Team Contrs., L.L.C. v. Waypoint NOLA, L.L.C., No. 16-1131, 2017 U.S. Dist. LEXIS 162172 (E.D. La. Oct. 2, 2017).

Waypoint NOLA (“Waypoint”) was the owner of a hotel construction project in New Orleans (the “Project”).  Waypoint contracted with Team Contractors (“Team”) to serve as the Project general contractor and HC Architecture (“HCA”) to serve as the Project architect.  HCA, in turn, subcontracted with KLG to prepare the mechanical, electrical, and plumbing (“MEP”) plans.

HCA delivered a complete set of specifications, including KLG’s MEP plans, to Team, and Team began work.  It was later discovered that the MEP plans did not comply with code requirements.  Team was forced to remove and reconstruct the MEP work before proceeding with its work as scheduled.
Team filed suit for breach of contract against Waypoint and for negligence against Waypoint, HCA, and KLG.  Team alleged it experienced delay and incurred damages when it was forced to remove and reconstruct the MEP work.  Its damages included extended home office overhead related to the delay.  Team’s expert used the Eichleay formula to calculate these damages.

Zirkelbach Constr., Inc. v. DOWL, LLC, 2017 Mont. Lexis 591 (Mont., Sept. 26, 2017)

In interpreting a state statute which makes contractual limitations on a party’s liability unenforceable in certain instances, the Supreme Court of Montana recently upheld the validity of a contract provision in a professional services agreement between a general contractor and a designer in which the parties waived consequential damages against each other and limited the liability of the designer to $50,000.00.
Zirkelbach Constr., Inc. (“Zirkelbach”) and DOWL, LLC (“DOWL”) entered into a professional services agreement (the “Agreement”), whereby DOWL agreed to provide design work to Zirkelbach, a general contractor, for the construction of a FedEx Ground facility in Billings, Montana.  The original contract price was $122,967, but was adjusted to approximately $665,000 after the parties made several addenda to the Agreement to account for additional services.

Frontier Dev. LLC v. Craig Test Boring Co., 2017 U.S. Dist. Lexis 149950 (D.N.J. Sept. 15, 2017)

On September 15, 2017, the Federal District Court for the District of New Jersey dismissed plaintiff’s, Frontier Development LLC’s, complaint for breach of contract against defendants, Craig Test Boring Co., Inc. and Craig Testing Laboratories, Inc., on the grounds that plaintiff failed to timely file an affidavit of merit as required by New Jersey statute.  The case is a reminder that plaintiffs making claims that sound in professional negligence must be aware of state statues requiring the submission of an affidavit of merit.
Plaintiff was the developer of a commercial building in Egg Harbor Township, New Jersey.  To prepare the site for construction, plaintiff was required to determine the depth of the topsoil it would have to remove and whether the soil beneath the topsoil was stable enough to support the foundations.  To do so, plaintiff engaged the services of defendants to perform geotechnical testing and prepare a soil boring report.  After receiving the report from the defendants and implementing the report’s recommendations, plaintiff claimed that the report’s conclusions were faulty and, as a result, plaintiff removed an excessive amount of topsoil and loose ground underneath the topsoil causing unnecessary delays and construction costs.

Rembrandt Enters., Inc. v. Dahmes Stainless, Inc., No. C15-4248-LTS, 2017 U.S. Dist. LEXIS 144636 (N.D. Iowa Sept. 7, 2017)

On September 7, 2017, the Federal District Court for the Northern District of Iowa denied a motion for summary judgment by Rembrandt Enterprises, Inc. (“Rembrandt”).  In the motion, Rembrandt asked the court to grant declaratory relief and excuse the company from its breach of a contract with Dahmes Stainless, Inc. (“Dahmes”) under the doctrine of frustration of purpose.

Beginning in approximately 2014, Rembrandt, a large-scale producer of eggs and egg products, sought to expand its business.  As part of these expansion efforts, Rembrandt planned to construct an entirely new egg processing plant in Thompson, Iowa.  After reaching agreements with multiple contractors to build the new facility, on November 20, 2014, Rembrandt entered into an agreement with Dahmes for the manufacture and installation of an $8.5 million egg dryer at the new processing facility.  During the course of the new facility’s construction, however, the Midwestern United States was impacted by the Avian Flu virus which caused Rembrandt to eliminate over a million of its birds in an effort to limit the spread of the virus, cutting Rembrandt’s production capacity by approximately 50 percent.  As a result of the loss in production capacity, Rembrandt decided to scuttle the construction of the new processing facility and subsequently breached its agreement with Dahmes.

Tomlinson v. Douglas Knight Constr., Inc., 2017 Utah Lexis 132 (August 29, 2017)

This case arises out of the construction of a residential property.  Lot 84 Deer Crossing (“Lot 84”) purchased the property and contracted with Douglas Knight Construction, Inc. (“DKC”) to build a house on it.  The parties’ contract included a one-year construction warranty.  Lot 84 then assigned to Outpost Development, Inc. (“Outpost”) all of its rights in the property and the construction agreement.  As the home neared completion, Outpost noticed defects in its construction and, pursuant to the warranty, directed DKC to fix the deficiencies.  Despite DKC’s efforts, the defects remained.  Outpost then sold the home to Joseph Tomlinson, but did not assign to Tomlinson its interests in the DKC construction agreement.  Tomlinson subsequently noticed defects in the home and filed suit against Outpost and DKC.
Shortly thereafter, Outpost declared bankruptcy and was dismissed from the case.  During the bankruptcy proceedings, Tomlinson was assigned an interest in any claims that Outpost had asserted or may assert against DKC.  Tomlinson maintained that this assignment encompassed claims for breach of the DKC construction agreement and amended his complaint to include claims for breach of express and implied warranties.  Tomlinson sought to assert these claims as an assignee of rights of parties in privity with DKC: first, through the assignment made when Outpost purchased the property from Lot 84, and second, through the assignment in Outpost’s bankruptcy proceedings.  The district court rejected these theories and dismissed Tomlinson’s claims, holding that they were barred because Tomlinson had never acquired a direct interest in the DKC construction agreement.

