Construction Dispute

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Waynesborough Country Club of Chester County v. Diedrich Niles Bolton Architects, Inc.
2008 U.S. Dist. LEXIS 45980 (E.D. Pa. July 21, 2008)
The case arose out of the design and construction of a new clubhouse for Waynesborough. Diedrich Niles Bolton Architects (“DNB”) provided professional architectural services to Waynesborough for the project and Ehret Construction served as the project’s general contractor and construction manager. Structural problems arose after the clubhouse was complete, and Waynesborough sued DNB alleging, as a result of DNB’s professional negligence and breach of contract, significant water leaks developed at various places throughout the interior of the clubhouse. DNB joined Ehret as a third party defendant. Ehret, in turn, filed a counterclaim against DNB for negligent misrepresentation, claiming that DNB’s architectural work was deficient and that Ehret’s work was delayed, disrupted and inefficient as a result of having relied upon inaccurate drawings and other architectural documents supplied by DNB during construction.

Chrysler Realty Company, LLC v. Design Forum Architects, Inc.
2008 U.S. Dist. LEXIS 42721, No. 06-CV-11785 (E.D. Mich. May 30, 2008)
The United States District Court for the Eastern District of Michigan was asked to consider whether a plaintiff’s claim for professional liability against a design professional should be dismissed where plaintiffs allowed evidence to be destroyed. Finding that the plaintiff’s intentional removal and destruction of the allegedly defective HVAC system without notice to the defendant deprived the defendant of an opportunity to develop defenses to the claims, the Court dismissed the plaintiff’s claims.

Quinn Construction, Inc. v. Skanska USA Building Inc.
2008 U.S. Dist. LEXIS 45980 (E.D. Pa. June 10, 2008)
The United States District Court for the Eastern District of Pennsylvania held that no certificate of merit was required in contractor and subcontractor’s negligent misrepresentation claims against architect.
Skanska served as general contractor for two private construction projects owned by the Trustees of the University of Pennsylvania. Skanska entered into two written subcontracts with Quinn for certain concrete work on the projects. Thereafter, Quinn filed a negligent misrepresentation claim against the project Architect, alleging that it relied upon the drawings, specifications, addenda and bulletins prepared by the Architect in preparing its bids, executing its subcontracts with Skanska, planning and scheduling its work and performing its work. Quinn further alleged that the Architect’s continuous design changes, its failure to complete drawings previously represented as 100% complete and its failure to timely review and approve Quinn’s shop and coordination drawings created an unreasonably and unforeseeably lengthy submission process, which prevented Quinn from timely delivering its materials to the Project and caused Quinn to incur overtime labor expenses to adhere to the Project schedule.

RLI Insurance Company v. Indian River School District
2008 U.S. Dist. LEXIS 43303 (D. Del. June 3, 2008)
In this case, the United States District Court for the District of Delaware held that a surety’s claim against an architect and construction manager for improper approval of payments to the principal was barred by the economic loss doctrine. Additionally, the court held that the surety was not released of its liability to the owner where the owner wrongfully paid the contractor, as the owner had made those payments in reliance on certifications from the architect and the construction manager.

Acme Contracting, Ltd. v. TolTest, Inc
2008 U.S. Dist. LEXIS 36355 (E.D. Mich. May 5, 2008)
The United States District Court for the Eastern District of Michigan recently had to interpret an Ohio statute (O.R.C. §4113.62) which statute dealt with the enforceability of no damages for delay provisions in construction contracts. Relying on prior cases interpreting the applicable statute, the District Court found that the subcontract which limited delay claims to a time extension only was prohibited under the statute and, therefore, void and unenforceable. Although the District Court permitted the subcontractor to recover delay damages, it also concluded that the subcontractor had not proven that it was entitled to extended home office overhead costs using the Eichleay formula and refused to award such damages.

