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Firm persuades judge to reject six-figure construction project contract claim

Tyler Chapman and Alycia Kennedy following a bench trial persuaded a Massachusetts Superior Court judge to reject a breach of contract and other claims asserted by a home builder contractor in a construction project dispute.

The firm represents a real estate agent who, along with a contractor, formed an LLC to purchase property in Newton, Mass., with an existing home, which it renovated, and an adjoining lot on which it constructed a new home. 

The goal was to split the profits from the home sales in accordance with the LLC agreement.  The firm’s client had majority voting interest in the LLC.

The project, funded by the real estate agent’s now ex-husband, was marred by the contractor’s delays and shoddy workmanship, according to the judge.  The defective work by the contractor caused costs to substantially exceed budget.

Eventually, the project loan came due (after a two-year extension), and the firm’s client decided to convey the property “as is” to her ex-husband in lieu of a foreclosure sale.

The judge found that the contractor misappropriated LLC funds for personal use and negligently supervised the renovation and construction project.  He rejected the contractor’s breach of contract claim that the property was sold for less than market value and that had the property sold for fair value he would be entitled to a six-figure payment.

With controlling voting interest in the LLC, the firm’s client, the judge found, was within her rights to convey the newly constructed home to the project investor in exchange for a discharge of the outstanding loan.

The judge awarded damages to the firm’s client, plus pre-judgment interest, for overpayment of project advances to the contractor.