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Spectro Alloys Corp. v. Fire Brick Eng’rs Co., Inc., 2014 U.S. Dist. LEXIS 140817 (D. Minn. Oct. 3, 2014)

Spectro Alloys Corporation (“Spectro”) operates a smelter, and it hired Fire Brick Engineers (“FBE”) to install refractory lining to two furnaces in Spectro’s plant.  When that refractory lining failed prematurely, Spectro sued FBE for breach of express and implied warranties and for breach of contract.  Spectro sought recovery of repair costs and profits lost while its plant was shut down for repairs.

Milton Reg’l Sewer Auth. v. Travelers Casualty & Surety Co., 2014 U.S. Dist. LEXIS 155419 (M.D. Pa. Nov. 3, 2014)

The United States District Court for the Middle District of Pennsylvania ruled that multiple instances of incomplete and/or defective performance by a contractor did not amount to a material breach so as to excuse the owner from providing notice and an opportunity to cure prior to termination.

Travelers Indem. Co. v. Crown Corr, Inc., 2014 U.S. App. LEXIS 21101 (9th Cir. 2014)

This action arose out of the construction of the University of Phoenix Stadium (the “Stadium”), home of the Arizona Cardinals.  Tourism and Sports Authority (the “Owner”) entered into a Design/Build Agreement with the Arizona Cardinals and Hunt Construction Group (the “Contractor”) for the design and construction of the Stadium (the “Prime Contract”).  The Contractor then entered into a subcontract with Crown Corr, Inc. (the “Subcontractor”) for the design of the Stadium’s exterior enclosure system (the “Subcontract”).

Wyman v. Ayer Properties, LLC, 469 Mass. 64,  2014 Mass. LEXIS 524 (July 10, 2014)

The Massachusetts Supreme Court ruled that the economic loss rule, which bars recovery of tort damages from the negligent supplier of a defective product when there is no claim of personal injury or damage to other property, does not apply to claims asserted by a condominium association or similar condominium organization seeking compensation for damage to common areas of a condominium building caused by defective construction.

This case arises out of a dispute between the Market Gallery Condominium Trust, the trustees responsible for management of a condo building, and Ayer Properties, the developer and builder of the condo building, after the trustees observed that Ayer had negligently constructed the window frames, the exterior brick masonry, and the roof of the building. The trustees commenced an action alleging that the negligent construction caused damage to both the common areas and the residential units in the building.

C&H Electric, Inc. v. Town of Bethel, 312 Conn. 843, 2014 Conn. LEXIS 263 (Aug. 5, 2014)

This dispute arose out of a project to renovate and build an addition at a high school in the Town of Bethel, Connecticut.  The plaintiff, C&H Electric, entered into a contract with the defendant, the Town of Bethel, to perform the electrical work on the project.  The parties’ contract included a “no damages for delay” clause, limiting the defendant’s liability for delays it caused on the project.  The no damages for delay clause specified that an extension of time would be plaintiff’s “sole remedy” for “(1) delays in the commencement, prosecution or completion of the work, (2) hindrance or obstruction in the performance of the work, (3) loss of productivity, or (4) other similar claims whether or not such delays are foreseeable, contemplated, or uncontemplated . . .”  The contract included a single exception to the no damages for delay clause, which allowed the plaintiff to recover for delays caused by acts of the defendant “constituting active interference with [the plaintiff’s] performance of the work.”  While the contract did not define “active interference,” it did specify that the defendant’s exercise of its contractual rights, including its right to suspend, reschedule or change the work, would not constitute “active interference.”

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.

Laquila Grp., Inc. v. Hunt Constr. Grp., Inc., 2014 N.Y. Misc. LEXIS 2824 (N.Y. Sup. Ct. June 25, 2014)

This action arose out of a payment dispute following construction of the Barclays Center in Brooklyn, New York.  General contractor Hunt Construction Group, Inc. (“Hunt”) retained Laquila Group, Inc. (“Laquila) as a subcontractor to perform excavation and foundation work for the project.  The parties executed a subcontract whereby Laquila would perform the work for $27.5 million with the understanding that the work had to be completed in a timely manner due to events at Barclays already scheduled around the completion date.  The subcontract further specified that Hunt was not liable to Laquila for any additional costs or changes in the work absent a written change order.

The project experienced various complications, which resulted in the parties entering into numerous change orders.  Hunt paid Laquila the money due under the original $27.5 million subcontract, plus payments covering the change orders.  Each change order executed by Laquila contained the clause, “[a]cceptance of this Change Order constitutes a waiver of any claim, additional compensation and time whatsoever in relationship to the items covered under this Change Order.”  Moreover, with each progress payment, Laquila submitted releases and a “Partial Waiver of Claims” including a waiver of liens that confirmed that it had been properly paid for its work.

United States ex rel. Heggem-Lundquist Paint Co. v. Centerre Gov’t Contracting Grp., LLC, 2014 U.S. Dist. LEXIS 66161 (D. Colo. Apr. 23, 2014) 
 Am. Constr. & Envtl. Servs. v. Total Team Constr. Servs., Inc., 2014 U.S. Dist. LEXIS 57467 (E.D. Cal. Apr. 23, 2014)

Federal district courts for the District of Colorado and the Eastern District of California have ruled  subcontract provisions that disputes will be resolved in accordance with the dispute resolution provisions in a prime contract are insufficient to waive or postpone a subcontractor’s Miller Act rights.

These cases involved claims asserted by subcontractors (collectively “Plaintiffs”) against the upstream contractors and their sureties (collectively “Defendants”) for work performed on federal government projects.  The plaintiff in Haggem-Lundquist performed as a sub-subcontractor on a Department of Veterans Affairs renovation project at a medical center in Denver, Colorado.  The plaintiff in Am. Constr. & Envtl. Servs. performed as a subcontractor in support of a contract with the Army Corps of Engineers to replace emergency generators at a Veterans Administration Care Facility in Fresno, California.  In both actions, Plaintiffs filed claims against the bonds issued for the projects pursuant to the Miller Act to recover money allegedly owed for changed and additional work performed.

Boone Coleman Construction, Inc. v. Village of Piketon, 2014-Ohio-2377, 2014 Ohio App. LEXIS 2317 (Ohio Ct. App. May 22, 2014)

The Court of Appeals of Ohio held that a liquidated damages provision in a public construction contract constituted an unenforceable penalty because the amount of liquidated damages sought – nearly one-third of the total contract price – was “so manifestly unreasonable and disproportionate” to the contract price that it was unenforceable.

The defendant in that case was the Village of Piketon, Ohio, which solicited bids for a public construction project for roadway improvements. Plaintiff, Boone Coleman Construction, Inc., was the low bidder on the project. The parties entered into a contract under which Boone Coleman agreed to construct the project for $683,300. The contract further provided that if Boone Coleman had not substantially completed its work within 120 days, it would pay the Village $700 per day in liquidated damages until the project was substantially completed. Ultimately, Boone Coleman did not complete its work until 397 days after the agreed project completion date. Upon completion, the Village paid Boone Coleman $535,823 for its work.