Decker Constr. Co. v. Wesex Corp., No. 2:18-cv-727, 2019 BL 232653 (S.D. Ohio June 24, 2019)

In Decker Construction Co. v. Wesex Corporation, the United States District Court for the Southern District of Ohio declined to dismiss a cause of action for fraudulent misrepresentation against Third-Party Defendant Mark Schrader (“Schrader”), the former Chief Financial Officer of Wesex Corporation (“Wesex”).  Wesex served as the general contractor on a construction project in New Albany, Ohio (the “Project”).  In its claim against Schrader, Third Party Plaintiff CCL Label, Inc. (“CCL”), the construction manager on the Project, alleged that Schrader signed affidavits included in Wesex’s payment applications that falsely certified Wesex’s subcontractors had been paid for their work on the Project.  Schrader sought dismissal on the basis that the Court lacked personal jurisdiction over him and that CCL failed to state a claim.

Continue Reading Ohio Federal Court Declines to Dismiss Action Against the Officer of a General Contractor Who Allegedly Submitted False Certifications Regarding Payments Made to Subcontractors With Payment Applications

Team Contractors, LLC v. Waypoint Nola, LLC, No. 16-1131, 2019 BL 96133 (E.D. La. Mar. 20, 2019)

The Eastern District of Louisiana recently denied the motion of a prime contractor (the “Contractor”) for summary judgment on its breach of contract claim against the owner (the “Owner”) of a construction project in New Orleans (the “Project”) where the primary issue involved whether a suspensive condition was enforceable.

Continue Reading Federal Court in Louisiana Upholds Suspensive Condition Not Subject Solely to Owner’s Whim

Sachse Constr. & Dev. Corp. v. Affirmed Drywall, Corp., 2018 Fla App. Lexis 9998 (July 18, 2018)

Sachse Construction, a Michigan-based general contractor, entered into a subcontract (the “Subcontract”) with Affirmed Drywall Corp. (“Affirmed”), a Florida drywall subcontractor, to perform work on a property in Florida.  The Subcontract provided that all disputes be resolved by mediation and/or arbitration in Southfield, Michigan, or within 20 miles thereof, pursuant to the Construction Industry Rules of the American Arbitration Association and in accordance with Michigan laws.  However, under Section 47.025 of the Florida Statutes, a venue provision in a contract involving a Florida-based contractor or subcontractor, etc., for the improvement of real property located in Florida is considered void as a matter of public policy if it requires that legal action be brought outside of Florida.

Affirmed filed an action in Florida state court alleging claims for breach of contract against Sachse and to recover against a bond naming Sachse and the surety on the bond.  Sachse moved to dismiss or to compel arbitration in Michigan in accordance with the dispute resolution provision in the Subcontract.  Sachse argued that the Subcontract involved interstate commerce, so the Federal Arbitration Act (the “FAA”) governed the Subcontract and preempted inconsistent state law.  Sachse claimed that Section 47.025 did not void the provision in the Subcontract mandating that disputes be resolved by arbitration in Michigan because of the FAA’s liberal policy favoring arbitration agreements.  The trial court disagreed, denied Sachse’s motion and ordered Sachse to answer the complaint.  Sachse appealed.
Continue Reading Federal Arbitration Act Preempts Florida State Statute Which Prohibits Out-of-State Resolution of Construction Claims Involving Florida Real Property

Pinnacle Crushing & Constr. LLC v. Hartford Fire Ins. Co., 2018 U.S. Dist. LEXIS 67965 (W.D. Wa. Apr. 23, 2018)

The Army Corps of Engineers (the “Corps”), as owner, and Cherokee General Corporation (“CGC”), as prime contractor, entered into a contract (the “Contract”) in connection with work at the Yakima Training Center (the “Project”).  CGC subcontracted with SCI Infrastructure (“SCI”) for certain work related to the Project (the “SCI Subcontract”), and SCI subcontracted with Pinnacle Crushing & Construction, LLC (“Pinnacle”) (the “Pinnacle Subcontract”).  CGC obtained a Miller Act payment bond (the “Bond”) from Hartford Insurance Co. (the “Surety”) to provide coverage for labor and materials supplied in carrying out the work.

