Contract dispute leads to frustration for Kuroshio restaurant owner and protesting contractor
Protestors holding signs alleging $35,000 in unpaid wages have been standing outside the recently opened Kuroshio restaurant in downtown Ann Arbor every evening since Saturday, March 16.
Restaurant owner Kenneth Wang said the picketers were not his employees, and that the dispute was between him and his general contractor who also was outside.
Protestors stood in the cold outside Kuroshio Restaurant on the corner of Liberty Street and Fourth Avenue on Sunday evening.
Ben Freed | AnnArbor.com
Wang said his contract with Benjamin Sun, who signed on behalf of Crystal Corporation, included a hefty per-day penalty for any time that Sun went over on the job. After the penalty is assessed, Sun actually owes him money, not the other way around, he said.
“He’s trying to make this into an employer versus employee thing, but that’s not what it is,” Wang said.
“This is a dispute between two companies, anyone who says their wages were not paid they weren’t paid by him, not me.”
Sun said it was up to the restaurant to honor the contract and pay him and his employees for the work that they completed. He hopes his protest will convince Wang to hand over the money so that the dispute does not have to be solved by the courts.
“The restaurant is done now, and he has decided he doesn’t want to pay,” he said. “It’s not right. We are going to do this now and then if he does not pay we will sue. We don’t want to have to do that which is why we are trying this first.”
Both parties agree that the project was supposed to be completed by September 30, but the restaurant did not receive its certificate of occupancy until the end of December 2012. However, Sun contests that an error in the plans that did not account for an overhaul of the heating ventilation and air conditioning (HVAC) system was the cause of most of the delay.
According to a copy of the contract between the parties obtained by AnnArbor.com, Sun was responsible for notifying Wang in writing of any circumstance that would delay the construction past the agreed upon date. Sun said that he did not write an official notice to Wang alerting him of the change in date but was under the impression that the delay was understood.
“He did not tell me that he was not going to pay until after the job was done,” Sun said.
“I am a contractor, I work with my hands and cannot put everything down on paper. If he was unhappy with the work he should have fired me, not let me finish and then not paid me the remainder of the money.”
According to the contract, “all claims or disputes arising out of this Contract or its breach shall be decided by arbitration in accordance with the construction industry arbitration rules.”
Harvey Berman, an attorney with Bodman PLC who specializes in construction, contracts, and real estate law, said it is not uncommon for there to be disputes involving the contracts that are drawn up between owners and builders.
“If you have a contract that requires something to be in writing… the court or arbitrator can rule that there was an oral modification but there’s a higher standard of proof there,” he said. “You have to have ‘clear and convincing evidence’ in that case.”
Berman said that if the case did go to arbitration, it would likely take six months to a year to complete the process.
General manager Alan Wang, Kenneth’s son, said the problems with the contractor made it difficult for the restaurant to know when they would be opening and caused them to hire their head chef too early.
“He was just unreliable,” Kennenth Wang said. “I kept pushing him and he would give me a date for things and then never finish them on time. One window he told me would take two weeks to put in, it took six.”
Two other men routinely join Sun at his protest, which he said will continue at least for “a few weeks.”
The owners of Kuroshio have placed a sign in their window attempting explaining their view of the situation to passers-by.
Ben Freed covers business for AnnArbor.com. You can sign up here to receive Business Review updates every week. Reach out to Ben at 734-623-2528 or email him at benfreed@annarbor.com. Follow him on twitter @BFreedinA2
Comments
anon
Tue, May 14, 2013 : 11:44 p.m.
realize, that, as a former employee, I agree with mr sun. kenneth has no business direction, before opening, the owner was very excite over-planned and over-spent on everything, always worrying about how things looked, rather than how the workers and customers felt. He talked behind the worker's backs about their performance. making the workers work into early morning hours, sometimes 1am. in the month of december, i was told by a former chef employee, he barely had anything set in place like the schedule for workers, the pay, when they would open and for how long, what each person would be doing, etc. I was told by the same employees that he fired several good workers for not knowing enough english, and because "personality did not fit the job", I dont think mr sun is totally to blame. The owner is a completely different person when hes around friends and family (he will talk badly behind your back), but around journalists and media he pretends to be so nice and inviting.... (I wasnt fired, by the way, I quit because of the owner's poor treatment of his workers)
Laurie Barrett
Wed, Mar 27, 2013 : 12:10 p.m.
