A recent case out of Maryland ruled that a subcontractor must pay a general contractor $2,500,000 for construction defects arising out of a 2004 project. Now, the case did take three years to wind its way through the courts, but would you be ready to defend even a 12-year-old claim? Would you have kept the contract and documents related to the project?
This project involved the construction of a biomedical research facility. The subcontractor was hired in 2004 to construct a masonry façade on the building. In 2013, a portion of façade collapsed, and the subcontractor refused to remedy the situation. The general contractor hired another contractor to remediate the damage. The general contractor sued the masonry subcontractor, asserting a breach of contract claim seeking just over $1,500,000 for remediation, $330,000 in general conditions costs in administering the contract, $400,000 in legal fees in pursuing the claim, and over $200,000 in expert fees, for a total of $2,500,000.00.
The Court Case
The court reviewed the contract between the general contractor and subcontractor and was primarily interested in the indemnity clause that required the subcontractor to indemnify the general contractor
From all claims, loss, costs, and expenses resulting from the subcontractor’s breach of the subcontract.
Based on the evidence presented by the general contractor, the court found that the subcontractor was responsible for all costs of remediation, attorney fees, expert fees, and prejudgment interest.
Take Away: If your company was sued on a 12-year-old project, would you be able to come up with documentation that supported your defense? Would you have kept e-mails from that long ago? Would you still have any employees that worked on the project?
I’m sure there were some communications between the general contractor and subcontractor before suit was filed, but did the subcontractor keep the project file?
Construction claims may take years to develop and it’s important to preserve project files where it appears that problems may arise. If you have questions about preserving project files, we recommend you contact an experienced construction attorney.