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.

Cont’l Res. v. P&P Indus., LLC, 2018 N.D. Lexis 20 (January 22, 2018)

In 2013, Continental Resources Inc. (“Continental”), an oil producer doing business in North Dakota, entered into a master servicing agreement, governed by Oklahoma law, with United Oilfield Services (“United”).  According to the contract, United agreed to provide transportation, water hauling, and related support services to Continental in support of Continental’s ongoing operations in North Dakota.  The contract also contained the following termination provision: “[I]t being understood and agreed that either party hereto may cancel this Contract by giving the other party thirty (30) days written notice of such cancellation.”

Approximately a year after the parties signed the contract, Continental alleged that United (i) violated state and federal limits and regulations regarding the number of hours a truck driver may drive, (ii) violated Continental’s policy limiting the number of hours an employee could work in a day, and (iii) engaged in improper and fraudulent billing.  Following its discovery of United’s alleged misconduct, Continental terminated its contract and filed suit against United and other related entities.

Strickland v. Arch Ins. Co., No. 17-10610, 2018 U.S. App. LEXIS 504 (11th Cir. Jan. 9, 2018)

Strickland provided sand to a paving company (“Douglas”) for a Georgia Department of Transportation (“GDOT”) road improvement project (the “Project”).  Arch Insurance Company (“Arch”) issued payment and performance bonds on Douglas’s behalf.  In 2007, GDOT declared Douglas in default and removed it from the Project.  In accordance with the performance bond, Arch arranged for a third-party contractor to complete Douglas’s work on the Project. Strickland did not supply sand after Douglas’s removal.
In August 2010, GDOT determined that the Project was substantially complete, and in September 2010, performed final inspection and generated a punch list.  Arch’s contractor completed the punch list by September 2011.  In March 2012, GDOT accepted Project maintenance responsibilities because the Project had been satisfactorily completed as of September 2011.  GDOT made semi-final payment to Arch in July 2012.

In September 2012, Strickland sent a demand for payment on Arch’s payment bond.  Arch acknowledged the claim and asked for additional documentation.  Strickland did not respond.  In 2014, Strickland learned that GDOT was preparing to close out the Project and filed a lawsuit against Arch.

McMillin Albany LLC v. Superior Court, No. S229762, 2018 Cal. LEXIS 211 (Jan. 18, 2018)

Several homeowners (“Plaintiffs”) brought suit against developer/general contractor McMillin Albany LLC (“McMillin”) for alleged defective construction of new homes.  Plaintiffs alleged the defects caused property damage and economic loss in the form of repair costs and reduced property values, and asserted common law claims for negligence, strict product liability, breach of contract, and breach of warranty, and a statutory claim for violation of the construction standards outlined in the Right to Repair Act (Civ. Code §§ 895–945.5, the “Act”).  The Act defines standards for the construction of individual dwellings; governs various builder obligations, including provision of warranties; creates a prelitigation dispute resolution process; and describes mandatory procedures for lawsuits under the Act.  McMillin sought a stay of proceedings so that the parties could proceed through the Act’s prelitigation dispute process, which includes notice to the builder of defects and an opportunity to cure.  Plaintiffs refused to stipulate to the stay and instead, dismissed their statutory claim.  McMillin then sought a court-ordered stay which Plaintiffs contested, arguing that their suit now omitted any claim under the Act, and therefore, was not subject to its procedures.

United States ex rel. Metro Mech., Inc. v. Triangle Constr. Co.,  2018 U.S. Dist. LEXIS 1487 (S.D. Miss. Jan. 4, 2018)

Triangle Construction Company, Inc. (“Triangle”) contracted with Mississippi Portfolio Partners III, LP (“Mississippi Partners”) to serve as the prime contractor on four apartment complex construction projects (the “Projects”) in Mississippi.  Triangle subcontracted the HVAC and plumbing work to Metro Mechanical, Inc. (“Metro”).  After Metro completed its work, Metro filed suit in the Federal District Court under the Miller Act, to collect sums due from Triangle and its payment bond surety.  Triangle moved to dismiss, asserting that the Court was without Miller Act jurisdiction because the projects and contracting parties were private.

The Miller Act requires contractors on “public work[s] of the Federal Government” to obtain payment bonds for the protection of subcontractors and suppliers.  See 40 U.S.C. § 3131.  To that end, the Millers Act also creates a civil action in federal court in favor of any “person that has furnished labor or material in carrying out work provided for” under a Miller Act contract and “that has not paid in full within 90 days.” 40 U.S.C. 3133(b)(1).  The District Court applied two alternative tests to determine whether the Projects were “public works of the Federal Government subject to the Miller Act.”

