Construction Dispute

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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”).

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.

Zacherl, Inc. v. Flaherty Mechanical Contractors, LLC, 131 A.3d 1030, 2016 Pa. Commw. LEXIS 22 (Jan. 6, 2016)

The West Allegheny School Board (the “School Board”) voted to approve the School District’s (the “District’s”) plan to renovate its high school building (the “Project”).  The District contracted with Flaherty Mechanical Contractors, LLC (“Flaherty”) to act as the prime contractor.  Flaherty submitted the names of its subcontractors for the School Board’s review.  When the School Board raised no objections to Flaherty’s submission, Flaherty subcontracted with F. Zacherl, Inc. (“Zacherl”) to perform sheet metal work at the Project.

During the Project, the District made timely payments to Flaherty, but Flaherty failed to make timely payments to its subcontractors, including Zacherl.  The District terminated Flaherty’s contract in part as a result of Flaherty’s payment issues.  Flaherty, in turn, terminated Zacherl’s contract.

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.

Apex Directional Drilling, LLC v. SHN Consulting Eng’rs & Geologists, Inc., 2015 U.S. Dist. LEXIS 105537 (N.D. Cal. Aug. 11, 2015)

The United States District Court for the Northern District of California held that an engineer that prepares plans and specifications to be relied upon by contractors in preparing their bids for a construction project owes a duty of care to those contractors, and therefore can be held liable to the contractors for breach of professional duty and/or negligent misrepresentation.

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.

On August 31, 2015, highway contractors Trinity Industries, Inc. and Trinity Highway Products, LLC (collectively, Trinity) appealed to the U.S. Court of Appeals for the Fifth Circuit a $663,360,750 final judgment entered against them under the federal False Claims Act (FCA). At the conclusion of a six-day trial that commenced on October 13, 2014, the jury rendered a unanimous verdict, finding Trinity “knowingly made, used, or caused to be made or used, a false record of statement material to a false or fraudulent claim” in violation of the FCA. The jury unanimously found that the U.S. government suffered damages in the amount of $175,000,000 as the result of Trinity’s FCA violations.

DVBE Trucking and Construction Co., Inc. v. McCarthy Building Companies, Inc., 2015 U.S. Dist. LEXIS 90052 (N.D. Cal. July 10, 2015)

This payment dispute case arises out of a Veterans Affairs (“VA”) construction project located in Palo Alto, California.  McCarthy Building Companies, Inc. (“McCarthy”) was the prime contractor, Federal Insurance Company and Travelers Casualty and Surety provided the performance and payment bonds on behalf of McCarthy mandated by the Miller Act, and DVBE Trucking and Construction Company, Inc. (“DVBE”) was McCarthy’s subcontractor.  Section 11.1 of DVBE’s subcontract required that, for any dispute involving the VA, it would follow the dispute resolution procedures agreed to by McCarthy in its contract with the VA, and agreed to be bound by the result of any such dispute resolution procedures to the same degree as McCarthy.

Clipper Pipe & Service, Inc. v. The Ohio Cas. Ins. Co., 2015 Pa. LEXIS 1275 (PA  June 15, 2015)

The Supreme Court of Pennsylvania held that CASPA, 73 P.S. §§501-516, “does not apply to a construction project where the owner is a governmental entity.”  The decision once and for all resolved the issue of whether the Contractor and Subcontractor Payment Act (“CASPA”) applies to payment disputes between prime contractors and subcontractors on public works projects,  either instead of, or in addition to, the prompt payment provisions of the Commonwealth Procurement Code, 62 Pa.C.S. §§ 3931-3939 (commonly referred to as “the Prompt Payment Act”).

State v. Perini Corp., 2015 N.J. LEXIS 388 (N.J. April 30, 2015)

The Supreme Court of New Jersey held that for an improvement supplying critical utilities to multiple buildings constructed as part of a multi-phase construction project, the ten year statute of repose (N.J.S.A. 2A:14-1.1(a)) begins to run from that time when the final buildings comprising the project are substantially complete and the improvement is hooked up to all of the buildings it is designed to serve.