Suing an LLC Contractor: A Comprehensive Guide

As a homeowner, one of the biggest investments you’ll make is hiring contractors for renovations, repairs or new construction projects. Whether it’s a kitchen remodel, addition, or a new deck, you’re trusting contractors with your home and money. 

But what happens when things go wrong – the work is subpar, timelines are missed, or there are ongoing disagreements? If you hired an LLC contractor, you may be wondering if and how you can take legal action. Here’s a look at some common reasons to sue an LLC contractor and what you need to know about the process.

Reasons to Sue an LLC Contractor

There are several potential breaches of contract or issues that could lead you to consider suing:

• Unfinished or Abandoned Work: The contractor starts the job but then stops coming, leaving your project incomplete with no explanation.
• Poor Workmanship: The completed work is shoddy, with obvious defects, code violations, or not up to professional standards.
• Breach of Contract: The contractor failed to deliver what was specified and agreed to in your signed contract, such as using substandard materials, missing deadlines, going over budget, etc.
• Property Damage: The contractor caused damage to other areas of your property during the project, such as breaking windows, damaging floors, or harming landscaping.
• Failure to Pull Permits: The contractor did work that required permits but failed to secure the proper permits ahead of time, putting you at risk of fines or having to redo work.

The LLC Factor

If the contractor you hired is an LLC (limited liability company), that adds some unique considerations. An LLC is a business structure that provides liability protection for the owner’s personal assets if the business is sued. So if you sue an LLC contractor, you would be suing the business entity itself – not the owner(s) individually.

This makes it a little more complicated if you’re seeking to recoup damages that exceed the business’s assets and income. You would have to take additional legal steps to try and “pierce the corporate veil” to go after an owner’s personal assets too.

What to Do First

Before suing, there are some important preliminary steps:

Send a Demand Letter

A demand letter explains in writing the issue, how the contractor failed to satisfy their obligations, and a demand for what you want – whether it’s to complete the project properly, pay for damages, or provide a refund. This gives the contractor a chance to resolve it before escalating to a lawsuit.

Document Everything

Save all paperwork related to the project like contracts, invoices, and communications. Also document the issues with videos and photos showing poor workmanship or damages.

Get Cost Estimates

If you need to hire someone else to fix or finish the work, get written estimates detailing these costs so you can include them in your lawsuit damages.

Explore Alternative Dispute Resolution

See if the contractor is willing to go through mediation or arbitration to try and resolve it before escalating to a lawsuit.

The Suing Process

If your demand letter goes unanswered and the contractor is unwilling to resolve it, you may proceed with a lawsuit. This typically involves filing a formal complaint and summons with your local county court and properly serving notice of the lawsuit on the contractor’s LLC.

For relatively small claims, you may be able to use small claims court which has lower costs and simpler processes for suing businesses up to a certain dollar threshold (often in the $5,000-$10,000 range). For larger claims exceeding these limits, it would require filing a formal civil lawsuit.

You’ll need to make a strong case quantifying the damages you’ve incurred and providing evidence like contracts, photos, receipts, and potentially expert witness testimony.  If you’re successful and receive a judgment in your favor, you then have to take steps to actually collect on that judgment from the assets of the LLC contractor.

When to Hire an Attorney

While it’s possible to represent yourself in small claims court for relatively minor disputes, hiring a local construction attorney is advisable for more complex cases or larger claims against LLC contractors. An experienced lawyer can best navigate the nuances of construction laws, contract disputes, limitations on LLC liability, building codes, and more.

In cases where damages exceed the business assets and you need to pierce the corporate veil of LLC protection, you’ll definitely want expert legal support. Attorneys can also help maximize the damages you’re owed, negotiate a settlement, draft official legal documents, represent you in court, and ultimately improve your chances of a successful outcome.

While no homeowner wants to deal with the hassle of suing a contractor, it’s sometimes necessary to protect your investment and rights. Doing your homework, acting promptly, and knowing the steps for suing an LLC contractor can go a long way in getting made whole again.

Takeaway

Dealing with an unscrupulous or underperforming LLC contractor can be extremely frustrating and costly for a homeowner. However, you do have legal recourse to go after the contractor’s business assets and revenue. 

The key is acting quickly to document everything, send a formal demand letter, consult an attorney, and prepare to take your case to court if informal resolution can’t be reached. While suing always comes with its own investment of time and money, it may be worth it to recover damages and hold negligent LLC contractors accountable. 

The corporate veil protection they enjoy is not absolute – with the right evidence and legal strategy, you can improve your chances of being made whole again after a disastrous contractor experience.