Abhe & Svboda, Inc. v. State of Michigan Department of Transportation, 2017 Mich. App. Lexis 1387 (August 29, 2017)

Contractor Abhe & Svboda, Inc. (“A&B”) entered into a contract with the Michigan Department of Transportation (“MDOT”) to clean and paint a portion of the Mackinac Bridge, with a contract completion date of October 30, 2009.  A&B missed the completion date by 644 days.  MDOT, therefore, imposed liquidated damages in the amount of $3,000 per day for each day by which completion was delayed.
In the trial court, A&B argued that MDOT’s assessment of liquidated damages was improper because a portion of the delay was caused by MDOT’s failure to approve a prerequisite to the work (scaffolding) and because site conditions were substantially worse than reasonably anticipated.

WTE-S&S AG Enters., LLC v. GHD, Inc., 2017 Bankr. LEXIS 2343 (Bankr. N. D. Ill. August 18, 2017) 

This breach of contract dispute arises out of a contract to design and build a cow-manure digester on a farm in Wisconsin.  The digester vessel designed and constructed by Defendant, DVO, Inc. (formerly known as GHD, Inc.), consisted of a 300-foot long tank with two side-by-side chambers which were each 35 feet wide.  A thick concrete cover sat atop the vessel to prevent “free oxygen” from entering the digester.  A center wall ran the length of the vessel, separating the two chambers and also serving as the interior load-bearing wall.

The Debtor/owner commenced this action against DVO, contending, among other things, that the interior center wall footing of the vessel was defectively designed in that it was undersized and not compliant with the applicable code for waste-storage facilities.  Debtor’s expert testified that the undersized and overstressed wall footings could lead to settlement of the vessel and cracks in the foundation, which would compromise its structural integrity.  Debtor’s expert further testified that to properly support the vessel weight, the currently constructed three-foot wall footing needed to be three-and-a-half to four foot wide.

The court agreed that DVO’s design was defective and constituted a breach of the contract because it failed to comply with the applicable code.  However, applying the “economic waste” doctrine, the court denied Debtor’s request for damages of $988,475 to replace the entire vessel or, in the alternative, $655,000 to shut down and clean out the vessel to check for cracks or settlement issues.

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.

RDA Constr. Corp. v. United States, No. 11-555 C, 2017 U.S. Claims LEXIS 875 (Fed. Cl. July 27, 2017)

This case arises out of a public construction project at the Newport Naval Station.  The Naval Facilities Engineering Command (“NAVFAC”) contracted with RDA Construction (“RDA”) for the demolition, removal and reconstruction of a fifty-year-old deteriorating wharf and bulkhead.  The wharf was supported by 248 steel H-pile beams, encased in concrete and driven into the sea floor.  In 2005, NAVFAC commissioned the Appledore Report which found that these structures exhibited advanced deterioration, much of which could only be observed during underwater inspection and could not support any vehicular loads.  A second report, commissioned in 2008, recommended that the structure not be used during its reconstruction.

In May 2009, NAVFAC issued its project solicitation but did not disclose these reports or their findings.  Instead, NAVFAC invited bidders to the site and encouraged them to investigate it carefully.  Hazardous site conditions were marked with sawhorses, barriers and fencing.  After visiting the site, RDA submitted its bid and was identified as the apparent low bidder.  Two days later, NAVFAC notified RDA that its bid was “substantially lower” than NAVFAC’s estimate and requested that it review and confirm its bid and the scope of work.  RDA assured NAVFAC that it had made no mistakes and would honor its bid.  RDA then provided its technical and management plans to NAVFAC, noting that it planned to perform demolition work from the wharf using land-based equipment.  After receipt of these plans, NAVFAC awarded the contract to RDA; RDA signed the contract on October 13, 2009 and received its Notice to Proceed two days later.  In November, at a pre-construction meeting, RDA again explained its plan to use the wharf during construction as a staging area for its excavators and demolition equipment.  NAVFAC personnel were “shocked” by this plan because the wharf was “condemned”  and subsequently provided RDA with the Appledore report.

Fogelson v. Bozzone, 2017 N.M. App. LEXIS 58 (July 26, 2017)

In May of 2008, Wallen Development, LLC (“Wallen”) entered into a written agreement to construct and sell a new home to David and Corinne Fogelson (“Fogelson”).  But, after Fogelson paid Wallen in excess of $165,111 under the agreement, Wallen went out of business as a result of financial difficulties.
Fogelson filed an arbitration action against Wallen and ultimately obtained a default judgment after Wallen failed to appear.  Thereafter, Fogelson filed a complaint in court against various individuals affiliated with Wallen.  As relevant here, Fogelson asserted a claim under New Mexico’s Unfair Practices Act, NMSA 1978 §§ 57-12-1 to -26 against one of Wallen’s owners, Mark Bozzone (“Bozzone”).  Bozzone filed a motion to dismiss on the basis that “construction services”, such as those provided by Wallen, do not fall within the scope of the Unfair Practices Act.  The trial court granted Bozzone’s motion.

The major issue on appeal was whether the doctrine of res judicata applied to an arbitration proceeding.  After a very lengthy discussion covering over half of the opinion, the Court of Appeals ruled the res judicata did apply to the arbitration result against Wallen.