Wax NJ-2, LLC v. JFB Constr. & Dev., 13-cv-4537, 2015 U.S. Dist. LEXIS 74508 (S.D.N.Y. June 9, 2015)

Wax NJ-2, LLC (“Wax”) hired the architectural firm GF55 Partners (“GF55”) to design and then inspect construction of a store that Wax planned to open in New York City.  The building which Wax was preparing to lease for the store had been leased as two separate commercial spaces.  Wax had the option of moving a partition wall between the two spaces and thus increasing or decreasing the amount of square footage leased for its store.  In designing the layout of Wax’s store, GF55 reported to Wax that the footprint called for 1235 square feet.  Wax then entered into a lease agreement with the owner for 1235 square feet of the building at $125 per square foot.  Construction commenced, and GF55’s remaining obligations under its contract with Wax included inspection of the contractor’s work to ensure compliance with the building code.

Vanguard Constr., Inc. v. United States, 2015 U.S. Claims LEXIS 1158 (Fed. Cl. Sep. 8, 2015)

The United States Air Force (the “Government”) entered into a contract with Vanguard Construction, Inc. (“Contractor”) to replace a roof (the “Contract”).  The Contract incorporated by reference portions of the Federal Acquisition Regulation (FAR).

Contractor’s demolition of the existing roof revealed that a significant section of the roof stem wall was missing.  The Contract did not address the contingency of a missing stem wall.  Contractor sent the Government several letters asking for guidance on how to proceed, including a request for information on structural requirements for building a stem wall.  The Government refused to provide the requested information, asserting that the terms of the contract allocated to the Contractor the risk of dealing with latent or unanticipated site conditions and the burden of devising a solution to the problem.

John Spearly Constr., Inc. v. Penns Valley Area Sch. Dist., 2015 Pa. Commw. LEXIS 337 (Pa. Commw. Ct. July 24, 2015)

This action arose out of the construction of a biomass boiler system for the Penns Valley Area School Districts (“District”) to house the District’s boiler plant  (“Project”).  The District contracted with general contractor John Spearly Construction, Inc. (“Contractor”) to construct the Project. The District entered into direct contracts with the Project Architect and other contractors responsible for other components of the work.

Construction began in July 2010 and was to be substantially completed no later than October 18, 2010.  From its inception, however, the Project was plagued with delays.  Project delays were caused by, among other things, delays by the District’s Architect in deciding on and responding to submittals relating to changes, disputes between the District and its HVAC contractor responsible for delivering the boiler, and work performed by a sewer contractor the District brought in toward the end of the Project to repair and replace storm water and sewer pipes. Ultimately, the Project was not substantially completed until August 11, 2011.

Pacific Caisson & Shoring, Inc. v. Bernards Brothers Inc., 236 Cal. App. 4th 1246 (Cal. Ct. App. 2015)

In California, a contractor must be licensed by the Contractors State License Board (Board) in order to lawfully perform construction operations. The Board issues three types of licenses: an “A,” or general engineering license[1]; a “B,” or general building license[2]; and a series of “C” specialty licenses for trade contractors (e.g., concrete, electrical, glass and glazing, structural steel, drywall, tile, etc.). California Business & Professions Code (B&P) §§ 7056–7058. In order to qualify for a license, a contractor must provide a responsible managing officer (RMO) or a responsible managing employee as its qualifier. B&P § 7068.

The consequences of contracting without the proper license can be severe. An unlicensed contractor may not sue to recover for the value of its work. B&P § 7031(a). Even more damaging, an owner can seek disgorgement of all monies paid to a contractor, even if there was nothing wrong with the contractor’s construction of the project. B&P § 7031(b); Alatriste v. Cesar’s Exterior Designs, Inc., 183 Cal. App. 4th 656 (Cal. Ct. App. 2010). As the California Supreme Court has observed, B&P § 7031 “represents a legislative determination that the importance of deterring unlicensed persons from engaging in the contracting business outweighs any harshness between the parties, and that such deterrence can best be realized by denying violators the right to maintain any action for compensation in the courts of this state.” MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., 36 Cal. 4th 412, 423; 115 P.3d 41 (Cal. 2005).