After the Corps terminated the Contract with CGC, CGC submitted a claim under the Contracts Disputes Act.  As required by the SCI Subcontract, CGC asserted SCI’s pass through claims against the Corps, which included amounts allegedly owed to both SCI and Pinnacle.

Separately, SCI and Pinnacle sued CGC and the Surety to recover under the Bond for the work they performed under the subcontracts, but for which CGC had not paid them.


Continue Reading Subcontract Provision Requiring Subcontractor to Pass Through its Claims Does Not Prevent the Subcontractor From Suing to Recover Against Miller Act Bond

Dormitory Auth. of the State of NY v. Samson Constr. Co., 2018 N.Y. Lexis 218 (February 15, 2018)

The Dormitory Authority of the State of New York (“DASNY”) undertook, as project manager, to construct a facility for the Office of the Chief Medical Examiner of the City of New York (the “City”) as a forensic biology laboratory (the “Project”).  DASNY retained Perkins Eastman Architects, P.C. (“Perkins”) as architect for the Project, and Samson Construction Co. (“Samson”) as the foundation contractor.

Complications during the construction of the foundation resulted in 18 months of delays due to the adjacent building settling eight inches, damages to the adjacent sidewalks, utilities and emergency repairs.  DASNY and the City filed suit against Samson, and later joined Perkins, asserting claims against Perkins for breach of contract and negligence.

Perkins moved for summary judgment to dismiss the City’s claims, and to dismiss DASNY’s negligence claim as duplicative of its breach of contract claim.  The trial court dismissed the City’s breach of contract claim; holding that the City was not an intended third-party beneficiary of the contract between DASNY and Perkins (the “Contract”), and allowed both DASNY’s breach of contract and negligence claims to proceed, holding that the claims were not duplicative of each another.


Continue Reading Divided New York Court of Appeals Holds That a Third Party Cannot Sue for Breach of Contract Absent Express Language Naming Them as an Intended Beneficiary and That Claims for Breach of Contract and Professional Negligence Against an Architect Cannot Both Be Maintained When the Allegations Supporting Both Claims Are Nearly Identical

Koudela v. Johnson & Johnson Custom Builders, LLC, 2017 Ohio App. Lexis 5800 (December 29, 2017)

In this case, Nicolas and Monica Koudela (the “Koudelas”) entered into a construction contract with “Johnson & Johnson Builders” (the “Agreement”), whereby Johnson & Johnson Builders agreed to construct a single family home for the Koudelas in Ohio.  However, Johnson & Johnson Builders was a fictitious name for Johnson & Johnson Custom Builders, LLC (“J&J”), and was not an entity registered with the Ohio Secretary of State.

In the Agreement, the parties agreed to submit all disputes to binding arbitration in Cleveland, Ohio.  The arbitration clause further provided that the cost of the arbitration would be borne by the party initiating the claim.

After disputes arose on the project regarding the work performed by J&J, the Koudelas filed suit in the State Court of Ohio against J&J and its principals, alleging claims for fraud in the inducement, breach of contract, negligence, conversion, unjust enrichment/detrimental reliance, and a declaratory judgment that the arbitration clause in the Agreement was unenforceable.  J&J moved for an order dismissing the complaint, or, in the alternative, staying the litigation pending binding arbitration.  The trial court granted J&J’s motion and stayed the litigation pending binding arbitration.


