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Subject: Professionally handling a business-to-business dispute
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JackJ9


Posts:0


07/11/2021 9:00 AM  
I have dealt with plenty of consumer to business disputes before but never a serious business-to-business dispute.

Situation: Can't go into a lot of detail for privacy, but we contracted with our landscaper last fall to winterize an irrigation system, which wasn't done properly. The system is in a failed state today. We will be spending approximately $5,000 or so to repair the system and hand water plants until our system has been repaired. I have detailed e-mails of the request to winterize the system as well as responses from the vendor agreeing to do the work.

The vendor, through their customer service person, denies that they failed to winterize the system properly, and claim that the irrigation system magically failed sometime after spring startup. They claim that it worked just fine when they first turned the system on in the spring.

So, I am wondering what is the best way to proceed? Our association clearly wants the vendor to cover the cost for hand watering and all irrigation repairs that are a result of the system freezing last winter.

I have written, but not yet sent, an 8 page letter detailing all of the reasons why we believe the system was not winterized and froze last winter.

Options being considered:

a) Requesting a face to face meeting with the general manager / company owner. Since he, though this customer service person, has already denied responsibility, I am not sure this would be productive.
b) Send the letter via FedEx and give the company 30 days to write us a check.
c) Go straight to small claims court.

I have consulted with the assocation attorney, but they would be expensive ($3,000 to $5,000) plus they need to work off of a contract with detailed contract language. We didn't sign a contract with the vendor to winterize the system, it was just communicated via e-mail.

Your thoughts are appreciated.
AugustinD


Posts:1675


07/11/2021 9:08 AM  
JackJ9, what did the vendor allegedly do wrong? Failed to drain (PVC?) pipes properly? Failed to drain backflow preventers properly?

I havespecific experience with a HOA probably comparable in size to your five parks, with a comparably sized irrigation systems (like 50 industrial size BFPs). How much effort the landscaper gave to draining did not matter. In the spring the repairs needed were staggering.

I have doubts you have much of a legal leg on which to stand.
JackJ9


Posts:0


07/11/2021 9:13 AM  
Posted By AugustinD on 07/11/2021 9:08 AM
JackJ9, what did the vendor allegedly do wrong? Failed to drain (PVC?) pipes properly? Failed to drain backflow preventers properly?

I havespecific experience with a HOA probably comparable in size to your five parks, with a comparably sized irrigation systems (like 50 industrial size BFPs). How much effort the landscaper gave to draining did not matter. In the spring the repairs needed were staggering.

I have doubts you have much of a legal leg on which to stand.




I can't go into more detail, but I can say that we would not have needed repairs if it was done properly (or even attempted). It is clear that they missed winterizing this particular component.

When you say I have no legal standing, I am confused. Doesn't the fact that they agreed to do the work, but failed to do so, make them liable for damages?
CathyA3
(Ohio)

Posts:2466


07/11/2021 9:15 AM  
Posted By JackJ9 on 07/11/2021 9:00 AM
I have dealt with plenty of consumer to business disputes before but never a serious business-to-business dispute.

Situation: Can't go into a lot of detail for privacy, but we contracted with our landscaper last fall to winterize an irrigation system, which wasn't done properly. The system is in a failed state today. We will be spending approximately $5,000 or so to repair the system and hand water plants until our system has been repaired. I have detailed e-mails of the request to winterize the system as well as responses from the vendor agreeing to do the work.

The vendor, through their customer service person, denies that they failed to winterize the system properly, and claim that the irrigation system magically failed sometime after spring startup. They claim that it worked just fine when they first turned the system on in the spring.

So, I am wondering what is the best way to proceed? Our association clearly wants the vendor to cover the cost for hand watering and all irrigation repairs that are a result of the system freezing last winter.

I have written, but not yet sent, an 8 page letter detailing all of the reasons why we believe the system was not winterized and froze last winter.

Options being considered:

a) Requesting a face to face meeting with the general manager / company owner. Since he, though this customer service person, has already denied responsibility, I am not sure this would be productive.
b) Send the letter via FedEx and give the company 30 days to write us a check.
c) Go straight to small claims court.

I have consulted with the assocation attorney, but they would be expensive ($3,000 to $5,000) plus they need to work off of a contract with detailed contract language. We didn't sign a contract with the vendor to winterize the system, it was just communicated via e-mail.

