Finally, JK Development contacted its attorney to assist in closing out the project and collecting final payment. The attorney quickly learned that not only was the owner refusing final payment, but he also was bringing a lawsuit because the home and the garage outbuilding allegedly were loaded with deficiencies. The suit listed more than 60 problems including stucco cracks, roof problems, cracked concrete, drainage issues, incorrect floor elevations, scratched window glass, and drywall cracks.
As a result of the lawsuit, JK Development was allowed to view the property and examine firsthand the alleged problems. Two years had elapsed, and there were some items in need of minor repairs, but nothing that was out of the ordinary or beyond rapid touchup and repair. The owner refused to allow JK Development to conduct the repairs and presented a summary of repair costs prepared by another contractor and non-involved subcontractors. The owners were requesting $325,000 in repair and remodeling costs as detailed and defined by their expert witnesses and repair contractors, plus attorney fees. However, if JK Development would agree to deduct the final draw payment and contribute the additional funds needed for the estimate of repairs, all would be forgiven and the lawsuit closed.
No dice. John’s defense hired a construction-expert witness to examine the requested repair work and evaluate construction according to the Minimum Workmanship Standards of the Arizona Registrar of Contractors. He categorized the repair work as very simple and estimated the cost to be $1,500 to $2,500 depending upon whether the repairs were conducted by the contractor or an independent repairman. Ninety percent of the complaint items were resolved by the Arizona Workmanship Standards because they defined the recommended remediation/repair steps for each listed condition. The majority of the repair costs involved repainting large wall surfaces so that the touched-up areas would fully color blend into the surrounding surfaces. Many of the items had been generated by the owners who had modified the property after completion.
The case went to trial, and it took nearly two weeks and involved testimony from 14 witnesses. The exaggerated claims and repair costs quickly evaporated under the scrutiny of the court. The arguments were concluded and the case was remanded to the eight-member civil jury.
After just 30 minutes, the jury reached a verdict in favor of the defendant, JKD. The jury foreman asked the judge, “Are we permitted to demand punitive damages for the defendant?” “Yes,” responded the judge. The jury then awarded JK Development all cash costs, lost time, legal fees, expert-witness fees, court costs, and significant punitive damages because the jurors determined the homeowners’ lawsuit to be frivolous and without merit.
When interviewed after the trial, several of the jurors stated that JKD’s integrity, professionalism, paperwork, and genuine effort to resolve the situation amicably convinced them to find in favor of the contractor. As one of the jurors put it, “We demonstrated to the homeowner that the legal system can bite you back!”
Dennis A. Dixon is an author, contractor, and speaker with 21 years experience in the building industry. You can e-mail him at dixven@aol.com.
