“The best laid plans of mice and men go oft awry.” – Robert Burns
Translated from his native Scottish to English
The above quoted line from Robert Burns’ poem “To A Mouse” is often quoted. A translation of this famous passage for modern day contractors would be: no matter how carefully and thoroughly a project is planned, something may still go wrong. Even in the best planned projects, often unanticipated things go wrong before a project can be completed. Suddenly, the unpredictable occurs. One day your project manager calls you and says that while excavating the site, a fully intact Tyrannosaurus Rex skeleton is uncovered. Or, a pandemic sweeps across the globe forcing your workforce to quarantine and placing the entire project on hold. Undoubtedly, these occurrences, which could not have been predicted, impact a contractor’s bottom line, potentially converting an otherwise profitable project into potential financial disaster. “But surely the owner will agree to pay my company additional compensation for this,” you may say to yourself. But, when you submit your claim notice and/or change order request, the owner says, “Oh, no, no, no.”
And thus, you have now entered Disputeville.
So how do you navigate through and get out the other side of Disputeville? Where do you go to get your claim dispute resolved? Fortunately, chances are you already have the roadmap. The contract you negotiated and signed all those months ago likely contains dispute provisions directing the parties as to where and how the claim gets resolved.
Whether it is an AIA or ConsensusDocs form contract or a homemade contract, your first step is always to refer to the contract. First, your contract will tell you the timeframe in which you must notify your contracting partner that you have a claim and you believe you are entitled to additional compensation. These time frames may be extremely short, and contractors should be prepared to send these notices promptly in accordance with the contract requirements. Even after sending a timely notice of your claim, there is still the question as to how the claim gets resolved and where you must go to have it resolved.
The AIA family of documents require that disputed claims first be submitted to an Initial Decision Maker; whereas ConsensusDocs requires the parties to engage in direct discussions in an effort to negotiate a resolution as a first step. Both the AIA and ConsensusDocs contracts provide contractors and owners with alternative dispute resolution procedures or ADR. These alternative dispute resolutions, typically mediation and/or arbitration, are alternatives to litigation. When the parties mutually select an alternative dispute resolution process, the parties must follow the agreed-upon dispute resolution process. The courts overwhelmingly favor enforcement of contractual alternative dispute resolution processes. If a contractor, owner or subcontractor files a lawsuit in court without first proceeding to the negotiated dispute resolution procedure contained in the contract, the court will order the parties to go to mediation or arbitration in keeping with the contract. It is surprising that even experienced attorneys sometimes “jump the gun” and go directly to court on behalf of their clients only to be ordered to mediation or arbitration.
There is an important exception to this rule however. Contractors and their lawyers should file a Complaint or Writ of Summons in court if the applicable statute of limitations or contractual statute of limitations is about to run out. For even though the Court will likely order the parties to proceed to mediation or arbitration, the statute of limitations will be tolled and will not expire while the parties proceed through the mediation or arbitration process.
Importantly, contractors should always keep in mind that even if mediation is not required under the contract, the parties are always in control as to how their disputes are resolved, and together they can always agree to an alternative to litigation at any time. That is to say the parties are always free to agree to mediate a dispute even after litigation has been commenced, and even if the parties have been locked in litigation for many years. Sometimes lengthy, expensive, contentious litigation has the parties reconsidering the merits of a negotiated resolution facilitated by an experienced mediator and retaking control over how their dispute will be resolved.
Tom Williams, a shareholder in Reager & Adler, is the longest-tenured attorney in the firm after Dave Reager and Ted Adler. Tom began his career with Reager & Adler in 1993 in the Litigation and Construction Law practice areas. He is the lead attorney in the Debt Recovery practice area. Prior to embarking on his legal career with Reager & Adler, Tom served in the United States Army performing with the “President’s Own” Old Guard Fife and Drum Corps. Tom travels extensively and is an avid gardener and photographer.
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Posted September 13, 2021