Gongloff Contracting, L.L.C. v. L. Robert Kimball & Assocs., Architects and Eng’rs, Inc., 2015 Pa. Super 149 (Pa. Super. Ct. July 8, 2015)

Pennsylvania law generally bars negligence claims when the injured party has suffered only economic losses.  This principle is commonly referred to as the economic loss doctrine.  An exception to this doctrine is found in Section 552(1) of the Restatement (Second) of Torts, which provides that, “one who, in the course of his business, profession or employment … supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.” In Bilt-Rite Contractors, Inc. v. Architectural Studio, 581 Pa. 545 (2005), the Pennsylvania Supreme Court adopted this exception and found it to be applicable in cases where information is negligently supplied by an architect or design professional under circumstances where it is foreseeable that others will rely upon that information.  In Gongloff, the Superior Court of Pennsylvania, interpreting Bilt-Rite, held that the Bilt-Rite exception can be triggered when an architect or design professional negligently includes faulty information in its design documents.  The Gongloff court rejected the argument that, under Bilt-Rite, an injured party is required to identify an “express” misrepresentation in a particular communication or document in order to support a claim of negligent misrepresentation.

USA Walnut Creek, DST v. Terracon Consultants, Inc. f/k/a HBC Engineering, Inc., 2015 Tex. App. LEXIS 1806 (Tex. App. 2015)

This cases arises out of the construction of a twelve building apartment complex in Austin Texas.  The builders, Creekstone Walnut, LP and Creekstone Builders, Inc., contracted with defendant Terracon for geotechnical engineering and inspection services.  As part of the services, Terracon performed test borings and provided the geotechnical recommendations for, among other things, the foundation design.  Terracon’s inspection services included providing testing and inspection of the construction materials, including compaction testing on the earthwork.

Montano Elec. Contractor v. United States, 2015 U.S. App. LEXIS 5928 (Fed. Cir. Apr. 13, 2015)

The Army Corps of Engineers (“the Corps”) hired a general contractor, who subcontracted certain electrical work to Montano (“Subcontractor”).  When Subcontractor was not paid for its work, Subcontractor sought assistance from the Corps’ contracting officer, who explained that he was unable to assist because Subcontractor did not have a contract with the government and the government was thus not a party to Subcontractor’s dispute; however, Subcontractor should pursue any claims it had against the general contractor in federal district court under the Miller Act.

G.T. Leach Builders, LLC v. Sapphire V.P., 2015 Tex. LEXIS 273 (Tex. Mar. 20, 2015)

This action arose after 2008’s Hurricane Dolly caused extensive damage to a luxury condominium project that Sapphire V.P., L.P. (“Developer”) was in the process of developing on South Padre Island (the “Project”).  In 2009, the Developer sued insurance brokers for negligence and breach of contract, alleging that they let the builder’s risk insurance policy expire eight days before the storm struck and be replaced by a permanent policy even though construction of the Project was not yet complete.  The Developer sought to recover millions of dollars for water damage and other increased building costs it alleged that the builder’s risk policy covered or should have covered but the permanent policy did not.

Fed. Ins. Co. v. Fredericks, Inc., 2015-Ohio-694, 29 N.E.3d 313, 2015 Ohio App. LEXIS 684 (Ohio Ct. App. Feb. 27, 2015)

This case arises from a construction project in Vandalia, Ohio that was damaged during a windstorm before construction was completed.  The project was for the construction of a “cross-dock facility” warehouse (the “Project”) on certain real property owned by Pasco Enterprises (“Pasco”), a company in the business of owning and leasing real estate holdings.  Pasco’s 100% parent, J.P. Holding Co., Inc. (“JP Holding”) also owned Carter Express, Inc. (“Express”) and Carter Logistics, LLC (“Logistics”).  Logistics was in the business of providing freight transportation services to its customers; it also contracted with freight carriers, including Express, to transport its customers’ freight.  Approximately 85% of Logistics’ freight shipments were transported by Express.

NYU Hosps. Ctr. v. HRH Constr. LLC, 2015 U.S. Dist. LEXIS 31967 (S.D.N.Y. Mar. 12, 2015)

NYU Hospitals Center (“NYU”) hired HRH Construction LLC (“HRH”) to renovate NYU’s radiology center. HRH entered into subcontracts with various trades to complete the work. The renovation project was to proceed in several phases, and the contract between NYU and HRH called for HRH to submit monthly payment requisitions for costs and expenses incurred during the preceding month.