Mostellar Mansion, LLC v. Mactec Engineering & Consulting of Georgia, Inc.
2008 N.C. App. LEXIS 1011 (May 20, 2008)
Mostellar Mansion, LLC (Mansion) entered into a contract with Mactec Engineering and Consulting of Georgia, Inc. (Mactec) in connection with Mostellar’s plan to purchase a tract of land for the construction of an apartment complex (the Project Site). Under the contract, Mactec was to assess the subsurface conditions of the Project Site, determine if the Project Site was suitable for the proposed construction and provide recommendations for foundation design and site preparation for the proposed structures. The contract contained the following pertinent provisions:

Trocon Construction Corp. v. City of New York
2008 N.Y. App. Div. LEXIS 4316 (May 20, 2008)
The Appellate Division of the Supreme Court of New York held that an early completion bonus in a construction contract was not barred by a “no damages for delay” clause as it was a bid item of the contract.
The case arose out of a contract between a contractor and the City of New York for the reconstruction of part of Sixth Avenue in Manhattan. The contractor agreed to perform soil borings to locate and determine the size of underground voids believed to be contributing to sidewalk and pavement subsidence and to appropriately remedy the voids. Because the City of New York contemplated that the work on the project would interfere with vehicular and pedestrian traffic, the contract provided for various payment incentives for early completion, including an early completion bonus if work on both sides of the avenue was completed within 30 days. Delays arose principally due to a dispute over the boring operations when unexpected boulders were encountered. The contractor contended that it was not required by the contract specifications to perform borings through boulders, which should be completed using a different boring operation; the City maintained that such borings were included and should be performed using the same operation as provided for in the contract. The dispute was resolved by the Contract Dispute Resolution Board, which found that the contractor was entitled to compensation for the extra work performed. The Board claimed lack of jurisdiction to resolve the contractor’s claim for the incentive bonus for early completion of the work on the west side of the avenue.

Sloan Constr. Co. v. Southco Grassing, Inc.
2008 S.C. LEXIS 99 (S.C. Mar. 24, 2008)
The South Carolina Department of Transportation (SCDOT) contracted with general contractor Southco Grassing, Inc. in connection with state highway maintenance project and, in accordance with the applicable statutory bond requirements, Southco provided a payment bond for the benefit of its subcontractors and suppliers in the full contract amount. Subsequently, Southco entered into a subcontract with subcontractor Sloan to perform asphalt paving work. In June 2001, before the paving work was completed, Southco’s payment bond was cancelled when the bond’s issuer became insolvent. Notice of the insolvency and cancellation was provided to SCDOT and SCDOT requested in writing that the Southco provide a replacement bond within seven days. Southco did not reply. In the meantime, Sloan completed its work, but in January 2002 notified SCDOT that it still had not received payment from Southco for its subcontract valued at approximately $52,000 and that the payment bond had never been replaced. In March 2003, despite that it had not made full payment to Sloan, Southco advised SCDOT that it had made all payments on the project, and SCDOT released final retainage to Southco.

Donald M. Durkin Contracting, Inc. v. City of Newark
2008 U.S. App. LEXIS 28987 (D. Del. Apr. 9, 2008)
The Delaware District Court held that a contractor who is improperly terminated is entitled to recover its expectation interest or the unpaid contract price less the amount it would have cost the contractor to complete the job. Other damages which are causally connected to the owner’s breach are recoverable as well, but costs of pre-termination performance or post-termination losses which are not causally connected are not recoverable. Further, the Court affirmed that Delaware follows the “American Rule’ which precludes recovery for attorneys fees incurred in consequence of the owner’s breach.

Regent Ins. Co. v. Storm King Contr., Inc.
2008 U.S. Dist. LEXIS 16513 (S.D.N.Y. Feb. 26, 2008)
In June 1999, the owner of The Emerson Inn hired Storm King to act as its general contractor in the remodeling and rebuilding of the Inn. Under their agreement, Storm King was not responsible for the design of the project or for compliance with applicable law, building codes, or regulations, and it was agreed that the remedy for any defective work would be limited to correction of the defects. Storm King entered into a subcontract with Sullivan Fire Protection for the installation of a fire sprinkler system. The subcontract incorporated the terms of the agreement between the owner and Storm King. Its scope of work section provided that Sullivan’s work was to be performed in accordance with the plans and specifications prepared by the design professional.