COVID-19 has created a severe disruption to the construction industry. Certain jurisdictions, including Boston, San Francisco and Pennsylvania, have placed restrictions on construction projects deemed “nonessential” and require waivers for certain projects to continue. Owners, contractors, suppliers and others may currently have more questions than answers. This article addresses some important concerns, and provides links to additional resources that more specifically address these concerns.
Continue Reading COVID-19 and the Construction Industry: Important Considerations

Decker Constr. Co. v. Wesex Corp., No. 2:18-cv-727, 2019 BL 232653 (S.D. Ohio June 24, 2019)

In Decker Construction Co. v. Wesex Corporation, the United States District Court for the Southern District of Ohio declined to dismiss a cause of action for fraudulent misrepresentation against Third-Party Defendant Mark Schrader (“Schrader”), the former Chief Financial Officer of Wesex Corporation (“Wesex”).  Wesex served as the general contractor on a construction project in New Albany, Ohio (the “Project”).  In its claim against Schrader, Third Party Plaintiff CCL Label, Inc. (“CCL”), the construction manager on the Project, alleged that Schrader signed affidavits included in Wesex’s payment applications that falsely certified Wesex’s subcontractors had been paid for their work on the Project.  Schrader sought dismissal on the basis that the Court lacked personal jurisdiction over him and that CCL failed to state a claim.

Continue Reading Ohio Federal Court Declines to Dismiss Action Against the Officer of a General Contractor Who Allegedly Submitted False Certifications Regarding Payments Made to Subcontractors With Payment Applications

  1. Lost profits, not part of unpaid contract balance, may be recoverable as consequential damages in contract claim, but cannot be included in lien. TSP Services Inc. v. National-Standard, LLC, 2019 BL 340267 (Mich. Ct. App. Sept. 10, 2019)

National-Standard, LLC contracted TSP Services, Inc. for asbestos abatement, demolition, restoration, and disposal of scrap steel

Winger Contr. Co. v. Cargill, Inc., No. 17-1169, 2019 BL 132092 (Iowa Apr. 12, 2019).

On April 12, 2019, the Iowa Supreme Court affirmed a lower court ruling which held that, inter alia, the Iowa mechanic’s lien statute would not permit the attachment of mechanic’s liens to the property of a lessor in connection with a contract to supply materials and labor to a lessee.

Continue Reading The Lessor of Two Evils: Iowa Supreme Court Holds That Mechanic’s Liens Will Not Attach to the Property of a Lessor for Work Authorized by a Lessee

James Talcott Construction, Inc. v. United States, No. 14-427 C, 2019 BL 72711, at *1 (Fed. Cl. Mar. 4, 2019)

In May of 2010, the United States, acting through the Department of Defense (the “Government”) awarded a contract to James Talcott Construction, Inc. (“Talcott”) to replace existing housing for military families at the Malmstrom Air Force Base in Great Falls, Montana.  Talcott was required to construct thirteen buildings, each comprising seventy housing units.  Each building was to be constructed with concrete foundations and wood framing, and the project’ design called for wooden floor joists and subfloor decking to be enclosed in crawlspaces.  The contract stated that the “structural drawings and specification represent the finished structure… [but] do not indicate the method of construction.  The contractor will provide all measures necessary to protect the structure during construction.”  The plans and specifications were silent as to ventilation of the crawlspaces.

Continue Reading Court of Federal Claim Rejects Spearin Claim and Holds Contractor Responsible for Failure to Prevent Mold Growth

American Towers LLC v. BPI, Inc., 2014 U.S. Dist. LEXIS 106724 (E.D. Ky. Aug. 4, 2014)

American Towers LLC (“American Towers”), which operates wireless and broadcast communications towers, undertook a project to construct a cell tower in Prestonburg, KY, along with a tower compound and access road.  American Towers selected BPI, Inc. (“BPI”) as general contractor for the project, and the parties executed a contract.