Koudela v. Johnson & Johnson Custom Builders, LLC, 2017 Ohio App. Lexis 5800 (December 29, 2017)

In this case, Nicolas and Monica Koudela (the “Koudelas”) entered into a construction contract with “Johnson & Johnson Builders” (the “Agreement”), whereby Johnson & Johnson Builders agreed to construct a single family home for the Koudelas in Ohio.  However, Johnson & Johnson Builders was a fictitious name for Johnson & Johnson Custom Builders, LLC (“J&J”), and was not an entity registered with the Ohio Secretary of State.

In the Agreement, the parties agreed to submit all disputes to binding arbitration in Cleveland, Ohio.  The arbitration clause further provided that the cost of the arbitration would be borne by the party initiating the claim.

After disputes arose on the project regarding the work performed by J&J, the Koudelas filed suit in the State Court of Ohio against J&J and its principals, alleging claims for fraud in the inducement, breach of contract, negligence, conversion, unjust enrichment/detrimental reliance, and a declaratory judgment that the arbitration clause in the Agreement was unenforceable.  J&J moved for an order dismissing the complaint, or, in the alternative, staying the litigation pending binding arbitration.  The trial court granted J&J’s motion and stayed the litigation pending binding arbitration.

Addison Ins. Co. v. 4000 Island Blvd. Condo. Ass’n, 2017 U.S. App. LEXIS 26870 (11th Cir. Dec. 28, 2017)

The owner of a high-rise condominium building in Florida hired a contractor to replace the building’s concrete balcony railings with new railings featuring aluminum and glass.  The contractor on the project, Poma Construction (“Poma”), entered into a subcontract with Windsor Metal Specialties (“Windsor”), under which Windsor agreed to paint the new aluminum railings.

Two years after the work was completed, the owner sued Poma and Windsor in Florida state court, alleging that the railings were defective and required replacement.  In addition to replacing the railing system, the owner alleged that Windsor’s defective paint finish damaged other surrounding property, including railing post pockets and the concrete balcony slabs.

Windsor submitted the claim to its liability carrier, Addison Insurance Company (“Addison”).  Addison then filed a declaratory judgment action in the United States District Court for the Southern District of Florida, seeking a declaration that it had no duty to defend Windsor in the owner’s underlying lawsuit.  Windsor’s policy provided a defense against claims alleging that an “occurrence” caused “property damage.”  But the policy excluded claims alleging damage to Windsor’s own work product or to the particular part of a property on which Windsor performed its work.  Addison had invoked that exclusion, arguing that the owner merely alleged damage to Windsor’s own work and/or the part of the property on which Windsor performed its work, i.e. the balcony.  The District Court granted summary judgment in favor of Windsor, and Addison appealed.

Superior Steel, Inv. v. Ascent at Roebling’s Bridge, LLC, 2017 Ky. LEXIS 511 (December 14, 2017)

Corporex Development and Construction Management, LLC (“Corporex”), a design builder, contracted with Dugan & Meyers Construction Company (“D&M”), a construction manager and general contractor on the Ascent at Roebling’s Bridge (the “Project”), a 21-floor luxury condominium in Covington, Kentucky.
As a cost saving measure, D&M asked Superior Steel, Inc. (“Superior”) to fabricate the steel and to have Ben Hur Construction Company (“Ben Hur”) complete the erection and installation work.  Superior and D&M entered into a fixed price contract for $1,814,000.  In turn, Superior subcontracted with Ben Hur to erect the steel and metal decking for $444,000.  As structured, the payments would flow from Corporex to D&M to Superior.  Superior would then pay Ben Hur.

Lathan Co. v. State, No. 2016-CA-0913, 2017 La. App. LEXIS 2277 (La. App. 1st Cir. Dec. 6, 2017)

 
On December 6, 2017, the Louisiana Court of Appeals, First Circuit, reversed and remanded the trial court’s decision to grant the appellee’s, Jacobs Project Management Co./CRSS Consortium (“Jacobs”), motion for summary judgment.  In its opinion, the court of appeals held that a project manager owed a general contractor a duty of professional care and thus, could be held liable to a general contractor under Louisiana law, even if the project manager was not in direct privity with the general contractor.

On August 13, 2010, the appellant, The Lathan Company, Inc. (“Lathan”), entered into a public works contract with the State of Louisiana, Department of Education, Recovery School District (“Owner”) to renovate the William Frantz School in New Orleans.  Jacobs, through its contract with the Owner, served as project manager on behalf of the Owner.  Four years later, in August 2014, after filing an original lawsuit against the Owner in 2012 for payment of undisputed amounts due, Lathan filed an amended pleading that alleged inter alia Lathan was entitled to damages from Jacobs under general tort law for negligent professional undertaking and under Louisiana’s Unfair Trade Practices Act.  According to Lathan, Jacobs owed Lathan a duty of conduct in accordance with a standard of care similar to professionals in the industry and that Jacobs breached its duty of care by failing to (i) disclose mold conditions and the existence of an underground fuel tank at the outset of the project; (ii) timely respond to Lathan’s 400+ requests for information; (iii) perform inspections consistent with industry standards; and (iv) review, certify, and/or approve amounts due to Lathan.