Continue Reading Claim of Fraudulent Inducement of a Construction Contract Does Not Invalidate Arbitration Clause in That Same Contract

Zirkelbach Constr., Inc. v. DOWL, LLC, 2017 Mont. Lexis 591 (Mont., Sept. 26, 2017)

In interpreting a state statute which makes contractual limitations on a party’s liability unenforceable in certain instances, the Supreme Court of Montana recently upheld the validity of a contract provision in a professional services agreement between a general contractor and a designer in which the parties waived consequential damages against each other and limited the liability of the designer to $50,000.00.
Zirkelbach Constr., Inc. (“Zirkelbach”) and DOWL, LLC (“DOWL”) entered into a professional services agreement (the “Agreement”), whereby DOWL agreed to provide design work to Zirkelbach, a general contractor, for the construction of a FedEx Ground facility in Billings, Montana.  The original contract price was $122,967, but was adjusted to approximately $665,000 after the parties made several addenda to the Agreement to account for additional services.


Continue Reading Montana Supreme Court Holds That a Waiver of Consequential Damages and a Partial Limitation of Liability in a Design Contract Are Not Contrary to Montana Law

TK Servs., Inc. v. RWD Consulting, LLC, 2017 U.S. Dist. Lexis 97239 (D.D.C., June 23, 2017)

This litigation arose from a dispute between TK Services, Inc. (“TKS”), as sub-subcontractor, and RWD Consulting, LLC (“RWD”), as prime subcontractor, in connection with a sub-subcontract (the “Subcontract”), whereby TKS agreed to be responsible for managing operation and maintenance-related services (the “Services”) for the Environmental Protection Agency headquarters in Washington DC (the “Project” or the “EPA Building”) in exchange for a monthly fixed fee and a percentage of profits derived from reimbursable projects performed at the EPA Building.  Pursuant to the Subcontract, all funds received by RWD as payment for the Services performed at the Project and all working capital provided by TKS were to be deposited into a joint bank account to which both TKS and RWD were signatories.

In its complaint, TKS alleged that RWD (1) breached the Subcontract by failing to properly compensate TKS and excluding TKS from accessing the EPA Building, (2) converted the funds in the joint bank account by unilaterally closing the account, and (3) was unjustly enriched by its improper conduct.  TKS also moved for a preliminary injunction to sequester the profits received by RWD in connection with the Project, prevent RWD from excluding TKS from the EPA Building and the joint bank account, and reinstate TKS to its prior role under the Subcontract.


Continue Reading D.C. Federal Court Declines to Enjoin Arbitration Because the Arbitrator Could Issue Any Equitable Relief Required, the Integrity of the Arbitration Was Not Threatened and the Movant’s Projected Economic Loss Did Not Prove Irreparable Harm

Balfour Beatty Infrastructure, Inc. v. Mayor and City Council of Baltimore, 2017 U.S. App. Lexis 7252 (4th Cir., April 25, 2017)

The United States Court of Appeals for the Fourth Circuit recently addressed whether the City of Baltimore (the “City”) had abandoned a contractually required administrative dispute resolution process and relieved Balfour Beatty Infrastructure, Inc. (the “Contractor”) of any obligation to use the administrative dispute resolution process before seeking judicial review of the Contractor’s claims.

The City and the Contractor entered into two contracts (the “Contracts”) whereby the Contractor agreed to build certain parts of a wastewater treatment plant servicing the Chesapeake Bay. The Contracts stipulated that time was of the essence and permitted the City to assess liquidated damages if the Contractor failed to meet the specified completion date.  The Contracts also incorporated by reference the administrative dispute resolution process set forth in the City’s “Department of Public Works Specifications – Materials, Highways, Bridges, Utilities and Incidental Structures 2006,” known as the “Green Book,” which requires contractors engaged by the City in connection with public works projects to seek administrative review by the City’s Department of Public Works of any dispute related to their contracts before suing in court.


Continue Reading Fourth Circuit Affirms Dismissal of Contractor’s Complaint, Declining to Create ‘Ultra Vires’ or ‘Bias’ Exceptions to the Requirement That Contractors Exhaust Their Administrative Remedies Under Maryland Law Before Suing a Government Agency