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

EnerQuest Oil & Gas, L.L.C. v. Antero Resources Corporation, No. 02-18-000178CV, 2019 BL 130860 (Tex. App. – Fort Worth Apr. 11, 2019)

A Texas appellate court recently found that an out-of-state Oklahoma-based limited liability company was not subject to personal jurisdiction in Texas for alleged misappropriation of trade secrets claims.

Continue Reading Texas Court Finds Out-of-State Defendant With Majority Ownership in Texas-Based Entity Not Subject to Personal Jurisdiction in Texas

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”).

Continue Reading Supreme Court of Pennsylvania Holds Contractor and Subcontractor Payment Act (“CASPA”) Inapplicable to Public Works Projects

An amended version of this post was published in the March 16, 2015 AGC Construction Law in Brief, the weekly newsletter for the Associated General Contractors of America.

Since 1994, Pennsylvania law has provided enhanced remedies for prevailing in a payment dispute arising out of a construction project.  The prevailing party in a recent jury trial discovered uncertainty in the precise contours of those available remedies.  There was no clear precedent governing recovery of fees of a testifying expert, necessary to overcome the complex accounting and delay claims asserted by the defendant in response to the invoice dispute, and the method of calculating pre-judgment and post-judgment interest and penalty interest under the statute.  Because of the large sums at issue, the difference in calculation methods was significant.  Entitlement to these matters was unclear in spite of 20 years of precedent under the Pennsylvania Contractor and Subcontractor Payment Act.

Continue Reading Analysis: Prevailing Party In Jury Trial Finds Uncertainty In Remedies Available Under Pennsylvania Contractor And Subcontractor Payment Act

Scungio Borst & Assocs. v. 410 Shurs Lane Developers, LLC et al., 2014 Pa. Super. LEXIS 4527 (Pa. Super. Ct. 2014)

On reconsideration of an earlier panel decision of the Pennsylvania Superior Court, the Court en banc rejected a contractor’s contention that Pennsylvania’s Contractor and Subcontractor Payment Act (“CASPA”) extends liability for non-payment beyond the actual contracting parties.

This action arose out of the construction of a condominium project in Philadelphia’s Manayunk neighborhood (the “Project”).  The owner, 410 Shurs Lane Developers, LLC (the “Owner”), entered into a written contract with Scungio Borst & Associates (the “Contractor”) for the construction of the Project.  The Contractor performed the contracted-for construction services, as well as $2.6 million in additional work at the direction of the Owner and the Owner’s President and fifty percent shareholder, Robert DeBolt.  When the Contractor was not paid approximately $1.5 million incurred due to the additional work, it filed suit against the Owner and Mr. DeBolt individually, alleging, inter alia, breach of contract and violation of CASPA.

Continue Reading En Banc Pennsylvania Superior Court Rejects Extending CASPA Liability Beyond Contracting Parties

KNL Construction, Inc. v. Killian Construction Co., Inc., 2014 U.S. Dist. LEXIS 58269 (M.D. Pa. Apr. 28, 2014)

This action arose out of the construction of the Mohegan Sun Hotel in Luzerene County, Pennsylvania.  General contractor Killian Construction Co., Inc. (“Killian”) retained KNL Construction, Inc. (“KNL”) as a subcontractor to perform certain work on the project.  The parties executed a subcontract which contained a forum selection clause mandating that disputes thereunder be litigated in Greene County Missouri, or if federal jurisdiction is applicable, in the District Court for the Western District of Missouri.
A dispute arose over KNL’s performance under the subcontract, eventually leading to its termination.  In response, KNL brought suit in Pennsylvania state court for breach of contract and related claims premised on payments allegedly owed by Killian, including a claim under Pennsylvania’s Contractor and Subcontractor Payment Act (“CASPA”).  Killian removed the case to the Middle District of Pennsylvania on diversity grounds and filed a motion to dismiss for improper venue, or, in the alternative, transfer for forum non conveniens.  In support of its motion, Killian argued that the clear language of the forum selection clause designates Missouri as the exclusive venue for litigation.

Continue Reading District Court in Pennsylvania Concludes that CASPA Prompt Payment Act Does Not Override Unambiguous Forum Selection Clause

Neshaminy Constructors, Inc. v. Concrete Building Systems, Inc.
2007 U.S. Dist. LEXIS 69197, Civil Action No. 06-1489 (E.D. Pa. 2007)
The United States District Court for the Eastern District of Pennsylvania conducted a bench trial in which the primary question was whether a contract had been formed between a contractor and subcontractor in connection with a project for which the contractor submitted a bid proposal utilizing, in part, the subcontractor’s bid proposal for calculating the total price for the work. Relying on Pennsylvania common law, the Eastern District held that use of a subcontractor’s bid, by a general contractor in the submission of its own bid to the owner, in and of itself is not sufficient to create a binding contract.
Continue Reading Federal District Court in PA Holds Contractor’s Use of Subcontractor’s Conditional Bid Proposal in its Bid to Owner Insufficient to Form Enforceable Contract

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

Charles Boyd Construction Inc. v. Vacation Beach, Inc.
No. 5D06-2168, 2007 Fla. App. LEXIS 9597 (Fla. Dist. Ct. App., June 22, 2007)
Following the precedent of the United States Supreme Court in Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006), the Fifth District Court of Appeal of Florida reversed its prior decision and held that whether a contract is illegal in its entirety and, thus, an arbitration provision contained therein would be unenforceable, must in the first instance be decided by the arbitrator, and not a court.
Continue Reading Florida Court Holds that Arbitrator, Rather Than Court, Should Determine Validity of Contract

EBWS, LLC v. Britly Corporation
2007 VT 37; 2007 Vt. LEXIS 69 (Vt. May 25, 2007)
The Vermont Supreme Court held that the cost of an owner’s anticipated voluntary payments of employee wages and for product purchases during the temporary shutdown of a creamery pending repair of construction defects were not recoverable consequential damages because they could not reasonably have been within the contemplation of the defendant when it contracted to build the creamery.
Continue Reading Vermont Court Reverses Award Of Consequential Damages To Owner In Construction Defect Case