Disputes Between the Owners of Construction CompaniesContractors normally begin their businesses with partners in whom they have a great deal of trust and respect. However, running a construction business is a high pressure environment. Payroll and vendors need to be paid, even when customers are slow in paying. The day-to-day pressures often lead to disputes between even the best of partners.
Hopefully the owners will be able to work this out among themselves. However, many times this is not possible. In the best case scenario under such circumstances, their partnership agreement will provide the method for making decisions and resolving the disputes. When it does not, our experienced construction attorneys offer many services to resolve partnership disputes. First, we will pursue negotiations, since if an agreement which protects our clients’ interests is possible, this is often what would be best for them and the business. If not, we aggressively fight for our clients’ rights in litigation, arbitration and mediation.
The Importance of a Well-Drafted Agreement Between Owners
Having a well-written partnership agreement is the most important thing owners can do to ensure that disputes are resolved in a way that protects their interests and the business. Under New Jersey law, these agreements allow the owners to determine their own rights, responsibilities, and remedies. Agreements between owners come in many forms. For instance, corporations have shareholder agreements, limited liability companies have LLC operating agreements, and partnerships have partnership agreements. While some of the details may vary, they all have the same main purposes: to establish the owners’ rights and responsibilities; to prevent disputes; to provide for resolving disputes when they occur; and to provide remedies when one owner’s rights have been violated and the dispute cannot be resolved. Using the law in New Jersey, attorneys from our firm have considerable experience negotiating and drafting partnership, shareholder and LLC operating agreements which protect our clients’ rights, and help ensure the efficient and profitable operation of their businesses.
Negotiation is often the best way to resolve disputes. It is not always possible, but if a problem can be solved the best thing to do is to solve it as quickly and amicably as possible. This is the best for the business, and that maximizes the owners’ return. Our attorneys are experienced at negotiating resolutions to partnership disputes for our business owner clients.
Alternative Dispute Resolution: Mediation & Arbitration
Mediation and arbitration are both forms of alternative dispute resolution provided for by the law in New Jersey. Attorneys from our firm use mediation and arbitration to fight for our clients’ rights. Arbitration and mediation can both be effective means for resolving disputes between the owners of construction businesses, although they are very different.
In mediation, a neutral third party (known as a “mediator”) will work with the owners to try to bring them together to reach an agreement to resolve the dispute. If there is a resolution, it will be voluntary. If both sides do not agree, mediation will not solve the dispute. However, in practice mediation is an excellent way to resolve disputes. Our attorneys have considerable experience successfully mediating ownership disputes, and indeed Maurice McLaughlin has been appointed as a mediator by the Superior Court of New Jersey to resolve lawsuits for more than a decade, and has successfully mediated many construction disputes, both as a litigator and a mediator.
In arbitration, just as in mediation, a neutral third party is appointed to the case. However in arbitration, unlike mediation, that neutral (known as an arbitrator), will make a final, binding decision which is fully enforceable in court under the New Jersey Arbitration Act and the Federal Arbitration Act. Our attorneys have obtained considerable success in construction arbitrations.
There are times when disputes cannot be resolved. In many cases, this leaves going to court as the only option. Courts have considerable power to remedy a situation. For instance, an owner of a majority interest has a fiduciary interest to act for the benefit of all the owners, and not to use his dominant position to the disadvantage of a minority owner. If he does, he has breached his fiduciary duty; this is known as minority oppression. A New Jersey chancery judge then has the power to issue a restraining order against the majority owner, order an accounting of the company’s finances, award the oppressed minority owner money damages, dissolve the company, or order a forced buyout of the minority owner’s ownership interest at fair market value.
Our attorneys have considerable experience and have had considerable success representing business owners in disputes with their partners (and shareholders in corporations and members in limited liability companies).
Contact one of our New Jersey construction attorneys if you are in a dispute with your fellow owners. Call us at (973) 890-0004 or e-mail us. We can help.
Our law offices are conveniently located in Totowa, New Jersey, near Routes 23, 46 and 80, and the Garden State Parkway, between Wayne, Paterson, Clifton and Little Falls.