If the restaurant owner gets the remodel for 30k less than it cost to perform, it's kinda mean to stick it to the contractor over a technicality. It would be nice if they could compromise, as people. This situation stains the contractor and the restaurant, both.
jcj
Mon, Mar 25, 2013 : 2:18 p.m.
Most of those commenting might have a good sense of the legalities, but no sense of justice!
jcj
Mon, Mar 25, 2013 : 6:27 p.m.
halflight If your idea of extortion is peacefully picketing then spare us any other definitions. You would have lined up pretty well with Sheriff Harvey in the 60's.
jcj
Mon, Mar 25, 2013 : 6:25 p.m.
Basic Bob Does Mr Sun have a right to picket? Is that breaking the law?
Basic Bob
Mon, Mar 25, 2013 : 5:32 p.m.
Mr. Sun has broken the law by not paying wages to his employees. So he claims.
jcj
Mon, Mar 25, 2013 : 5:23 p.m.
While I may be "ignorant of the legalities". I always taught my children not to be Ignorant of a sense of fairness. I would much rather be "ignorant of the legalities" than ignorant of a sense of fairness! While we are talking "legalities" please tell me where Mr Sun has broken the law????
halflight
Mon, Mar 25, 2013 : 4:57 p.m.
While you are ignorant of the legalities, and have an overconfident estimation of your own sense justice. If the contractor had followed the law (which he apparently didn't), he would have a ready remedy for his problem of nonpayment-- a construction lien, and the power to foreclose on the property. Instead, he has chosen to extort $35,000 out of a business by extra-legal means. If that's your idea of "justice", spare the rest of us.
jcj
Mon, Mar 25, 2013 : 2:19 p.m.
I might add that it is foolish for any worker to put his/her trust in getting paid at the end.
wisecat
Mon, Mar 25, 2013 : 2:03 p.m.
Same old story. There is the law, and there is justice. Justice: the worker told the boss, in his ear, that there would be a delay for circumstances of code or something, unanticipated at the beginning. The boss knew it, any continued to allow people to work, for which they are due their wages, (which workers are due for working.) But secretly, in his boss head, he decided to not pay for the work, invoking a legal form of the contract. In short he stole the workers work. It's not the first time in such a thing has happened. It is unjust. It may be legal. It is still unjust. If the boss considered to not pay for work being done, the moral obligation is to tell the worker, "From now on, you are working for free, bound and enslaved by this legal contract, as a penalty for the "delay." The worker can then agree to work for free, or stop work, and take it right then to the arbitrator or court or street, or re-negotiate the deal. Maybe the worker-with-my-hands contractor should have been smarter and covered his ass with legal paper when unanticipated circumstances arose, but work performed without payment is not just. And such practice at the beginning cannot reflect well on the other recipes served in this Asian fusion addition to Ann Arbor. If the boss thinks the worker is responsible for a loss he has incurred, he can sue the worker and collect, in the judgement of a court or arbitrator, a proper compensation for his loss, to the extent it was the worker's responsibility. Refusal to pay wages, and materials, for work performed is not right. It is in very bad taste.
jcj
Mon, Mar 25, 2013 : 2:16 p.m.
Bingo! In a nutshell The owner might be legal but he is not just.
buildergirl
Mon, Mar 25, 2013 : 12:59 p.m.
Three months seems like a long time for just the HVAC to be redone in the restaurant space. It would be interesting to know how long the overall process took in comparison to the disputed time.
johnnya2
Mon, Mar 25, 2013 : 2:28 p.m.
I am guessing you have never done a build out on a restaurant, HVAC would be one of the things that would take the most time. The contractor can not even star to do anything until the city deems the revisions acceptable. If the city came in and said, this system will not work for this restaurant, everything is back to square one. City approvals, plans and ordering the and building the system would take plenty of time. I have seen delays that take 6 months to a year based on HVAC
Craig Lounsbury
Mon, Mar 25, 2013 : 11:37 a.m.
