There is nothing more frustrating to a contractor than not being paid for work completed. We previously discussed measures to be taken to protect the contractor's payment rights. This article discusses what to do after negotiations are exhausted and the contractor is forced into litigation.

It is now time to gather the necessary information needed to recover the money owed. Typically, the contractor's lawyer will want documents not only necessary to prove up the contractor's case but also to refute any defenses and counter-claims by the opposition. Documents that will help prove up the case typically include the general contract between the owner and contractor; plans, specifications and other documents incorporated as part of that agreement; change orders; payment applications and approvals; copies of checks for progress payments received; and lien or bond information. Of course, if a subcontractor is the one who has not been paid, the subcontract agreement should also be provided to the lawyer. Documents relevant to the position of the adversary typically include correspondence, notes regarding meetings and telephone calls, and documents regarding alleged construction defects.

The contractor should also provide their attorney with a list of witnesses who have knowledge of relevant facts, whether favorable or unfavorable, to the dispute. This will allow the attorney to perform a pre-suit investigation, decide which witnesses to depose and ultimately which witnesses to call to trial or arbitration. It is important that the contractor submit this information to the lawyer as soon as possible rather than waiting until the statue of limitations is about to expire. Typically, the statue of limitations for a breach of contract claim is four years, unless the contract states otherwise. However, the limitations periods for enforcing lien rights or a claim under a payment bond are typically much shorter.

It is important at the outset that the contractor be truly committed to pursuing this claim. Litigation is a form of civil warfare and will typically require a substantial financial commitment to be successful. Do not expect to simply be able to file a lawsuit and extract a quick settlement. The contractor should be prepared to take all necessary steps to prepare for trial or arbitration. Taking this approach will show strength and help improve the chances of settlement. If the opposition smells weakness, they may be more likely to push the case to trial or arbitration.

The lawyer will incorporate the information provided by the contractor into the lawsuit that will be filed. After the lawsuit is filed, written discovery requests will normally be served upon the opposition seeking information relevant to proving up the contractor's claims and to the contentions of the opposition. The discovery requests should also encompass information helpful in impeaching the testimony of the opposition or adverse witnesses. Typically depositions will be taken of some or all of the adverse witnesses. It can often take a year or two to get to trial. Hopefully, along the way the case will settle as information is gathered through the discovery process and the parties are able to better evaluate the case.

As you can see, litigation takes time and commitment. It is important that the contractor continue providing their lawyer with information needed to properly develop the case. It is also important that once this information is provided that the contractor let the lawyer decide the means and tactics to be used to achieve the contractor?s objectives. Of course, it is up to the contractor to ultimately decide whether to accept any settlement offers or to proceed to trial or arbitration.


This article is not intended to be a substitute for legal advice. If you have a legal problem, you should consult a lawyer.