Pavarini Construction Co. v. Ace American Insurance Co., 2015 U.S. Dist. LEXIS 151247 (S.D. Fla. Oct. 29, 2015)

This action arose out of a construction project to build a 63-story luxury condominium tower located in Miami, Florida (“Project”).  Pavarini Construction Co. (“Pavarini”) was the general contractor for the construction of the Project.   Pavarini hired a subcontractor for the installation of the concrete masonry unit walls and certain reinforcing steel, and a second subcontractor for the supply and installation of reinforcing steel within the cast-in-place concrete columns, beams, and sheer walls. The work performed by both of these subcontractors was deficient.  A significant amount of reinforcing steel was either omitted entirely or improperly installed, including within important concrete structural elements, resulting in destabilization throughout the building.  This, in turn, caused stucco debonding and cracking on the walls of the building, worsening cracking of cast-in-place concrete elements, and cracking in the mechanical penthouse enclosure on the roof, which led to water infiltration.

NFL Mgmt. Council v. NFL Players Ass’n, 2015 U.S. Dist. LEXIS 117662 (S.D.N.Y. Sept. 3, 2015)

“Arbitration has been proven to be an effective way to resolve disputes fairly, privately, promptly and economically.”  So provides the preamble to the Construction Industry Rules of the American Arbitration Association.  A large part of the advantage of arbitration is the finality of the result, stemming from the lack of a meaningful appeal rights on legal issues, contractual interpretation, factual determinations, or the dispute resolution process itself.  Indeed, the Federal Arbitration Act, 9 U.S.C. §10, provides that an arbitration award is to be confirmed as a judgment unless one of four specific and narrow conditions for vacatur is met.

Probably the most notorious instance of an appeal of an arbitration award (and certainly the one most likely to come up in cocktail party conversation) was decided in September 2015 by Judge Richard M. Berman of the United States District Court for the Southern District of New York – the successful appeal by All-Pro Quarterback Tom Brady and the NFL Players Association of Brady’s four game suspension based on accusations of complicity in a scheme to gain an unfair competitive advantage in an NFL playoff game.  NFL Mgmt. Council v. NFLPA, No. 15-Civ.-5916 (RMB) (S.D.N.Y. Sept. 03, 2015)  There, the Southern District applied the Federal Arbitration Act standard to its review of Brady’s suspension, the same standard of review usually applied to an arbitration award arising from a claim under a construction contract with an arbitration clause. [1]  But Brady, unlike the vast majority of parties disappointed with arbitration awards, succeeded in having his suspension vacated.  The NFL Management Council has appealed the Southern District’s decision, and the matter is currently on an expedited appeal track, with argument before the Second Circuit scheduled for March 1, 2016.

City of Whiting, Indiana v. Whitney, Bailey, Cox, & Magnani, LLC, 2015 U.S. Dist. LEXIS 150229 (N.D. Ind. Nov. 5, 2015)

The City of Whiting, Indiana (the “City”) contracted with American Structurepoint, Inc. (“Engineer”) to design a lakefront park that would protect its shoreline from erosion (the “Project”).  Engineer subcontracted with Whitney, Bailey, Cox, & Magnani, LLC (“Subconsultant”) to serve as the marine engineer for the Project (the “Subcontract”).  Pursuant to the Subcontract, Subconsultant designed a revetment to protect the Project shoreline.  The revetment failed, damaging the City’s property and necessitating remediation.

Butch-Kavitz, Inc. v. Mar-Paul Co., Inc., 2015 U.S. Dist. LEXIS 160652 (M.D. Pa. Dec. 1, 2015)

The United States Army Corps of Engineers (the “Owner”) entered into a contract (the “Contract”) with Mar-Paul Company, Inc. (“Mar-Paul”) for $3,381,000.00, under which Mar-Paul would serve as general contractor on a construction project for renovations to a building at the Tobyhanna Army Depot in Tobyhanna, Pennsylvania (the “Project”).  In turn, Mar-Paul entered into a subcontract (the “Subcontract”) with Butch-Kavitz, Inc. (“Butch-Kavitz”) for $452,000.00, under which Butch-Kavitz would perform the electrical and generator work in connection with the Project.

