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Dormitory Auth. of the State of NY v. Samson Constr. Co., 2018 N.Y. Lexis 218 (February 15, 2018)

The Dormitory Authority of the State of New York (“DASNY”) undertook, as project manager, to construct a facility for the Office of the Chief Medical Examiner of the City of New York (the “City”) as a forensic biology laboratory (the “Project”).  DASNY retained Perkins Eastman Architects, P.C. (“Perkins”) as architect for the Project, and Samson Construction Co. (“Samson”) as the foundation contractor.

Complications during the construction of the foundation resulted in 18 months of delays due to the adjacent building settling eight inches, damages to the adjacent sidewalks, utilities and emergency repairs.  DASNY and the City filed suit against Samson, and later joined Perkins, asserting claims against Perkins for breach of contract and negligence.

Perkins moved for summary judgment to dismiss the City’s claims, and to dismiss DASNY’s negligence claim as duplicative of its breach of contract claim.  The trial court dismissed the City’s breach of contract claim; holding that the City was not an intended third-party beneficiary of the contract between DASNY and Perkins (the “Contract”), and allowed both DASNY’s breach of contract and negligence claims to proceed, holding that the claims were not duplicative of each another.

Adams v. Barr, 2018 VT 12, 2018 Vt. LEXIS 10 (VT 2018)

On February 24, 2016, Barr Law Group (“Barr”) filed a demand for arbitration with the American Arbitration Association to recover $40,000 in unpaid legal fees from its client, Adams Construction VT, LLC (“Adams”).  Adams responded by filing an answer and counterclaim, seeking to recover $97,000 in damages from Barr.  Thereafter, Adams and Barr each actively participated in the arbitration, including arbitrator selection, preliminary conferences, extensive discovery and motion practice over a period of more than five months.  At the request of Adams, the matter was set for a three day hearing.

In October of 2016, just one week before the three day hearing was set to begin, Adams filed an objection and motion to dismiss the arbitration, arguing that the arbitration clause in its fee agreement with Barr was unenforceable.  Specifically, Adams argued that Barr, as Adams’ counsel, owed a fiduciary duty and ethical obligations that required it to disclose to Adams the rights it would forego by signing the agreement.  According to Adams, Barr had failed to explain the legal implication of the arbitration clause and failed to advise Adams to obtain independent counsel before signing the agreement.  However, Adams’ objection and motion to dismiss was the first time it had raised any objection to the arbitration proceedings.

Cont’l Res. v. P&P Indus., LLC, 2018 N.D. Lexis 20 (January 22, 2018)

In 2013, Continental Resources Inc. (“Continental”), an oil producer doing business in North Dakota, entered into a master servicing agreement, governed by Oklahoma law, with United Oilfield Services (“United”).  According to the contract, United agreed to provide transportation, water hauling, and related support services to Continental in support of Continental’s ongoing operations in North Dakota.  The contract also contained the following termination provision: “[I]t being understood and agreed that either party hereto may cancel this Contract by giving the other party thirty (30) days written notice of such cancellation.”

Approximately a year after the parties signed the contract, Continental alleged that United (i) violated state and federal limits and regulations regarding the number of hours a truck driver may drive, (ii) violated Continental’s policy limiting the number of hours an employee could work in a day, and (iii) engaged in improper and fraudulent billing.  Following its discovery of United’s alleged misconduct, Continental terminated its contract and filed suit against United and other related entities.

Strickland v. Arch Ins. Co., No. 17-10610, 2018 U.S. App. LEXIS 504 (11th Cir. Jan. 9, 2018)

Strickland provided sand to a paving company (“Douglas”) for a Georgia Department of Transportation (“GDOT”) road improvement project (the “Project”).  Arch Insurance Company (“Arch”) issued payment and performance bonds on Douglas’s behalf.  In 2007, GDOT declared Douglas in default and removed it from the Project.  In accordance with the performance bond, Arch arranged for a third-party contractor to complete Douglas’s work on the Project. Strickland did not supply sand after Douglas’s removal.
In August 2010, GDOT determined that the Project was substantially complete, and in September 2010, performed final inspection and generated a punch list.  Arch’s contractor completed the punch list by September 2011.  In March 2012, GDOT accepted Project maintenance responsibilities because the Project had been satisfactorily completed as of September 2011.  GDOT made semi-final payment to Arch in July 2012.

