Construction Dispute

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Kuhn Construction Company v. Ocean and Coastal Consultants, Inc.
2010 U.S. Dist. LEXIS 71057 (D. Del. July 15, 2010)

Diamond State Port Corporation (“DSPC”) engaged Ocean and Costal Consultants, Inc. (“OCC”) to prepare engineered drawings, plans, and specifications for a project at the Port of Wilmington in Delaware. In soliciting bids, DSPC utilized the bid documents designed and prepared by OCC. Kuhn Construction Company (“Kuhn”) relied upon those documents to prepare its bid for work on the project. As the lowest bidder, Kuhn entered into a contract with DSPC.

John L. Mattingly Constr. Co. v. Hartford Underwriters Ins. Co.
2010 Md. LEXIS 327 (Md. July 27, 2010)

The Maryland Court of Appeals determined that the waivers of subrogation clause in AIA A107-1997 is ambiguous as to whether it encompasses losses sustained after completion of construction and final payment. As a result, the case was remanded to the Court of Special Appeals so that it could resolve the ambiguity by considering extrinsic evidence.

In 2002, K.B.K., Inc. and John L. Mattingly Construction Company, Inc. entered into AIA form contract number A107-1997 to build an Arby’s Restaurant. Section 16.4 of the Contract required K.B.K. to “purchase and maintain property insurance until final payment has been made” or until no person … other than K.B.K. had an insurable interest.” Section 16.5 of the Contract stated that K.B.K. and Mattingly “waived all rights against … each other and any of their subcontractors for damages covered by property insurance … applicable to the Work.”

Weigand Construction Co., Inc. v. Stephens Fabrication, Inc.
2010 Ind. App. LEXIS 1109 (Ind. Ct. App. June 25, 2010)

Ball State University (BSU) contracted with Weigand Construction Co. (“Weigand) to act as the general contractor for its Music Instruction Building project. Weigand subcontracted the structural steel work to Stephens Fabrication, Inc. (“Stephens”). Stephens was to manufacture the steel, perform certain engineering and prepare shop drawings. Stephens contracted with sub-subcontractors, Argo and Wilson, to perform the engineering and prepare the shop drawings.

Turnberry Pavillon Partners, L.P. v. M.J. Dean Construction, Inc.
2010 U.S. App. Lexis 9832 (9th Cir. May 13, 2010)

Developer built a luxury condominium tower and hired contractor to serve as both the construction manager and concrete subcontractor. A separate interior drywall and site wall subcontractor was also hired for the Project. A series of lawsuits arose. In the first lawsuit, construction manager was found liable for causing “lost production” and “uncompensated overtime” to site wall subcontractor due to its negligent concrete work as well as negligent construction management. While cross-appeals were pending on the matter Developer paid $2.1 to settle the site wall subcontractor’s claim. In a second case, condominium association sued Developer for construction defects. In turn, Developer filed a third-party complaint against construction manager as well as other subcontractors alleging that their negligence caused defects in the Project. Ultimately, the parties to the second suit reached a settlement whereby Developer and construction manager paid the condominium association $2 million and $600,000 respectively.

Village of Sturtevant v. STS Consultants, Ltd.
2010 Wisc. App. LEXIS 433 (Wis. Ct. App. June 9, 2010)

The Court of Appeals of Wisconsin recently considered whether a design professional could maintain a claim for contribution against a subcontractor on the basis that the subcontractor had a duty to advise that the design was not suited for the intended application. The Court of Appeals upheld the lower court’s dismissal of such claims on the basis that the subcontractor had no design or construction responsibility and therefore could not be a joint tortfeasor.

Centex/Vestal J.V. v. Friendship West Baptist Church
2010 Tex. App. LEXIS 4346 (Tex. App. June 10, 2010)

The trial court denied a motion to confirm an arbitration award and granted a motion to vacate finding that the arbitrator exceeded his authority when he determined the validity of and awarded the general contractor damages on its pass through subcontractor claims. On appeal, the Court of Appeals reversed the trial court, holding that because of the breadth of the arbitration clause, the arbitrator was authorized to determine the pass through subcontractor claims, and entered an order confirming the arbitrator’s award.

Lillibridge Health Care Services, Inc. v. Hunton Brady Architects, P.A.
2010 U.S. Dist. LEXIS 34210 (M.D. Fla. April 7, 2010)

Lillibridge Healthcare Services, Inc. sued Hunton Brady Architects, P.A. and Heery International, Inc. for breach of contract, negligent design, and negligent misrepresentation.

Hunton had entered into an agreement with Mediplex Medical Building Corporation (“MMBC”) to prepare documents and to provide other services for the construction of a four story, steel frame medical office building located in Celebration, Florida. MMBC assigned its rights under that contract to Lillibridge. Heery had assumed obligations under a subcontract with Hunton to perform the engineering work for the Project.

Penava Mechanical Corp. v. Afgo Mechanical Services, Inc.
2010 N.Y. App. Div. LEXIS 1973 (N.Y. App. Div. March 16, 2010)

In a contract dispute, the trial court granted motions for summary judgment filed by the general contractor and owner, dismissing counterclaims asserted by the subcontractor, and denied the subcontractor’s motion for summary judgment as to liability for such counterclaims. On appeal, the Appellate Division reversed the trial court’s order to the extent it granted the general contractor’s and owner’s motions for summary judgment.

GEM Industrial, Inc. v. Sun Trust Bank
2010 U.S. Dist. LEXIS 31042 (N.D. Ohio Mar. 31, 2010)

The United States District Court for the Northern District of Ohio denied a contractor’s claims against a project’s lenders, where the contractor’s claims were based on the lender’s representations that the contractor would be paid.

GEM Industrial was the mechanical contractor for the construction of an ethanol production plant owned by GOE Lima, LLC. Due to budget overruns and cash flow problems, GOE fell behind on monthly payments to GEM. Eventually, GOE requested that GEM enter into a formal payment deferral. Before agreeing to the deferral, GEM asked to meet with representatives of the project’s debt and equity investors, SunTrust Bank and Paladin Homeland Security Fund, LP and Paladin Capital Group, LLC to confirm that sources of funding were available to pay construction costs. GEM asserts that, during its calls with SunTrust and Paladin, representatives for both entities promised and assured GEM that it would be paid for both its already completed work and its work going forward on the plant. After its calls with SunTrust and Paladin, GEM agreed to the payment deferral and continued to perform its mechanical work at the plant.

Excel Construction, Inc. v. HKM Engineering, Inc.
2010 WY 34 (Wyo. Mar. 23, 2010)

The Supreme Court of Wyoming recently reexamined its prior ruling barring a contractor’s assertion of negligence claims against design professionals economic loss rule.

The case pertained to a construction project for the replacement and improvement of water and sewer lines in the Town of Lovell, Wyoming. The Town of Lovell entered into an engineering services agreement with HKM Engineering, Inc. The Town also entered into a construction agreement with Excel Construction, Inc. No contract existed between HKM and Excel.