My first disaster (contractor from hell) - some advice please

[Billy Zhao]

Here is what happened:

I hired a general contractor in November 2021 to help me remodel a vacation home. The contract is an all-inclusive/fixed-priced contract. She didn't want to do time-and-material or cost-plus which I was fine with but she insisted on doing all-inclusive and keeping her cost opaque from me. She initially made many promises and she sounded friendly and eager to please. However, when the project started, her attitude started changing. She swapped materials from mid-grade level to just the cheapest Home Depot stuff. She complained that her workers are expensive ($40-80/hr). When the framing was done, and it's entering the 2nd phase of drywall and paint, the day after I paid her the scheduled draw, she sent me an email threatening to walk off the job if I don't pay her additional money (up to 90% of the contract). I agreed to it with her promise that she will complete everything. Only a month later, after several mishaps on her side including painting the house exterior with completely wrong color (I literally sent her the paint code from Benjamin Moore, she tried to color match it at Home Depot, I wanted gray and black, she painted house blue), she walked off the job claiming that she lost money and she blames me for all the delays. When her crew left the job, they left me a house with about 65% done per the original contract scope, a huge pile of construction debris in the driveway, and many items that need significant rework. I found out later that she didn't pay her plumber (about $7,700). She then sent me an invoice of $17,000 that was neither part of the original contract nor part of the change order and told me if I don't pay it she will put a lien on my house. Despite my repeated plea for her to come back and my willingness to compromise, she refused to come back and berated me in her emails by ending "see you in court" in every email.

Now I am receiving her lawyer's and the plumber's lawyer's threatening email asking for payment or else they will file a lien.

After they left, I've been working on the house by hiring new contractors or doing it myself to save money. Overall, another $20,000 of work was put in to complete the project.

I am wondering if anyone had a similar experience and how to navigate the legal process. I reached out to a few lawyers but I haven't found one that I feel is good. I am planning on suing her through small claims court. I have no contractual relationship or even awareness of who her plumber is, and in Texas, there are specific rules for subs to be protected and they didn't follow those rules. I want to follow the steps to protect myself against further damage. If you can provide me with some suggestions and advice, it will be greatly appreciated!

[Nathan Grabau]

I am a roofing contractor in Colorado and I would encourage you to focus on protecting yourself from the GC and sub instead of trying to recover the money you lost to the GC. I would primarily focus on doing what you need to to avoid having a lien placed on the property, especially if you are going to try to refinance after the renovation. I would also encourage you to not try to get the bad contractor to come back, while it seems like things cannot get worse, they can actually get worse. 

In the future I would make sure that draws are based off of work that has been completed and not based off of future work. This is standard and good contractors will not demand money in excess for the work that is finished, this should be seen as a major red flag. We have an average delay of 60-90 days between when work is completed and then payment is received. While I realize that residential GC's will want a faster turn around time, I share this so you know that you are not engaging in inappropriate business practices by demanding that work not be paid for before its finish, and potentially even holding a "retainer" of 10% of the completed work, to incentivize the contractor to actually finish the work. 

Sorry that you had to learn the hard way on this project and good luck in this and future projects!