[wasdifferent]

From: http://dictionary.law.com

fiduciary
1) n. from the Latin fiducia, meaning "trust," a person (or a business like a bank or stock brokerage) who has the power and obligation to act for another (often called the beneficiary) under circumstances which require total trust, good faith and honesty. The most common is a trustee of a trust, but fiduciaries can include business advisers, attorneys, guardians, administrators of estates, real estate agents, bankers, stockbrokers, title companies or anyone who undertakes to assist someone who places complete confidence and trust in that person or company. Characteristically, the fiduciary has greater knowledge and expertise about the matters being handled. A fiduciary is held to a standard of conduct and trust above that of a stranger or of a casual business person. He/she/it must avoid "self-dealing" or "conflicts of interests" in which the potential benefit to the fiduciary is in conflict with what is best for the person who trusts him/her/it. For example, a stockbroker must consider the best investment for the client and not buy or sell on the basis of what brings him/her the highest commission. While a fiduciary and the beneficiary may join together in a business venture or a purchase of property, the best interest of the beneficiary must be primary, and absolute candor is required of the fiduciary. 2) adj. defining a situation or relationship in which a person is acting as a fiduciary for another.

I often work as a construction manager, on a percentage basis. I have an obligation to put the customer's best interests ahead of my best interests.

During the busiest times of the year, on an almost daily basis, I see examples of subcontractors who have not acted in their customers best interests. Compared to a construction manager what is their liability?

As an example, two days ago I met with a customer to discuss replacing a section of foundation, that had settled over 3". They just had new vinyl siding and replacement windows installed. The contractor who installed them was aware that the section of foundation would be replaced, and the house would be leveled up in the near future, but went ahead with the job anyway. Now, when the house is leveled up, the siding will be 3" out of level, and the new windows will be out of level and out of square. The siding installer should have held off on his installation until the house was leveled up.

If the siding installer did this out of greed, trying to get the customer's money before the customer changed his mind, how liable is the siding installer?

If the siding installer did this out of ignorance, not realizing the vital role that the General Contractor/Construction Manager plays in preventing these kinds of stupid mistakes, how liable is the siding installer?

A lot of subs try to avoid working with construction managers, and general contractors, and try to work directly with the home owner. Over the years, I have come to understand why.

What course of action should I recommend to my customers to recover damages from these greedy and incompetent contractors?

 

[CogentRES]

Good post.

Fiduciary,
I remember this word from Real Estate Law.

I have a saleperson's license and when I work for clients, I represent them and their best interests. All parties involved understand this. If I did something that was self serving at the expense of my client I would be sued.

Why this is not the case with contractors confounds me. Hiring someone to sell your house is an important decision. Houses are usually the only asset many people own. So why they would let some hack devalue their property and take thier money?

 

[wasdifferent]

1. Just for the record; other than being a total waste of the customer’s money, the siding job was exemplary. I haven’t seen better in a long, long time.

2. I see dozens and dozens of these cases every year, where subs do a lovely job at their particular trade, but have NFC about thinking of the property as a whole.

 

[wasdifferent]

Tonight I look at a job where brand new sheetrock has just been installed. The (obviously) old roof is now leaking, and has ruined the brand new ceiling. That's two this WEEK. We're just getting started...

 

[PipeGuy]

From: http://dictionary.law.com

The contractor who installed them was aware that the section of foundation would be replaced, and the house would be leveled up in the near future, but went ahead with the job anyway. Now, when the house is leveled up, the siding will be 3" out of level, and the new windows will be out of level. The siding installer should have held off on his installation until the house was leveled up.

What course of action should I recommend to my customers to recover damages from these greedy and incompetent contractors?

Are the 'damages' you refer to solely the inevitable cost of remedying the siding/window job once the foundation has been repaired? Should we assume the contractor has already been paid in full?

I can't imagine that I can tell you anything you don't already know in the way
of the various means available for recovering damages. Personally,
I've yet to see damages valued under $30,000 whose recovery by means of the court system was cost effective.