Your thoughts are appreciated.



My take on this: your HOA is at least partly at fault here.

* You didn't have a contract with the vendor who would perform the service.

* You apparently paid for the service without verifying that the work was actually done according to the (non-existent) contract.

* You have no proof that the winterizing didn't happen. You only suspect that it didn't because the system failed after start-up in spring. This is a logical fallacy known as "post hoc, ergo propter hoc" - which means you assume an event was caused by something that happened prior to it.

* Other things can cause an irrigation system to fail (ours was temperamental, and it was winterized each fall).

Finally, it sounds like the cost of pursuing this legally would cost almost as much as you paid to the vendor, and that's best case scenario. Based on the four points above, I don't think you have a winnable case.

I recommend that the board consider this an expensive lesson and that you improve your processes going forward. Probably not what you wanted to hear, but there it is...
AugustinD


Posts:1675


07/11/2021 9:22 AM  
Posted By JackJ9 on 07/11/2021 9:13 AM

I can't go into more detail, but I can say that we would not have needed repairs if it was done properly (or even attempted). It is clear that they missed winterizing this particular component.

When you say I have no legal standing, I am confused. Doesn't the fact that they agreed to do the work, but failed to do so, make them liable for damages?
-- It depends.

-- You say it's clear they did something wrong. They say otherwise. I might be able to give more informed input if you were willing to explain more. I understand you are not comfortable doing so. I am not comfortable giving more advice without more information. Lots of laypeople have little clue about irrigation systems; engineering; that sometimes; things are not an exact science. And so on.

-- I agree with CathyA3's observations.
JackJ9


Posts:0


07/11/2021 9:24 AM  
Posted By AugustinD on 07/11/2021 9:22 AM
Posted By JackJ9 on 07/11/2021 9:13 AM

I can't go into more detail, but I can say that we would not have needed repairs if it was done properly (or even attempted). It is clear that they missed winterizing this particular component.

When you say I have no legal standing, I am confused. Doesn't the fact that they agreed to do the work, but failed to do so, make them liable for damages?
-- It depends.

-- You say it's clear they did something wrong. They say otherwise. I might be able to give more informed input if you were willing to explain more. I understand you are not comfortable doing so. I am not comfortable giving more advice without more information. Lots of laypeople have little clue about irrigation systems; engineering; that sometimes; things are not an exact science. And so on.

-- I agree with CathyA3's observations.




If you can send me an e-mail, I can send you my 8 page letter detailing out the whole situation. Not sure if you wanted to read it or not, but that's an option if you are willing.
AugustinD


Posts:1675


07/11/2021 9:28 AM  
JackJ9, sure, I will take a look. augustin1919[at]gmail et cetera.
CathyA3
(Ohio)

Posts:2466


07/11/2021 10:02 AM  
The bottom line is: do you have proof that will stand up in court? The burden of proof is on you. And you need to consider what will happen if the vendor counter sues - what happens if the vendor has deeper pockets than the HOA and can afford to tie you guys up in court until you run out of money?

This is one of those situations where anger can result in actions that make no economic sense. Yes, it's annoying to have to spend money to repair the damage caused by a malfunctioning irrigation system. But legal costs can skyrocket pretty quickly, and there is no guarantee that you'll win.

Based on the dollars you mentioned, simply repairing the damage makes the most sense economically. And I would say the same thing if I were in this situation: convinced that I was right but lacking hard proof supporting my belief. The only thing that would change my mind is if the cost of repairs far exceeded the cost of getting the lawyers involved, since the risk-reward profile is different.
JackJ9


Posts:0


07/11/2021 10:08 AM  
I guess my question is - are there any alternatives that I should pursue prior to the legal system? I only have discussed this with the customer service rep over the cell phone. Is a meeting with the owner more appropriate, or just sending my 8 page letter along with a demand to pay back? Clearly the conversation doesn't end with a single cell phone call, but I'm not sure of the best next steps for a business to business dispute such as this.
AugustinD


Posts:1675


07/11/2021 10:14 AM  
I read JackJ9's letter. Based on the details, I agree with CathyA3's two posts here.

