Atlas Focus of Lawsuits

Although legal disputes involving home builders are common in Northwest Arkansas, one company seems to be involved in more lawsuits than most.

Atlas Construction of Arkansas LLC in Fayetteville has been sued by a Springdale homeowner and is facing two other lawsuits filed this year by subcontractors on unrelated projects. The construction company has been involved in eight other lawsuits in Washington County since 2001.

All three pending suits are for breach of contract. The plaintiffs in the three cases are asking for a total of $151,838 for costs. Trials have been set for early 2006, according to the lawsuits.

Stears vs. Atlas

Christopher and Tracy L. Stears of Springdale filed suit against Atlas in August for breach of contract. The Stearses hired Atlas in March 2003 to construct a 3,278-SF house on their property for an “estimated contract price” of $298,752, the lawsuit states.

Atlas asked for $10,000 as “a nonrefundable deposit.” After that, Atlas made 29 change orders — changes in the design and construction of the house — and the total price was then $308,133, which was approved by Stears and Dan Ferguson, vice president of Atlas Construction.

When the sale of the Har-Ber Meadows home was completed, the final price was $308,319. The Stearses paid Atlas the money, minus the $10,000 that was made as a down payment, according to the lawsuit.

According to the contract, Atlas was supposed to have finished the work in February 2004, but the job wasn’t completed then. Atlas denies the claim, according to the lawsuit.

Some of the incomplete work cited by the plaintiffs were: stairway not stained or varnished, problems with heating and air units, quarter round trim wasn’t stained or sealed, master bathtub wasn’t correctly installed, and insulation installation wasn’t completed. Atlas also denies those allegations.

When the Stearses received the deed to the house in December 2004, 10 months after it was to be completed, the plaintiffs found “certain other defects resulting from shoddy design, inferior construction and faulty workmanship.”

The Stearses stated in the lawsuit that, among other things, there were major leaks in the master bathroom and kitchen, ongoing problems with air conditioning and heating systems, unstable fixtures, doors that weren’t level, loose tile, missing weather stripping, non-matching door hinges and screws, an unstable back porch railing, and a wood floor that made a “popping sound.” Atlas denies the claim.

The Stearses gave Atlas several written notices regarding their complaints but nothing has been done to correct them, according to the lawsuit.

The Stearses are asking for $46,500 in damages, plus attorney’s fees. A non-jury trial has been set for Jan. 9.

The Business Journal was unable to reach Ferguson for a comment.

Other Lawsuits

Atlas is no stranger to the Washington County Circuit Court. The company was involved in four lawsuits last year. In two of those claims, Atlas was the plaintiff and the homebuilders were the defendants. But, the homebuilders filed counterclaims citing fraud and negligence.

In May 2004, Atlas filed a lawsuit against David and Lisa King of Springdale for breach of contract, breach of the duty of good faith and fair dealing, and quantum meruit (reasonable value of services). The lawsuit states that Atlas and the Kings signed a contract for the drawing of construction plans for a house. The cost was said to be $4,000, of which the Kings paid Atlas $1,000 as a retainer. Once the plans were written up, the Kings failed to pay Atlas the remaining $3,000, according to the lawsuit. They asked for $5,500 plus attorney’s fee.

The Kings then filed a counterclaim of fraud against Atlas. They said the plans Atlas drew up for the construction of a new home far exceeded their budget. Atlas agreed that it could build a home for $94 to $115 per SF and “for $115 per foot he could give them golden toilets,” the lawsuit states.

When the plans were finished in December 2003, Atlas provided no quote for the cost to build the house. In April 2004, the Kings were told it would cost $518,638 to build a 2,900-SF home, which amounts to $178 per SF, according to the lawsuit.

Atlas denies agreeing to build a home for $95 to $115 per SF and that the Kings “were damaged in that they paid a $1,000 retainer that they otherwise would not have paid.”

The lawsuit was settled in May 2004 for an undisclosed amount.

Atlas vs. Kay

Another lawsuit filed by Atlas Construction was against Steven H. Kay of Fayetteville in April 2004. In this case, Atlas had used Kay’s services as an attorney and owed him $3,000. Instead of paying Kay the money owed, Kay asked that work be done on his property and he would pay the additional amount above that figure.

