Anyone sue and win on contingency contract breach?

Hi guys,

I signed a homeowner back Dec. 20, 2010 for an inspection agreement that states that we will do the work if successful at getting the roof bought with the insurance company during the adjuster meeting.

My contract states that homeowner agrees to my company doing the work if successful at getting the roof replaced by the insurance company and has 3 days to cancel from date of signing (long since past)

The roof had already been denied twice from MetLife with another roofing contractor before me. But I knew that I could get it approved after walking the roof and seeing the damage.

MetLife took forever to get the re-inspect… almost 2 months… met personally with insurance adjuster manager for the state of NC… who finally approved the replacement and eventually sent the check and scope to the customer.

Now the customer has gone with another contractor for $5000 on a $7500+ replacement job. I would love to nail his hindside for breach of contract… anyone done this successfully before and any comments or advice?

I’d have to see your contract before offering an opinion. Do you have a termination clause with penalty as part of your contract?

If the contract was written and filled out correctly, there’s no reason it shouldn’t hold up. I’d recommend you visit a local attorney with contract in hand, get his professional opinion. I wouldn’t hire an attorney to replace my roof and I sure wouldn’t hire (or ask) roofers for legal advice.

To answer your direct question, ask me in a month or two. For a long while, we just let the occasional dead beat go when they pulled the same stunt your Customer did. I got tired of it a couple of months ago and decided we’d start taking action. One guy paid the 10% termination fee when he was made aware our attorney was going to take action which would immediately add $200 to his invoice. We had a check from him within 5 days.

I’ve subsequently also took the steps of having our contract reviewed again, by a different attorney. He cleaned a few things up and we jointly agreed to raise the termination fee to 20%.

We have another dead beat that is going to get a letter from our attorney this coming week or early next. I’m prepared to take him to court should he not respond in a positive fashion. So ask me in a month or two, I’ll let you know how it goes. I will say that when I reviewed it with the attorney, he saw no reason we wouldn’t win a judgment assuming our contract had been filled out correctly.

I have a “inspection agreement” and then a “work order agreement”. The inspection agreement basically allows us to represent the homeowner at the adjuster meeting with the insurance company and if successful authorizes us to do the work…

once successful, I complete the “work order agreement” with the info from the insurance scope and the payment info of course… there is a early termination clause on the “work order agreement” but I feel that I need to amend the “inspection agreement” to include one.

Even so, he clearly signed the inspection agreement that states, "After three (3)days from acceptance of this agreement, homeowner is of full knowledge that Affordable Home Renovations will perform all duties herein.

Sounds like a storm chaser contract?

Good luck convincing a judge to side with a contractor versus a home owner.

My brother has been able to talk a few home owners out of these “contracts” with home owners over the years and none have been “sued”.

I tried to convince a home owner once to do the same but his lawyer said his wife messed up with signing with a storm chaser. The contractor wanted 20% to back out which on a $38K roof was too much to risk.

$7,500 roof? Move on to bigger and better things.

I think in Minnesota they just changed the law and these types of “contracts” won’t hold up in court.

BTW, Met Life? They are horrible. They are right in there with allstate.

I had a friend of mine take a customer to court for backing out of a claim agreement. The biggest issue in court was the lack of a dollar figure on the contract. When the judge asks what does he owe you what do you say? Replacement cost value is not a real number as far as courts are concerned.

You say “it is xx% of the claim amount.” The Homeowner signed a contract agreeing to that. Replacement Cost Value is a very real number. It is on the insurance scope of loss and it is the dollar figure the Homeowner may get paid if they do the work.

[quote=“Authentic_Dad”]

You say “it is xx% of the claim amount.” The Homeowner signed a contract agreeing to that. Replacement Cost Value is a very real number.[/quote]

I was just talking to you about that a little while back A.D.Ironically enough I had a contingency that turned out to be a $26,000.00 job.The homeowner was not really happy with the open amount.I explained to her that I will meet the adjuster come to an agreement pertaining cost etc.

She wanted for me to put a cap on the cost.No matter how I explained it she wanted a dollar amount guarantee that won’t be exceeded.Once again I explained it a different way again.Finally I wrote $50,000.00.

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[quote=“dougger222”]Sounds like a storm chaser contract? My brother has been able to talk a few home owners out of these “contracts” with home owners over the years and none have been “sued”.

In doing so, your brother committed an act of tortious interference which caused the HO to illegally breach their perfectly legal contract for which both you and the HO could be sued. Presumably, he then did the work for substantially less then the SC’r would have done it for.[/quote]

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I tried to convince a home owner once to do the same but his lawyer said his wife messed up with signing with a storm chaser. The contractor wanted 20% to back out which on a $38K roof was too much to risk.

If the SC’r was competent and did quality work, the wife didn’t mess up and the HO’s lawyer did the right thing (for once) by recommending to the HO’s that they abide by their legally enforceable agreement. Local contractor(s) who talk against the contingency process because they don’t understand it lose millions across the country every year to SC’rs who do understand it and come into anytown, USA and write a majority of the storm repair business for big legitimate profits. Now, if the local guys in each city took the time to learn the process, they’d level the playing field and the SC’rs would move on - and the average per job prices and profits for the locals would increase dramatically.

$7,500 roof? Move on to bigger and better things. I think in Minnesota they just changed the law and these types of “contracts” won’t hold up in court. quote]

No, Minnesota did not change the law, at least not in the way you imply here. All the “law” (326B.811) says is that if the HO’s insurance company denies the claim (deny would mean 0$), the HO has the right to cancel within 72 hours from the time they learn of the ins co denial and the contractor must return any monies paid to them within ten days of the date the contractor receives the cancellation notice. Doesn’t specify whether contingency or other contract. In fact, as written, only really speaks to non contingency contracts since with contingency agreement, no money is accepted until HO knows claim has been approved.

Then there’s the ole’ attorney opinion given out to HO’s whose contractors get them paid full RTA pricing and the HO attempts to cancel “those contracts (contingency agreements) that aren’t worth the paper they are printed on” so the HO can go with a free estimate guy for less $ and the HO can defraud the ins co. Bad idea on the part of the HO and the attorney.

The attorneys “legal reasoning” behind “not worth the paper they are printed on”? Because they are an “open” contract with no work description and no pricing. The implication being that the contractor is free to write in anything they want and steal from the HO. That, of course, is pure nonsense since, in reality, when the HO signed the contingency (and is given three business days in which to cancel from that date) they were informed by the contractor that the contingency and the ins co loss report are made one once the ins co has approved full payment. The line item and pricing are transferred from the loss report to the contingency agreement that converts to an enforceable contract. Nobody’s fooling anybody there. Any argument to the contrary is specious and nonsensical…transparent and just plain silly.

Then there’s that silly “rule” bulletin that now ex insurance friendly commerce commissioner Glenn Wilson and now ex DLI commissioner Steve Sviggum put out last September that implied that contractors who negotiate on behalf of HO’s with damage would be in violation of PA laws and rules and therefore subject to fines, penalties, etc. Both agencies have been doing a tremendous amount of back peddling on that one ever since they realized they had crossed over the line far past what any objective person would perceive as being reasonable.

Departments of Commerce and DOLI’s along with clueless legislators in a number of states (IL is high on the list) are playing the same and similar games. Ins restoration is a specialty that requires substantially more knowledge than is required to simply estimate and contract for normal retail work. When a contractor takes the time to aquire that knowledge, they put themselves years and profits ahead and no longer concern themselves with the out of stater’s.[/size]