G&G Mech. Constructors, Inc. v. Jeff City Indus., Inc., No. WD80840, 2018 Mo. App. LEXIS 271 (Mar. 20, 2018)

This case arose out of a project in Columbia, Missouri on which Jeff City Industry, Inc. (“JCI”) was the general contractor and G&G Mechanical Constructors, Inc. (“G&G”) was a subcontractor.

The draft subcontract contained an interest provision which provided that overdue payments “shall bear interest at the annual rate of 18% or the highest rate allowed by law, if lower. Retainage shall not be held out of payment.”  JCI struck through this provision, wrote “5% Retiange [sic]” in the margin, initialed it, and sent it to G&G.  G&G also initialed the revision.

When JCI failed to pay G&G for its work, G&G sued JCI for breach of contract, unjust enrichment, and violation of Missouri’s Prompt Pay Act.  A jury returned a verdict against JCI, and the trial court entered a judgment against it which included prejudgment interest at the rate of 9% pursuant to Missouri Revised Statute § 408.020.

Meridian Eng’g Co. v. United States, 2018 U.S. App. LEXIS 7024 (Fed. Cir., Mar. 20, 2018)

Meridian Engineering Company (“Meridian”) was hired by the United States (“Government”) to construct flood control structures on the Chula Vista Project.  Meridian encountered what it considered to be differing site conditions on the project.  The Government issued two contract modifications in response to Meridian’s claims.  Later, structural failures occurred and the Government ultimately terminated Meridian.  Meridian filed suit in the Court of Federal Claims.

The court held that Meridian failed to establish a compensable differing site condition because the bid documents sufficiently notified contractors of potential water conditions at the site that could result in the conditions claimed.  Also, the court held that Meridian was charged with knowledge of the conditions that a pre-bid site visit would have revealed, which included the conditions in question.  The Court of Appeals affirmed the trial court on that issue.

Suffolk Constr. Co. v. Rodriguez & Quiroga Architects Chtd., 2018 U.S. Dist. LEXIS 42652 (S.D. Fla. Mar. 15, 2018)

This case arises out of the design and construction of a science museum in Miami, Florida (the “Project”).  Museum of Science, Inc. (“MSI”), the Project owner, executed several agreements relating to the Project, including: (i) an agreement with Defendant Rodriguez and Quiroga Architects Chartered (“R&Q”) to serve as executive architect; (ii) an agreement with Defendant Grimshaw Architects P.C. (“Grimshaw”) to serve as the design architect; (iii) a construction services contract with Plaintiff Suffolk Construction Co. (“Suffolk”); and (iv) a direct contract with Suffolk’s subcontractor, Plaintiff Baker Concrete Construction, Inc. (“Baker”) for construction services after MSI terminated Suffolk for convenience.  After execution of these agreements, R&Q executed contracts with Defendant Fraga Engineers, LLC (“Fraga”) for mechanical, electrical, and plumbing design services, and with Defendant DDA Engineers, P.A. (“DDA”) for structural design and engineering services.

Suffolk and Baker (collectively, “Plaintiffs”) filed suit for negligence against R&Q, Grimshaw, Fraga, and DDA (collectively, “Defendants”), claiming that by issuing deficient design documents, Defendants breached their duties owed to Plaintiffs causing Plaintiffs to incur economic losses.  All Defendants but R&Q moved to dismiss the claims, arguing that they had no supervisory role or control over Plaintiffs, as demonstrated by the fact that their contracts with MSI did not designate them as “supervisory architects,” and thus, owed no duty to Plaintiffs.

Transocean Offshore Gulf of Guinea VII Ltd. v. Erin Energy Corp., 2018 U.S. Dist. LEXIS 39494 (S.D. Tex. Mar. 12, 2018)

On March 12, 2018, in Transocean Offshore Gulf of Guinea VII Ltd. v. Erin Energy Corp., the U.S. District Court for the Southern District of Texas became the second U.S. court to recently determine that the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), as codified in the Federal Arbitration Act (“FAA”), applies to consent awards.  Although seemingly inconsequential at first glance, the question of whether consent awards—i.e., settlement agreements recorded by arbitral tribunals as awards—are subject to the New York Convention, has remained the subject of much debate within the field of international arbitration for many years.

