Originally posted 2010-12-06 10:49:11.
Recently, I came across another Virginia construction case that serves as a reminder that, in Virginia, the contract is king and that because of this fact, the contract will be enforced by its terms.
In L. White and Company v Culpeper Memorial Hospital, the plaintiff contractor (L. White and Company) sued the hospital for wrongful termination from the project. The hospital responded that the contract required exhaustion of a two-stage informal resolution process prior to any suit being filed. The informal resolution required both submission of any claim to the architect and mandatory mediation. L. White and Company could show that it had submitted the claim to the architect but conceded that it never sought to mediate its claim. However, L. White and Company argued that the mediation provision was merely advisory.
The Culpeper County, Virginia Circuit Court disagreed with the plaintiff and dismissed the claim in its entirety because the contract provided for exhaustion of the informal resolution process prior to either party filing suit. In short, both sides agreed and signed the contract, and therefore both parties were going to be held strictly to its terms.
While I have discussed the great value of mediation on several occasions here at Musings over the past year and a half (and my thoughts on mandatory mediation), the true takeaway from this case for contractors, subcontractors, and suppliers is to carefully read the contract documents that control your rights regarding a construction project. You, as a construction professional, should read them carefully at the time of signing the contract and any time you plan to make a claim or exercise your rights under the contract. Here, the court clearly implied that the simple act of requesting mediation could have saved the contractor’s claim (particularly if the owner did not reply or blocked mediation).
Remember, your contract is the law governing the construction project. Make sure that you carefully read and analyze that law prior to beginning work. Also, the help of a Virginia construction attorney will help avoid problems down the road.
As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.
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Yet another great post Counselor! I will forward this to a few ‘key’ clients. (Too bad none are in Virginia)
Thanks Bobby. Let me know if you or any of your clients have VA related questions.
.-= Christopher G. Hill´s last blog post .. Random Thoughts on LEED Challenges and De-certification =-.
Chris:
Was the dismissal with or without prejudice? It didn’t say from the link you provided. If with prejudice– ouch! An expensive lesson to learn.
.-= Melissa Brumback´s last blog post .. Even Subcontractors can sue other Prime Contractors Directly on State projects (Law note) =-.
Good point Melissa. I am not sure. I could not tell from the opinion either. I hope, for the plaintiff’s sake, that the dismissal was without.
.-= Christopher G. Hill´s last blog post .. How a Legal “Blawg” Helps! (Thanks Blog for Profit) =-.
Chris,
As you have pointed out, it is not enough to read the contract but you have to follow the contract. In this case, the effort and cost of the mediation would have been less than the cost to oppose the dismissal. The outcome would have been a whole lot better too. Even if the case did not settle in mediation, the issues would have been narrowed that could have lead to a resolution before trial.
.-= Ron White´s last blog post .. RESOLVING INTERNATIONAL CONSTRUCTION DISPUTES THROUGH U.S.-STYLE MEDIATION =-.
Thanks for the insight Ron. Reading and following a well drafted contract is key
.-= Christopher G. Hill´s last blog post .. Newsflash: Musings to Invade the Advocate’s Studio =-.