South Florida Construction Verdict Shows Contract Provisions Can Make or Break a Case
“A small contractor like this relies on the contract to know that he’ll receive money for the next year and a half on a big project that would take millions of dollars,“ said Brown of Morgan & Morgan in West Palm Beach.
After finding a developer wrongfully terminated a contract, a Broward County jury has awarded $850,000 to a Miami Springs general contractor.
It’s a case that highlights the importance of having a clear contract. Failing to abide by a contract can really hurt small contractors, according to Morgan & Morgan’s Business Trial Group attorney William Lewis, who worked alongside attorneys Roger Brown and Zachary Hudson.
“It was difficult for our client. He did have to lay off employees and there was a financial setback. It was important for the jury to understand why that provision existed,” said Lewis.
In June 2019, developer Royal Estates of Cooper City signed a contract with Gray Construction & Associates, a general contractor, to build concrete shells for 18 homes on the property at SW 106th St. in Cooper City. The contract included labor, services and materials for the project, which consisted of four different models of large luxury homes.
Royal Estates, owned by Isaac Dabakaroff, the founder and CEO of New York real estate and property management firm Skyland Management, terminated the contract in July 2019. The contract was terminated because the developer decided to sell the property for about $6 million to another developer.
According to Lewis, the contract had a clause that required payment for reasonable overhead and profit on all work “which had not been executed at the time of termination.” Lewis said Royal Estates refused to pay the subcontractor after the contract termination.
Grey Construction then sued Royal Estates for damages resulting from a breach of contract. For Brown, one of the biggest challenges was justifying the award to the jury and helping them understand how the construction industry works.
Lewis said Royal Estates argued it’s not reasonable to pay all of the profit and overhead Grey Construction would’ve made because it didn’t do all of the work.
“A small contractor like this relies on the contract to know that he’ll receive money for the next year and a half on a big project that would take millions of dollars,“ said Brown. “And that he has money to pay all of his employees, home office expenses, and everything he would need to keep his business going.”
The trio at Morgan & Morgan secured the verdict after three years of litigation. Broward Circuit Judge Michele Towbin-Singer heard the case.
Attorney Keith Silverstein in Miami represented Royal Estates.
“Following entry of summary judgment in favor of the plaintiff on a claim for breach of contract, Florida law requires that the case proceed to trial for the jury to determine damages, if any. Now that the trial has concluded, the defendant may take an appeal,” said Silverstein in a written statement.
Lewis said it’s crucial for small contractors to pay attention to a signed contract and have a lawyer review it. He said it’s also important to have a prevailing party attorney fee provision and retain the right to a jury trial.
For attorneys representing small contractors, Brown suggests paying attention to the client and their outlook on the case.
“You want to find someone to work with who has experience in construction because they can make all the difference in the world,” said Brown.
Both Brown and Lewis said their unique contingency business model levels the playing field for smaller contractors. Under the model, the law firm fronts all of the litigation costs, and the client pays nothing if they lose.
According to final judgment, Royal Estates will have to pay $850,000 plus $122,223 for prejudgement interest.
Read the complaint:
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