The contract contained a number of provisions that allocated the parties’ responsibilities with respect to design and construction.  In particular, the contract provided that American Towers was to provide BPI with drawings, specifications, and instructions.  BPI, for its part, was responsible for “all construction means, methods, techniques, sequences, and procedures[.]”  Moreover, BPI was to complete its work in a “workmanlike manner and with the highest degree of skill and care exercised by reputable contractors performing the same or similar services[.]” In performing its work, if BPI recognized any problems with American Towers’ design, the contract provided that BPI was to stop work and inform American Towers of the problem.  American Towers would then “issue written instructions” to BPI about how BPI should proceed.


Continue Reading U.S. District Court in Kentucky Holds that Contractor Which Proposed Design Solution During Construction Might Be Liable for Failure Notwithstanding Owner’s Obligation to Provide Designs and Instructions

Window Specialists, Inc. v. Forney Enterprises, Inc.,
2014 U.S. Dist. LEXIS 2014 U.S. Dist. LEXIS 34702 (D.D.C. March 18, 2014)

This dispute arises out of a construction contract to repair property at Fort McNair in Washington, D.C.  The Army contracted with a general contractor, IIU Consulting Institute, who in turn contracted with defendant subcontractor, Forney Enterprises.  Forney entered into a sub-subcontract with plaintiff Window Specialists, Inc. for the labor and materials to supply and install over 680 windows and over 60 doors on the project.  During the course of the project, the Army issued a 10-day cure notice identifying numerous issues with the general contractor’s demolition of existing windows and Window Specialists’ installation of new windows.  Ultimately, Forney terminated the contract with Window Specialists and the general contractor had to demolish, re-order, and re-install all of Window Specialists’ work on the project.
Window Specialists filed suit against Forney, the general contractor, the general contractor’s payment bond surety, and the Secretary of the Army, bringing claims for breach of contract, unjust enrichment, a payment bond claim, and for injunctive relief.  Forney filed two counterclaims against Window Specialists, one for breach of contract and one seeking indemnification related to the costs the general contractor incurred replacing Window Specialists’ work.


Continue Reading Federal District Court for DC Rejects Subcontractor’s Pass-Through of General Contractor’s Claim to Sub-Subcontractor

Copper Mountain, Inc. v. Industrial Systems, Inc.
2007 Colo. App. LEXIS 2298 (Colo. App. Ct. Nov. 29, 2007)
Copper Mountain, Inc. hired Amako Resort Construction, Inc. as the general contractor to renovate and expand a mountain resort lodge. Amako subcontracted with Industrial to build the steel framework for the project. The parties signed a standard American Institute of Architects (AIA A201) contracts, which required Copper to obtain property insurance to cover damages for the work. To comply with this requirement, Copper relied on its all-purpose insurance policy that provided coverage for all of Copper Mountain, including the work and adjacent properties, instead of purchasing separate insurance policy, which would cover only the expansion and renovation work.

Continue Reading Colorado Appeals Court Holds that AIA Contract Waiver of Subrogation Extends to “Non-Work” as Well as “Work”

Dur v. Western Branch Diesel, Inc.
2007 U.S. App. LEXIS 16237 (4th Cir. July 9, 2007)
Following the precedent of the Supreme Court of Virginia in Sensenbreunner v. Rust. Orling & Neale, Architects, Inc., 374 S.E.2d 55 (Va. 1988), the Fourth Circuit Court of Appeals upheld the district court’s grant of a motion for summary judgment. The Court held that damage to an owner’s boat caused by an electrical fire fell within the scope of the contract between the owner’s general contractor and the subcontractor and amounted to nothing more than economic loss, which barred the owner from maintaining a cause of action for negligence against the subcontractor.
Continue Reading Fourth Circuit Court of Appeals Holds Owner’s Negligence Cause of Action Against Subcontractor Barred by the Economic Loss Rule

U.S. ex. rel. Straightline Corp. v. American Casualty Corp.
2007 U.S. Dist. LEXIS 50688 (N.D. W.Va 2007)
The United States District Court for the Northern District of West Virginia held that a “pay-if-paid” clause was not a valid defense to a Miller Act claim. Straightline, involved a contract dispute between a general contractor’s surety (“surety”)