Construction Dispute

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Branch Banking & Trust Co. v. Construction Supervision Services Inc. (In re Construction Supervision Services Inc.), 753 F.3d 124 (4th Cir. 2014)

Our sister publication, Bankruptcy-Real Estate-Insights.com, recently discussed the unique issues relating to the perfection of mechanics liens after the filing of a bankruptcy petition as resolved…

Pending House Bill 473 seeks to amend the current lien law by creating a centralized construction notices registry in Pennsylvania known as the State Construction Notices Directory (“Directory”), which would provide owners and general contractors with access to a database listing all potential lien claimants on a registered project.

An owner would have the option of registering a project by filing a notice of commencement on the Directory and posting a copy at the site of the project prior to the start of physical construction.

Shafer Elec. & Constr. v. Mantia, 2014 Pa. LEXIS 1766 (Pa. July 21, 2014)

Homeowners Raymond and Donna Mantia contracted Shafer Electric & Construction (“Shafer”) to build a two-car garage addition onto their house. Shafer’s proposal was extremely detailed as to the work to be completed. Despite the detail in Shafer’s specifications, however, Shafer’s proposals did not comply with several requirements of the Home Improvement Consumer Protection Act, 73 P.S. §§ 517.1-517.18 (the “Act”). Specifically, pursuant to the Act, any home improvement contract must be legible, in writing, and satisfy thirteen other requirements. § 517.7(a). The contract satisfied only three of those requirements.
Notwithstanding the deficiencies, work began on the addition. During the subsequent months, a dispute arose concerning changes the Mantias made to the design of the addition. Other alterations became necessary as a result of excavation problems that arose during the work. The parties could not agree on a new contract, which Shafer believed was required due to the design changes. The parties agreed that Shafer would stop work and invoice the Mantias for the work it completed. When Shafer issued the final invoice, the Mantias refused to pay.

Bedwell Co. v. Camden County Improvement Auth., 2014 U.S. Dist. LEXIS 95510 (D.N.J. July 14, 2014)

The University of Medicine and Dentistry of New Jersey contracted HDR Architects and Engineers, P.C. (“HDR”) to design a medical school building. After the project went to bid, the Bedwell Company (“Bedwell”) contracted with the owner’s development and contracting agent for the performance of foundation, structural steel, and other construction work.

Bedwell and HDR did not have a contract with each other. According to the allegations in Bedwell’s complaint, however, HDR was aware that the design documents that it prepared under its contract with the owner would be used by contractors like Bedwell in their estimation of costs and time for completion of the work. In its complaint, Bedwell alleged that defects in HDR’s design documents—which led to 212 Requests for Information and 469 Change Order Requests—caused unexpected costs and numerous delays.

KNL Construction, Inc. v. Killian Construction Co., Inc., 2014 U.S. Dist. LEXIS 58269 (M.D. Pa. Apr. 28, 2014)

This action arose out of the construction of the Mohegan Sun Hotel in Luzerene County, Pennsylvania.  General contractor Killian Construction Co., Inc. (“Killian”) retained KNL Construction, Inc. (“KNL”) as a subcontractor to perform certain work on the project.  The parties executed a subcontract which contained a forum selection clause mandating that disputes thereunder be litigated in Greene County Missouri, or if federal jurisdiction is applicable, in the District Court for the Western District of Missouri.
A dispute arose over KNL’s performance under the subcontract, eventually leading to its termination.  In response, KNL brought suit in Pennsylvania state court for breach of contract and related claims premised on payments allegedly owed by Killian, including a claim under Pennsylvania’s Contractor and Subcontractor Payment Act (“CASPA”).  Killian removed the case to the Middle District of Pennsylvania on diversity grounds and filed a motion to dismiss for improper venue, or, in the alternative, transfer for forum non conveniens.  In support of its motion, Killian argued that the clear language of the forum selection clause designates Missouri as the exclusive venue for litigation.

