Question
A few months ago, we did some work for another shop. They needed parts processed on our router for a large commercial job they were doing. We agreed to do the work and covered the associated costs with them. The guy paid us in full for the first phase of work. After processing the second phase of work ($8k worth), he hee-hawed about paying us. He said he needed 10 days to get the next installment from the GC. Two weeks turned into two months. I kept calling him. I wanted to give him the benefit of a doubt. He said he hadn't been paid by the GC.
After all of the delays, I checked up on the guy. It turns out that he isn't a licensed contractor in VA. He doesn't have a state business license or business licenses for the county in which his shop is located in, nor the county where his office is located. And to top it off, I was talking to one of the guys that worked for him on the project and he said that all of his men were paid by personal check from an account with someone else's name on it and was always under the table. No withholding.
Not a good sign. The guy is still around and still doing business. Any suggestions? The lawyer said we could sue him and get the state involved because it's pretty serious when you are doing $80k contracts in VA without a Class A contractor's license, not to mention not withholding fed taxes, fica, etc. The lawyer also wants to bring the GC that hired the guy into court because it would expose them and their clients for hiring companies that aren't licensed.
I'd appreciate some advice. I'd like to get paid. I'm not sure the GC knew all of this about this guy and if I were to drag them into court over this and cause a lot of bad press for them, it may really screw me up in the business community. I don't need that either.
Forum Responses
(Business and Management Forum)
From contributor B:
You might have your attorney drop him a letter and threaten to sue if he doesn't pay up immediately. Perhaps pointing out to him that working without his paperwork in order could be more expensive than just paying you off. Of course, you don't want to be accused of extortion!
This guy is a rat. Don't corner him with threats of lawsuits if you don't have to. Just a simple, direct to the point letter asking for your money with copies of all the pertaining paperwork to order.
If you do need to file, I would try not to get the other parties involved. As you stated, word of this will get around. Even though it is not fair to you, you need to keep your reputation in the local building community intact.
You did have a contract and proposal written and signed, right? I hope so for your sake. Now most importantly you have learned a lesson from this instance. Use it to put policies in place that will keep you out of this situation in the future, i.e. contracts, copies of certificates of insurance, resale certificates, business license, etc. Also make sure that in your contracts you are entitled to interest for overdue payments and lawyer's fees for collections so that if you do need to sue for money down the road, you can collect extra to apply to your extra time spent.
While it is fresh in your memory, write down everything you can remember that happened during this time period so if you need to sue, you have a timeline to go by backed up by phone, fax and email records to corroborate your side of the story. (Don't ask why I know to do this.)
Hopefully you can walk away with just spending a few hundred bucks for your lawyer to write up the letters. It may even be in your interest to negotiate a lower payment just to move on. Your heart tells you that you deserve the money (and you do), but the best thing to do for your business and mental health is to get whatever you can as quick as you can and get this behind you. To save some money, you can write the letters and have your lawyer just review and clean them up and put them on his letterhead instead of paying them more to draft the entire thing themselves.
If the GC is no help, keep going up the ladder. Even if you have to involve a lawyer eventually, at least you will have tried to mitigate this thing on friendly terms, and they will remember this. Any more time spent trying to collect directly from this worthless leach is probably further wasted time. He's patting himself on the back right now for his ingenuity in screwing you over. Next time be more careful in determining the type of person you do business with. Ask around - this is not the first or last time he's done this.
