Firm Wins Half Million Dollar Judgment in Construction Arbitration

On December 9, 2013, STSW lawyers Bill Sinclair and Ned Parent obtained a half million dollar judgment in a complex construction arbitration before the American Arbitration Association. After pre- and post-arbitration briefing and a four-day hearing before Arbitrator J. Snowden Stanley, which included a comprehensive site visit and fact and expert witness testimony, Sinclair and Parent convinced Mr. Stanley that their client, the Edgewood American Legion Service Post 17, should receive money and credits from the architect and general contractor who failed to complete a re-build of the Legion’s hall in Edgewood, Harford County, Maryland.

This case began during the “Snowmageddon” of February 2010, when record Maryland snows caused the roof of the Edgewood American Legion hall (“Hall”) to collapse. The Legion obtained bids from several local contractors to re-build the Hall and ultimately went with Burton Pfund, Inc. to design and rebuild the Hall. Burton Pfund agreed to do this work through two trade names — Burton Pfund Architecture would design the re-build, while MasterPlan Design Build (collectively, “Burton Respondents”) would perform the reconstruction services. The parties signed a guaranteed maximum price contract for the Burton Respondents to perform the necessary work for $840,000.00, plus selective demolition services for a GMP of $50,000.00. Work began in the Fall of 2010 and continued through Spring 2011.

Ultimately, the Burton Respondents failed to reach substantial completion of the project, as required by the contract, as amended, by Memorial Day 2011 as they were required to do and, by oral agreement with the Legion, extended that date to July 4, 2011. But by that date, the Hall still was not ready, even though the Legion had paid nearly the entire $890,000.00 required under the Contract, in large part because of an alleged signed Change Order installing an automatic sprinker system that was not included in the Hall’s original design. In mid-July 2011, after the Burton Respondents alleged that the Legion fell short of an invoice by a nominal $3,500, the Burton Respondents walked off the job, claiming the Legion breached the Contract first by failing to pay. As a result, the Legion was left with an unfinished Hall that needed significant additional work before it could be re-opened.

The Legion initially brought suit against the Burton Respondents in Harford County Circuit Court but agreed to enter binding arbitration. The parties then selected Mr. Stanley, through his association with the American Arbitration Association, to arbitrate the matter. Over four days in early September, 2013, the parties presented documentary evidence and fact and expert witness testimony and conducted a day-long site inspection with Mr. Stanley. After the close of evidence, the parties submitted post-arbitration briefs to supplement the pre-arbitration briefs already filed.

Mr. Stanley ultimately concluded that the Burton Respondents breached the Contract with the Legion because they failed to achieve substantial completion by July 4, 2011. He rejected the Burton Respondents’ contention that the Legion signed a change order for the sprinkler system and found that, while the Burton Respondents’ last invoice showed the Legion owed a nominal amount, in fact, because of unapplied credits and the Burton Respondents’ own typographical errors, the Legion was in a net credit position at that time by approximately $40,000.00. Mr. Stanley awarded the Legion damages based on the breach of contract in an amount of $523,221.00 and credits in the amount of $39,405.05. Mr. Stanley further rejected as “invalid” the Burton Respondents’ counter-claims against the Legion for breach of contract.

STSW is widely recognized as one of the premier litigation and trial firms in the Mid-Atlantic region. Sinclair is a 2013 Maryland Super Lawyer in the area of business litigation and has successfully litigated and arbitrated construction disputes in Maryland and North Carolina for owners and contractors. Parent is a 2013 Maryland Rising Star who has tried and arbitrated cases throughout the United States involving a range of business, insurance, and construction disputes. They can be reached at (410) 385-2225, bsinclair@silvermanthompson.com, or nparent@silvermanthompson.com.