On June 16, 2016, the U.S. Supreme Court ruled in the matter of Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), changing the legal landscape for False Claims Act qui tam claims concerning the implied false certification theory of liability. This article will discuss the Escobar holding and examine relevant considerations for contractors in light of this ruling.
John Conrad
Texas District Court Rejects Rail Contractor’s Delay and Prompt Payment Claims and Awards Owner More Than $3 Million
By John Conrad on
Balfour Beatty Rail, Inc. v. The Kansas City Southern Railway Company, 2016 U.S. Dist. LEXIS 39086 (N.D. Tex., March 25, 2016)
The contractor contracted with owner to install 65 miles of railroad track, for a price of $12,206,666. The owner had engaged another contractor to grade and prepare the substrate for the railroad track, and was to furnish and deliver aggregate for track ballast and track rail material to various locations along the rail route. The contractor’s scope included all other work. The contractor fell behind in its work, and the owner hired additional contractors to complete a portion of its scope. The contractor blamed the delays on the owner’s late delivery of aggregate and rail, and improper subgrade preparation under a theory of differing site conditions. It sought $4.35 million in unpaid change orders, delay damages, and penalties under Texas’ prompt payment statutes. The owner in turn sought $2.6 million in completion costs and costs of wasted aggregate.
Ohio Supreme Court Holds Reasonableness of Liquidated Damage Provision to Be Determined Based Upon the Parties’ Knowledge at Time of Contracting Rather than After Performance
By John Conrad on
Posted in Contracts
Boone Coleman Constr., Inc. v. Vill. of Piketon, 2016-Ohio-628, 2016 Ohio LEXIS 441 (Ohio Feb. 24, 2016)
A general contractor entered into a construction contract with a public agency for a road construction project with a $700 per day liquidated damages provision. The contractor completed the project over one year late, and was assessed $277,900 in liquidated damages. The original contract price was $683,300. The trial court granted summary judgment for the public agency, awarding the full amount of the liquidated damages. An intermediate appellate court overturned the ruling based upon an after-the-fact comparison of the total liquidated damages imposed in relation to the contract price, stating, “the amount of damages [as a whole] is so manifestly unreasonable and disproportionate that it is plainly unrealistic and inequitable.” The Ohio Supreme Court vacated the decision of the appellate court and remanded for further consideration.