Craig Martin, Construction Attorney, Lamson Dugan & Murray, LLPAnother court has found that poor record keeping will prevent recovery on a claim.  The court in Weatherproofing Tech., Inc. v. Alacran Contracting, LLC found that a contractor’s documents were a mess and that no reasonable jury could base a verdict on the contractor’s records.

The underlying project involved the construction of an army training facility.  The total project cost approximated $13 million.  Alacran, the general contractor, subcontracted about $3 million of the work to Weatherproofing Tech.  Alacran paid Weatherproofing $700,000 for its work, even though Weatherproofing submitted invoices of more than $2 million.  Alacran justified its refusal to pay Weatherproofing on the grounds that the parties had agreed to split the profit and loss on the project and the project was out of money.  Not surprisingly, Weatherproofing sued Alacran for the amount owed.

Even though Alacran’s justification for refusing to pay Weatherproofing was suspect from the outset, the real problem with Alacran’s defense was its deplorable recording keeping. The court found:

Alacran’s accounting records were a mess and the expenses reflected in its books were fraught with contradictions that Alacran’s own employees could not explain. 

The records were so bad that the court ruled that Alacran could not introduce any of the underlying documentation of its expenses during trial.

To make matters worse, the parties did not execute a contract.  They instead relied on oral agreements, a Teaming Agreement, a Statement and Acknowledgment and Purchase Order.  These documents detailed the parties’ agreement to prepare their proposal for the bid, describe the initial scope of each company’s responsibilities, and provide that Weatherproofing’s compensation would be one third of the $13 million contract, but lacked any specific duties or obligations of the parties.

Apparently because the documents supporting the relationship lacked specific duties and obligations, Alacran even argued to the court that it had never agreed to pay Weatherproofing’s invoices.  When you have no documents to support your claim, it’s interesting to see the defenses that can be raised.

Take Away: The devil is in the details. If you cannot support your claim, you will not prevail at trial.  It is imperative that proper documentation is created and maintained throughout a project.