Arbitrating The Costs of Residential Remodeling

RESOLVING CONSTRUCTION DISPUTES

Remodeling the Denver Mint

Mr. Nolan represented an asbestos removal contractor ("Asbesco"), who had bid on an asbestos removal subcontract for the renovation project at the Denver Mint. The general contractor who got the project ("Caddell") used Asbesco's bid when computing its own bid for the primary contract, but didn't notify Asbesco until several months later. By then, Asbesco's other contractual commitments prevented it from participating on the Mint project. Caddell used other subcontractors for the asbestos removal, and then sued Asbesco in federal court on a promissory reliance theory. Caddell sought recovery of over $150,000 as the difference between Asbesco's bid and the actual costs for the asbestos removal.

The client's resources permitted only limited discovery; a few depositions and thorough review of documents. At pretrial conference, the trial judge (who was widely known for his success in "strong arming" settlements) pressured Asbesco to pay $80,000 to settle the case. Asbesco refused, and offered only $20,000. No settlement.

As is the case with most federal trials, this jury trial moved quickly. Mr. Nolan focused upon the reasonableness of the general contractor's reliance, the delay in notifying Asbesco, and the reasons why the actual removal costs had skyrocketed. The jury returned a verdict for the general contractor, but awarded only slightly more than $6,000. One of the jurors later told Mr. Nolan the damage award was a "compromise verdict," computed by averaging the amount(s) of damages which each juror was inclined to award. Though the jury's deliberation method was questionable, Mr. Nolan's sterling performance produced a result that saved his client's business.

Caddell Construction Co. v. Asbesco, Inc.; U.S. District Court for the District of Colorado

A Commercial Roofing Dispute

Mr. Nolan's client, a roofing contractor, was sued by the owner of a large warehouse complex. The owner claimed the roofer had performed in an unworkmanlike manner when re-roofing a warehouse several years earlier. Before suit was filed, the owner notified the roofer of leakage problems and predicted the need for a completely new roof. Mr. Nolan helped his client prepare written responses to posture for future litigation. From his client's perspective, the owner was intent upon getting someone else to pay for a new (and better) roof. As events developed, this seemed to be the case. The owner replaced the roof and sued Mr. Nolan's client for approximately $190,000.

Pretrial preparations were modest, but adequate; just a few depositions, careful review of documents, and working with an independent roofing expert to refute the plaintiff's claims. Part of the defense strategy was to focus upon the responsibility of the owner's architect, who had monitored and approved the roofer's work during the initial job.

Mr. Nolan's performance at trial was top-rate, and eventually produced a favorable settlement. Feeling strongly about their case, the owner and his lawyer demanded $120,000 to settle the claim just before trial commenced. Mr. Nolan's client simply said "No." By the end of the first day of trial, Mr. Nolan's artful cross-examination of the plaintiff's architect had shaken the plaintiff's confidence, causing a new settlement offer of $90,000 to be proposed by the owner. Mr. Nolan's client said, "No" again, and the court reporter commented to Mr. Nolan "I like your style, Thom." On the second day of trial, the plaintiff's expert witness was subjected to Mr. Nolan's effective cross-examination. By the end of that second day, the plaintiff dropped its settlement demand to $60,000. Mr. Nolan's client refused, countering with a $12,000 offer. Trial continued into a third day, with Mr. Nolan's effectiveness making the opponent even more concerned. By lunchtime, the plaintiff's settlement demand dropped to $40,000. With this, further settlement discussions were pursued in earnest. Ultimately, Mr. Nolan's client agreed to pay a $20,000 settlement over one year. As the case was closed up, both the client and opposing counsel complimented Mr. Nolan on the terrific courtroom performance he had rendered.

Industrial Partners/Stan Drobnek v. Metro Roofing, Inc.; District Court for the City and County of Denver, Colorado

Arbitrating the Costs of Residential Remodeling

A wealthy corporate executive purchased a large and historic Denver home and hired a contractor to do substantial remodeling. As the renovation project neared completion, total costs were so high that the homeowner terminated the relationship with the contractor. The contractor pressed for payment of costs and fees exceeding $230,000. The homeowner acknowledged a substantial payment was still due, but claimed some work was defective, and felt substantial cost overruns were the contractor's fault. He engaged Mr. Nolan to help resolve the dispute through negotiation and/or arbitration.

An arbitration demand was filed by the contractor, and a hearing was scheduled. Mr. Nolan and his client hired a construction management specialist to serve as advisor and expert witness. Together they prepared a matrix, identifying many questionable cost overruns and workmanship issues. As the arbitration hearing approached, that matrix became the basis for settlement discussions. Settlement was reached a few days before the hearing, as the contractor reduced his initial demand by approximately $55,000. Mr. Nolan's client promptly paid the negotiated settlement amount.

When the final settlement documents were executed, opposing counsel gave Mr. Nolan the following compliment: "I've arbitrated a lot of construction disputes like this, and your case was as well-prepared as any I've seen."