Kenneth A. Cushing

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Tilson Home Corp. v. Zepeda, No. 14-16-00075-CV, 2016 Tex. App. LEXIS 12022 (Tex. App. Nov. 8, 2016)

The Court of Appeals of Texas has held that an arbitrator—not a trial court—must determine whether a prerequisite to the obligation to arbitrate has been met. Thus, when faced with the procedural question of whether an arbitration demand was timely filed, Texas trial courts must compel arbitration, leaving the question to the arbitrator. 

In Tilson Home Corp., Jorge and Lisa Zepeda hired Tilson to build a home on their property.  The contract’s arbitration provision stated:

Any dispute or claim which arise[s] from or relates to this Agreement, the Work and/or the Home will be barred unless the claim is filed with the [AAA] by Owner or Contractor within two (2) years and one (1) day from the date the cause of action accrues.

Turner Constr. Co. v. BFPE Int’l, Inc., No. JKB-15-368, 2016 U.S. Dist. LEXIS 39161 (D. Md. Mar. 25, 2016)

The University of Maryland Medical Center (“UMMC”) entered into a contract (the “Prime Contract”) with Turner Construction Company (“Turner”), pursuant to which Turner agreed to renovate UMMC’s hospital offices.  Turner then entered into a subcontract (the “Subcontract”) with BFPE International, Inc. (“BFPE”), pursuant to which BFPE agreed to perform work associated with the fire protection system, including demolishing sprinkler piping and coordinating sprinkler outages to accommodate the renovations.
The Prime Contract included a waiver of subrogation, under which UMMC and Turner waived all rights against each other and any subcontractors for damages covered by property insurance, even if the subcontractor would otherwise have a duty to indemnify.[i]  The Subcontract incorporated the Prime Contract by reference and included flow down provisions, but the Subcontract also stated that if any provision “irreconcilably conflicts” with a provision of the Prime Contract, “the provision imposing the greater duty or obligation on [BFPE] shall govern.”  The Subcontract included an assumption of liability, under which BFPE assumed liability for all property damage in connection with its work and agreed to indemnify Turner from any claims that result.[ii]  This assumption of liability seemed inconsistent with the waiver of subrogation in the Prime Contract.

Time is money in construction, and project delays can cause contractors to incur substantial additional costs. To avoid responsibility for paying these costs, project owners often include a no-damage-for-delay (NDFD) clause in the contract, where legally permitted.[1] An example of a typical NDFD clause reads as follows:

The Contractor agrees to make no claim for damages for delay in the performance of this contract occasioned by any act or omission to act of the [Owner] or any of its representatives, and agrees that any such claim shall be fully compensated for by an extension of time to complete performance of the work as provided herein.[2]

An NDFD clause may bar a contractor from recovering delay damages. But, in most states, the enforceability of NDFD clauses is also subject to exceptions.[3] As shown in the clause quoted above, NDFD clauses often provide that the exclusive remedy for delay is an extension of time. The issue is whether an NDFD clause, which provides a time extension as an exclusive remedy, also bars claims for acceleration. As explained below, there are several approaches to this issue.

J.C. Penney Props. v. Hiram LL, LLC, 2016 U.S. Dist. LEXIS 8027 (N.D. Ga. Jan. 25, 2016)

In January 2008, Hiram LL, LLC (“Hiram”) leased property to J.C. Penney Properties, Inc. (“J.C. Penney”) for the construction and operation of a J.C. Penney retail store.  Pursuant to the lease, Hiram was required “to design and construct certain improvements on the property” to prepare the site on which J.C. Penney planned to build its store.  Based on plans and specifications prepared by an architect, Hiram entered into a contract (the “Contract”) with Benning Construction Company (“Benning”) to construct the site.  The Contract was based on two AIA forms:  the A101 standard agreement and the A201 general conditions.  Benning completed its construction work and J.C. Penney eventually opened the store for business.

Butch-Kavitz, Inc. v. Mar-Paul Co., Inc., 2015 U.S. Dist. LEXIS 160652 (M.D. Pa. Dec. 1, 2015)

The United States Army Corps of Engineers (the “Owner”) entered into a contract (the “Contract”) with Mar-Paul Company, Inc. (“Mar-Paul”) for $3,381,000.00, under which Mar-Paul would serve as general contractor on a construction project for renovations to a building at the Tobyhanna Army Depot in Tobyhanna, Pennsylvania (the “Project”).  In turn, Mar-Paul entered into a subcontract (the “Subcontract”) with Butch-Kavitz, Inc. (“Butch-Kavitz”) for $452,000.00, under which Butch-Kavitz would perform the electrical and generator work in connection with the Project.

Oakdale Equip. Corp. v. Meadows Landing Assocs., LP, 2015 Pa. Super. Unpub. LEXIS 2067 (Pa. Super. Ct. July 8, 2015)

Meadows Landing Associates, LP (“MLA”) contracted with Richard Lawson Excavating, Inc. (“Lawson”) for work on MLA’s 200-acre subdivision, including earthwork, grading, excavating and pond construction.  Lawson then contracted with Oakdale Equipment Corporation (“Oakdale”) to rent heavy equipment for the work.  More than one year later, MLA terminated Lawson for failure to achieve substantial completion on time.  Oakdale and Lawson both filed mechanics’ lien claims against MLA.