This abstract briefly summarizes Holloway Consulting’s expert services on behalf of the construction developer in litigation with the general subcontractor.
Key Facts of the Case
The subject of this litigation was an 81 unit residential development in Summit County, Colorado. The contract was an AIA Document A111 under which the builder was to be paid the cost of the work plus a fee with a guaranteed maximum price. This standard form is intended to be used for a single family residential project when the owner hires a home builder to perform the construction.
Here, the builder’s performance and the financial results of the project were inconsistent with the interests of the Owner as specified in the Contract. The builder’s performance failed to meet both industry standards and the requirements of the various agreements and contracts, thereby causing the Owner to incur delays, additional costs and lost profits. The builder either fraudulently, negligently and/or improperly failed to mitigate and control costs despite its recognition of the project’s sensitivity to any cost increase.
Holloway Consulting’s Findings and Conclusions
The terms of this modified A111 contract were unique to this project and the construction industry and placed a higher duty on the contractor than other contract forms. Because of the unique nature of this project and contract, where the contractor was in a very dominant position, the contractor/builder accepted a special relationship of trust and confidence with the Owner. The builder was then bound to act in good faith and with due regard for the Owner’s interests. The Owner had the right to rely upon the builder to manage the object of the Owner’s interests. This did not happen.
Holloway found that the reasonable measure of the financial damages suffered by the Owner on the homes was the difference between the GMP budget agreement, and the Owner’s actual incurred costs, minus approved change orders, upgrades, design changes and other costs for which the builder was not believed to be responsible.
Decisions
This case settled after initial expert reports had been exchanged by the parties.