In September 2012, Strickland sent a demand for payment on Arch’s payment bond.  Arch acknowledged the claim and asked for additional documentation.  Strickland did not respond.  In 2014, Strickland learned that GDOT was preparing to close out the Project and filed a lawsuit against Arch.

United States ex rel. Metro Mech., Inc. v. Triangle Constr. Co.,  2018 U.S. Dist. LEXIS 1487 (S.D. Miss. Jan. 4, 2018)

Triangle Construction Company, Inc. (“Triangle”) contracted with Mississippi Portfolio Partners III, LP (“Mississippi Partners”) to serve as the prime contractor on four apartment complex construction projects (the “Projects”) in Mississippi.  Triangle subcontracted the HVAC and plumbing work to Metro Mechanical, Inc. (“Metro”).  After Metro completed its work, Metro filed suit in the Federal District Court under the Miller Act, to collect sums due from Triangle and its payment bond surety.  Triangle moved to dismiss, asserting that the Court was without Miller Act jurisdiction because the projects and contracting parties were private.

The Miller Act requires contractors on “public work[s] of the Federal Government” to obtain payment bonds for the protection of subcontractors and suppliers.  See 40 U.S.C. § 3131.  To that end, the Millers Act also creates a civil action in federal court in favor of any “person that has furnished labor or material in carrying out work provided for” under a Miller Act contract and “that has not paid in full within 90 days.” 40 U.S.C. 3133(b)(1).  The District Court applied two alternative tests to determine whether the Projects were “public works of the Federal Government subject to the Miller Act.”

Pritchett Controls, Inc. v. Hartford Accident & Indemnity Co., 2017 U.S. Dist. LEXIS 192182, 2017 WL 5591872 (D. Md. Nov. 21, 2017)

James W. Ancel, Inc. (“JWA”) was the prime contractor on a project for the Maryland Transit Authority in Baltimore.  JWA subcontracted a portion of the work to Pritchett Controls, Inc. (“Pritchett”).  The subcontract contained a forum selection clause requiring any disputes to be “brought in the District or County where Contractor’s  principal office is located….”  JWA’s principal office is located in Towson, Maryland, which sits in Baltimore County.

As required by Maryland’s Little Miller Act, JWA, as principal, executed a payment bond with Hartford Accident & Indemnity Co. (“Hartford”), as surety.  This case involves Pritchett’s claim against Hartford for payment under the bond.

While performing its work on the project, Pritchett submitted twelve (12) payment applications to JWA totaling $744,799.  It completed its work on March 16, 2017 but never received any payment for its work.  On May 11, 2017, Pritchett submitted a notice of claim to Hartford.  When that claim remained unpaid by July 25, 2017, Pritchett filed this action against Hartford in the United States District Court for the District of Maryland.

United States v. John C. Grimberg Co., Case No. 1:16-cv-991, 2017 U.S. Dist. LEXIS 173362 (E.D. Virginia, October 19, 2017)

John C. Grimberg (“Prime Contractor”) was awarded a contract (the “Prime Contract”) to design and complete certain improvements at the FBI Academy in Quantico, Virginia (the “Project”).  Hartford Accident and Indemnity Company (“Surety”) issued payment and performance bonds for the Project pursuant to the Miller Act.  The Prime Contractor thereafter entered into a subcontract (the “Subcontract”) with Kitchens-to-Go (“Subcontractor”) to furnish, install, lease and remove a temporary kitchen facility for the Project.  The Subcontract contained a “no-damages-for-delay” clause, which provided that the Prime Contractor shall not be liable for delays beyond its control and that the Subcontractor is “entitled only to reimbursement for damages for delay actually recovered from the Owner.”  The Subcontract also incorporated the dispute resolution procedures in the Prime Contract, which required that all “disputes arising out of Owner acts, omissions or responsibilities” be submitted through an administrative process with the government’s contracting officer under 41 U.S.C. §§7101 et. seq.

