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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 88613
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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I am a contractor in Texas. I had a cabinet shop build and

Customer Question

I am a contractor in Texas. I had a cabinet shop build and install cabinets for a kitchen project my company did. However the cabinet company walked off the job (there were many mistakes). I had to hire a 3rd party cabinet company to complete the project. They had to purchase hinges, Reva shelves, lazy susans etc to complete the project. They also had to correct many mistakes the company made on the cabinets.

I tried many many times to contract this company by phone and email to try and get them to come and complete their project. I received no response from them except and invoice.

There was the original price of about $9,500 for the cabinets and they are now charging me $10,600 for the cabinets. They do have a line in there estimate that says "if paid by" it will be the $9,500 and $10,600. if paid after 14 days past delivery.

There is no signed contract between my company and this cabinet company at all. They just sent me a new invoice again stating that the cabinet were delivered in December 2010 and the invoice has been overdue since February 2011.

So my 3 question are: 1 do I have to pay him at all (because of no contract). 2 If I do have to pay him money am I allowed to deduct for all the cost to complete the project (couple of thousand). 3 How easy is it to turn over the lien he will probably put on the customers property?
Submitted: 3 years ago.
Category: Business Law
Expert:  Richard replied 3 years ago.

Good afternoon. I have answered each of your questions below:

 

So my 3 question are: 1 do I have to pay him at all (because of no contract). If they sue you, which they can based on the verbal contract because they have partially performed, they would likely be awarded the price of the estimate reduced by the cost you expended to fix and finish the job. 2 If I do have to pay him money am I allowed to deduct for all the cost to complete the project (couple of thousand) Yes, you are entitled to deduct any expenses incurred to either fix their errors and/or finish the job. . 3 How easy is it to turn over the lien he will probably put on the customers property? His deadline to file the lien was the 15th day of the 3rd month following the month in which he performed services. If that was in December, he's too late to file the lien.

 

 

I hope this has given you the guidance you were seeking. I wish you the best of luck!

 

If you have a follow-up question, please remember that there might be a delay between your follow up questions and my answers because I may be helping other clients or taking a break.

 

 

 

The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

Richard, Attorney
Category: Business Law
Satisfied Customers: 45614
Experience: 32 years of experience practicing law and a businessman.
Richard and 8 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

I had sent him a lien waiver requesting that it be signed before payment. He said he would need to be paid first. Should I now resend, less the charge backs, and send this certified. Also, should I pay him the original amount not the "penality amout" less the charge backs. And is this requirement to pay him in the Texas Property Code? I would like to read it.

 

If this does go to court am I responsible for his lawyer or he mine?

 

I am trying to judge whether I should go beyond online and get an attorny. Sounds like you are saying it is pretty much a slam dunk that I will have to pay them if I goes to court. Can my cost for this come out of that money?

 

 

Expert:  Richard replied 3 years ago.
You have the upper hand here because the subcontractor is the one in default. You don't need a lien waiver because he is past the time deadline for filing a valid lien on the home. Neither one of you will be awarded legal fees, and he is the one that will sue because you haven't paid him anything...but although you will most likely have to pay something, you will be the victor because you only will have to pay whatever is left after you have deducted every other cost. Best to let him know this is the outcome and try to settle this reasonable to save you both the legal costs.
Richard, Attorney
Category: Business Law
Satisfied Customers: 45614
Experience: 32 years of experience practicing law and a businessman.
Richard and 8 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

I now know I can deduct for the cabinets sub sub and materials, but can I, but can I deduct for my time to find a new sub, call time, monitoring time etc.

Expert:  Richard replied 3 years ago.
You can certainly ask for all your damages, which include lost time. It will be up to the judge as to whether you will be allowed those....my best advice on those is the more reasonable you are, the more likely they are to be awarded.
Richard, Attorney
Category: Business Law
Satisfied Customers: 45614
Experience: 32 years of experience practicing law and a businessman.
Richard and 8 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

So the cabinet sub contractor did hire a legal firm. They call and said they are sending out an investigator to my bank and to the residence where the job was done, and to my house to take pictures and talk to my neighbors, they were going to ask for a list of past and present clients, take a look at my assets and online assets etc. Don't they need to some type of legal authority to do this? Doesn't a judge need to authorize this? I kind of think it is just a scare tactic. Why waste the money on an investigator until it is known that communication has stopped. I am not obligated to pay for this investigator or attorney am I?