In Transocean, the petitioners, Transocean Offshore Gulf of Guinea VII Limited and Indigo Drilling Limited, entered into an agreement to provide drilling equipment, personnel, and services in the waters off the coast of Nigeria to the respondent, Erin Energy Corporation.  Prior to the completion of the contract, a dispute arose and, pursuant to an arbitration clause, the petitioners initiated an arbitration under the rules of the London Court of International Arbitration (“LCIA”).  Before the tribunal made a decision on the merits, the parties reached a settlement and, at the parties’ request, the tribunal issued a consent award setting forth the terms of the parties’ settlement.

Hope v. Dep’t of Veterans Affairs, 2018 U.S. Dist. LEXIS 28479 (E.D. Ark. Feb. 22, 2018)

This matter involved a motion for temporary restraining order and preliminary injunction (the “Motion”) filed by Richard Alan Hope (“Hope”) and his HVAC company, Powers of Arkansas (“Powers”), asking the District Court to prohibit the Department of Veterans Affairs (“VA”) from continuing debarment proceedings against them.  In 2012, Federal agents began investigating Hope for fraudulently presenting DAV Construction Company, Inc. as a legitimate service-disabled, veteran-owned small business in order to obtain government construction contracts.  Hope was indicted in 2016 for conspiracy to defraud, among other things.  The VA thereafter suspended Hope and Powers from government contracting based on the indictment.  The indictment was ultimately dismissed after the Court declared a mistrial.  In January of 2018, the VA lifted the suspensions, but issued notices of proposed debarment to Hope and Powers.  While debarment proceedings are pending, a contractor may not be awarded government contracts.
The Court first analyzed jurisdiction.  Absent waiver, sovereign immunity shields the VA from suit.

However, the Administrative Procedure Act (“APA”) waives sovereign immunity to allow judicial review of final agency actions.  The Court held that it lacked jurisdiction here because there was no final agency decision as to the proposed debarment.  Indeed, the VA has established procedures for debarment decisions and the proposal for debarment is only the first step.  The Court found that because the VA’s decision-making process had only just begun, and there had been no final agency action, the APA did not authorize the Court to review the merits of the proposed debarment at this time.

St. George Fire Prot. Dist. No. 2 v. J. Reed Constructors, Inc. 2018, La. App. LEXIS 262 (February 20, 2018)

J. Reed Constructors, Inc. (“J. Reed”) and St. George Fire Protection District No. 2 (“St. George”) entered into two construction contracts under which disputes were subject to binding arbitration. A dispute arose in which J. Reed contested St. George’s assessment of liquidated damages and claims for breach of warranty. The matter was submitted to arbitration and the arbitrator awarded St. George $58,865.00.
St. George petitioned the trial court to confirm the arbitration award, pointing out that the three month deadline for the parties to request that the award be vacated, modified, or corrected had lapsed.  J. Reed answered the petition by objecting to the confirmation of $41,660.00 for architect and attorney fees.  J. Reed acknowledged that it did not file a motion to modify within three months of the award, as required by the Louisiana Binding Arbitration Law (the “Act”), but argued that it was not prohibited from raising its objection as an affirmative defense in its answer to the petition.

The trial court rejected J. Reed’s argument and confirmed the award.  The Court of Appeals affirmed, holding that J. Reed’s right to challenge the award had been waived and could not be revived by characterizing the challenge as an affirmative defense to the petition to confirm.

Dormitory Auth. of the State of NY v. Samson Constr. Co., 2018 N.Y. Lexis 218 (February 15, 2018)

The Dormitory Authority of the State of New York (“DASNY”) undertook, as project manager, to construct a facility for the Office of the Chief Medical Examiner of the City of New York (the “City”) as a forensic biology laboratory (the “Project”).  DASNY retained Perkins Eastman Architects, P.C. (“Perkins”) as architect for the Project, and Samson Construction Co. (“Samson”) as the foundation contractor.

Complications during the construction of the foundation resulted in 18 months of delays due to the adjacent building settling eight inches, damages to the adjacent sidewalks, utilities and emergency repairs.  DASNY and the City filed suit against Samson, and later joined Perkins, asserting claims against Perkins for breach of contract and negligence.

