Legal Question in Construction Law in California

Re: Failure to perform on a Contract by an Owner

Based on the information you've provided, I concur with Mr. Newton's reply.

Re: Failure to perform on a Contract by an Owner

The facts you've described indicate a good claim against the owner. He seems to not understand that a contract works both ways. While he has a right to expect you to fulfill the promises you made, he has a correlative obligation to let you complete the work and earn the amount of the bid he accepted.

If he reneges and contracts with someone else for reasons unrelated to anything that you have done or failed to do, (subject to some exceptions noted below) he has wrongfully terminated the contract. You would have a right to claim any profits you can prove you'd have made had you been allowed to fulfill the contract. Please note, though, that proving lost profits is not always as easy as it may sound.

Your claim for labor and materials already supplied to the job appears sound as well, although I can't comment on the dollar amount without more information. But, if the labor and materials you've already provided are within the scope of work of the signed contract, then he is obligated to pay. You would have mechanics lien rights for the lesser of the contract value or reasonable value of the labor and materials.

I'm curious about the long delay between contract execution an issuance of building permits. If the owner can legitimately lay any of that delay at your feet, he may have the grounds for some dispute. If you assumed some responsibility to process the permits, and the delay was caused by some error or omission on your part, the owner might have some grounds for his beef. But, without having seen the contract, I can't say if any such problem would constitute a material breach allowing him to terminate the contract. Who was responsible for plan check and permit issuance? If an architect involved, I'd wonder if design problems caused problems and delay in plan check.

I'd also want to know if the contract contains a "termination for convenience" clause. Some contracts allow an owner to terminate for reasons unrelated to any breach by the contractor. However, those clauses almost invariably require fair compensation for work performed and materials supplied.

There are a lot more questions that need answered, but based solely on what you've told us, your claim seems sound. I'd contact an attorney in your locale who specializes in construction and mechanics lien law. Please let me know if you have any further questions or comments.

Now the inevitable caveat: I've offered the preceding information as an accommodation only and my response cannot be construed to create an attorney-client relationship. The response I have provided to your question does not constitute a legal opinion based on a comprehensive review of the facts of this dispute or relevant documents. Before undertaking any action, you should contact counsel in your area that are proficient in this area.

Best Regards,

Tom Newton