 

So I did talk to the sub contractors attorney, I told him everything that I told you in the first statement to you (no upcharge, charge back for 3rd party sub, he walked off the job and never called back etc.).

 

The sub contractors attorney wants me to sent proof of the charges, which will included a time sheet for my supervisors time, my time for locating and purchaseing finish materials, the 3rd party charges cabinet company's charges etc. Is this ok to do.

He said he could get this resolved quickly. It is only about $3,000.00 less than what is requested from the sub.

 

Please let me know. Thanks

 

 

 

Expert:  Richard replied 3 years ago.
Good morning. Provide them only what you reference in the last paragraph above. They have no right to any of the other information until they sue you and are issued a judgment. You should let them know that if they do any of the things referenced in the first paragraph that you will file a suit against the sub and the attorney for tortuous interference and also file a formal ethics complaint against the lawyer with the State Bar Association.
Richard, Attorney
Category: Business Law
Satisfied Customers: 45614
Experience: 32 years of experience practicing law and a businessman.
Richard and 8 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

This is an continuation to this string of questions.

 

As it turns out this is a commercial dept collection company (mpanda.net). I sent them an offer for about $ 3,700.00 less than the total bill. Deductions (in round numbers) $1,000.00 for late fee, $1,000.00 for on site supervision of new sub to finish (supervisor always on site so customer does not have to be there or monitor job, company policy for years, $500.00 my time to locate new sub and parts, $300.00 for painting repaired items and about $ 1,000 for the new sub and parts. Total bill from original sub

$ 11,174.00

 

My offer $7,430.00 Their offer $ 8,891.00.

 

After one round I told them my offer was the only and final offer.

 

Their reply was that they will not accept the offer that they are going to have their investigator notify the homeowner that a lien will be placed on the home.

 

The also said that they are going to place this account on D & B for collections.

 

So my questions are, would all these deductions fly in front of a judge, can they place a lien (I know it will not be valid) on the home and is this something I can have overturned myself and since there is no real credit card, bank loan whatever, can they place this on D$B for collections?

 

In addition this company has told me they are going to have an investigator go to my bank, my neighbor, request records from me, go to my clients house etc. You spoke to this in an earlier letter.

 

They also called and said at the cabinet sub requested I am not to call or contract him. Basically they accused my of trying to make contact, which I did not. I think this is just a tactic from the collection company.

 

I am rolling the dice here, but there is about $1,500.00 difference between my offer and his, but I think it will cost him that much to go to court. For me, if I am going to lose $1,500.00 I would just as soon give it to the attorney. I am gambling that his patience will run short and he will, in time, accept the offer.

 

 

 

 

 

 

 

 

 

Customer: replied 3 years ago.
PS Did you get my bonus money. I had placed a tip, but nothing showed up at my bank.
Expert:  Richard replied 3 years ago.

Good afternoon. They cannot do any of this..... What they are threatening you with is in violation of the Fair Debt Collection Practices Act. Send them a certified, return receipt requested letter demand they immediately cease and desist all further efforts to contact you and/or anyone connected with you to collect this debt other than to file a suit against you. Inform them that any efforts to do otherwise will constitute a violation of the Fair Debt Collection Practices Act and that you will report each and every violation to the Federal Trade Commission. Each violation carries at least a $1,000 fine, so that should be the end of things for you. They have no right to file a lien against the homeowner...one, they were not the contractor; and two, the time period has passed.

 

I didn't see it show up, but thank you so much!

Richard, Attorney
Category: Business Law
Satisfied Customers: 45614
Experience: 32 years of experience practicing law and a businessman.
Richard and 8 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

But what is your gut feeling about the deductions? Am I unreasonable?

 

Will get the tip to you somehow, have not quite figured the process out yet. Maybe I have to add money first, you would think that they would request to put it on my card.