The Subcontract originally contemplated a Project duration of approximately 13 months, ending on April 5, 2014, but was ultimately extended until June 27, 2015.  The Subcontractor submitted its Application for Payment to the Prime Contractor, which included $607,221 for extended rental of the kitchen facilities.  Although the Prime Contractor submitted a payment request to US Department of the Navy (“Owner”), for the extended rental and use of Subcontractor’s temporary kitchen facilities, this request was rejected by the Owner.  The Prime Contractor refused to pay Subcontractor’s Application for Payment and the Subcontractor filed a complaint against the Surety under the Miller Act.

Team Contrs., L.L.C. v. Waypoint NOLA, L.L.C., No. 16-1131, 2017 U.S. Dist. LEXIS 162172 (E.D. La. Oct. 2, 2017).

Waypoint NOLA (“Waypoint”) was the owner of a hotel construction project in New Orleans (the “Project”).  Waypoint contracted with Team Contractors (“Team”) to serve as the Project general contractor and HC Architecture (“HCA”) to serve as the Project architect.  HCA, in turn, subcontracted with KLG to prepare the mechanical, electrical, and plumbing (“MEP”) plans.

HCA delivered a complete set of specifications, including KLG’s MEP plans, to Team, and Team began work.  It was later discovered that the MEP plans did not comply with code requirements.  Team was forced to remove and reconstruct the MEP work before proceeding with its work as scheduled.
Team filed suit for breach of contract against Waypoint and for negligence against Waypoint, HCA, and KLG.  Team alleged it experienced delay and incurred damages when it was forced to remove and reconstruct the MEP work.  Its damages included extended home office overhead related to the delay.  Team’s expert used the Eichleay formula to calculate these damages.

Zirkelbach Constr., Inc. v. DOWL, LLC, 2017 Mont. Lexis 591 (Mont., Sept. 26, 2017)

In interpreting a state statute which makes contractual limitations on a party’s liability unenforceable in certain instances, the Supreme Court of Montana recently upheld the validity of a contract provision in a professional services agreement between a general contractor and a designer in which the parties waived consequential damages against each other and limited the liability of the designer to $50,000.00.
Zirkelbach Constr., Inc. (“Zirkelbach”) and DOWL, LLC (“DOWL”) entered into a professional services agreement (the “Agreement”), whereby DOWL agreed to provide design work to Zirkelbach, a general contractor, for the construction of a FedEx Ground facility in Billings, Montana.  The original contract price was $122,967, but was adjusted to approximately $665,000 after the parties made several addenda to the Agreement to account for additional services.

Rembrandt Enters., Inc. v. Dahmes Stainless, Inc., No. C15-4248-LTS, 2017 U.S. Dist. LEXIS 144636 (N.D. Iowa Sept. 7, 2017)

On September 7, 2017, the Federal District Court for the Northern District of Iowa denied a motion for summary judgment by Rembrandt Enterprises, Inc. (“Rembrandt”).  In the motion, Rembrandt asked the court to grant declaratory relief and excuse the company from its breach of a contract with Dahmes Stainless, Inc. (“Dahmes”) under the doctrine of frustration of purpose.

Beginning in approximately 2014, Rembrandt, a large-scale producer of eggs and egg products, sought to expand its business.  As part of these expansion efforts, Rembrandt planned to construct an entirely new egg processing plant in Thompson, Iowa.  After reaching agreements with multiple contractors to build the new facility, on November 20, 2014, Rembrandt entered into an agreement with Dahmes for the manufacture and installation of an $8.5 million egg dryer at the new processing facility.  During the course of the new facility’s construction, however, the Midwestern United States was impacted by the Avian Flu virus which caused Rembrandt to eliminate over a million of its birds in an effort to limit the spread of the virus, cutting Rembrandt’s production capacity by approximately 50 percent.  As a result of the loss in production capacity, Rembrandt decided to scuttle the construction of the new processing facility and subsequently breached its agreement with Dahmes.