Warning to Real Estate Developers: Get a Lawyer On Board Before You Contract with Engineers and Architects

A large part of real estate development requires entering into contracts with architects, engineers, and construction companies. The contracts can be complex, and worth millions…and if something goes wrong, someone will be left holding the bag—most often the developer.

The best way to avoid such problems is by making sure your contract language is clear and comprehensive. This is usually done by hiring an attorney to help. Such a contract is less likely to be challenged in court, too.

That said, real estate development contracts is one area where a firm’s expertise is essential. Without proper experience, too much can go wrong, given the complexity of these kinds of cases.

For example, I myself am currently representing a real estate developer who is alleging a breach of contract in the development of two properties. We are bringing suit against the engineering firm hired by the developer, and I am also defending the developer against the engineering firm’s countersuit. The complex nature of this case underscores the need for clear, concise contracts that cover a wide array of possible circumstances and eliminate confusion. And since even the best contracts may be challenged, the lawsuit also highlights the importance of having experienced and knowledgeable legal counsel should litigation be necessary.

Details of the Breach of Contract Lawsuit

The lawsuit in question was recently detailed in an article in the St. Louis Business Journal. Our client, Alpha Tulip, LLC was organized in 2017 and in January, 2018, bought vacant land to develop. One property was to be a residential house in Chesterfield, and the other a $7 million senior housing development in Hazelwood. 

Alpha Tulip hired THD Design Group, a company providing civil and geotechnical engineering, surveying, and construction management.

Our Client’s Suit

The current lawsuit was filed on behalf of Alpha Tulip against THD in December 2023 for failure to complete services in both Chesterfield and Hazelwood.

According to Alpha Tulip, when THD was in charge, it failed to have licensed engineers represent the company at site inspections of the Chesterfield residential property. As a result, alleges Alpha Tulip, the project was rejected with 26 objections. Among the issues, they say, was THD’s plan for a retaining wall that was a known violation of the city’s requirements.

In Hazelwood’s public hearings regarding the senior housing development, Alpha Tulip alleges that THD engineers lacked the skills and knowledge to respond to the city’s questions. As a result, the city rejected the project.

In 2019, THD abandoned the project. It did not provide Alpha Tulip with its plans and drawings, forcing the developer to start over with a new engineering firm. Ultimately, the plans were approved.

The Countersuit

In its countersuit, THD claims it ceased work in 2019 due to Alpha Tulip’s failure to pay for engineering services amounting to just over about $7000. They filed a mechanics lien on the residential property for the amount. It was later voided and released in August 2021.

THD insists Alpha Tulip’s claims of breach of contract are meritless and that THD did everything it was required to do with regards to both cities. Further, THD accuses Alpha Tulip of filing suit in the first place as a ploy to avoid paying the outstanding balance. 

The Importance of a Specialist in Contract Law

At the core of this case is the contract between Alpha Tulip, LLC and THD Design Group. Alpha Tulip hired THD to perform a service that was left incomplete. 

THD’s counterclaim focuses on Alpha Tulip withholding payment as a reason for stopping their work. Its attorneys argue that there was nothing in the contract that said payment was contingent upon either project’s acceptance by the appropriate municipality. 

All contracts have an implied covenant of good faith and fair dealing. Beyond that, crafting a contract involves anticipating likely scenarios to mitigate the risk for both parties. As this case works its way through the legal process, attorneys for both sides will assert their interpretations of how the contract defines the expectations and obligations of each party. Ultimately, a judge will weigh in on the final decision.

This is why it is so important for legal help with business contracts. A contract law specialist can draft a strong contract, and if necessary, defend its intended meaning in court.

When You Need a Business Litigation Attorney

Alpha Tulip, LLC has employed Swiecicki & Muskett since its inception. Having a contract lawyer who is also a business litigation attorney onboard should prove to be a definite advantage in both bringing this lawsuit and defending against the countersuit. 

The best time to partner with a business attorney is before problems arise. Their skills are indispensable for setting up a business entity properly, drafting and reviewing contracts, and if it becomes necessary—representing the company in court. 

For help with establishing your business, creating ironclad contracts, or litigating on your behalf, contact Swiecicki & Muskett.