Apex Directional Drilling, LLC v. SHN Consulting Eng’rs & Geologists, Inc., 2015 U.S. Dist. LEXIS 105537 (N.D. Cal. Aug. 11, 2015)

The United States District Court for the Northern District of California held that an engineer that prepares plans and specifications to be relied upon by contractors in preparing their bids for a construction project owes a duty of care to those contractors, and therefore can be held liable to the contractors for breach of professional duty and/or negligent misrepresentation.

SAK & Assocs. v. Ferguson Constr., Inc., 189 Wn. App. 405 (Wash. Ct. App. 2015)

Ferguson Construction, Inc. (“General Contractor”) entered into a fixed sum contract (the “Subcontract”) with SAK & Associates (“Subcontractor”) to provide concrete materials and paving services (the “Work”).  The Subcontract included a termination for convenience clause providing that General Contractor could terminate Subcontractor for convenience upon written notice.  After Subcontractor completed 24 percent of the Work, General Contractor terminated Subcontractor.  General Contractor paid Subcontractor 24 percent of the fixed contract price for the work Subcontractor actually completed.

King County v. Vinci Construction Grands Projects/Parsons RCI/Frontier-Kemper, JV, 2015 Wash. App. LEXIS 2735 (Nov. 9, 2015)

The Court of Appeals of Washington recently decided King County v. Vinci Construction Grands Projects/Parsons RCI/Frontier-Kemper, JV, a dispute between a joint venture contractor (the Contractor) and King County, Washington (the County). The dispute stemmed from problems that arose and significant delays that occurred during a major expansion of the County’s wastewater treatment system, known as the Brightwater project. The case illustrates the potential pitfalls of a contractor’s claim of differing site conditions.

Oakdale Equip. Corp. v. Meadows Landing Assocs., LP, 2015 Pa. Super. Unpub. LEXIS 2067 (Pa. Super. Ct. July 8, 2015)

Meadows Landing Associates, LP (“MLA”) contracted with Richard Lawson Excavating, Inc. (“Lawson”) for work on MLA’s 200-acre subdivision, including earthwork, grading, excavating and pond construction.  Lawson then contracted with Oakdale Equipment Corporation (“Oakdale”) to rent heavy equipment for the work.  More than one year later, MLA terminated Lawson for failure to achieve substantial completion on time.  Oakdale and Lawson both filed mechanics’ lien claims against MLA.

Elliot-Lewis Corp. v. Skanska USA Building, Inc., 2015 U.S. Dist. LEXIS 98405 (E.D. Pa. July 27, 2015)

This dispute arises out of a major renovation and expansion of the Franklin Institute in Philadelphia (the “Project”).  Plaintiff Elliot-Lewis Corporation (“ELCo”) was a subcontractor hired to install the piping and controls for the Project’s heating, ventilation and air conditioning (“HVAC”) system.  The Project’s schedule required that start up and testing of the HVAC system begin by February 23, 2013 and that the system be operational by April 1, 2013.  But, when the HVAC was started for testing, flooding issues arose due to problems with the condenser pumps specified in the HVAC system’s specifications.  Ultimately, the HVAC system was not operational by April 1 and ELCo was required to perform additional work and install temporary cooling equipment so that the Franklin Institute could open during the summer.  ELCo was never paid by the prime contractor for this additional work.

On August 31, 2015, highway contractors Trinity Industries, Inc. and Trinity Highway Products, LLC (collectively, Trinity) appealed to the U.S. Court of Appeals for the Fifth Circuit a $663,360,750 final judgment entered against them under the federal False Claims Act (FCA). At the conclusion of a six-day trial that commenced on October 13, 2014, the jury rendered a unanimous verdict, finding Trinity “knowingly made, used, or caused to be made or used, a false record of statement material to a false or fraudulent claim” in violation of the FCA. The jury unanimously found that the U.S. government suffered damages in the amount of $175,000,000 as the result of Trinity’s FCA violations.