Fed. Ins. Co. v. Empresas Sabaer, Inc.
2013 U.S. Dist. LEXIS 112930 (D.P.R. Aug. 9, 2013)

This action arose out of a surety’s claim for expenses incurred for correcting a subcontractor’s defective work. DTC Engineering and Constructors, LLC (“DTC”) and the U.S. Army Corps of Engineers (the “Corps”) entered into a contract for the design and construction of the Armed Forces Reserve Center at Fort Buchanan, located in Guaynabo, Puerto Rico. Federal Insurance Company (“Federal”) and DTC subscribed to a payment and performance bond as surety and principal, respectively, naming the government as obligee. DTC subsequently entered into a subcontract (the “Subcontract”) with Empresas Sabaer, Inc. (“Sabaer”) and BBS Developers, S.E. (“BBS”) (collectively the “Subcontractors”). The Subcontract provided that Sabaer was required to complete the work under Subcontract, while BBS was responsible for providing technical and economic support. United Surety and Indemnity Co. (“USIC”) and the Subcontractors, as surety and principal, respectively, subscribed to a payment and performance bond and named DTC as obligee. DTC assigned to Federal all of its rights emerging from the Subcontract and USIC’s bond.


Continue Reading U.S. District Court in Puerto Rico, Applying Connecticut Law, Considers Application of Notice Requirements to Termination of Joint Subcontractors

Shelter Prods. v. Steelwood Constr., Inc.
307 P.3d 449 (Or. Ct. App. 2013)

This action arose from a payment dispute between a general contractor, Catamount Constructors, Inc. (“Catamount”), and one of its subcontractors, Steelwood Construction, Inc. (“Steelwood”). Catamount contracted with Steelwood (the “Subcontract”) to provide materials and perform work for the construction of a Home Depot distribution center in Salem, Oregon (the “Project”). Included in the Subcontract was a provision that allowed Catamount to terminate the Subcontract for convenience and “without cause.” In the event the Subcontract was terminated for convenience, Steelwood would be entitled to the cost of all work performed on the Project as of the date of termination.


Continue Reading Oregon Court of Appeals Holds General Contractor Cannot Offset Costs of Repairing Subcontractor’s Defective Work After Subcontractor Is Terminated “For Convenience” Without an Opportunity to Cure

TRG Construction, Inc. v. District of Columbia Water & Sewer Authority
2013 D.C. App. LEXIS 257 (May 9, 2013)

Appellant, TRG Construction, Inc. (“TRG”), was hired by the District of Columbia Water and Sewer Authority (“D.C. Water”) to renovate bathrooms at D.C. Water’s central operations facility. When TRG initially contracted with D.C. Water it agreed to complete the bathroom renovations by June 13, 2004. The project suffered delays, however, and the deadline for completion was extended to July 31, 2005. Before that deadline, TRG requested another extension. D.C. Water declined to grant the request. Shortly thereafter, D.C. Water sent TRG a cure notice detailing several alleged deficiencies in TRG’s work. TRG declined to fix the problems asserting that its work was not defective. On September 2, 2005, D.C. Water terminated TRG’s contract for convenience.


Continue Reading DC Court Holds that Authority’s Consideration Of Contractor’s Claim on Merits Raises Issue of Fact as to Waiver of Late Notice Defense

SRC Constr. Corp of Monroe v. Atl. City Housing Auth.
2013 U.S. Dist. LEXIS 47301 (D.N.J. April 2, 2013)

The U.S. District Court for the District of New Jersey denied a defendant architect’s motion for summary judgment, holding that the economic loss doctrine applies only to bar tort claims between parties to a contract.


Continue Reading U.S. District Court in New Jersey Holds Economic Loss Doctrine No Bar to General Contractor’s Delay Claims Against Architect

SAK Construction of CA, L.P. v. PSC Industrial Outsourcing, L.P.
2012 U.S. Dist LEXIS 123473 (E.D. Mo. 2012)

This action arose out of the Los Coyotes Water Reclamation Plant Interceptor Project in Los Angeles County, California. General Contractor, SAK Construction of CA, L.P. (“SAK”) was retained by the County to perform sewer rehabilitation work. SAK subcontracted with PSC Industrial Outsourcing, L.P. (“PSC”) to perform the inspection, cleaning, waste removal and disposal work on the Project. The Project consisted of rehabilitating 16 stretches or “shots” of pipeline.


