When a contractor has breached his construction contract by either failing to complete a job or by negligently doing the work, homeowners are left with a difficult decision about how to proceed.  Even homeowners who checked out the contractors – their licenses, insurance and references – can be surprised with defective work, or an abandoned job.  Should the homeowner sue the contractor?  If so, in what court?  What about the contractor’s insurance or bond?  There are a lot of details that can make the difference between seeing compensation and an unsuccessful claim.  A knowledgeable consumer protection lawyer with experience in construction claims can help.  Alan Green is a consumer protection attorney in Spokane that has experience in all manner of construction claims and lawsuits.

One of the biggest problems homeowners encounter when suing a contractor can be that even if they obtain a judgment, they may never collect.  That is where the contractor’s insurance and contractor’s registration bond can come into play. For more discussion about insurance and bond issues, see this previous blog post.  Here, we will focus on the different common law and statutory claims that a homeowner can make against a contractor to maximize their recovery.

Breach of Contract

The basic underlying claim behind any lawsuit against a contractor is going to be a common law breach of contract claim.  The contractor and the homeowner had a verbal or written (hopefully written!) agreement about each party’s obligations, or duties – the work and the payment for it.  If the contractor did not complete the work he was paid for under the contract, then he breached his contractual duty to the homeowner.  Once a contractual duty and a breach of that duty are established, then the homeowner will calculate their damages.  Damages are the amount of recovery they are entitled to, and equal the amount of money it will take to put them in the same condition in which they would have been if the contractor had adequately completed their work.  Damages are often determined by having another competent contractor come out and provide an estimate for finishing or fixing the incomplete and defective work.

If the homeowner can prove those elements – the existence of a contractual duty, the breach of that duty, the existence of damages, and that those damages were caused by the contractor’s breach – then they are entitled to recover the amount needed to fix the problem.  There can be some problems, though.  The homeowner will have to pay their own attorney’s fees unless there is a specific term in the construction contract that says otherwise.  And, if the contractor disappears, has no assets, or files bankruptcy it may become difficult or impossible to collect on a judgment.  That is where a good attorney can help you make other claims against the contractor that may provide other avenues of recovery.

Contractor’s Registration Statute

RCW 18.27 is the Washington statute that deals with contractors’ licenses.  It requires that contractors are registered with the state. To keep their registration they must maintain a bond.  General contractors must maintain a $12,000.00 bond, while specialty contractors only need to keep a $6,000.00 bond.  If a homeowner sues a contractor for defective work and breach of contract, then the homeowner can recover this bond money directly from the bond company, regardless of the solvency of the contractor himself.

There are a great many procedural details that must be followed closely if a homeowner is going to collect a contractor’s bond.  Specific language must be contained in the complaint, and the complaint must be filed in Superior Court.  Special steps must be taken to serve the complaint on the bond company through the Department of Labor & Industries, as well as having the complaint personally served on the contractor.  The bond company will appear through their own attorney, who must be included in the proceedings.  Eventually, if the homeowner is awarded a judgment,  special arrangements need to be made to assign part of the judgment to the bond company in exchange for payment of the bond proceeds.  This can all be very complicated, and it is important to have an experienced attorney assist you if you are going to recover all you can.

In addition to making available the bond proceeds to cover part or all of a judgment against a contractor, a claim under RCW 18.27 may also have other advantages.  One of the provisions of that law states that if a homeowner prevails on their claim, the contractor must pay for their attorney’s fees and litigation costs.  This can make a huge difference in the practical outcome of a claim.

Consumer Protection Act

Washington’s Consumer Protection Act (CPA) is codified at RCW 19.86.  The laws in this chapter set forth a framework to protect consumers from unfair and deceptive practices used by shady businesses to take advantage of people.  If a homeowner can show that a contractor’s actions met the elements of a CPA claim, that homeowner can be entitled to collect up to three times the amount of their actual damages in addition to their attorney’s fees and litigation costs.    If the right set of facts applies, an experienced attorney can make a relatively small claim that would otherwise be eaten up by fees and costs actually result in an award that will allow the homeowner to recuperate all their losses and possibly even additional punitive damages.  It is necessary to consult an attorney to see if the Consumer Protection Act applies to your situation.

There can be a lot more to a claim  for construction defects than meets the eye.  If you have a problem with a contractor in Spokane or Eastern Washington, contact the Green Law Office to see what can be done.

Recommended Posts