Government Contracts

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DVBE Trucking and Construction Co., Inc. v. McCarthy Building Companies, Inc., 2015 U.S. Dist. LEXIS 90052 (N.D. Cal. July 10, 2015)

This payment dispute case arises out of a Veterans Affairs (“VA”) construction project located in Palo Alto, California.  McCarthy Building Companies, Inc. (“McCarthy”) was the prime contractor, Federal Insurance Company and Travelers Casualty and Surety provided the performance and payment bonds on behalf of McCarthy mandated by the Miller Act, and DVBE Trucking and Construction Company, Inc. (“DVBE”) was McCarthy’s subcontractor.  Section 11.1 of DVBE’s subcontract required that, for any dispute involving the VA, it would follow the dispute resolution procedures agreed to by McCarthy in its contract with the VA, and agreed to be bound by the result of any such dispute resolution procedures to the same degree as McCarthy.

Vanguard Constr., Inc. v. United States, 2015 U.S. Claims LEXIS 1158 (Fed. Cl. Sep. 8, 2015)

The United States Air Force (the “Government”) entered into a contract with Vanguard Construction, Inc. (“Contractor”) to replace a roof (the “Contract”).  The Contract incorporated by reference portions of the Federal Acquisition Regulation (FAR).

Contractor’s demolition of the existing roof revealed that a significant section of the roof stem wall was missing.  The Contract did not address the contingency of a missing stem wall.  Contractor sent the Government several letters asking for guidance on how to proceed, including a request for information on structural requirements for building a stem wall.  The Government refused to provide the requested information, asserting that the terms of the contract allocated to the Contractor the risk of dealing with latent or unanticipated site conditions and the burden of devising a solution to the problem.

Gongloff Contracting, L.L.C. v. L. Robert Kimball & Assocs., Architects and Eng’rs, Inc., 2015 Pa. Super 149 (Pa. Super. Ct. July 8, 2015)

Pennsylvania law generally bars negligence claims when the injured party has suffered only economic losses.  This principle is commonly referred to as the economic loss doctrine.  An exception to this doctrine is found in Section 552(1) of the Restatement (Second) of Torts, which provides that, “one who, in the course of his business, profession or employment … supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.” In Bilt-Rite Contractors, Inc. v. Architectural Studio, 581 Pa. 545 (2005), the Pennsylvania Supreme Court adopted this exception and found it to be applicable in cases where information is negligently supplied by an architect or design professional under circumstances where it is foreseeable that others will rely upon that information.  In Gongloff, the Superior Court of Pennsylvania, interpreting Bilt-Rite, held that the Bilt-Rite exception can be triggered when an architect or design professional negligently includes faulty information in its design documents.  The Gongloff court rejected the argument that, under Bilt-Rite, an injured party is required to identify an “express” misrepresentation in a particular communication or document in order to support a claim of negligent misrepresentation.

USA Walnut Creek, DST v. Terracon Consultants, Inc. f/k/a HBC Engineering, Inc., 2015 Tex. App. LEXIS 1806 (Tex. App. 2015)

This cases arises out of the construction of a twelve building apartment complex in Austin Texas.  The builders, Creekstone Walnut, LP and Creekstone Builders, Inc., contracted with defendant Terracon for geotechnical engineering and inspection services.  As part of the services, Terracon performed test borings and provided the geotechnical recommendations for, among other things, the foundation design.  Terracon’s inspection services included providing testing and inspection of the construction materials, including compaction testing on the earthwork.

Montano Elec. Contractor v. United States, 2015 U.S. App. LEXIS 5928 (Fed. Cir. Apr. 13, 2015)

The Army Corps of Engineers (“the Corps”) hired a general contractor, who subcontracted certain electrical work to Montano (“Subcontractor”).  When Subcontractor was not paid for its work, Subcontractor sought assistance from the Corps’ contracting officer, who explained that he was unable to assist because Subcontractor did not have a contract with the government and the government was thus not a party to Subcontractor’s dispute; however, Subcontractor should pursue any claims it had against the general contractor in federal district court under the Miller Act.

