Title Mark provides title services for Minnesota and Western Wisconsin.

Subcontractor Rights to be Paid on New Home Contract

The Minnesota Court of Appeals, in an unpublished decision, Eischen Cabinet Company vs. New Traditional Homes, Inc. and Robert Allen Juve, et. Al made a ruling on the rights of a subcontractor to be paid on a contract for a new home. The Eischen Cabinet Company had done work for New Tradition Homes and their perspective purchaser, the Juve family. To summarize what took place, the cabinet company threw every possible argument at the trial court and then again at the Court of Appeals but lost.  They argued the followiing:
  • There was an agency relationship between the general "because the matter was going to foreclosure". 
    The purchaser had an implied contract in which the builder was the agent for the purchaser.
  • The cabinet company was an intended beneficiary of a purchase agreement between the builder and the perspective  homeowner.
  • The cabinet company was owed a duty as a third party beneficiary of a contract.
  • There is contract directly between the contractor and the homeowner and equitable relief (just out of general fairness). 
All arguments were shot down.  What happened in this case is the cabinet company did not only get any money but incurred tens of thousands of dollars in legal fees while proceeding in the District Court and the Court of Appeals.  The other subcontractors accepted a settlement and were paid fifty cents on the dollar. Practice Tip: The laws regarding contract rights between the parties are specific.  The best thing parties can do is work together to get the issue resolved and move on.
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