It appears from the story that Wang may be legally correct. But.......... if the delays would have been allowable under the contract if put in writing and IF Sun verbalized them but failed to put them in writing then Wang may win on that technicality but it would still be morally reprehensible to me. Lots of ifs in there.
jcj
Mon, Mar 25, 2013 : 12:18 p.m.
I agree Wang may be technically legal. BUT not the morally correct thing to do.Which is what I tried to say earlier.
Mercutio
Mon, Mar 25, 2013 : 7:13 a.m.
The delay cost Wang tens of thousands of dollars due to lost business and restaurant staff idled because of the late opening. Sun claims its up to Wang to honor the contract for the work done, but it's up to BOTH parties to honor the contract. He cost Wang money. Taking this to court or arbitration is the correct way to deal with this, not trying emotional blackmail with picket line games. Some people here are making it sound like Wang is some rich fat cat taking advantage of a little guy, I just don't see that. Sun should have followed the contract and put everything in writing if these were legitimate delays. I'm sorry but it sounds to me like the other writer is right, Sun's playing games since he knows he won't do well in court.
jcj
Mon, Mar 25, 2013 : 1:50 p.m.
Wang no doubt knew he was getting cheap labor from Sun. And that's likely why he never pushed harder to get the job done. That and he knew he was holding all the cards for not having to pay at all.
jcj
Mon, Mar 25, 2013 : 12:20 p.m.
You do not know what it cost Wang. And we do not know how much the errors on the plans cost Sun in time and money.
Mercutio
Mon, Mar 25, 2013 : 7:15 a.m.
And I hope the Wangs read this and know I'll be happy to come try out their new restaurant as soon as I can, welcome to Ann Arbor!
johnnya2
Mon, Mar 25, 2013 : 3:42 a.m.
I am not sure of all the specifics in this case (and none of you do either), but if a contractor does not pay a subcontractor for work performed at your home, the sub can file a mechanics lien against your property.
Michael Feeney
Mon, Mar 25, 2013 : 3:40 a.m.
In a check on LARA licensing of Michigan builders there was no record of a license in either Crystal Corp., or Benjamin Sun, that could be a huge problem for the builder
jcj
Mon, Mar 25, 2013 : 1:36 p.m.
Do you really think Wang did not know he was getting cheap unlicensed labor?
Michael Feeney
Mon, Mar 25, 2013 : 3:22 a.m.
Easy to say he broke a contract and Wang shouldn't have to pay but Wang had a lot of opportunity to fire Sun but chose to let him finish, time to pay up. We don't know what the causes of the delay were so we can't blame Sun alone. Builders can't pay if they haven't been paid, Wang should have known by the amount of work completed the restaurant was not going to open on time, the hiring of the chef has nothing to do with the builder. Sun isn't doing enough, he should be bringing families to join him in his protest, cover the walk with protesters.
snapshot
Mon, Mar 25, 2013 : 2:42 a.m.
Even the weather is in support of Mr. Wang
Greg
Mon, Mar 25, 2013 : 12:59 a.m.
Who is Crystal Corporation? Kuroshio is there for everyone to see, but it's hard to know the track record of this contractor. Reporting on this would help readers.
Michael Feeney
Mon, Mar 25, 2013 : 3:26 a.m.
Agreed, wouldn't be hard to find out what Sun is made of by online reviews as well as history on Michigan Builders license
Jack Gladney
Sun, Mar 24, 2013 : 11:41 p.m.
Great! A new place for Asian fusion cuisine in town. Another contractor not paying his workers and subs to add to the "Don't Use This Guy" list. Thanks for letting us know, Mr. Sign Dude.
davecj
Sun, Mar 24, 2013 : 11:02 p.m.
sounds familiar. We had a similar situation. Signed contract with a Jan CO date. Contracter finished near the end of April. We invoked the penalty fee and he put a lien on the property. We went to arbitration. Won. He ended up having to pay arbitration fees as well. a contract is a contract!
walker101
Sun, Mar 24, 2013 : 10:39 p.m.
Bottom line, the contractor failed to meet his obligation to complete his job as what was printed in the contract, Mr. Sun can picket all he wants but he has no legal recourse. If anything Mr. Wang can ask for lost revenue for not completing the work as promised.
jcj
Mon, Mar 25, 2013 : 1:19 a.m.
