General Contractors

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Balfour Beatty Rail, Inc. v. The Kansas City Southern Railway Company, 2016 U.S. Dist. LEXIS 39086 (N.D. Tex., March 25, 2016)

The contractor contracted with owner to install 65 miles of railroad track, for a price of $12,206,666.  The owner had engaged another contractor to grade and prepare the substrate for the railroad track, and was to furnish and deliver aggregate for track ballast and track rail material to various locations along the rail route.  The contractor’s scope included all other work.  The contractor fell behind in its work, and the owner hired additional contractors to complete a portion of its scope.  The contractor blamed the delays on the owner’s late delivery of aggregate and rail, and improper subgrade preparation under a theory of differing site conditions. It sought $4.35 million in unpaid change orders, delay damages, and penalties under Texas’ prompt payment statutes.  The owner in turn sought $2.6 million in completion costs and costs of wasted aggregate.

Pacific Caisson & Shoring, Inc. v. Bernards Brothers Inc., 236 Cal. App. 4th 1246 (Cal. Ct. App. 2015)

In California, a contractor must be licensed by the Contractors State License Board (Board) in order to lawfully perform construction operations. The Board issues three types of licenses: an “A,” or general engineering license[1]; a “B,” or general building license[2]; and a series of “C” specialty licenses for trade contractors (e.g., concrete, electrical, glass and glazing, structural steel, drywall, tile, etc.). California Business & Professions Code (B&P) §§ 7056–7058. In order to qualify for a license, a contractor must provide a responsible managing officer (RMO) or a responsible managing employee as its qualifier. B&P § 7068.

The consequences of contracting without the proper license can be severe. An unlicensed contractor may not sue to recover for the value of its work. B&P § 7031(a). Even more damaging, an owner can seek disgorgement of all monies paid to a contractor, even if there was nothing wrong with the contractor’s construction of the project. B&P § 7031(b); Alatriste v. Cesar’s Exterior Designs, Inc., 183 Cal. App. 4th 656 (Cal. Ct. App. 2010). As the California Supreme Court has observed, B&P § 7031 “represents a legislative determination that the importance of deterring unlicensed persons from engaging in the contracting business outweighs any harshness between the parties, and that such deterrence can best be realized by denying violators the right to maintain any action for compensation in the courts of this state.” MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., 36 Cal. 4th 412, 423; 115 P.3d 41 (Cal. 2005).

C. Szabo Contracting, Inc. v. Lorig Construction Co., 2014 IL App (2d) 131328; 2014 Ill. App. LEXIS 699 (Sept. 29, 2014)

In May of 2006, the Illinois State Toll Highway Authority (“Highway Authority”) retained Defendant Lorig Construction Company (“Lorig”) as general contractor on a construction project for improvements to Interstate 355. The Highway Authority required that Lorig subcontract a portion of its work to a “Disadvantaged Business Enterprise” (“DBE”), and that the project be performed with union labor.

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.

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.

Liberty Mut. Fire Ins. Co. v. Kay & Kay Contr.
2013 U.S. App. LEXIS 23587 (6th Cir. Nov. 19, 2013)

This action arose out of a commercial general liability (“CGL”) policy issued by Liberty Mutual Fire Insurance Co. (“Liberty Mutual”) to MW Builders, Inc. (“MW Builders”) and Kay and Kay Contracting, LLC (“Kay & Kay”) for the construction of a Wal-Mart store in Morehead, Kentucky. Wal-Mart Stores, Inc. (“Wal-Mart”) contracted with MW Builders as general contractor for the construction of the building. MW Builders then entered into a subcontract with Kay & Kay to perform site preparation work and construct the building pad beneath the structure. Liberty Mutual issued the CGL policy to Kay & Kay, with MW Builders as an additional insured (the “Policy”). The Policy was the standard ISO (Insurance Services Office, Inc.) policy containing the standard coverage language. Specifically, the Policy provided: “This insurance applies to ‘bodily injury’ and ‘property damage’ only if… [t]he ‘bodily injury’ or ‘property damage’ is caused by an ‘occurrence’ that takes place in the ‘coverage territory’…” The Policy defined “occurrence” to mean “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The term “accident” was not defined in the Policy.

Kuhn Construction Company v. Ocean and Coastal Consultants, Inc.
2010 U.S. Dist. LEXIS 71057 (D. Del. July 15, 2010)

Diamond State Port Corporation (“DSPC”) engaged Ocean and Costal Consultants, Inc. (“OCC”) to prepare engineered drawings, plans, and specifications for a project at the Port of Wilmington in Delaware. In soliciting bids, DSPC utilized the bid documents designed and prepared by OCC. Kuhn Construction Company (“Kuhn”) relied upon those documents to prepare its bid for work on the project. As the lowest bidder, Kuhn entered into a contract with DSPC.

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.

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.

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.