I think the course of action, if any, depends upon:
1. The extent to which the contractor's prior knowledge of the pending remedial foundation work can be evidenced.
2. The extent to which it can be demonstrated that the contractor had knowledge of the potential conflict posed by performing the siding work prior to the foundation work.
3. The extent to which it can be demonstrated that, having knowledge of the potential conflict, the contractor failed to identify the conflict to the Owner.
4. The extent to which it can be shown that the contractor proceeded without due direction of the Owner.

I agree that, given the circumstances you've outlined, the contractor should have identified to the Owner the need to sequence the siding work appropriately. That being said, if the Owner subsequently directed the contractor to proceeed then I don't see the problem stemming from the contractor's misconduct.

 

[PipeGuy]

from: http://dictionary.law

malfeasance
n. intentionally doing something either legally or morally wrong which one had no right to do. It always involves dishonesty, illegality or knowingly exceeding authority for improper reasons. Malfeasance is distinguished from "misfeasance," which is committing a wrong or error by mistake, negligence or inadvertence, but not by intentional wrongdoing. Example: a city manager putting his indigent cousin on the city payroll at a wage the manager knows is above that allowed and/or letting him file false time cards is malfeasance; putting his able cousin on the payroll which, unknown to him, is a violation of an anti-nepotism statute is misfeasance. This distinction can apply to corporate officers, public officials, trustees and others cloaked with responsibility.

 

[CogentRES]

Mike-

From reading your other posts you seem to charge a premium price for premium work. If you do get the two jobs in question and make the clients happy, perhaps you can use these examples with pictures in future sales presentations.

Homeowners:We did get a lower bid than yours Mike
You: I understand that. But see that bid does not really compare with mine. That person is bidding to re-side your house. I am bidding to work with you to improve your home while always making sure your best interest is the most important aspect of this project. There are many people who will bid on a job without caring whether or not other factors may ruin what you are paying
for. Look at these examples.

However if you do this and miss something you will most likely end up court facing people who claim you pledged to represent them and did not. Situations like these are not simple.

 

[wasdifferent]

Pipe,
I am not missing the point that, in many cases, the customer is more to blame than the contractor. In the siding case, the customer is an old woman who knows nada about anything mechanical, the sheetrock case is a professional guy who would pass out cold if he ever got dirt under his fingernail. These particular homeowners just don't know anything about construction at all, and they depend on their (sometimes inept or greedy) contractors to take care of them. I really dislike seeing so much litigation, but some of these stunts are just sick. Some of these guys are not contractors, they're salesman. There is a difference. They have no respect for the fiduciary/beneficiary relationship that is supposed to exist between the contractor and the home owner.

I was mainly interested in how liable these guys are compared to a construction management firm. I was lucky enough to take building construction, construction technology, and civil engineering technology; and this stuff was drilled into us from square one. It's not just an idea, it's a way of life, and I take it into consideration with every single move that I make. With 6 years of that stuff being pounded into me every day, it doesn't take any thought, it just comes naturally. I guess that's what the professors had in mind...

 

[wasdifferent]

...Homeowners:We did get a lower bid than yours Mike...

cogentRES,
I just tell 'em "Here's a refrigerator magnet with my phone number on it, save it".

 

[PipeGuy]

Pipe,
I was lucky enough to take building construction, construction technology, and civil engineering technology; and this stuff was drilled into us from square one. It's not just an idea, it's a way of life, and I take it into consideration with every single move that I make. With 6 years of that stuff being pounded into me every day, it doesn't take any thought, it just comes naturally.

I'm the same way - just got here by a different bus. I was fortunate to spend the better part of 20 years working for someone who always, without fail, had the customer's best interest as priority #1. Thanks to his Rotary interests I learned The Four-way Test: Is it the TRUTH? Is it FAIR to all concerned? Will it build GOODWILL and BETTER FRIENDSHIPS? Will it be BENEFICIAL TO ALL CONCERNED? Not a bad test.

I'm going to call an attorney friend of mine and bounce this off him. I'll let you know what he says.

 

[wasdifferent]

...I learned The Four-way Test: Is it the TRUTH? Is it FAIR to all concerned? Will it build GOODWILL and BETTER FRIENDSHIPS? Will it be BENEFICIAL TO ALL CONCERNED? Not a bad test...