Fed. Ins. Co. v. Fredericks, Inc., 2015-Ohio-694, 29 N.E.3d 313, 2015 Ohio App. LEXIS 684 (Ohio Ct. App. Feb. 27, 2015)

This case arises from a construction project in Vandalia, Ohio that was damaged during a windstorm before construction was completed.  The project was for the construction of a “cross-dock facility” warehouse (the “Project”) on certain real property owned by Pasco Enterprises (“Pasco”), a company in the business of owning and leasing real estate holdings.  Pasco’s 100% parent, J.P. Holding Co., Inc. (“JP Holding”) also owned Carter Express, Inc. (“Express”) and Carter Logistics, LLC (“Logistics”).  Logistics was in the business of providing freight transportation services to its customers; it also contracted with freight carriers, including Express, to transport its customers’ freight.  Approximately 85% of Logistics’ freight shipments were transported by Express.

Clipper Pipe & Service, Inc. v. The Ohio Cas. Ins. Co., 2015 Pa. LEXIS 1275 (PA  June 15, 2015)

The Supreme Court of Pennsylvania held that CASPA, 73 P.S. §§501-516, “does not apply to a construction project where the owner is a governmental entity.”  The decision once and for all resolved the issue of whether the Contractor and Subcontractor Payment Act (“CASPA”) applies to payment disputes between prime contractors and subcontractors on public works projects,  either instead of, or in addition to, the prompt payment provisions of the Commonwealth Procurement Code, 62 Pa.C.S. §§ 3931-3939 (commonly referred to as “the Prompt Payment Act”).

Marenalley Constr., LLC v. Zurich American Ins. Co. and Nason Constr. Inc., 2015 U.S. Dist. LEXIS 30968 (E.D. Pa. March 13, 2015)

This payment dispute case arises out of a Veterans Affairs (“VA”) construction project located in Philadelphia. Nason was the general contractor, Zurich was Nason’s surety, and Marenalley was Nason’s subcontractor. Marenalley’s subcontract required it to pursue any claim related to the project through the administrative disputes resolution process provided by Nason’s prime contract with the VA before bringing suit against the project’s bond.  The prime contract’s administrative dispute resolution process clause incorporated the terms of the Contract Disputes Act (the “CDA”).

KBW Assocs. v. Jaynes Corp., 2015 U.S. Dist. LEXIS 18220 (D. Nev. Feb. 13, 2015)

This action arose out of the construction of additions to existing buildings at Creech Air Force Base in Indian Springs, Nevada (the “Project”).  The United States Army Corps of Engineers (the “COE”) contracted with Defendant Jaynes Corporation, Inc. (“Jaynes”) to perform the work.  Jaynes then subcontracted with Plaintiff, KBW Associates, Inc. (“KBW”), to construct the metal framing and outer shell of the buildings.

Following construction delays, Jaynes found itself involved in two separate actions.  In the first action (the “Prime Contract Litigation”), Jaynes was defending against liquidated damages assessed by the COE under the prime contract.  In the instant action (the “Subcontract Litigation”), Jaynes was defending a Miller Act suit for contract balances brought by KBW.  KBW alleged Jaynes was responsible for the construction delay, through a “pattern of mismanagement”, involving failure to timely approve work, unilateral imposition of work beyond the scope of the subcontract and improper scheduling.  Jaynes asserted several affirmative defenses and filed counterclaims against KBW, on grounds that KBW failed to perform in accordance with the subcontract and failed to meet construction schedules.

Total Eng’g, Inc. v. United States, 2015 U.S. Claims LEXIS 30 (Fed. Cl. Jan. 26, 2015) 

The United States Army Corps of Engineers (the “Government”) awarded a contract to Total Engineering, Inc. (“Total”) for preliminary site construction work for the United States Army Medical Research Institute of Chemical Defense Replacement Facility.  When failures occurred in a steam line system that Total had installed, the contracting officer issued a cure notice and ultimately terminated Total for default.
Total’s contract required it to construct a steam line system, consisting of steam and condensate lines anchored to parallel concrete piers inside a concrete trench.  During a hydrostatic pressure test, the Government noted cracks in the piers, pipe detachment from several concrete piers, and damage to an anchor support.  The parties disputed the cause of the failures.  Total contended that the Government’s faulty design caused the failures, and the Government alleged that deficiencies in Total’s work were to blame.