an arbitration panel ruled he was not at fault for holding up the project. The contractor had brought claims for delay on a project.
On September 2007, in the midst of the project, the project’s owner issued a stop work order, which delayed the project for 10 months. The stop work order was issued at the recommendation of the project’s architect.
In 2011, the general contractor settled the delay claim with the owner for over $2.6 million.
According to Jim Roberts, lead counsel for the mason subcontractor, “The general contractor informed my client back in 2008 that the two parties could only be made whole by working together on a joint claim against the project owner on account of the wrongful stop work order recommended by its architect, and the mason fully cooperated in that effort.”
But the general contractor did not allow the mason to participate in the mediation and the mason received nothing out of the more than $2.6 million settlement, Roberts said.
The general contractor filed a demand for arbitration against the mason, claiming that it was the mason’s performance that led to the stop work order. The mason counterclaimed for his unpaid subcontract balance, extra work claims and pre-award interest.
During the arbitration, the mason introduced evidence that it was the architect’s bad-faith actions that led to the delay in the project. He entered into evidence numerous emails from the general contractor to the owner and the architect that said the stop work order was the architect’s attempt to cover-up his poor quality work and that the order was “ill-advised,” “inexcusable” and “illegitimate.” The mason also entered evidence pertaining to the owner’s 2011 settlement with the general contractor including the fact that he was not allowed to attend the mediation and that any delay damages were already recovered by the general contractor at the 2011 settlement.
The arbitration panel ruled that the general contractor was not to collect on his delay claim, that the owner wrongfully entered the stop work order based on the architect’s recommendation and that the mason should recover from the general contractor $906,410 in unpaid subcontract balance, $80,606 in change orders, and $122,920 in prejudgment interest.
The mason has collected the award from the general contractor’s bonding company.
“The award should serve as a warning to construction litigants throughout North Carolina,” said Matt Bouchard, co-counsel for the mason. “When project disputes involve multiple parties, it’s risky settling with one without the others.”
ARBITRATION REPORT
Type of action: Breach of construction contract
Injuries alleged: Contract damages
Name of Case: Confidential
Tried before: Arbitration panel
Name of arbitrators: John Shaw, L. Franklin Elmore, L.G. “Skip” Lewis Jr.
Demand: $4,187,662.73 by claimant; $1,772,350.91 counterclaim by respondent
Amount of verdict: Arbitration award for respondent on counterclaim in the amount of $1,109,937
Date of verdict: Feb. 6
Attorney for claimant: Mike Meeker of Brooks Pierce, Greensboro
Attorneys for respondent: Jim Roberts and Matt Bouchard of Lewis & Roberts, Raleigh
Follow Laurie Landsittel on Twitter @NCLWLandsittel