Ugh Just trying to balance things out. I would not have gone there no matter what. But I was in construction 30 years and it is seldom that the owner does not want to change something for no cost to him. All we have is one persons word against the other and we all choose sides.
UghAnnArbor
Sun, Mar 24, 2013 : 11:57 p.m.
@JCJ you are all over the board making your own accusations and drawing your own conclusions just for the other side with as little information. So - I don't think you get to be incredulous about walker101's statement. Nice try though!
jcj
Sun, Mar 24, 2013 : 10:52 p.m.
When you get all the facts you can say there is a bottom line!
a2phiggy
Sun, Mar 24, 2013 : 10:33 p.m.
This feels like harassment, not picketing - I hope it is handled as such. Makes me want to try some Japanese food!
Amnachaidh
Sun, Mar 24, 2013 : 10:05 p.m.
I don't have a copy of the contract, obviously, but I'm assuming that the restaurant created the contract. If that is so, the error and/or omission of the HVAC may create an excusable delay for the contractor. In the case of an Owner -created delay, liquidated damages do not apply.
Basic Bob
Sun, Mar 24, 2013 : 8:59 p.m.
Mr. Sun can't legally refuse to pay wages to his employees. Even in the case of bankruptcy, wages are paid first. So while this little picket he is operating is valid, to assert or admit he has not paid his employees is unacceptable. Did Mr. Sun hire out the HVAC work to a licensed contractor, or did he assign unskilled workers to complete the job and pay them below prevailing wage? Perhaps that is the reason for such a long delay.
jcj
Sun, Mar 24, 2013 : 9:35 p.m.
Obviously we are not privy to the actual contract but Mr Sun did indicate there was an error on the plans. I would like to hear Mr Wang deny it.
nickcarraweigh
Sun, Mar 24, 2013 : 8:35 p.m.
Yoked to the Rule of Law, they chafe.
Tom Joad
Sun, Mar 24, 2013 : 6:27 p.m.
Project delays and cost-overruns are common on construction jobs. Why should the contractor be held responsible for unforeseen delays that were no fault of his own? Pay the contractor his money. You're open, the work has been completed. I will not cross a picket line.
J-smith
Mon, Mar 25, 2013 : 1:39 p.m.
Yes, these things are common, but if the delay was caused by design changes then the contractor should have done a change order with a detailed description of the new costs.
OLDTIMER3
Mon, Mar 25, 2013 : 12:52 p.m.
I had a contractor bid a job for me at $12000 . Through incompetence the job was a total disaster. When finished he billed me $29000 which I refused to pay. To make a long story short we went to court and the court allowed him $6000 over the original bid. Two years after the court case I had 2 sub contractors ask me when I was going to pay the guy so he could pay them. When I told them he had been paid a long time ago they didn't think I was telling them the truth. Had to show them the receipots before they would believe me.
jcj
Sun, Mar 24, 2013 : 10:51 p.m.
I am sure if Mr Wang thinks its libel he will go to court. It is just someone not willing to be taken advantage of!
Brad
Sun, Mar 24, 2013 : 10:39 p.m.
Blackmail or libel? You make the call.
justcurious
Sun, Mar 24, 2013 : 10:34 p.m.
I would not cross it either.
jcj
Sun, Mar 24, 2013 : 9:41 p.m.
I call it a picket sign. So any time someone stands up for what they think is right it's blackmail? I think not!
jcj
Sun, Mar 24, 2013 : 9:38 p.m.
Fair is fair. But then people in this town are used to taking advantage of people. If I hire someone to do work on my home that should be done by a certain date. I would not wait 3 months.
eagleman
Sun, Mar 24, 2013 : 9:01 p.m.
But if he didn't put it in writing than why should the owner have to foot the bill???
tom swift jr.
Sun, Mar 24, 2013 : 7:17 p.m.
I would call that sign a blackmail note, not a picket line.
jcj
Sun, Mar 24, 2013 : 6:25 p.m.
This works both ways. Mr Sun does not appear to be an accomplished business man. But Mr Wang appears to be a very shrewd one. He waited until the job was done to let it be known he was not going to pay instead of confronting Mr Sun before the end of 3 months of delay. Looks like he was more interested in not paying than opening the restaurant.