JackJ9, your Board can always ask the vendor for reimbursement. Maybe the vendor will offer something because the vendor values its income in general from the HOA. If the vendor does not offer enough, then you folks should have the HOA pay for the repair; move forward; make plans on how to better winterize (if possible); and maybe consider a new vendor. I am not convinced the vendor did wrong here. Winterizing of certain irrigation components can be a tricky business, without guarantees. Communications on the point need to be clear. I do not think they were clear here.
MelissaP1
(Alabama)

Posts:10523


07/11/2021 11:11 AM  
Not knowing all the details it does smell more like a miscommunication issue. #1 the HOA not being familiar with what winterizing entails and what they detailed with the contractor. The contractor's definition of "winterize" can defer but does not make it wrong. They did what was requested or in the contact to do. If it's not the right thing to have done, then that's not on them. That is on the HOA for lacking details.

At this point, is just best to move on with a new contactor and lick your wounds. Best to get a better understanding of the scope of the job next time.

Former HOA President
LetA
(Nevada)

Posts:1425


07/11/2021 11:57 AM  
I am agree with the other Jack, this is a $5000.00 bill that your HOA is going to have to eat. My HOA re plastered the spa in the spring of 2019, and in and in the spring of 2021 the health district said the spa needs to be re plastered again. Yes I immediately pointed the finger at the pool cleaner, with the pool completely closed down in 2020, there is no reason the spa should look the way it does. Our HOA attorney said it would not be worth it to pursue a small claims court case even though we would likely win.
SheliaH
(Indiana)

Posts:4221


07/11/2021 12:53 PM  
I agree with the others, but if you'd like to try and come up with an alternative approach, start with point A. When you schedule the meeting, assuming the owner agrees, you may want to have another contractor to review the damage with both of you there and give his/her opinion on what could have hapoened. Maybe you end up splitting repair costs.

Don't over think this - there's not a lot of difference in handling a business/business complaint, other than you may need a little more expertise. You can also try alternative dispute resolution, where an independent party years both sides and negotiates a settlement. You might also agree in advance to split the costs of arbitration and agree in advance to comply with the decision - the losing side might be compelled to reimburse the other side for its costs. It's not as formal as going to court and you'll get results quicker.

You may be asked additional questions by the owner and contractor and if your answers indicate that your board didn't do its homework, you'll have to suck it up, pay for the repairs and next time ask questions if you're about to contract work where you don't complete understand what's involved. You don't have to be an expert, but you should have a general idea of what the problem is and the best way to resolve it. This is also why it's a good idea to get two or three quotes and the the contractor's reputation for quality of work before you make your selection and then haggle over price.


There's also the matter of whether this irrigation system had been properly maintained in the past - if you don't know or its NEVER been winterized, you may be looking at the result of neglect - and now the association will have to pay the price of deferred maintenance.
KerryL1
(California)

Posts:8599


07/11/2021 12:56 PM  
Having read Jack's letter, Augustin, do you think Jack should send it to the vendor and ask to meet in person? The 9 pages seems really long to me. Maybe Jack can pare it down?

For all: Jack's HOA board did not have a signed contract with the vendor, only a verbal one. From what LetA has written today and previously, his Board on which he's a member, did not have a signed contract with their pool vendor. I'm hoping directors can learn form this!
JackJ9


Posts:0


07/11/2021 1:34 PM  

For all: Jack's HOA board did not have a signed contract with the vendor, only a verbal one. From what LetA has written today and previously, his Board on which he's a member, did not have a signed contract with their pool vendor. I'm hoping directors can learn form this!




No, it was not verbal. I communicated with the vendor via e-mail, and they agreed to the work via e-mail. I specified exactly what we needed done and the reason why, and received a confirmation from the vendor that they would accomplish the work and would let me know if they ran into any problems or had any questions. There is no disagreement about them receiving the instructions or the clarity of the instructions. Rather the vendor claims they did the work when the condition of the irrigation system indicates that they did not.

We didn't have a legally signed contract that the attorneys would like to see, but the amount of work is small (about $300) and the vendor is the established landscaping company that we use for landscape maintenance, so I didn't see a need to have a separate legally binding contract for this work. Clearly, this type of work and the risk involved if not done properly means that a signed, legally binding agreement would be worthwhile. With that said, I am sure that many other board members authorize work by e-mail rather than signed contracts.

