How I Lived Through a Frivolous Lawsuit

Owning a small business, or any business, almost guarantees there will come a day when you are approached by a person that hands you a piece of paper which is a notification that you are being sued. (Frivolous - meaning of little seriousness or importance, trivial, petty)

The set-up

One of our regular clients, a contractor that specialized in construction of mini-storage buildings, came into my office one day with a new client. She was a nice looking woman about 10 years my junior. They explained that she wanted to build and establish a mini-storage business in our town with the intent of it housing her day office and continuing for a retirement income for her. She had some special requests and had come with my client to inform us of those things which she wanted incorporated into the planning of the project. This was not unusual. We went over the things she wanted and the criteria the contractor needed and the two left. Establishing a successful mini-storage business is a detail orientated job. Much time and effort is given to gathering information about the surrounding local to see exactly who will be available to rent the storage spaces and then what sizes the spaces should be according to the available users. The site is important based on size and location, ease of entering and exiting and of course local city codes. It is just not as simple as throwing up some metal buildings and putting locks on the doors!

The drawings were generated and we met with the client and the Owner again to see if we were heading in the direction they both needed and wanted. The conflicts started. He knew what was needed to complete the job, and she was opinionated and stubborn. This was when we found out she was an attorney by trade. Changes were noted to the plans and they left. From that time on, our client declined to attend the planning meetings and just let the Owner meet with us. All appeared to be well for a time and the project continued. Other necessary disciplines were included (Landscape Architect, Engineering) as required by the City codes. About 80% into the project the Owner informed us that our client had withdrawn from the project! That made things difficult for us. We asked her if she had chosen a new contractor and she informed us that she was going to build the project. Oh boy. We spent about a week discussing whether we would continue the drawings since the client had "bailed out" of the job.Based on the percentage of completion and that we felt it was the right thing to do, we chose to continue. The construction documents were completed, the building permit was obtained, our fees were paid and everyone was happy.....we thought.

The serving

About 18 months later a nice, calm man came into the office and asked for me. When I introduced myself he handed me the envelope. It informed us that we were being sued. I did not really need to read by whom, I already knew. I called our business attorney and sent the papers to his office via courier. He instructed me what needed to be done next. I spent a lot of valuable time and effort over the next weeks recreating that entire job and also getting copies of paperwork from the City on all the meetings she had with the City, all changes she had made, all inspection results the City had recorded. Several interesting facts revealed themselves in the City notes....namely, she had made a lot of people mad along the way. The problem she had noted was that the plans were not complete, especially the Engineering. She and he had gotten into difficulties almost immediately and they did not like one another from the start. Amazingly the Landscape Architect was not mentioned. Only later we were told the reason our client had withdrawn from the job was that she had threatened to sue everyone if the project did not turn out the way she wanted.

The mediation (the joke)

The word mediation means; to intend; to plan; to dwell in thought; to muse; to reflect; to consider. It was supposed to be a bidding war....she started high and we had nothing to offer. Our attorney had been telling them that there was no insurance and we had offered a very small amount to settle....apparently they did not believe us. There were four attorneys present. Her attorney, the mediator attorney, the attorney for the Engineer and our attorney. We sat for 2 1/2 hours listening to three attorneys (ours did not participate) plan, consider or outright scheme on how they could get money from our company or us personally. We were not vulnerable since we were a corporation and they finally were convinced that there was no insurance money. As their attention turned to the Engineer our attorney stood up to leave. They asked if the small amount we had offered in the past was still available and our attorney said we would have to discuss it. We left without saying a word! Unbelievable! It just floors me the nerve that these people had....as if they were the ultimate authority and we were nothing! For the first time in my life, I was glad I was a nobody! Bess the poor Engineer's heart.....he was not so lucky.....he was not a corporation and when we left, their attention had turned to his lake property.....amazing!

The entire premise for this suit was that the Owner was not happy with the way the project had turned out. There were some paving difficulties as the site was not entirely flat (she refused to pay for a survey) and ramps were steep to some of the doors due to inexperience in not knowing when to "step down" the floor pad with the grade of the property. Non of which would have happened had there been an experienced contractor on the job!

The end

Our attorney made the opposing attorney wait about 3 weeks before responding that the small amount of money we had originally offered would be still available for settlement. We reluctantly wrote the check. She signed the paperwork saying she would go away forever. We heard later that the Engineer did settle out of court for a sum. Hopefully for not much, however, we were sure it would be for everything they could get.

This entire learning process cost about two years of bother, the original sum gained from the project plus an equal amount for the attorney fee and copy costs. The lesson we learned....never do a project for an attorney.

We never did again.