A Memphis-area arbitration panel awarded residential homebuilder David Clark Construction contract damages and attorney fees Wednesday in a dispute closely-watched by the regional construction industry. Clark is the immediate past president of the Memphis Area Home Builders Association.
Pietrangelo Cook Attorneys
In its binding opinion, the panel determined that the homeowners had breached the construction contract by changing the standards of construction and evicting Clark’s team from the project mid-stream.
Because binding arbitration provisions are so common in construction contracts, the decision will likely resonate across the home construction industry in its protection of the rights of homebuilders in disputes with owners.
The homeowners, in this case, contracted with Clark to build them a $600,000 home in the exclusive “Enclave” subdivision in Germantown, Tennessee. After Clark had completed 80% of the work, the homeowners ceased payment, arguing that Clark had breached the construction contract because his work varied in small ways from the home designer’s original plan. They then hired a new builder to finish the job at a substantially increased cost using building methods not customary for residential construction in the area, and sought to hold Clark liable for the balance.
Pietrangelo Cook attorneys Tim Johnson, Bryan Smith and Darrell Phillips vigorously defended the contract, arguing that Clark retained some discretion under its terms to vary from the plans, and that the homeowners had themselves breached, by changing the standards of construction in the middle of the game.
Bolstered by the expert testimony of widely-revered architect Carson Looney and builder Brad Rainey, Clark showed the arbitrators that his work was consistent with standard building practices in Memphis and Shelby County and that the homeowners’ unilateral termination of the contract was not allowed.
The arbitrators unanimously agreed, awarding Clark $230,000 in damages.Click here to read the binding opinion of the Arbitration panel.
