Rights of contractor to correct damage

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Latest post 03-31-2013 3:41 PM by prof.N.J.D.Jr. esq. 18 replies.
  • 03-27-2013 11:16 AM

    • dbs123
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    Rights of contractor to correct damage

    I own a construction business in which some employees installed attic insulation incorrectly.  Soon after the customer had mold growth in their attic.  Our liability insurance has determined that we do no have coverage for mold even though their own inspector cites water intrusion as the main culprit (condensation) caused by the insulation blocking the eave vents (my company mistake) inadequate attic venting (customers home builder mistake) and customer running a humidifier at 40%.

    We had 3 mold remediation companies bid to work on the project.  The middle bid was $20,000 and the lowest bid was $14,000.  The company giving the bid for $20,000 convinced the home owner the lowest bid company (and my company) was going to cut corners and so they insisted on using company B rather then C that I wanted to use.  The customer threatened to sue me and file a complaint on my license if I didn't let them use company B.  Now company B has also convinced them they should also be allowed to not only deal with the mold but also the complete rebuild.

    According to the Registrar of Contractor in my state I have the right to choose who does the work as long as they meet the legal guidelines to do so, my company included.  My own insurance company who has refused to be involved has let the customer know they can choose whoever they want, despite the ROC's info to the contrary,( that I must be allowed to correct the work and damage first.)

    We are now at a stalemate as the homeowner does not want me to do any of the work, which would be much cheaper since my insurance company is refusing to help, and I have the subcontractor using scare tactics to secure the work.  Where do I go from here?

  • 03-27-2013 11:25 AM In reply to

    Re: Rights of contractor to correct damage

    I would like to read the ROC's regulations that say you are allowed to choose who repairs damage cause by your negligence.

    However, on the chance that the citation is correct, the homeowner is not likely to be bound by that regulation and can use whoever he wants to use.

    That being said, you can simply decline to pay and let the homeowner take it to court where the court might rule in your favor and you'd only have to pay the lowest bid.

    I suggest you have a liability defense attorney draw up your offer to pay the $14,000 and include a proper disclaimer against any further damage if your offer is not accepted.

    As for you doing the work at an even lesser cost, talk to the lawyer about that being an option and see if that has any force of law behind it.

    PS: You should have had a lawyer on this the minute you found out your insurance didn't cover it.

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 03-27-2013 11:57 AM In reply to

    • Drew
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    Re: Rights of contractor to correct damage

    I'm not so sure that the insurance company's view is a final determination of any apportioned liability--but  the builder/design is not  out of the loop for sure as I see it. 

    I sort of see it it adjuster jacks way as a poker play --have your attorney craft a reasonable settlement offer that includes a mutual release/hold harmless and put it on the table and then shut up and let the chips fall as they may.

    If relevant, I'd probably cite the AZ contractor regs in my offer in such a way that homeowner has fewer workable ways to bellyache to  ROC

    I think you'd be smarter to use lawyer to play this hand of poker.

    I'm not so sure I agree as to insurance view--they may be in equation for your workmanship liability problems but out of equation as to subsequent  mold damage  --you might be in equation as a professional for failing to address a visible ventilation problem created by others

    I'm not sure if its cheaper to pay homeowner or to pay lawyer --your call as to the spread.

    But even if you pay the higher number I think you wise to get a full written mutual release/hold harmless crafted by somebody to protect you ,in place as the money crosses the table.  .



  • 03-27-2013 12:52 PM In reply to

    • dbs123
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    Re: Rights of contractor to correct damage

    I should have stated, the contractor of record (me) according to the roc has the right to correct the issue and any resulting damages.  I have acquiesced and let the owner choose company B for the mold remediation as that is not something my company has the skills to do.  However, as a general contractor with 30 years experience and 250 projects with zero complaints, we have the skill set to do the rebuild and IMO the owner has simply listened to company B give mold horror stories and has convinced them he is the only one looking out for them, which is quite untrue.

    I have every intention of correcting all issues, but the homeowner has begun to get their own bids and wants to have me pay all the bills, no matter the cost which is why the roc directs on their website for complainants to work with the contractor of record.  I find it unethical for my own insurance company who is attempting to claim we have no coverage to also give the homeowner incorrect information before contacting the roc, as well as mold remediation company whose contract is with me and not the homeowner, to attempt to circumvent me to do more work which is also unethical IMO in a GC/SC relationship.  I am attempting to have the roc do a courtesy inspection to get us all on the same page.

