Legal Question in Civil Litigation in California
Contract law-Are we responsible for an insurance company claim?
We are a Contractor who has a contract to do a complete remodel on a residence.The homeowner decided not to do the work.We had since ripped out the area.She turned it in to her homeowners policy.The insurance paid her 3120.00.We told the insurance company after they paid out that we have a binding contract with the owner.The insurance company then billed us for the claim they paid out. They have since sent this to collections.Here we are with contract for the remodel.Insurance company that paid out before doing any checking on our contract with the owner.And a collection agency wanting us to send them a check.What do we do?
3 Answers from Attorneys
HERE ARE THE STEPS TO TAKE
First, do not pay any money to the collection agency. Send them a letter saying that the charges are in dispute. Then, if you want to, start an action against the homeowner for whatever is owed on the contract. If it is less than $5,000 you can do it in small claims court without hiring a lawyer.
Collections NO!, Contract YES
It is unclear by your message what you mean by "we ripped out the area."However, if you had a valid binding contract, then you shouldtake the homeowner to small claims court (up to $5,000) under abreach of contract theory. As for the insurancecompany, notify them that the charges are in dispute, since the homeowner may be guilty of insurance fraud. Youmay need to hire a lawyer to write a letter to the insurancecompany and/or defend you against a collectionattempt. However, I do not think that you would be liable to them for anything.
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Remodeling and Insurance Claim
The way you phrase your question leaves me wondering what you mean when you say "We had since ripped out the area." By "since", do you mean you continued doing work after the owner told you she no longer wanted the work done? If so, the insurance company may have a valid claim. If you did the work before she cancelled, you may well be entitled to recover for the fair value of the work you performed and should inform the insurance company that you dispute the claim.
If the $3120 is the full extent of your loss then the matter can be handled in small claims court without an attorney; however, if you have other losses (especially if they are substantial) you might want to consult with a lawyer. You may contact me if you wish.
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