How We Helped YJ Construction Reclaim $275k After a Handshake Deal Went Wrong

Unfortunately, our client’s agreement was made verbally and confirmed with a firm handshake. In our part of the country, this is more common than you might think. The fact of the matter is local contractors and subs want to live in a world where agreements are made with a handshake–one where people are taken at their word.

This, as you might imagine, made our job more difficult.

Here are the circumstances of the case:

The homeowners appeared to have waited as long as they could, allowing YJ to continue working without being paid. Once the house became fairly well weatherproofed, about halfway through the construction project, the homeowners demanded YJ pack up and leave–essentially ejecting them from the site.

When confronted about past-due payments, the homeowners refused to pay–claiming they were being charged for materials and labor that YJ was not putting into their custom home.

When written correspondence and in-person meetings failed to resolve the issue, YJ realized that the only way to be reimbursed for their labor, skills, and materials—approximately $275,000—was to seek legal counsel.

Continue reading to see how we won this breach of contract case for YJ.

Navigating Breach of Contract Without a Written Contract

Breach of contract occurs when one party doesn’t live up to their obligations as per a legally binding agreement. The most common reasons for why a contract may be breached include:

Failure to perform;
Work or service doesn’t meet agreed-upon standards, i.e., substandard performance and
Repudiation–refusing to honor the deal before its due date.

In Wyoming, we have a few rules that both parties must follow when entering into a legal agreement.

1. Enforceability of Oral Contracts

While the state does recognize oral agreements as binding, they’re often hard to prove.

2. Implied Covenant of Good Faith & Fair Dealings

As per Wyoming law, all contracts are to be performed fairly and in good faith. Failure to do so is a breach of the contract.

3. Unjust Enrichment as a Remedy

This is an important law as it applies to our case. It says that one party cannot benefit at another’s expense, which is exactly what the homeowners did in this case.

Addressing YJ Construction’s Needs

The discussions between YJ Construction and the homeowners became contentious, and it was clear that the owners were not going to pay the outstanding invoices for services and materials provided.

The owners also made early but not very developed claims for damages, stating YJ’s work was defective or subpar. By the time YJ filed a Complaint in District Court and the owners counter-claimed, the homeowners’ allegations had grown, as did their prayer for damages.

Since they were not going to finish the custom home build, the owners of YJ Construction simply wanted to be paid for their labor and out-of-pocket costs thus far.

Despite not being paid for some months, they also paid their subcontractors, so YJ Construction would have been out even more money if the homeowners had not paid them.

The owners of YJ were concerned about their reputation, as the homeowners were accusing them of charging for labor and materials that were never used and claiming their work was substandard.

Stinson Law’s Legal Strategy

On the day the homeowners ejected YJ Construction from the build site, they presented them with a letter from their attorney outlining their complaints and telling YJ Construction to pick up their tools and materials and vacate the site.

The letter stated in part that if the owners of YJ Construction provided receipts of their purchases and payment for materials as well as labor, the homeowners would pay the outstanding Invoices and the parties would go their separate ways.

The owners of YJ were referred by another general contractor to Stinson Law Group and contacted Scott Stinson for help.

After discussing with our client the facts and circumstances of the hiring of YJ, negotiation for costs, design plans, stages of construction, and the dispute as the owners of YJ understood it–along with the homeowner’s letter from their attorney–we formed a strategy to get YJ Construction paid without resorting to litigation. This is because litigation can be expensive, and it usually serves clients who want to try to resolve their case prior to having the fight in court.

Multiple attempts were made to get YJ paid by communicating with the homeowner’s attorney. Eventually, while it was not part of the agreement between YJ and the owners, YJ Construction provided receipts from material suppliers, labor invoices from the subcontractors, and labor and costs from work performed by YJ Construction to opposing counsel in an attempt to get paid.

The homeowners still refused to pay–despite what their attorney’s letter said.

Pre-suit mediation was also discussed, but the homeowners put too many conditions on it.

At the end of the day, the homeowners had possession of the house and were moving forward with construction on their own. They had little incentive to pay despite their promise in their letter to pay.

Challenges We Faced

All litigation is challenging, especially for clients, as it often takes longer than expected and can be both mentally and emotionally exhausting. In the case of YJ Construction’s owners, there was also confusion and frustration because they were not getting paid for the work they did, and they were being accused of being deceptive–billing for work and materials they did not do or provide–which, of course, is not true.

This case was particularly challenging in how obstinate the homeowners were. They had been provided proof of purchase and payment of materials and labor put into their home but they would not pay.

Instead of paying they filed counterclaims alleging damages and that YJ Construction owed them. Throughout the litigation, the owners would bolster their claims that some of the construction was defective or subpar as a basis for damages that YJ Construction should pay them.

During depositions, the homeowners provided YJ Construction with a spreadsheet of their claims for defects or losses. The total changed three times over the course of the litigation, going from an amount almost equal to what YJ Construction was owed to about half of that amount.

Some of the claims were outrageous.

For example, the owners wanted to be paid their normal work rate for doing construction work when they had little to no experience in the construction field. Their hourly rate was three times the amount of what general contractors in the area make.

Ultimately the only way the substantive issues were overcome was through a trial. The jury fixed this problem for YJ Construction with their verdict.

Actions Taken

The strategy played out quite well in court for a number of reasons, including the homeowners continuing to take untenable positions. Our case was simply better developed, better prepared, and more intelligently argued in and out of court.

YJ Construction made claims for breach of contract, breach of the implied duty of good faith and fair dealing, and unjust enrichment.

YJ’s claims for damages were the same from day one–to be paid the approximately $275,000 they were owed for labor and materials supplied.

The homeowners counterclaimed with breach of contract, breach of the implied duty of good faith and fair dealing, and claims of fraud.

Results & Outcome

The jury returned a verdict for YJ on their contractual claims and found YJ Construction had not breached any of its contractual obligations nor engaged in any fraud.

In particular the jury found that the homeowners did not act in good faith or deal with YJ fairly. This was a win, both monetarily and on principle.

The homeowners were awarded none of their damages from the jury.

The Judge also awarded YJ Construction money for some of their costs of the litigation and interest on the unpaid amounts during the course of the litigation.

Our client did very well.

Dealing with a Breach of Contract Dispute? Let’s Discuss Your Options

Through unwavering advocacy, Stinson Law Group managed to secure justice for YJ Construction. Not only did we get $275,000 they were owed, we also helped restore their reputation in the community.

Our team has successfully represented countless legal disputes in Wyoming and Montana and is ready to take on the next challenge. If you are facing a breach of contract situation and want to discuss your legal options, please reach out today to either our Cody law firm or Bozeman law offices for a free consultation.

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