Not bad indeed; and not optional either. Very nice...

...Some of these guys are not contractors, they're salesman. There is a difference...

I guess your boss was a contractor, god bless him.

I'll check back later, I'm interested in what your lawyer friend says. I'll check with mine when I get a chance. The trouble is, as you said, It's not worth the legal fees to litigate these cases, except in small claims court. The cheapest insurance still turns out to be a long term relationship with a good general contractor. Many of these subs are good tradesman, but they just can't see how the whole process works. I demolish their nice work all of the time. Much of it is still new and fresh. It's just a shame, and it bothers me.

 

[PipeGuy]

Many of these subs are good tradesman, but they just can't see how the whole process works.

BINGO! "You win a cookie!" (in my best Don Rickles voice - as Crap Game in the movie Kelly's Heroes).

 

[MikeF.]

My $.02

I think I'm qualified to answer your question..I hold a Juris Doctorate. Basically, you guys already know the answer..the sub is only as liable as he is reachable for damages. So, you've already answered the practical aspect of the problem.
As for "liability"; the more appropriate terminology would probably be "duty" in this case. In other words, does the sub have a duty to the HO that requires that he anticipate that the foundation would need replacing (and ultimately make the siding/window work that he was about to do pretty much useless). This is a question of fact (i.e. is it reasonable to hold a siding guy responsible for knowing that his siding work would have to be redone if the foundation is settled).
Chances are, under normal circumstances, the sub will not be expected to have this type of knowledge/expertise. Thus, if he had no knowledge (which would be presumed, and could be rebutted only by evidence that he had actual knowledge of the impending foundation repair), he had no "duty" and consequently, he could not breach his fiduciary duty to the HO.
As you already discussed, whether or not he did know about the foundation flaws (and that the siding would have to be replaced if he installed it before the foundation work was done), is something that only thousands of dollars in legal fees spent on a trial could ascertain. Unfortunately, the old adage, caveat emptor (buyer beware) holds true, despite the existence of a legal remedy. Legal remedies are useless if you can't realistically exercise them.
Again the answer to your question, is the sub liable for the damages, similar to a construction manager? No. You would be on the hook more often because your role is that of an expert in various disciplines of "contracting". Even if you have a broad knowledge of all of these areas (ie. framing, flooring, etc.) but the sub you hire to do siding F's up, you might be the one the HO drags into court (if the dmgs are enough) because you "hold yourself out" as having greater knowledge of construction/remodel than the HO. Unfortunately, this puts you first in the line of fire. If a sub F's up, and you are blamed, you can drag them into court as well...but as you know any time you need a lawyer it's expensive.
As a practical matter (I can't believe I'm about to say this) if the stakes aren't too high and your comfortable doing it...represent yourself if you are named as a defendant. Judges are very lenient with defendants who are "pro se" (not represented by an atty), as long as you comply with time limits the judge gives you. While this is time consuming, it can be cheaper than retaining counsel. Also, judges are usually fair, but remember they are human and will be sympathetic to an 85 year old widow who reminds them of their own mother.
Also, please do not construe any of the above as actual legal advice. If you find yourself in a similar situation, you should consult with an attorney in your state/locality. Sorry...I had to say it.

 

[wasdifferent]

...Basically, you guys already know the answer...

Yeah, but I just had to vent a little. A lifetime of fixing other people's mistakes can get on your nerves once in a while. I should be thankful, they generate a lot of work for us.

Welcome aboard. We get quite a few legal questions here, and we are thankful for your advice.

Thanks for the imput. I'll pass it on to the homeowners. :Thumbs:

 

[Teetorbilt]

MikeF, very nice. It suprised me that an attorney would be reading our pages.
I was attacking pre-reqs for law at Nova U when my father was killed. He was a GC specializing in commercial renovations, I was the eldest and forced to take over the company.
I still think that I would have made one he** of an attorney, I love leading ol#2 in an argument and then dropping the bomb on her. It does have certain repercussions though.
Glad to have you on board!