Construction Group Success Story

“In the cases I see in the Construction Group, I think there have been three very specific criteria that have helped us in developing the high success rate we have with our clients: We always negotiate from a position of strength; we always organize our facts; and we always have patience, understanding and creativity to spare.

For instance, one of our clients was retained to build five apartment buildings during an 18-month period of time. After 18 months of construction, three buildings were completed. The final two buildings were finished shortly thereafter. During the course of the project, the owner never complained about the progress of the work or about our client's quality of workmanship.

At the end of a project like this, typically the construction financing (those dollars borrowed for construction purposes) is converted to permanent financing (a mortgage). The owner on this project represented to its bank that the project had been completed in a workman-like fashion, thereby allowing it to obtain its permanent financing. Once the transaction was completed, however, the owner began to complain about the quality of the workmanship, refusing to pay well over a million dollars in contract balance owed to our client. The owner took this position despite the fact that it was leasing the property for exactly the rentals it had projected. In fact, people were beginning to move into these buildings at the time.

So why would the owner say one thing to its lender and another to our client? Probably because it simply did not want to pay our client the remainder that it owed on this $20 million project. After numerous attempts to resolve the dispute through negotiations, and later mediation, our client was forced to seek court intervention to secure his money. As we prepared for litigation, we did so with the belief that we could use the legal process to pressure the owner into settling the case.

You see, it is not unusual for companies that erect buildings and own real estate to do so as single-purpose entities. Often these entities take certain liberties regarding how they allocate their money and how they run their operations. We had reason to believe that such liberties were taken here. So, instead of simply defending against the owner's allegations of faulty workmanship, we took the position that not only was our client entitled to its entire contract balance, totaling more than a million dollars, but that the owner may not have operated the entity in accordance with the law. If the court ultimately agreed with our position, the owner would have been personally liable for that debt.

At trial, the owner was unprepared, or unwilling, to answer many of the questions that we asked regarding how it operated the entity or accounted for costs. That said, the owner was questioned on a Friday; by Monday, the case was settled. Our client got the money he was owed, plus interest.

At Cohen Seglias, our attorneys negotiate from a position of strength by looking at the big picture. Our knowledge of the construction industry makes this possible, enabling us to seek victory from a vast array of angles and positions. This particular victory took several years to earn, but when we’re fighting for our client’s best interests, we leave no stone unturned. There is always a soft spot in a case. It's our job to find it.”