  • 03-27-2013 12:59 PM In reply to

    • Drew
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    Re: Rights of contractor to correct damage

    I'd not put in print that I lacked the skills to do part of the job--you can get them as required!

    With a 0 complaint history I might be willing to play poker on this one --if there is a legal basis for you to be allowed to abate/remediate your problems and Homeowner has refused to allow you your right to remediate  you might be off the hook ENTIRELY  or at worst be on the hook only if HO takes it to court and wins.



  • 03-27-2013 1:05 PM In reply to

    • Drew
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    Re: Rights of contractor to correct damage

    PS --$14,000 or $20,000 matters NOT as both are way over AZ SC court limits --hence HO would need to go up a level in court --and thats NOT a DIY task for most folks and its unlikley HO can get any attorney costs out of equation even if he wins.

    I think HOs denial of your right under ROC as you put it  and the common law duty to abate damages is going to sit poorly for the HO if he plays a card and you don't blink.

    I'm NOT a lawyer

     



  • 03-27-2013 1:45 PM In reply to

    Re: Rights of contractor to correct damage

    dbs123:
    I should have stated, the contractor of record (me) according to the roc has the right to correct the issue and any resulting damages.

    I think what we're looking for is a link to where it says that on their website.  Does it cite any laws?  I spent a little time looking at their website, and found nothing other than a nonfunctional link titled, "Hiring Another Contractor to Correct or Complete Faulty Work" on the Consumer Corner page.

    dbs123:
    which is why the roc directs on their website for complainants to work with the contractor of record.

    Again, can you link to this on the website so we can read it?  Do they say it's required (and if so, do they say what law says so?), or do they only recommend it?

  • 03-27-2013 2:23 PM In reply to

    • dbs123
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    Re: Rights of contractor to correct damage

    I just left the AZ ROC after meeting and discussing this situation with an inspector there.  He confirmed what I already knew in that if a homeowner wants to foot the bill they can use whomever they want.  If they want the contractor of record (as in this case) to take care of the expenses they must allow him to do the repairs as long as he meets the legal qualifications and addresses it in a timely manner.

    As far as qualified to do mold remediation...there is a generally accepted method to that as well as some specialized equipment usually associated with it.  That is why my company would not do that ourselves.  Company C had all hose items however.

  • 03-27-2013 2:39 PM In reply to

    • Drew
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    Re: Rights of contractor to correct damage

    And I presume you could rent the necessary skills you lack so I'd not add more worms to the equation.

    I'm not sure the inspector is qualified as to legal answers --you'd be smart to double check legal status is as you post it.

    Assuming your post is correct--then  HO is entitled to do it his way on his nickle.

    Me, I'd feel safer if my side was well papered that I offered to do the full job on a timely basis as per ROC XXX and have the legal qualification to do so and the HO rejected my offer

    HO is bound to bellyache --anticipate it -

    (I did a lot of electrical contracting but not in your state and not a lawyer)



  • 03-27-2013 3:19 PM In reply to

    • dbs123
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    Re: Rights of contractor to correct damage

    The mold remediation at this time is a moot point as I caved and hired the company they insisted on using which has cost me $6k more then a company of my choosing would have done it for.  I am a big fan of doing what I know how to do and leaving to other experts to do what I don't, especially in a mold case with severe legal ramifications.  The rebuild items are a no brainer for me as those items are an everyday project for us, and again who the homeowner wants to dictate to use has become the issue.  If they wanted to choose who does all the work and pay for it themselves, there would be know issue.  It's that they want to use a company who has convinced them that unless they do ALL the work they will be short changed and probably sick rhe rest of their lives, then jack up the price 33% over what I can have the work done for but still expect me to just pay for it all because if not they'll sue me and file a complaint on my license.  I rolled over once, but right now see no sense it doing it any more.

    As far as getting legal advice at the roc-that IS the first place to look for this kind of clarification as they have jurisdiction over all construction activity and should one end up in court, that is the first regulations referenced in construction disputes.  If you follow their guidelines you typically don't have issues in court.

