Too often parties to a construction dispute do not focus on the importance of proving and recovering damages until the later stages of the case. A recent bankruptcy case, In re Patrick Gannon, shows why an analysis of damages and recoverability should be the highest priority when a home improvement project turns into a nightmare.
An often-overlooked downside to the surging real estate market is that the demand for good contractors often exceeds the supply. As a result, the risk of poor quality construction tends to rise as builders rush to complete jobs or use workers that are not up to the task. In the context of condominiums, the risks of construction defects present some unique complications for unit owners when the defect is found in a common area such as a roof, elevator, or staircase.
Most people don't realize that there are a series of important facts they should know about their building contractor before hiring them to build or renovate their home. First, make sure that the contractor you are dealing with is registered with the state as Home Improvement Contractor ("HIC") and has a Construction Supervisor's License ("CSL"). Contractors who have registered as an HIC are required to pay a fee to a Guaranty Fund held by the Office of Consumer Affairs that may be available to partially reimburse the homeowner if the contractor does not perform or performs negligently. A Construction Supervisor's License can only be obtained after the contractor has passed a test showing that he or she has knowledge of the building code, which will be important when the work is reviewed by a building inspector. More detailed information regarding HICs and CSLs can be found on the website for Massachusetts Office of Consumer Affairs and Business Regulation. This website also details the complaint process homeowners can use when something goes wrong.
For a viable negligence claim against a construction project management firm, the plaintiff has the burden of showing that the defendant exercised "managerial control" over the manner in which the work was performed when the plaintiff was injured. A recent Suffolk Superior Court ruling emphasized that in order for an injured plaintiff-laborer to bring suit against a construction manager, there must be a showing that the management company directed the work, assumed contractual responsibility, or otherwise could be deemed to have been "in control" of the jobsite.
The Massachusetts Consumer Protection Act, General Laws Chapter 93A, § 2, prohibits "unfair or deceptive acts or practices in the conduct of trade or commerce." Since Chapter 93A was enacted in 1967, the Commonwealth's courts have continued to define the scope and substance of the conduct that the law prohibits.
The "economic loss rule" prohibits a plaintiff from suing for negligence to recover "pure economic losses," such as lost profits or the cost of replacing an allegedly-defective product. The rule requires a showing of harm to person or property in a negligence case. If a defective product is involved, any property damage asserted must involve property other than the defective product itself.
The Supreme Judicial Court recently exhorted subcontractors to make sure they know the terms of general contracts before agreeing to import them in a wholesale fashion into their own subcontract.