Parkcrest Builders, LLC v. Hous. Auth. of New Orleans, 2017 U.S. Dist. LEXIS 125012 (E.D. La. August 8, 2017)

The Housing Authority of New Orleans (“the Authority”) contracted with Parkcrest Builders, LLC (“Parkcrest”) to construct a public housing project.  The Project was delayed and the Authority terminated Parkcrest prior to completion, and entered into a Takeover Agreement with Parkcrest’s Surety.  The Surety retained Parkcrest to complete the work, and later notified the Authority that it had achieved substantial completion.  The Authority asserted deficient and incomplete items remained on the project, which the Surety refused to complete.  The Authority then solicited bids for the remaining work, and awarded the work to a replacement contractor.

Parkcrest sued the Authority for breach of contract and also asserted that any delays on the Project were excusable and, therefore, not subject to liquidated damages.  The Authority counterclaimed against Parkcrest for added costs to complete the project.  The Surety intervened, also seeking a ruling that all delays were excusable.  The Authority then counterclaimed against the Surety for completion costs.


Continue Reading Federal Court Holds That Under Louisiana Law, Actual Notice of Cause of Delay Satisfies Contractual Notice Requirement Despite Failure to Strictly Comply With the Notice Provision

Nova Group/Tutor-Saliba v. United States, 125 Fed. Cl. 469 (Fed. Cl. Mar 16, 2016)

The United States Naval Facilities Engineering Command (the “Navy”) contracted with the joint venture of Nova Group and Tutor-Saliva (the “JV”) for construction of a pier at the Puget Sound Navy Shipyard in Bremerton, Washington.  The contract assigned selection of pier stability assessment methods to the JV’s discretion.  Exercising that discretion, the JV selected a SAP 2000 model for performance design loads.  Five months after the Navy had approved the JV’s design submittals, the Navy’s construction manager voiced concerns about the design and questioned the JV’s reliance upon the SAP 2000 model.


Continue Reading Federal Claims Court Holds that Government’s Actual Knowledge of Contractor’s Delay and Acceleration Excuses Technical Non-Compliance with Time Limit for Providing Notice of Constructive Change

John Spearly Constr., Inc. v. Penns Valley Area Sch. Dist., 2015 Pa. Commw. LEXIS 337 (Pa. Commw. Ct. July 24, 2015)

This action arose out of the construction of a biomass boiler system for the Penns Valley Area School Districts (“District”) to house the District’s boiler plant  (“Project”).  The District contracted with general contractor John Spearly Construction, Inc. (“Contractor”) to construct the Project. The District entered into direct contracts with the Project Architect and other contractors responsible for other components of the work.

Construction began in July 2010 and was to be substantially completed no later than October 18, 2010.  From its inception, however, the Project was plagued with delays.  Project delays were caused by, among other things, delays by the District’s Architect in deciding on and responding to submittals relating to changes, disputes between the District and its HVAC contractor responsible for delivering the boiler, and work performed by a sewer contractor the District brought in toward the end of the Project to repair and replace storm water and sewer pipes. Ultimately, the Project was not substantially completed until August 11, 2011.


Continue Reading Pennsylvania Commonwealth Court Explains and Applies Active Interference Exception to No Damage for Delay Clause

Curtiss-Manes-Schulte, Inc. v. Safeco Insurance Company, 2015 U.S. Dist. LEXIS 10032 (W.D. Mo. 2015)

NOTE:  THIS DECISION WAS VACATED ON REHEARING AND THE DECISION ON REHEARING WILL BE THE SUBJECT OF A POST TO BE PRESENTED SHORTLY IN CONSTRUCTLAW.

This dispute between a general contractor and its subcontractor’s performance bond surety arose out of a renovation project at Fort Leonard Wood in Missouri.  On October 19, 2010, the general contractor, Curtiss-Manes-Schulte, Inc. (“CMS”), entered into a subcontract with Balkenbush Mechanical, Inc. to replace the air conditioning system on the project.  A week later, Balkenbush obtained the required performance bond from Safeco Insurance Company of American.

