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KAST CONSTRUCTION COMPANY LLC AND SUBSIDIARY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of and for the years ended December 31, 2013 and 2012 NOTE 14 — LITIGATION The company is a defendant in a lawsuit filed by an owner of a project that has been completed. The owner has alleged damages from water intrusion as a result of defective work performed by the company and its subcontractors. An investigation by all parties involved has found evidence of water intrusion, but each has differed as to the cause and necessary remedy. As of January 14, 2014, outside counsel for the company has advised that the company's insurance carrier is handling the matter and has filed third party complaints against the subcontractors that performed work on the project, their sureties and the architect. Outside counsel has also advised that at the present stage of the matter, the likelihood of an adverse recovery against the company that is not covered by its insurance policies or indemnity is neither probable nor remote. Management intends to vigorously pursue its position in the matter. The company is a defendant in another lawsuit filed by a subcontractor on a project that is in progress. The lawsuit claims that the subcontractor is owed in excess of $15,000 for work performed on the project. As of January 28, 2014, outside counsel for the company has advised that discovery is ongoing in the matter to determine the actual amount claimed as owed by the subcontractor and that there is or may be insurance coverage available for all or part of this claim. The company is a defendant in another lawsuit filed by a subcontractor on a project that is in progress. The lawsuit claims that the subcontractor is owed $97,055 for work performed on the project. The company has asserted as its defense that the subcontractor has provided a release to the company for the alleged balance owed. As of January 28, 2014, outside counsel for the company has advised that there is or may be insurance coverage available for all or part of this claim. During the year ended December 31, 2013, the company reached a settlement agreement on an ongoing lawsuit with a subcontractor regarding work performed on a contract that has been completed. The amount awarded in the settlement agreement had been reserved by the company in prior years. 13