Breach of Construction Contract: Subdivision Development

Ron Tate, a member of the design and construction team, obtained a favorable arbitration award for a South Carolina general contractor in a claim involving breach of contract and tortious interference with a construction contract. Our client contracted with a developer to construct a subdivision of several hundred single-family homes along the South Carolina coast. Despite continuous delays and disruptions by the developer, our client successfully completed nearly 25% of the units. Subsequently, however, the client learned that its own CFO covertly solicited bids from trade contractors and secretly agreed with the developer that he would take over the construction for the remaining units in subsequent phases of the development. The developer then terminated the contract under the pretext of delayed performance.

Our client brought a breach of contract claim against the developer seeking the contract balance due, along with lost profits. Additionally, the client claimed tortious interference with a contract against its former CFO for usurping a corporate opportunity. We negotiated a settlement of the amount due for the construction in place and proceeded to arbitrate the claim for breach of contract and lost profits. The arbitration panel agreed with our client that the developer breached the contract, and it made an award for lost future profits.

This case is one of many examples of how the relationships of trust and confidence inherent in a construction project can be violated. It also shows how the law can intervene against parties who violate that trust in order to provide compensation to the damaged party.