Expert:  Richard replied 3 years ago.
I think you are on very solid ground. They will settle this with you..collection agencies don't tend to sue when there is a question of the underlying claim. That's why they're pulling out all these illegal intimidating methods....like a big bully. Stand firm!
Richard, Attorney
Category: Business Law
Satisfied Customers: 45614
Experience: 32 years of experience practicing law and a businessman.
Richard and 8 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

Ok just to make sure on the lien. The cabinet installation was done on February 10th according my customers computerized records. Does the cabinet guy still have lien rights?

Expert:  Richard replied 3 years ago.

Good morning...Your original narrative stated the cabinets were delivered in Dec and the invoice was overdue in Feb. The lien deadline for specially fabricated products is the 15th day of the 4th month following the delivery. If that was December, the deadline would have been April 15. If that instead was Feb., the deadline will be June 15.

Richard, Attorney
Category: Business Law
Satisfied Customers: 45614
Experience: 32 years of experience practicing law and a businessman.
Richard and 8 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

Ok so where does that put me, he got me. I still don't want to pay this guy except what I offered him. What advantage does this give him? Other than giving me a very annoyed customer. My understanding is that the lien just sits there until house is sold. It is not a lien with the power to sale. Does this effect my clients credit?

 

 

 

Customer: replied 3 years ago.

His deadline to file the lien was the 15th day of the 3rd month following the month in which he performed services. If that was in December, he's too late to file the lien.

Above is the first description to file a lien 3 months after the 15th which would have been May 15th. But there is a special clause that extends this because the cabinets are a specialty fabricated product?

Expert:  Richard replied 3 years ago.

If it was a specially fabricated product, it's the fourth month rather than the third.

Customer: replied 3 years ago.

Ok so where does that put me, he got me. I still don't want to pay this guy except what I offered him. What advantage does this give him? Other than giving me a very annoyed customer. My understanding is that the lien just sits there until house is sold. It is not a lien with the power to sale. Does this effect my clients credit?

 

Not sure if the above made it to you.

 

I want to be sure here, custom cabinets qualify for specially fabricated products. They are a common item although custom. Does not mean something very unusual.

 

Should I still send in the Fair Credit Letter?

 

I am a little unsure now if he has me over a barrel.

Expert:  Richard replied 3 years ago.
He doesn't have you over anything....1) The lien is really meaningless because he is going to have to win the underlying claim. 2) He may still be barred from placing the lien if the client was retaining 10% of your contract. 3) If he doesn't prosecute the underlying claim, the lien will automatically lapse. 4) You can contest that these are specially fabricated product, but this one will be uphill unless you can make the claim they could be used in another house which is probably not true given the dimensions. 5) I would still send in the letter.
Richard, Attorney
Category: Business Law
Satisfied Customers: 45614
Experience: 32 years of experience practicing law and a businessman.
Richard and 8 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

I alway keep 10% of the full contract price out as the last payment from my customer. Everything must be done for me to collect. I do not hold back 10% of the subcontractors funds until my contract is finished, they are paid when they are done and all problems are solved. I know this is a sticky area.

 

So I could not figure why I had used December as the original date. So I did some research. The cabinet maker had sent me a letter, a "Formal Notice". In that notice he stated that I was advanced the sum owed in December and that they have been overdue since February. The cabinet maker started their design work in December. If this is true, they are way out of their lien rights depending upon your answer to the next question.

 

The question is which is the effective date, the date of the beginning of the design drawing or the date of delivery to the house? By his own admission, December is the date the sums were advanced.

 

Expert:  Richard replied 3 years ago.
The delivery of the cabinets to the house, unfortunately.
Richard, Attorney
Category: Business Law
Satisfied Customers: 45614
Experience: 32 years of experience practicing law and a businessman.
Richard and 8 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

So I am confused. I just received a warning letter from the cabinet makers attorney (though the collection agency). It is a photo copy of a letter.

 

The letter says in brief, I owe the dept and have 10 days to make up my mind.

 

But is states that it is the dept plus interest. The last line says "You should be aware that Texas law allows not just the recovery of the original amount due on a sworn account but also prejudgment interest, post judgment interest, court costs and attorney fees".

 

I thought they were not allowed any of this, i.e. post, pre, court and fees.