VSI Sales, LLC v. Griffin Sign, Inc., 2014 U.S. Dist. LEXIS 57620 (D. Del. Apr. 25, 2014)

The Delaware Department of Transportation awarded a contract for a highway construction project. Defendant Griffin Sign, Inc. (“Griffin”) was hired as the subcontractor responsible for installation of road signage on the project. Griffin then subcontracted with Plaintiff VSI Sales, LLC (“VSI”) for the supply of overhead highway sign structures, accompanying hardware, and installation materials.

A dispute arose regarding VSI’s right to payment for work performed on the project. Griffin disputed that it owed VSI payment and contended that VSI’s performance was untimely and deficient. In its seven count complaint against Griffin and its payment bond surety, VSI asserted a claim for violation of the Delaware Construction Prompt Payment Act, Del. C. §§ 3501-3509. The defendants sought to dismiss the Payment Act claim on the basis that the work performed by Griffin and VSI—the supply and installation of highway signs—was outside the scope of the Act.

Metcalf Constr. Co. v. United States
742 F.3d 984 (Fed. Cir. 2014)

This action arose out of the design and construction of military housing units at a U.S. Navy facility in Hawaii.  Pre-bid documents for the project supplied by the government provided test information regarding soil conditions on the site.  The government also included a disclaimer that this information was “for preliminary information only” and the resulting contract required that the contractor conduct its own independent soil investigation.

Metcalf Construction Company (the “Contractor”) was awarded the contract.  When the Contractor conducted its independent soil investigation it discovered that the soil was not as represented.  The Contractor notified the government and discussions ensued.  In those discussions, the Contractor recommended a different design and construction approach to account for the newly uncovered conditions, while the government generally insisted on following construction requirements set out in the original contract.  After a year’s delay, the Contractor decided that the cost of waiting for the government to approve the design changes had become too high, and it began to implement those changes without a contract modification.  As a result, the Contractor spent approximately $26 million over the original contract amount to remedy the soil conditions and finish the project.

RSP Architects, Ltd. v. Five Star Dev. Resort Communities, LLC
306 P.3d 93 (Ariz. Ct. App. 2013)

This action arose from a payment dispute on a construction project where an architectural firm, RSP Architects, Ltd. (“RSP”), contracted with a developer, Five Star Development Resort Communities, LLC (“Five Star”), to provide architectural services for a development known as the Palmeraie (the “Project”). Pursuant to the architectural services contract (the “Architectural Agreement”), RSP was tasked with several different duties, including “construction administration,” “overall coordination,” and “conceptual design” related to the Project. For its services, RSP was to receive approximately $3,000,000. Prior to completion, however, RSP ceased work on the Project and sued Five Star, alleging, among other claims, a violation of Arizona’s Prompt Payment Act, A.R.S. § 32-1129 et seq. (the “PPA”).

Engeman Enterprises, LLC, v. Tolin Mechanical Systems Company
2013 Colo. App. LEXIS 345 (Colo. App. Mar. 14, 2013)

Engeman operates a cold storage facility and Tolin designs, installs, maintains, and repairs cooling systems. In 2008, Engeman engaged Tolin for an emergency repair at Engeman’s facility. The parties entered into two agreements, both of which stated that Tolin would perform its work in a “prudent and workmanlike manner,” and which disclaimed Tolin’s liability beyond repairing issues caused by defective workmanship.

Maisel v. Erickson Construction, Inc.
2012 U.S. Dist. LEXIS 108726 (D. Colo. August 3, 2012)

Plaintiff contracted with Charles Cunniffe & Assoc. Architects (“CCA”) for architectural services. Plaintiff separately contracted with Erickson Construction, Inc. (“Erickson”) for construction and general contractor services. No contract existed between CCA and Erickson.

Plaintiff sued both CCA and Erickson for various defects and design deficiencies, and asserted claims for breach of contract, breached of implied warranties, negligence and vicarious liability. Erickson cross-claimed against CCA for negligence, breach of contract (on a third-party beneficiary theory), indemnification and contribution.