Legal Question in Construction Law in California

Contract breach by general contractor

A licensed general contractor was hired last June 2006 to rebuild our home. It has been one year and the home is only 40% done. We are 6 months behind his contract. Delays were not for unforeseen reasons( weather, materials) but due to his lack of man power and subs that weren't paid on time or at all. We are paying interest only on our construction loan and am incurring a penalty. We requested money back for unfinished part, he is stalling again. If we fire him and sue him, could we still hire another general contractor to finish the house while in letigation? He seems to be having trouble with money so I don't know if it is a good idea to sue and incur legal fees on top of the extra cost for the delays to us (if he is bankrupt or has no money to pay) He is also incorporated so does that mean we cannot go after his personal assets if he does not have any money in his business? Do we need to hire a lawyer if it is in small claims court?


Asked on 7/15/07, 3:38 pm

2 Answers from Attorneys
Jim Schaefer Schaefer & Associates

Re: Contract breach by general contractor

I strongly suggest you consult a construction attorney for this one. Please call me to discuss if you seek representation.

Generally,you may hire another contractor to finish the job if he is in default. However, caution is in order that if you wrongfully eject him you may be found in default. Hence why I suggest speaking with an attorney.

Please review my profile and contact me should you seek representation.

Thanks for the question.

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Answered on 7/30/07, 4:39 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Contract breach by general contractor

The strategic analysis must begin with a careful reading of the contract. Contracts for major (commercial, industrial, public works) construction projects are full of provisions covering delays and failure to perform, including completion bonds, performance bonds, liquidated-damages late penalties, requirements for weekly meetings between the contractor, the subs, the architects or engineers, and the owner.

Residential construction contracts probably lack most of these features, especially the performance or completion bond. However, you must start your process by combing the contract for default provisions and remedies. You also need to look at whether there are mediation or arbitration provisions.

I doubt that this matter is suitable for small claims court. The jurisdictional limit there is $7,500. You might be able to recover your loan penalties, but the major issue of damages for breach of contract would be left unaddressed and perhaps compromised by litigating in small claims.

I think after you read your contract and form a good layman's view of your rights and remedies, you should ask a local construction lawyer for an initial free consultation, at which time you could find out about fees, possible contingency fee agreements, statutes of limitations, possible actions on the contractor's bond, whether you can now hire another contractor to finish up, and whether the contractor might be personally liable or whether your causes of action must be against the corporation alone.

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Answered on 7/15/07, 4:26 pm


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