Contracts

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Fortney & Weygandt, Inc. v. American Manufacturers Mutual Insurance Co.
2010 U.S. App. Lexis 2836 (6th Cir. Feb. 12, 2010)

The United States Court of Appeals for the Sixth Circuit recently held that where a contractor’s defective foundation work required complete demolition and rebuilding of project that the defective work exclusion of commercial general liability policy did not preclude coverage for destruction of portions of the building not defectively constructed.

A.A. Bellucci Constr. Co. v. United States Surety Co.
2010 U.S. Dist. LEXIS 8369 (M.D. Pa., Feb. 2, 2010)

CSI Engineering, DC, P.C. (“CSI”) entered into a contract with a division of the U.S. Department of Labor to act as the general contractor for one of its construction projects. In turn, CSI subcontracted a portion of the work to A.A. Bellucci (“Bellucci”). The contract between CSI and Bellucci required mediation and arbitration to resolve disputes between them. To secure payment to all of its subcontractors, including Bellucci, CSI furnished Miller Act payment bonds from United States Surety Company (“Surety”) and U.S. Specialty Insurance Company (“Speciality”).

Hunt Construction Group, Inc. v. National Wrecking Corporation
587 F.3d 1119; 2009 U.S. App. LEXIS 25909 (2009)

Plaintiff, Hunt Construction Group (“Hunt”), commenced an action against one of its subcontractors, National Wrecking Corporation (“National”) and against two sureties (the “Sureties”) on National’s performance bond. The Sureties argued that Hunt failed to give timely notice of default depriving the Sureties of a realistic opportunity to exercise their rights under the bond to cure National’s defective performance.

GTECH Corp. v. Commonwealth, Dept. of Revenue
965 A.2d 1276 (Pa. Commw. 2009)

The Commonwealth Court of Pennsylvania considered whether the Pennsylvania Procurement Code provides the exclusive remedy for aggrieved bidders to challenge the procedure and outcome of bidding contests in the context of a procurement for the Pennsylvania Lottery. The Court found that while the Procurement Code provides an exclusive remedy for substantive challenges (i.e., a general right of protest to an offeror who is aggrieved in connection with the solicitation or award of a contract), it did not provide a remedy for procedural challenges.

U.S. for Use and Benefit of Greenmoor, Inc. v. Travelers Casualty and Surety Co.
2009 U.S. Dist. LEXIS 113153 (W.D. PA 12/04/2009)

The Court held that a properly terminated subcontractor was nevertheless entitled to payment for contract work and extras performed prior to termination, less certain offsets for contractor’s damages. Subcontractor was also entitled to interest at 1% per month under a prompt payment statute, but because it was properly terminated was not entitled to lost profit on the terminated portion of the subcontract.

Charter Foods Inc. v. Derek Engineering of Ohio, Inc.
2009 U.S. App. LEXIS 115477 (E.D. KY. Dec. 11, 2009)

The District Court for the Eastern District of Kentucky held that a general contractor, who had performed excavation work on a site in accordance with the plans and specifications, could not be held liable for breach of contract as a matter of law, but could potentially be held liable to the owner for negligence if the contractor breached the duty of care it owed the owner.

U.S. ex rel Pioneer Construction v. Pride Enterprises
2009 U.S. Dist. LEXIS 110935 (M.D. Pa., November 27, 2009)

The court denied the contractor’s claim for summary judgment, which was based on the theory that the subcontractor’s claims were barred by the releases it submitted with partial payment requests, holding that the contractor’s submission of the subcontractor’s claims to the government as part of an equitable adjustment request supported an inference that the parties by course of performance did not regard the releases as barring the claims. Further, the court held that notwithstanding Pennsylvania law to the contrary, federal law allows recovery of delay costs under a Miller Act payment bond.

Federal Insurance Co. v. Philotimo, Inc.
2009 U.S. Dist. Lexis 108105 (W.D.P.A. Nov. 19, 2009)

Homeowner hired defendant to inspect and clean its fireplace and chimney after observing chunks of mortar falling into the fireplace. Homeowner showed defendant’s technicians the fallen mortar. The technicians cleaned and visually inspected the chimney and reported to homeowner that it “looked good.” Thereafter, an extensive fire swept through the house causing over $400,000 in damage.
Following the fire, homeowner’s insurer commissioned an inspection which revealed numerous signs of damage and disrepair to the chimney that suggested defendant’s technicians should have instructed homeowner not to use fireplace and chimney until repairs were made.

Kiski Area Sch. Dist. v. Mid-State Surety Corp.
2008 Pa. LEXIS 2260 (Dec. 17, 1988)

Kiski Area School District (“the District”) entered into an agreement with contractor, Lanmark, for the construction and renovation of an elementary school. Mid-State Surety Corporation (“Midstate”) provided a performance bond for the project naming Lanmark as principal and the District as obligee.

The District became dissatisfied with the quality and timeliness of Lanmark’s work, declared it in default, withheld final payment and demanded that Mid-State assume responsibility for the remaining work. The District did not remit the remaining contract balance to Mid-State. Lanmark filed suit against the District seeking payment of the contract balance (the “Lanmark Matter”). The District counterclaimed and joined Mid-State. The District also filed a separate action against Lanmark and Mid-State (“the District Matter”), which was stayed pending resolution of the Lanmark Matter.

Steadfast Insurance Co v. Brodie Contractors, Inc.
2008 U.S. Dist. LEXIS 88448 (October 31, 2008 W.D. Va.)
Steadfast Insurance Co., as subrogee of Skanska USA Building Co., the general contractor, alleged claims for breach of contract and breach of warranty against Brodie Contractors, Inc., a masonry subcontractor, concerning replacement of brick veneer on the Danville Regional Medical Center. Brodie moved for summary judgment alleging that the lawsuit was barred by Virginia’s statute of limitations.