J-smith
Mon, Mar 25, 2013 : 1:32 p.m.
A change order is standard business practice. If the contractor did not know this, he has learned a valuable, if expensive, lesson. Mr Wang should have pointed out the per diem charge as a lever to get the contractor moving, but he was under no legal obligation to do so.
halflight
Mon, Mar 25, 2013 : 1:44 a.m.
No, Mr. Sun had a contractual obligation to finish the work according to the contract. We don't know how the contract scheduled payment, but as long as Mr. Wang followed the contract and made the payments, Mr. Sun had a legal obligation to continue work-- regardless of whether Mr. Wang had a right to withhold some of the final payment. Mr. Wang had no obligation to warn Mr. Sun. Why should he? So that Mr. Sun can further violate the contract, and hold Mr. Wang and his restaurant hostage? Further, construction contracts typically require the contractor to sign lien waivers before the contractor receives payment. If Mr. Sun has a valid money claim against Mr. Wang under the contract, he can file a construction lien against the property for the amount in dispute. That's the way you do it if you're a legitimate contractor. If there was a significant delay caused by a change in the HVAC system, Mr. Sun should have demanded a written change order addendum to the construction contract. Written change orders are the common practice in the construction industry, and any contractor who fails to get a change order, especially when the contract requires it, doesn't know his business.
justcurious
Sun, Mar 24, 2013 : 10:34 p.m.
I agree with you jcj. How does Wang think the workers should be paid for the work they did? I suppose he doesn't care just as long as he got his restaurant opened. No, he owes for the work that was done. Delays can occur in any project.
jcj
Sun, Mar 24, 2013 : 7:45 p.m.
It is not uncommon for errors on the plans or an oversight by the architect or owners (whether it be commercial or residential) to change things. In those cases the contractor should not have to bear all the cost.
Michigan Reader
Sun, Mar 24, 2013 : 7:19 p.m.
I think Mr Wang was more interested in opening the restaurant than in saving money on the contractor. If he had told Mr. Sun he would enact the penalty provision of the contract, Mr. Sun would have stopped work part way through the remodeling process, leaving Wang in limbo.
leezee
Sun, Mar 24, 2013 : 6:08 p.m.
Picketing as a first choice instead of going through the court system just shows Mr. Sun realizes his chances of succeeding in court are pretty slim.
YouAreNotAlwaysRight
Sun, Mar 24, 2013 : 11:04 p.m.
Not like this though. Leezee is totally correct and Sun is being incredibly immature. Take this man to court and so Sun will pay his employees, and hopefully learn a thing or two about business in the process.
Michigan Reader
Sun, Mar 24, 2013 : 7:25 p.m.
Parties in a contractual dispute always try to resolve it first outside of (in this case arbitration) the legal system, and usually sue as a last resort.
dancinginmysoul
Sun, Mar 24, 2013 : 6:02 p.m.
I think it's in very poor taste for Mr. Sun to resort to a picket line already, especially when the restaurant is just opening. It appears, based on the article, the contractor did not meet his end of the signed and agreed upon contract. And it hasn't been through any kind of mediation. Seeing a picket sign saying Mr. Wang owes $35,000 in wages is very misleading-not to mention somewhat factually inaccurate-and (I suspect) intended to shock. However, it's Mr. Sun's responsibility to pay the wages, not Mr. Wang. If it clearly states in the contract any delays had to be put in writing, and Mr. Sun didn't put it in writing, isn't the culpability on him?
zip the cat
Sun, Mar 24, 2013 : 6 p.m.
When doing business ,EVERYTHING needs a paper trail. That's why you have a written contract. Any changes to that initial contract need to be put in writing From the smallest tid bit to the largest change,any thing that deviates from the first contract must be in writing. I don't care how busy you say you are,get it in writeing or lose. You agreed to a certain completion date and it didn't happen,either by your hand or not,but you need the reason in writeing and agreed by both parties.
tom swift jr.
Sun, Mar 24, 2013 : 5:56 p.m.
""I am a contractor, I work with my hands and cannot put everything down on paper." That statement actually says "I'm a poor business person, didn't follow through on my agreement and now I'm not willing to deal with the consequences of my choices. I wonder if Mr. Sun realizes how much this little act of his is going to cost him in the long run.