Expert:  Richard replied 3 years ago.
This is pretty much a standard letter. It is highly unlikely the judge will award attorney fees absent an agreement that provides for it. I don't see how this constitutes a sworn account.
Customer: replied 2 years ago.

Ok so here we are several months later. To bring you up to speed, we had settled with this guy for a lesser amount approximately $8,250.00 through the collection mediator.

We made a cashier check out to the collection company, emailed a release of lien to be signed and returned. The mediator informed the cabinet company of this and it was going to be done. The mediator had emailed me verifying that the cabinet company had received the release and the mediator was waiting on the signed release. They even double checked with me but even they were not hearing from this guy. So as usual, we never heard from him or the mediator again, we waited 25 days and then redeposited the check into our account. I don't know why I have to chase someone to pay them. (PS I have email verification of all of this).

 

So this weekend, we relieved a certified letter from an attorney demanding payment by the 27th of this month. They also sent a copy of the letter to the client.

 

But here is the problem now, we are down 60% in our business and in the last few months we have had no business. We had to, at some point, use the money to live on in order to keep our house. We don't even now have the money to hire an attorney and we don't have his money.

 

So what can he do to us, the letter says we have to pay his attorney in addition to the money for the cabinets. We really don't have the money to pay him. Can he take our house, we do office out of it or can he only get a judgment against us that sits there until paid or until we sell the house (judgment meaning a lien against our home).

 

Can we make payments? Is there anyway to put this off until spring, maybe I will have some business.

 

 

 

 

Expert:  Richard replied 2 years ago.

If this is your homestead, they can't touch your house as Texas has an unlimited homestead exemption. I would simply reply with the situation .... that circumstances have changed, that you had offered the check months ago and it was not accepted, that you don't now have the money and that they can either work some payment schedule out that works for you or you will have no choice but to file for bankruptcy protection and get this debt discharged....they don't know whether or not you actually would, but it's good leverage.

 

 

I hope this has given you information that has been helpful to you. I wish you the best of luck!

 

If you have a follow-up question, please remember that there might be a delay between your follow up questions and my answers because I may be helping others or taking a break.

 

 

 

Please be aware that the information provided here is not legal advice. Rather it is simply general information. All states have intricacies in their laws and any information given is simply information only and specifically is not intended to be, nor does it constitute, legal advice. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

 

 

Richard, Attorney
Category: Business Law
Satisfied Customers: 45614
Experience: 32 years of experience practicing law and a businessman.
Richard and 8 other Business Law Specialists are ready to help you
Customer: replied 2 years ago.
But can they charge penailty, interest, do I have to pay for their attorney etc? And is there a way to put this off until Spring?
Expert:  Richard replied 2 years ago.
This is all going to be negotiable.....even if they get a judgment, if you don't have the money, they can't take what you don't have. I would play hardball here....convincing them they need to wait until spring and then have a payment schedule without all the fees or you are filing for bankruptcy protection and getting this debt discharged in its entirety.
Richard, Attorney
Category: Business Law
Satisfied Customers: 45614
Experience: 32 years of experience practicing law and a businessman.
Richard and 8 other Business Law Specialists are ready to help you
Customer: replied 2 years ago.
Relist: Other.
I think I am not getting a complete answer and the answer from the attorney in a little contraindicative.

I think this attorney is very good and have been happy with him but I think I need a second opinion.
Expert:  Law Educator, Esq. replied 2 years ago.
Up to date, your previous expert has been 100% correct. Unfortunately, your re-deposit of the money you agreed to pay them will be a bit of an issue because when a settlement agreement is reached and you do not pay, you are still bound to make that payment and if you could not get the release you can deposit the money in escrow since they agreed to sign that release in exchange for the money. They can seek to charge judicial interest from the date you were supposed to make payment, but as the previous attorney said, this is negotiable. The previous attorney was also correct in that because their client has "unclean hands" for failure to sign the release to get the payment, this is grounds for denial of not only attorney's fees but for the court to deny them interest if it goes to court.

You need to send them a letter telling them how their client has caused this by refusing to sign the release and attach copies of the correspondence you have showing the conversations about the signing of the release as proof their client brought this matter to this point. You will have to work out the payment of the original sum though, since you were supposed to have that still to pay them and this is where negotiation will come in.


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