Maxum Indemnity Co. v. Robbins Co., P.C., No. 1:17-CV-01968, 2018 U.S. Dist. LEXIS 57729 (N.D. Ohio Mar. 28, 2018)

On March 21, 2018, the United States District Court for the Northern District of Ohio granted a motion for judgment on the pleadings in favor of Maxum Indemnity Co. and declared that Maxum has no duty to defend or indemnify The Robbins Company in an international arbitration initiated by a third-party, JCM Northlink, LLC.

Robbins is a designer, manufacturer, and supplier of tunnel-boring machines (“TBMs”) and was engaged by JCM to supply a TBM for Seattle’s Northgate Link Extension project to add additional light rail lines to the city’s existing public transportation system.  Maxum insured Robbins under two commercial general liability policies in connection with the Northgate Link Extension project.

Continue Reading Boring Through the Details: U.S. District Court Declares Boring Company Dispute Not Covered by Insurance Policies

Randy Kinder Excavating, Inc. v. JA Manning Constr. Co. 2018 U.S. App. LEXIS 21878 (8th Cir. Aug. 7, 2018)

This article was published in the February 2019 issue of ConsensusDocs Construction Law Newsletter (Vol. 5, Issue 1).

This dispute arose from a contract to build a pumping station in Arkansas (the “Project”).  In June of 2010, the U.S. Army Corps of Engineers (“COE”) awarded a contract to Randy Kinder Excavating, Inc. (“Kinder”) to serve as the general contractor on the Project.  Kinder entered into a subcontract with J.A. Manning Construction Co. (“Manning”) to engineer, furnish and install a mechanically stabilized earth (“MSE”) wall at the Project.

The Project experienced significant delays which affected the Manning’s initial start date.  By the time Manning could begin constructing the MSE wall, only six days remained until the original completion date of the entire Project.  Unknown to Manning, however, Kinder was telling the COE that weather and other issues were delaying the Project and Kinder represented to the COE that its projected completion date for MSE wall was in the summer of 2012.  At the same time, Kinder was telling Manning that the MSE wall needed to be completed by November of 2011 and repeatedly threatened to assess delay damages against Manning if this did not occur.  In addition, during the construction of the MSE wall, Kinder and/or the COE demanded that Manning install the wall panels 0.75 inches apart with absolutely no variance, despite industry standard allowing a 0.25 inch variance.  On March 7, 2012, Kinder terminated Manning, at which point Manning had constructed 27.5 feet of the 40-foot MSE wall.  The MSE wall was later completed by a replacement contractor, although the wall as-accepted by the COE contained a number of defects that Kinder and the COE told Manning were unacceptable. 
Continue Reading General Contractor’s Unjustified Threats to Assess Delay Damages Against Subcontractor Are a Material Breach of Contract

Rembrandt Enters., Inc. v. Dahmes Stainless, Inc., No. C15-4248-LTS, 2017 U.S. Dist. LEXIS 144636 (N.D. Iowa Sept. 7, 2017)

On September 7, 2017, the Federal District Court for the Northern District of Iowa denied a motion for summary judgment by Rembrandt Enterprises, Inc. (“Rembrandt”).  In the motion, Rembrandt asked the court to grant declaratory relief and excuse the company from its breach of a contract with Dahmes Stainless, Inc. (“Dahmes”) under the doctrine of frustration of purpose.

Beginning in approximately 2014, Rembrandt, a large-scale producer of eggs and egg products, sought to expand its business.  As part of these expansion efforts, Rembrandt planned to construct an entirely new egg processing plant in Thompson, Iowa.  After reaching agreements with multiple contractors to build the new facility, on November 20, 2014, Rembrandt entered into an agreement with Dahmes for the manufacture and installation of an $8.5 million egg dryer at the new processing facility.  During the course of the new facility’s construction, however, the Midwestern United States was impacted by the Avian Flu virus which caused Rembrandt to eliminate over a million of its birds in an effort to limit the spread of the virus, cutting Rembrandt’s production capacity by approximately 50 percent.  As a result of the loss in production capacity, Rembrandt decided to scuttle the construction of the new processing facility and subsequently breached its agreement with Dahmes.


Continue Reading A Frustrating Exercise: Federal District Court in Iowa Declines to Grant Summary Judgment on Frustration of Purpose Doctrine in a Breach of Contract Case

Tomlinson v. Douglas Knight Constr., Inc., 2017 Utah Lexis 132 (August 29, 2017)

This case arises out of the construction of a residential property.  Lot 84 Deer Crossing (“Lot 84”) purchased the property and contracted with Douglas Knight Construction, Inc. (“DKC”) to build a house on it.  The parties’ contract included a one-year construction warranty.  Lot 84 then assigned to Outpost Development, Inc. (“Outpost”) all of its rights in the property and the construction agreement.  As the home neared completion, Outpost noticed defects in its construction and, pursuant to the warranty, directed DKC to fix the deficiencies.  Despite DKC’s efforts, the defects remained.  Outpost then sold the home to Joseph Tomlinson, but did not assign to Tomlinson its interests in the DKC construction agreement.  Tomlinson subsequently noticed defects in the home and filed suit against Outpost and DKC.
Shortly thereafter, Outpost declared bankruptcy and was dismissed from the case.  During the bankruptcy proceedings, Tomlinson was assigned an interest in any claims that Outpost had asserted or may assert against DKC.  Tomlinson maintained that this assignment encompassed claims for breach of the DKC construction agreement and amended his complaint to include claims for breach of express and implied warranties.  Tomlinson sought to assert these claims as an assignee of rights of parties in privity with DKC: first, through the assignment made when Outpost purchased the property from Lot 84, and second, through the assignment in Outpost’s bankruptcy proceedings.  The district court rejected these theories and dismissed Tomlinson’s claims, holding that they were barred because Tomlinson had never acquired a direct interest in the DKC construction agreement.


