James lost his funeral home to a fire. He retained an architect and hired his brother’s firm to be his Contractor. While his contracts with the Contractor and the bank required him to have his architect certify the Contractor’s pay applications, he deleted this scope of work from this architect’s contract, saving some money.
The Bank processed the Contractor’s pay applications without the architect's certification that the monies requested were appropriate and proportionate to the work completed to that point. The Contractor got behind in his payments to subcontractors and the Owner fired him and then alleged that the bank’s failure to demand architect-certified pay applications had damaged him – though he was the one responsible to provide them - because, he alleged, the Contractor had been overpaid and he was damaged by the amounts he paid to complete the project.
Our analysis discovered that the Owner had not acted in good faith, had falsely claimed costs to complete that were for his adjacent apartment building on the site and were excessive amounts for work he completed himself. Our analysis indicated that the Contractor had not been overpaid and in fact was slightly underpaid at the time of termination. The case settled.