Atlas claimed it completed $8,534 worth of work at Kay’s home, of which $3,000 was to be deducted. But Kay didn’t pay Atlas for the work, and in a counterclaim cited negligence because the work wasn’t done to “specific instructions” and that “failure to follow [Kay’s] instructions have resulted in damages to [Kay] in excess of that which [Atlas] is claiming.”

In Atlas’ claim, it stated that when it contacted Kay regarding payment, the “defendant referred to the outstanding bill as an ‘absurd claim.’ Defendant further stated ‘the last time you were sued for negligent building practices, I represented the plaintiff and won … I have no problem suing for negligent building practices on my own property.'”

In December 2004, Circuit Court Judge Kim M. Smith ruled in favor of Atlas, awarding the company $4,459 for damages.

Other pending lawsuits involving Atlas are:

L & L Plumbing and Heating Inc. filed a lawsuit against Atlas and Henry Jordan, owner and operator of Rasberry Apartments, in August citing failure to pay $16,365 for labor and materials used in construction of the apartments. A non-jury trial is set for January.

Also in August, Decco Contractors-Paving Inc. filed a complaint against Atlas alleging that it was not paid the full amount for the work Decco completed at the Shenandoah Hills Subdivision in Springdale. Decco claims that Atlas failed to pay the company $88,974 for additional work. A trial is set for April.

Atlas filed a complaint against Andy Kirsch, owner of International Construction Service, for breach of contract regarding incorrect, substandard materials and negligence. The trial has been postponed until January.

Atlas filed a complaint in April against Deer Run Limited Partnership and Fox Run Limited Partnership of Springdale, Walling Development Inc., Affordable Multi Family LLC, Barry Walling Development, Interstate Construction, Travelers Casualty and Surety Co. of America, Devcon Enterprises Inc., and A.R. Mays Construction Inc. The suit alleges that Atlas wasn’t paid an unspecified amount for work completed to the Deer Run and Fox Run Apartments. A jury trial has been set for April.

Construction Practices

Lance Johnson, owner of Lance Johnson Building Co. in Springdale and president of the Northwest Arkansas Home Builders Association, said there will be a fair share of shoddy work done by construction companies in areas that are booming in development like Northwest Arkansas.

Johnson, who is also on the Residential Building Contractors Committee, said many people also have the option of contacting the Arkansas Contractor’s Licensing Board or the NWAHBA regarding complaints against contractors.

The licensing board regulates contractors just like a medical board regulates doctors, said Greg Crow, a lawyer for the state’s Contractor’s Licensing Board. Crow said they don’t necessarily take away a license unless there was a pattern of gross negligence, incompetence and misconduct. What the board tries to do is get the two parties to talk before any legal action takes place. Once lawyers are called, the board steps out of the way, he said.

“We send a complaint to a contractor and ask them to respond,” Crow said. “We get their written response back, send it to the homeowner and ask if there is anything else they’d like to add.”

But Johnson said many times people don’t follow through when contacting the licensing committee and association.

“In my experience in the [NWAHBA] and the licensing committee is that I will have people call me and want to discuss their complaint at length,” Johnson said. “And when I ask them to put it in writing, people, in most cases, aren’t wanting to put the complaint down in writing.”

Johnson said it is a buyer-beware situation, but the main thing is to be sure to check references — even go see a house a contractor has built. And if there is a problem with work a contractor has done, they need to let the contractor know right away.

“People need to make sure they communicate their complaint to the builder,” Johnson said. “If they don’t get a resolution, they can make a complaint to the [NWAHBA] if [the contractor is] a member, or to the licensing committee.”

Construction Tip Sheet

Under the Home Solicitation Sales Act, a consumer has a three-day right to cancel the contract if the contract was signed in their home. During those three days, the contractor is not legally allowed to begin the work, nor is he permitted to deliver construction materials to the home.

Things to be on the lookout for:

• Out-of-town or unknown contractors or builders
• Contractors who use the term “special introductory offer,” “limited-time offer” or who offer any discount to use your house as a “model home”
• Contractors who want a contract signed quickly
• Contractors who want to discuss the price of the job later
• Anyone who uses high-pressure tactics or makes you feel uncomfortable or pressured
• A company that demands that you make full payment before the project is finished

More: Arkansas Attorney General’s Web site here.