Perkins moved for summary judgment to dismiss the City’s claims, and to dismiss DASNY’s negligence claim as duplicative of its breach of contract claim.  The trial court dismissed the City’s breach of contract claim; holding that the City was not an intended third-party beneficiary of the contract between DASNY and Perkins (the “Contract”), and allowed both DASNY’s breach of contract and negligence claims to proceed, holding that the claims were not duplicative of each another.

Smith Jamison Constr. v. Apac-Atlantic, Inc., 2018 N.C. App. LEXIS 132 (N.C. Ct. App. Feb. 6, 2018)

General contractor APAC-Atlantic (“APAC”) hired Smith Jamison Construction (“Jamison”) as a subcontractor to perform concrete work on a highway project.  The APAC-Jamison subcontract included an agreement that the parties would arbitrate all claims arising out of or relating to their subcontract.  Jamison alleged that APAC later sought to have Jamison further subcontract the concrete work to Yates Construction Company (“Yates”).  According to Jamison, APAC terminated the subcontract when Jamison refused to subcontract with Yates.

Jamison sued APAC and Yates in state court, alleging that APAC had breached its subcontract with Jamison and that Yates had committed fraudulent misrepresentation, tortious interference, civil conspiracy, and violations of the North Carolina unfair and deceptive trade practices statute.  Both APAC and Yates sought to compel arbitration of the claims Jamison asserted against them.  The court ordered arbitration of Jamison’s claims against APAC based on the arbitration agreement in their subcontract.  The court denied Yates’s attempt to compel arbitration.  Like APAC, Yates also based its argument on the arbitration agreement in the subcontract between Jamison and APAC – a contract to which Yates was not a party.  Yates appealed.

Adams v. Barr, 2018 VT 12, 2018 Vt. LEXIS 10 (VT 2018)

On February 24, 2016, Barr Law Group (“Barr”) filed a demand for arbitration with the American Arbitration Association to recover $40,000 in unpaid legal fees from its client, Adams Construction VT, LLC (“Adams”).  Adams responded by filing an answer and counterclaim, seeking to recover $97,000 in damages from Barr.  Thereafter, Adams and Barr each actively participated in the arbitration, including arbitrator selection, preliminary conferences, extensive discovery and motion practice over a period of more than five months.  At the request of Adams, the matter was set for a three day hearing.

In October of 2016, just one week before the three day hearing was set to begin, Adams filed an objection and motion to dismiss the arbitration, arguing that the arbitration clause in its fee agreement with Barr was unenforceable.  Specifically, Adams argued that Barr, as Adams’ counsel, owed a fiduciary duty and ethical obligations that required it to disclose to Adams the rights it would forego by signing the agreement.  According to Adams, Barr had failed to explain the legal implication of the arbitration clause and failed to advise Adams to obtain independent counsel before signing the agreement.  However, Adams’ objection and motion to dismiss was the first time it had raised any objection to the arbitration proceedings.

Harakas Constr., Inc. v. Metro Gov’t of Nashville, 2018 Tenn. App. LEXIS 45 (Tenn. App. January 29, 2018)

 BK Partners LLC (“BK”) sought to build a condominium complex in Davidson County.  This required an upgrade to the existing public sewer system.  Therefore BK and the Metropolitan Government of Nashville and Davidson County (“Metro”) entered into an agreement whereby Metro agreed to contribute $200,000 to the cost of the sewer upgrade with BK responsible for the actual construction.  BK hired Harakas Construction, Inc. (“Harakas”) to upgrade the system (the “Project”).  Metro was not a party to that contract (the “Contract”).

Harakas encountered unforeseen soil conditions, which resulted in two change orders that increased the Contract amount.  Under the Contract, Metro was not required to authorize change orders; nevertheless, Metro was involved in the discussions.  Harakas performed the extra work and achieved substantial completion.  However, after a defect was discovered in the upgraded system, Metro refused to fund the Project.  When BK failed to pay Harakas, Harakas sued both Metro and BK.  Against Metro, Harakas claimed promissory estoppel and unjust enrichment.  The trial court granted Metro summary judgment based on sovereign immunity.