By October 2011, CMS knew that Balkenbush was behind schedule.  In July 2012, CMS responded to a Contract Bond Status Inquiry and informed Safeco that the contract was not complete, that Balkenbush’s work was not progressing satisfactorily, that the project was nine months late, and that liquidated damages would be assessed.  Around the same time, Safeco hired consultants and a law firm to investigate, defend and resolve claims made against four performance bonds Safeco issued to Balkenbush on other projects.  In December 2012, Safeco filed a lawsuit against Balkenbush to recover its losses resulting from the claims on the four other performance bonds.  One month later, in January 2013, Balkenbush filed a bankruptcy petition and Safeco’s counsel entered their appearance in that proceeding.


Continue Reading Federal District Court Holds that General Contractor’s Failure to Provide Notice of Default Does Not Preclude Recovery on Performance Bond

U.W. Marx, Inc. v. Koko Contracting, Inc., No. 518611, 2015 N.Y. App. Div. LEXIS 600 (N.Y. App. Div. Jan. 22, 2015)

The Appellate Division of the Supreme Court of New York affirmed judgment in favor of a subcontractor holding that although the subcontractor failed to comply with a contractual provision requiring it to give timely notice of its intent to stop work due to contractor’s failure to make payment, the contractor’s prior failure to make three consecutive progress payments to subcontractor constituted an uncured, material breach that relieved the subcontractor from performing its remaining obligations under the parties’ contract.


Continue Reading New York Appellate Division Holds That Subcontractor’s Failure to Give Cure Notice Before Stopping Work Did Not Bar Recovery Because Contractor’s Prior Unjustified Failure to Make Three Successive Progress Payments Constituted Uncured, Material Breach

Milton Reg’l Sewer Auth. v. Travelers Casualty & Surety Co., 2014 U.S. Dist. LEXIS 155419 (M.D. Pa. Nov. 3, 2014)

The United States District Court for the Middle District of Pennsylvania ruled that multiple instances of incomplete and/or defective performance by a contractor did not amount to a material breach so as to excuse the owner from providing notice and an opportunity to cure prior to termination.


Continue Reading U.S. District Court in Pennsylvania Dismisses Owner’s Claim Against Performance Bond Surety – Repeated Instances of Poor Performance By Contractor Were Not So Material As to Allow Owner to Terminate Without Providing Cure Notice

United States ex rel JEMS Fabrication, Inc. v. Fidelity & Deposit Co. of Maryland, 2014 U.S. App. Lexis 8175 (5th Cir., April 30, 2014)

This dispute arises out of a construction project to renovate and redevelop pumping stations located at various sites along the Mississippi River.  The U.S. Corp of Engineers entered into a contract with Benetech, LLC for the project.  Benetech then entered into a subcontract with plaintiff JEMS, whereby JEMS agreed to supply custom-fabricated structural steel for use on the project.  The contract amount, including approved change orders, was $2.38 million and required JEMS to provide shop drawings, materials and on-site labor.

JEMS delivered all of the shop drawings and most of the materials required by the subcontract.  However, JEMS did not supply most of the on-site labor, as Benetech and JEMS agreed that Benetech would supply the labor to satisfy its self-performance obligations in its contract with the Corp of Engineers.  JEMS and Benetech also agreed to a subcontract modification such that Benetech would purchase a custom building directly from JEMS’ subcontractor for $54,000.  However, because of changes made by the Corp of Engineers, which were not incorporated into the subcontract, Benetech’s cost for the custom building was $147,000.  Ultimately, Benetech paid JEMS just under $1 million for its work on the project and alleged that JEMS was not entitled to any additional payment.  Benetech claimed that it was entitled to a set-off against any amount due under the subcontract because it had to purchase materials that JEMS should have supplied for the project.


Continue Reading Fifth Circuit Holds Contractor May Not Assert Set-Off for Defective Work Because It Failed to Comply with Subcontract Provisions for Notice and Opportunity to Cure