Continue Reading U.S. District Court in Missouri Holds Three-Month Suspension of Work Due to Work Safety Concerns Did Not Constitute Unreasonable Delay to Work Permitting Subcontractor to Terminate Subcontract Under AIA-Type Provision

DuBaldo Electric, LLC v. Montagno Construction, Inc.
119 Conn. App. 423; 2010 Conn. App. LEXIS 55 (Conn. App. Feb. 23, 2010)

Subcontractor, DuBaldo Electric contracted with general contractor, Montagno Construction to perform electrical work in connection with the renovation of retail space leased by Burlington Coat Factory.
DuBaldo had estimated that it could complete the work in 3200 man hours over the scheduled ten week period. Issuance of the permit required for DuBaldo to commence its electrical work was delayed three weeks due to deficiencies in Burlington’s architectural design and understaffing at the City electrical inspector’s office. Unable to perform the electrical work without a permit, DuBaldo fell approximately three weeks behind. Nevertheless, Montagno refused to update the schedule. To make up for lost time, DuBaldo agreed to work 7 days a week with overtime. In addition, Montagno hired Globe Electric to work along side DuBaldo, and deducted from DuBaldo’s account the amount it paid to Globe for work performed within DuBaldo’s scope.


Continue Reading Connecticut Court Holds Termination Improper Where Subcontractor Substantially Performed; Also Holds Evidence Supported Subcontractor’s Inefficiency Claim

Current Builders of Florida, Inc. v. First Sealord Surety, Inc.
2008 Fla. App. LEXIS 4698 (April 2, 2008)
The Court of Appeals of Florida held that a jury finding that a contractor which terminated a subcontractor failed to provide notice in accordance with the terms of a performance bond was sustainable, given that the contractor did not tender the remaining contract balance to the surety or give it an opportunity to provide for the completion of the work. Accordingly, the surety’s obligations under the bond were not triggered.
Continue Reading Florida Court Holds That Contractor’s Failure To Provide Notice Of Default In Accordance With Terms Of Performance Bond Discharged Surety From Its Obligations

Donald M. Durkin Contracting, Inc. v. City of Newark
2008 U.S. App. LEXIS 28987 (D. Del. Apr. 9, 2008)
The Delaware District Court held that a contractor who is improperly terminated is entitled to recover its expectation interest or the unpaid contract price less the amount it would have cost the contractor to complete the job. Other damages which are causally connected to the owner’s breach are recoverable as well, but costs of pre-termination performance or post-termination losses which are not causally connected are not recoverable. Further, the Court affirmed that Delaware follows the “American Rule’ which precludes recovery for attorneys fees incurred in consequence of the owner’s breach.
Continue Reading Delaware District Court Reduces Contractor Recovery for Wrongful Termination

Carlson v. SALA Architects, Inc.
2007 Minn. App. LEXIS 74
The of Minnesota Court of Appeals reversed entry of summary judgment in favor of a purchaser of architectural services, holding, among other things, that the relationship between an architect and its client is not per se a fiduciary relationship. Rather, the Court held that whether a fiduciary relationship exists was a question of fact which was unable to be resolved on summary judgment.
Continue Reading Minnesota Court Rules Architect-Client Relationship Is Not Per Se Fiduciary

Charles T. Driscoll Masonry Reconstruction Co., Inc. v. County of Ulster
2007 N.Y. App. Div. LEXIS 6068 (N.Y. App. Div., May 17, 2007)
The Appellate Division of the Supreme Court of New York held that a construction contract must be enforced according to its terms and, therefore, oral modifications of an agreement which specifically calls for modifications to be in writing will be unenforceable. Although recognizing that written modification clauses may be waived based upon the conduct of the parties, the court found that the conduct of the parties in this case did not support a waiver.
Continue Reading NY Court Disallows Recovery For Additional Work Performed Pursuant To Oral Modification Because Contract Required Written Change Orders