  • 03-27-2013 4:06 PM In reply to

    Re: Rights of contractor to correct damage

    dbs123:
    As far as getting legal advice at the roc-that IS the first place to look for this kind of clarification as they have jurisdiction over all construction activity and should one end up in court, that is the first regulations referenced in construction disputes.  If you follow their guidelines you typically don't have issues in court.

    If you say so...

    Generally, organizations like the ROC in other states only control licensing.  They are in charge of whether you meet the standards for their contractor's license, and they can yank your license if they determine you have violated their requirements.  They have no say over lawsuits between owners and contractors for damages.

    And an employee of such a regulatory agency is only expressing his personal opinion when he talks to you.  You'd be smart to ask which state law he thinks supports his opinion, because I very much doubt that calling "Jeff" from the ROC as your witness will count for much in front of a judge.

     

  • 03-27-2013 4:32 PM In reply to

    Re: Rights of contractor to correct damage

    dbs123:
    The mold remediation at this time is a moot point as I caved and hired the company they insisted on using which has cost me $6k more then a company of my choosing would have done it for.

    Ouch.  I think this puts you in a difficult position.  Seems to me either you should be in charge of who you hire to make good with your customer, and part of that is that if it doesn't fix the problem then you are still on the hook to repair the repair, as it were.  Or the customer should directly hire the contractor he wants to hire, and then get you to reimburse him for the cost of the repairs.  The advantage of that is that if his contractor doesn't fix the problems, you are clear of the situation and he has to sue that contractor himself.

    So hopefully you can trust this mold remediation company to do that job well.  If you aren't sure, then maybe consider hiring a different company altogether - ideally one with a great reputation in mold remediation.  The fact that they are trying to get work away from you by going over your head suggests they aren't as trustworthy/ethical as you'd like.

    I guess in your shoes I'd either get the customer to agree to give you the chance to make good on your terms (you pick the providers and take full responsibility for the outcome) or allow the greedy mold remediation company to take over all the work on condition that the customer signs away his right to sue you if the greedy mold remediation company fails to fix everything to the customer's satisfaction for the agreed-in-advance, bearable-for-you, price.

    Option #1 sounds better to me, but requires you to figure out how to charm the customer into it, or to get a lawyer to explain to the customer why he has no choice other than to give you that chance.

  • 03-27-2013 4:58 PM In reply to

    • Drew
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    Re: Rights of contractor to correct damage

    Just my personal suggestion

    If you have solid reqason to believe the rules are on your side then I agree you have rolled enough.

    The HO refused your offer to  correct the issues as per the ROC . I'd paper same. But keep in mind the less you say/write the less somebody can twist a different way --keep it short, crisp, and to narrow facts.

    Double check that your contract does not provide other options.

    I'd walk away .

    Let him sort out the next steps

    For sure he will bellyache--but so be it.

    It would seem you have complied with the license requirments--I'd double paper that .

    He will need to lay out some serious funds to take it to the next level.



  • 03-27-2013 7:15 PM In reply to

    • dbs123
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    Re: Rights of contractor to correct damage

    I am in no way suggesting the roc can prevent a HO from suing a contractor and I am only speaking from expereince in AZ, but since the roc is the entity that does set the standards for licensing as well as where typically most folks start with a compliant it is their rules that would generally govern my actions as a contractor, so yes I put a lot of stock into what 4 different inspectors have told me recently as well as the information not changing for the last 25 years.

    We are at the point that the HO has been furnised the contact info for said inspector.  Should they choose to use someone of their own choice the roc will not hold me liable or put my license in jeopardy and would testify at a separate court hearing that I have made a good faith effort to satisfy the issues per their statutes which carries significant wieght here in a court of law.

  • 03-27-2013 8:45 PM In reply to

    Re: Rights of contractor to correct damage

    dbs123:
    Should they choose to use someone of their own choice the roc will not hold me liable or put my license in jeopardy and would testify at a separate court hearing that I have made a good faith effort to satisfy the issues per their statutes which carries significant wieght here in a court of law.

    I'm just guessing here, but it sounds to me as though that has to do with your keeping your contractor's license and good reputation, and doesn't address whether the homeowner can hire the most expensive contractors he can find to fix the problems and then send you the bills, or has to allow you the chance to fix them yourself.  Unfortunately I couldn't find anything about that in the Arizona statutes or on the ROC's website.

     

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