The Basics of Construction Disputes and Litigation
Construction lawsuits have numerous aspects that must all be handled correctly in order to prevail on your defense (if you’re the contractor) or your success (if you’re the owner).
Most construction lawsuits involve claims for a combination of different legal theories. The most common legal theories to use are breach of contract, breach of warranty, the Unfair and Deceptive Trade Practices Act, N.C.G.S. § 75-1.1 (the “UDTPA”), lien claims (contractors and subcontractors asserting mechanics’ liens), fraud, and tort claims. Each case is different and the claims you should file, or that you may need to defend against, will be specific to your case.
The UDTPA is a useful statute that allows treble (triple) damages to be assessed against anyone who commits unfair or deceptive trade practices. These claims are common in construction. North Carolina courts have found UDTPA claims to exist when, for example, a builder constructed a house on unstable land filled with vegetable material, when a siding contractor made a cancellable contract but refused to provide the homeowner with the form to cancel, and when a homeowner routinely obtained services from subcontractors with no intent to pay them.
A construction case is document-intensive. Virtually all cases involve the contract, change orders, RFIs (requests by the owner or architect to clarify instructions), payment applications, and blueprints. These documents will all need to be gathered and provided to your attorney, along with any other informal communications like emails and text messages.
Expert witnesses are usually required. Attorneys may be experts in the court system, but your case needs an experienced general contractor, engineer, or architect to evaluate the case and provide an unbiased opinion. The expert witness will likely need to review the construction site, as well as the documents referenced above.
Liens are likely to be an issue, too. The general contractor or subcontractors may have filed liens on funds the property owner expects to receive form their bank, or may have a lien filed on the property itself. A pre-notice may be required to send to the property owner or a lien agent, and the property may not be able to be sold until the dispute is resolved or the lien released. Property owners must be especially careful about “liens on funds,” which must be held by the property owner or else there will be direct liability to the subcontractor. There are may forms, deadlines, and procedures involved in mechanics’ liens (contractors’ liens) in North Carolina.
A construction-dispute case may be heard in court, but construction contracts often specify that disputes must be heard by an arbitrator, instead. An arbitrator is a third party (often a retired judge or an experienced attorney) takes the place of the judge and jury in deciding the outcome of the case. Arbitration may be conducted by an organization like the American Arbitration Association, or the parties may choose a neutral third party to make the necessary determination.
If you have a construction dispute or any business dispute, the first step is to have the filed reviewed by a competent attorney who can evaluate whether claims or defenses exist. From that point, your attorney can decide whether engaging an expert witness should be the next step, or whether a lawsuit should be commenced to enforce your rights.
Dye Culik PC is a Charlotte, North Carolina business law firm representing owners and contractors throughout North Carolina. If you’re a homeowner, business owner, general contractor, or subcontractor with a construction dispute, contact us to see how we can help you.