Construction Dispute

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Crown Castle USA, Inc., et al. v. Fred A. Nudd Corporation
2008 U.S. Dist. LEXIS 3416 (W.D. N.Y. Jan. 16, 2008)
The United States District Court for the Western District of New York held that the “economic loss doctrine” did not bar a professional negligence claim against defendant where plaintiff’s claims sought tort liability for defendant’s failure to exercise reasonable care in the design of a prefabricated product.
Fred A. Nudd Corporation (“Nudd”) fabricates steel products, including cellular phone towers (“monopoles”). On January 12, 2001, Crown and Nudd executed a construction services agreement (the “CSA”) where Nudd was to design, fabricate and/or construct twelve monopoles for Crown. In November 2003, a monopole designed by Nudd for another company collapsed. When Crown became aware of the collapse, it became concerned about the monopoles that Nudd designed and manufactured under the CSA. Crown alleges that it began an investigation which revealed that the monopole shafts, base plates, anchor rods and foundations for each of the monopoles were defective, overstressed and did not have the capacity to support the loads for which they were designed. Crown filed a complaint alleging that the monopoles which Nudd designed, fabricated and constructed contained design and construction defects. In its complaint, Crown’s only claim for damages is the costs to repair the allegedly defective monopoles.

Liberty Mutual Insurance Company v. N. Picco & Sons Contracting Co., Inc.
2008 U.S. Dist. LEXIS 4915 (S.D.N.Y. Jan. 16, 2008)
The United States District Court for the Southern District of New York (“SDNY”) recently had to decide whether a surety was entitled to assert subrogation rights against other project participants when the surety completed the construction work abandoned by the general contractor and performed remediation work. The SDNY determined that the surety did not voluntarily undertake the remediation work and, therefore, was entitled to assert subrogation rights.

Potomac Constructors, LLC v. EFCO Corp.
2008 U.S. Dist. LEXIS 1602 (D. Md, Jan. 9, 2008)
Plaintiff general contractor and Defendant manufacturer entered into a purchase order agreement under which Defendant would engineer and supply steel formwork used to cast concrete segments to be incorporated in the support structure for a bridge. The agreement contained a clause, which specifically limited the Defendant’s liability to the repair or replacement of any defective work, explicitly disallowing incidental, direct or consequential damages.

WM Hotel Group, LLC v. Pride Construction, Inc.
2008 R.I.Super.LEXIS 9 (2008)
WM Hotel, owner of the Hampton Inn & Suites, located in Middletown, R.I. initiated a lawsuit against Pride Construction, the general contractor for the construction of its hotel, Antcil Plumbing & Mechanical Contractors, Inc., the plumbing subcontractor that installed the hotel bathtubs and Travelers, Antcil’s insurer under a CGL policy.
Antcil installed the tubs, tested them for leaks, placed “tub protectors” in each and transferred control of them to Pride. The tubs began evidencing cracking, rust, and sagging. WM Hotel asserted that 93 of the 95 tubs were defective as manufactured and/or installed and that it was Antcil’s faulty installation that resulted in the damage to the tubs. Forensic testing and analysis indicated that a styrofoam sound deadening pad was missing from beneath the tubs, and that the omission could have contributed to deflection of the bathing surface. Travelers filed a motion for summary judgment asserting that the CGL policy issued on behalf of Antcil did not provide coverage for the damage incurred. Travelers asserted that the damages were not the result of an “occurrence” as defined in the policy and that exclusionary language in the policy precluded coverage.