I am going to pursue this one. We'll see how it goes. I will try to remember this thread and provide an update when all is done.
CathyA3
(Ohio)

Posts:2466


07/11/2021 1:59 PM  
Among the many benefits of having a written contract is that you're able to spell out what will happen when things don't go according to plan: does the vendor come back and re-do? monetary penalties? etc.

In addition, this is typically where a savvy board/PM has the vendor provide proof of insurance or any appropriate licensing, if these items were not included with the bid. And the contract should be SIGNED by all parties.

Email is fine for transmitting formal paperwork, but unless the email systems allowed people to e-sign, I doubt that an email "agreement" without signatures would be considered legally binding. Email is too easily hacked.


AugustinD


Posts:1675


07/11/2021 2:18 PM  
Posted By JackJ9 on 07/11/2021 1:34 PM

No, it was not verbal. I communicated with the vendor via e-mail, and they agreed to the work via e-mail. I specified exactly what we needed done and the reason why, and received a confirmation from the vendor that they would accomplish the work and would let me know if they ran into any problems or had any questions.
The exchange is quite short. The vendor's response is on the vague side. Neither side appears to have followed up. In my opinion, but with the benefit of specific experience with what was requested, both sides should have followed up. Drip drip from an irrigation component in a thaw in January is a bad sign, but not necessarily that a vendor did not properly winterize.
There is no disagreement about them receiving the instructions or the clarity of the instructions. Rather the vendor claims they did the work
Noted.
when the condition of the irrigation system indicates that they did not.
I disagree. Based in experience with very similar situations regarding winterizing of irrigation systems, to me it's largely a guess as to what caused the damage. The vendor may have done the work exactly as requested, and the damage could still have occurred.

Winterizing irrigation components exposed to the elements or to deep freezes does not guarantee that those components will be free of water all winter long; will not freeze; will not have ice expanding in them; and will not rupture.

Maybe this vendor did the work. Maybe the vendor did not.

The HOA did not follow up last Autumn. I tend to think some of any fault here belongs to the HOA.

I do feel that what the HOA wanted, regarding winterizing, should have been more formalized. Because the destruction of certain irrigation components, on account of water getting into them, freezing and expanding, is darned expensive.

At present, JackJ9 intends to go ask this vendor to pay for the damaged part. If he rages at the vendor, then I think he's out of line. If he asks nicely, then this might be appropriate. It's a fair question to ask, "So where's the invoice for the work you claim you did?"

Still, like SheliaH, and after reading the letter, I too feel that some overthinking seems to be going on.

I am sure that many other board members authorize work by e-mail rather than signed contracts.
As long as the board designates the director as some kind of liaison with the authority to spend x amount of money without Board approval, sure.

Somehow I wish I could soften this post more. Because I have had feelings about the winterization crew at a certain HOA and felt they were inept the first year (with expensive components bursting) I observed them. It took a few years watching how things worked to realize the vendor was about as good as any other; the irrigation system lacked certain features that would have helped ensure the main components lasted longer (and would be less likely to burst in winter); and so on.

I think folks who are responding here do have the main gist, such that their comments should be considered.

JohnC46
(South Carolina)

Posts:11514


07/11/2021 2:54 PM  
I have some experience with winterizing irrigation systems both commercially (golf courses) and private (home). Off the top of my head, I have never seen an irrigation system come put of winter freezes without some problems. Also at a cost of $300 to winterize, I do not believe this to be a top line job. Sounds like nothing more than an air pressure blow versus a blow and anti freeze fill job.

Even here in SC where we do not winterize, every Spring when we turn our system on after having been off for 5 months or so, we have issues with broken pipes/heads.
TimB4
(Virginia)

Posts:17766


07/11/2021 3:26 PM  
Bottom line, you are in a we say, they say situation.

Unless you have proof that the work wasn't done, it can be a hard sell.

I would also suggest that the HOA only ask for the system to be repaired vs. the additional cost of hand watering.


Lessons learned:

Written contracts - use them.
Trust but verify - have someone with the contractor when they at least start the work and check with them off an on.

KerryL1
(California)

Posts:8599


07/11/2021 4:58 PM  
I hadn't noticed and won't be going back to review the whole post, but agree that Jack should not have authorized the work unless he's been delegated by the Board, with its vote, to enter into contracts.
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