Continue Reading In Dismissing Homebuyer’s Defective Construction Suit Against Contractor for Lack of Privity, Supreme Court of Utah Cautions Future Homebuyers to Obtain Express Assignment of All Available Warranties at Time of Acquiring Home

Jay Jala, LLC v. DDG Construction, Inc., No. 15-3948, 2016 US Dist. LEXIS 150969 (E.D. Pa. Nov. 1, 2016)

Jay Jala, LLC was the owner of a motel construction project in Allentown, Pennsylvania. DDG Construction, Inc. was the contractor.  The project was delayed during construction and, four months after the specified completion date, DDG abandoned the project.  Jay Jala terminated DDG for default, completed the project, and initiated this action.

The contract provided that the parties “waive Claims against each other for consequential damages arising out of or relating to this Contract.” During litigation, DDG stipulated that it breached the contract but moved for partial summary judgment, arguing that Jay Jala’s damages were consequential, and thus waived.


Continue Reading Federal Court in Pennsylvania Analyzes Which Types of Damage are Barred by Contractual Waiver of Consequential Damages

Summit Contracting Grp., Inc. v. Ashland Heights, LP,  2016 U.S. Dist. LEXIS 60662 (M.D. Tenn. May 6, 2016)

Ashland Heights, LP (“Owner”) contracted with Summit Contracting Group, Inc. (“Contractor”) to construct an assisted living facility in Tennessee.  After completing the project, Contractor alleged that Owner had failed to pay Contractor in full for the work it performed; to make timely payments; to provide Contractor a time extension for inclement weather; and to deposit retainage into an interest-bearing escrow account as required by Tennessee’s Retainage Law.

Contractor filed a breach of contract and Retainage Law action in federal district court, seeking damages and litigation costs in excess of $1.5 million (the “Contract Action”).  Contractor concurrently filed a mechanic’s lien action in state court seeking enforcement of the lien in the amount of $1,074,688.74 (the “Lien Action”).


Continue Reading Tennessee Federal District Court Holds That Contractor May Pursue Both Breach of Contract Action in Federal Court and Lien Enforcement Action In State Court – Abstention Not Required

Securiforce Int’l America, LLC v. United States, 125 Fed. Cl. 749 (March 21, 2016)

Plaintiff Securiforce International America, LLC (“Securiforce”) was awarded a contract by the Defense Logistics Agency Energy (“DLA Energy” or the “agency”) to deliver diesel fuel and gasoline to eight Department of State sites in Iraq.  But, within three months of the award, the agency partially terminated the contract for the convenience of the government.  The remainder of the contract was terminated for cause shortly thereafter.

As a result of its termination, Securiforce submitted claims to DLA Energy’s contracting officer, seeking, among other things, a declaration from the contracting officer that the termination for convenience was invalid and constituted a breach of contract.  The contracting officer denied the claims.


Continue Reading Court of Federal Claims Rules Contracting Officer’s Failure to Exercise Independent Business Judgment Renders Partial Termination for Convenience an Abuse of Discretion and Breach, but Holds Subsequent Termination for Cause of Remainder of Contract to Be Appropriate

Dallas/Fort Worth International Airport Board v. INET Airport Systems, Inc., et al., 2016 U.S. App. LEXIS 6646, 819 F.3d 245 (5th Cir. Apr. 12, 2016)

This action arose out of a construction project in terminal E of the Dallas/Fort Worth International Airport (“DFW”), in which pre-conditioned air and rooftop air handling units were to provide conditioned air (cooling and heating) to passenger boarding bridges and aircrafts parked at terminal gates (the “Project”).  In August, 2009, following a competitive bidding process, owner Dallas Fort Worth International Airport Board (the “Owner”) entered into a contract with contractor INET Airport Systems, Inc. (the “Contractor”) to construct the Project. The plans and specifications for the contract included detailed drawings, the precise rooftop units and parts to be used, approved manufacturers and performance requirements.  Under the contract and these plans, the Contractor was obligated to install operational rooftop units that were required to use 30 percent ethylene glycol/water supplied through DFW’s existing piping system. The Contractor was not allowed to substitute products or designs for those agreed upon in the contract documents without authorization from the Owner. The contract also required that if anything in the agreed-upon plans needed to be changed, the Contractor would alert the Owner and the parties would collaborate to come up with a workaround that would be incorporated into the contract by written change order issued by the Owner with agreed prices for performing the change order work.


Continue Reading Fifth Circuit Considers Allocation of Risk of Defective Plans and Specifications in Reversing $1.29 Million Judgment Entered in Favor of Contractor

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.


Continue Reading Texas District Court Rejects Rail Contractor’s Delay and Prompt Payment Claims and Awards Owner More Than $3 Million

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.


Continue Reading Federal Court in Pennsylvania Holds That Contractor’s Nominal Underpayment of Progress Payments Does Not Relieve Subcontractor’s Duty to Perform