1800 Ocotillo, LLC v. WLB Group, Inc.
2008 Ariz. App. LEXIS 9 (Jan. 29, 2008)
The Court of Appeals of Arizona held that a state statute prohibiting design professionals for contracting for indemnity for their sole negligence does not as matter of law prohibit the use of limitation of damages provisions in professional service contracts.
In 1998, a real estate developer, 1800 Ocotillo, undertook the development of a townhouse project in Phoenix that bordered the Arizona Canal. Developer hired an engineering-architectural firm, The WLB Group, to perform surveying, engineering and landscape architecture services on the project. Developer had its design-build contractor sign the contract with the engineering-architectural firm, which included a limitation of damages provision limiting its exposure to the amount of its fees. While the parties never specifically discussed this provision, the entire contract was incorporated into a supplemental contract between the Developer and the engineering architectural firm approximately two years later.

Argonaut Great Cent. Ins. Co. v. DiTocco Konstruction, Inc.
2007 U.S. Dist. LEXIS 93846 (D.N.J. Dec. 21, 2007)
After a fire destroyed a T.G.I. Friday’s restaurant and all of its equipment, the meaning of the subrogation continuation clause contained in the contract between the owner and the contractor who had performed renovations and remodeling of the restaurant five years earlier became the focal point of ensuing dispute.

Jalapenos, LLC v. GRC General Contractor, Inc.,
2007 PA Super 391, 2007 Pa. Super. LEXIS 4411 (Dec. 19, 2007)
Jalapenos, LLC, hired GRC General Contractor, Inc. to remodel a restaurant. The parties signed standard American Institute of Architects contracts (AIA Forms A101 and A201 – 1997). Under the contract, Jalapenos was required to obtain Builder’s Risk “all-risk” property insurance or equivalent, or inform the contractor in writing before the work began if it did not intend to purchase such insurance. Furthermore, if GRC was damaged by Jalapenos’ failure to maintain the required insurance without notifying GRC, then Jalapenos would be liable for all reasonable costs attributable to such failure.

Steel Services Corp. v. Board of County Commissioners
2007 U.S. App. Lexis 30052 (6th Cir. Dec. 27, 2007)
The Cincinnati Reds were building a new baseball stadium. Hamilton County (“County”) awarded Contractor, Steel Service Corp. (“Contractor”), a $33 million dollar contract for the fabrication and erection of the steel superstructure. The start of the Contractor’s work was delayed. The County’s construction manager directed the Contractor to accelerate its work due to the project delays and take extraordinary measures to comply with the contract and schedule. Contractor accelerated and submitted a claim for additional costs incurred by itself and its subcontractors. The County and Contractor executed a change order providing for a provisional payment to be applied against the amount, if any, to which the Contractor was ultimately determined to be entitled in reimbursement of the acceleration costs. Neither party accepted responsibility for the delays in the change order. The change order stated that Contractor had begun implementing extraordinary measure, had incurred additional costs and would continue to do so throughout the course of the project. Construction proceeded.

U.S. ex rel. Platinum Mechanical, LLC v. U.S. Surety. Co.
07 Cv. 3318(CLB), 2007 U.S. Dist. LEXIS 94026( S.D.N.Y. Dec. 21, 2007)
CFP Group, Inc. was awarded a contract with the United States Government to refurbish facilities at Stewart Air National Guard Base in New York. Platinum Mechanical, LLC subcontracted to perform all of the plumbing and HVAC work for the Project. All work on the Project was to be completed by March 12, 2007. Notice to proceed issued on June 14, 2006.

United States Fire Insurance Co. v. J.S.U.B., Inc. and Auto-Owners Insurance Co. v. Pozzi Window Co.
2007 Fla. LEXIS 2394 and 2007 Fla. LEXIS 2391 (Dec. 20, 2007)
On December 20, 2007, the Florida Supreme Court decided United States Fire Insurance Company, et al. v. J.S.U.B., Inc., et al., 2007 Fla. LEXIS 2394, and Auto-Owners Insurance Company v. Pozzi Window Company, et al., 2007 Fla. LEXIS 2391 – two cases dealing with whether a standard form CGL policy with products completed operations hazard coverage issued to a general contractor, cover a general contractor’s liability to a third party for repair and/or replacement costs due to defective work by its subcontractor.