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CalAttorney2, Attorney
Category: Business Law
Satisfied Customers: 10244
Experience:  I am a businesses law attorney, with experience advising and representing owners and investors.
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Okay I own a construction company and did work . I

Customer Question

Okay I own a construction company and did work for sears. I had a supervisor that gets paid a percentage. He found a sub and negotiated a price that I agreed upon, but nothing was signed. Just through text with my husband and the supervisor. Then in the middle of the job they wanted more money for same work we agreed upon. We refused and was going to have someone else finish, but my supervisor said he decided to finish, so I said ok. Now at the end the job was horrible. Was a long punch list. We got it done, but my sears supervisor said the job was worse he seen and also some parts like a child did it. Also, things that werwe agreed to do between my supervisor and husband with the sub was not all done. So sears paid me for the job but deducted those things done. Now the sub wants to get paid. The agreed amount was 3750 but he did not do all the work and it was a horrible job. I deposited 1500 into the account that my supervisor gave me that he said was the subs. I never had any contact with the sub. I am afraid to pay the rest because the work was done so bad that what is water gets in when it rains and I will be responsible. This was an exterior siding job. I have insurance and am licensed. I do not know if this sub has insurance or license. Should I ask for it and what if he doesn't have? Also, now sears stopped giving me work and said will start me in a few weeks with a small job. So now due to this I am losing business and worried if this job will have future problems that will fall on me. How can I handle thjs. Do I pay him or not, get his license and insurance which never did. Is my supervisor responsible for this since he got him and negotiated? Also, regardless would need to deduct for the work that wasn't done. How would I do that cause never had a breakdown. What are my rights and responsibilities? Thanks
Submitted: 2 years ago.
Category: Business Law
Expert:  CalAttorney2 replied 2 years ago.
Ultimately, you are going to be liable for the work that was done on the project (if the homeowner has an issue, they can pursue you for the claim). You will have a right of indemnity against the subcontractor, but whether or not they are solvent, or have insurance is another issue.You can try to get information from the sub regarding their insurance information, this probably isn't a bad idea, but there really isn't a way to force them to provide this information after the fact. (Hindsight being what it is - and definitely for future contracting - it is best to get this information prior to contracting with them, and get it in writing).Be very careful in trying to withhold payment for services. What your subcontractor may try to do is place a mechanic's lien against the property (this wouldn't be a valid lien as they have no written contract - but that doesn't necessarily mean your sub won't try one and harass your customer, creating further problems with your vendor (Sears)). If you want to negotiate a resolution (your sub did breach their contract with you by only partially performing, and requiring you to complete the work, or pay for it in the form of reduced payment), you can try doing so through direct negotiations (which may even include requiring them to provide their insurance/contact information as part of your settlement), or try using a mediator to help you settle the dispute.Unfortunately, lost profits due to the work are going to be a much harder claim here. While you are probably entirely correct on a practical perspective that this sub's shoddy workmanship caused you a decrease in profit, it is going to be very hard to press a legal claim against them. To protect yourself from this type of issue in the future, I would suggest being more aggressive at the front end and ensuring that your contractors are licensed and insured (working with the same subs routinely will help you reduce time in screening, but most insurance agencies can verify insurance with a single phone call). A business law, or construction law, attorney can usually provide you with a subcontracting agreement that meets your business needs for a small fee (you can find drafts available online and modify them to meet your business needs as well - this is not ideal, but it is far better than relying on text messaging).
Customer: replied 2 years ago.

Thank you

Do you think it would be right to pay the sub an amount minus the work he did not do, but only if he provides his insurance and license to me?

If he is not licensed or insured can he sue me and win? Or could I explain my part in court if he does and let the judge decide?

Thanks again!

Expert:  CalAttorney2 replied 2 years ago.
I would recommend trying to negotiate this type of resolution with him (I recommend against simply sending a check with a demand letter - this seldom has the desired result and likely will wind up with you in litigation, which is going to cost you more than it is worth).Again, get any resolution in writing, and signed by each of you. If he did this bad a job, he likely knows it, and hopefully he will be willing to negotiate (you may be paying more than you want, but part of what you would be buying is not just the labor, but also the insurance information and the contractual finality of getting a release from the sub for any additional claim (so you can pay less than the full amount you contracted for).But these are just general negotiation tips, if you want specific strategy tips and assistance, you will need to speak with a local attorney (we are limited to providing "general legal information" only on this forum, and must refer you to local counsel for formal legal advice).
Customer: replied 2 years ago.

Thank you. That sounds good to avoid litigation, but legally is he entitled to all the pay? My supervisor said if I do not pay the sub he can sue me for 4x the amount. I didn't believe that, but is it true? Thanks

Expert:  CalAttorney2 replied 2 years ago.
Your supervisor may be thinking of this as an employer/employee relationship ( as oppsed to a breach of contract matter between two businesses (your general contractor business and the subcontractor business) in which the damages are limited to "compensatory damages" for the breach of contract.I would recommend settling this dispute as soon as possible though - you have a lot of collateral issues hanging on this (including your future contracting ability with your supplier) that are not going to be resolved until you are able to get a resolution to this. Unfortunately this means the other side is going to have a little more leverage in settling (you cannot drive as hard a bargain due to your need to settle) - but ultimately this is up to you, and you can manage the negotiations as you see fit.

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