Curtiss-Manes-Schulte, Inc. v. Safeco Insurance Company, 2015 U.S. Dist. LEXIS 57836 (W.D. Mo. May 4, 2015) 

In this opinion, the United States District Court for the Western District of Missouri (i) vacated its earlier order denying the surety’s motion for summary judgment (see earlier post) and (ii) held that the contractor’s failure to formally declare the sub-contractor in default precluded the contractor from recovering from the subcontractor’s performance bond surety.  The dispute involved the contractor, Curtiss-Manes-Shulte, Inc. (“CMS”) and Safeco Insurance Company of America (“Safeco”), who provided a performance bond to Balkenbush, CMS’s mechanical subcontractor.

Marenalley Constr., LLC v. Zurich American Ins. Co. and Nason Constr. Inc., 2015 U.S. Dist. LEXIS 30968 (E.D. Pa. March 13, 2015)

This payment dispute case arises out of a Veterans Affairs (“VA”) construction project located in Philadelphia. Nason was the general contractor, Zurich was Nason’s surety, and Marenalley was Nason’s subcontractor. Marenalley’s subcontract required it to pursue any claim related to the project through the administrative disputes resolution process provided by Nason’s prime contract with the VA before bringing suit against the project’s bond.  The prime contract’s administrative dispute resolution process clause incorporated the terms of the Contract Disputes Act (the “CDA”).

KBW Assocs. v. Jaynes Corp., 2015 U.S. Dist. LEXIS 18220 (D. Nev. Feb. 13, 2015)

This action arose out of the construction of additions to existing buildings at Creech Air Force Base in Indian Springs, Nevada (the “Project”).  The United States Army Corps of Engineers (the “COE”) contracted with Defendant Jaynes Corporation, Inc. (“Jaynes”) to perform the work.  Jaynes then subcontracted with Plaintiff, KBW Associates, Inc. (“KBW”), to construct the metal framing and outer shell of the buildings.

Following construction delays, Jaynes found itself involved in two separate actions.  In the first action (the “Prime Contract Litigation”), Jaynes was defending against liquidated damages assessed by the COE under the prime contract.  In the instant action (the “Subcontract Litigation”), Jaynes was defending a Miller Act suit for contract balances brought by KBW.  KBW alleged Jaynes was responsible for the construction delay, through a “pattern of mismanagement”, involving failure to timely approve work, unilateral imposition of work beyond the scope of the subcontract and improper scheduling.  Jaynes asserted several affirmative defenses and filed counterclaims against KBW, on grounds that KBW failed to perform in accordance with the subcontract and failed to meet construction schedules.

Curtiss-Manes-Schulte, Inc. v. Safeco Insurance Company, 2015 U.S. Dist. LEXIS 10032 (W.D. Mo. 2015)

NOTE:  THIS DECISION WAS VACATED ON REHEARING AND THE DECISION ON REHEARING WILL BE THE SUBJECT OF A POST TO BE PRESENTED SHORTLY IN CONSTRUCTLAW.

This dispute between a general contractor and its subcontractor’s performance bond surety arose out of a renovation project at Fort Leonard Wood in Missouri.  On October 19, 2010, the general contractor, Curtiss-Manes-Schulte, Inc. (“CMS”), entered into a subcontract with Balkenbush Mechanical, Inc. to replace the air conditioning system on the project.  A week later, Balkenbush obtained the required performance bond from Safeco Insurance Company of American.

By October 2011, CMS knew that Balkenbush was behind schedule.  In July 2012, CMS responded to a Contract Bond Status Inquiry and informed Safeco that the contract was not complete, that Balkenbush’s work was not progressing satisfactorily, that the project was nine months late, and that liquidated damages would be assessed.  Around the same time, Safeco hired consultants and a law firm to investigate, defend and resolve claims made against four performance bonds Safeco issued to Balkenbush on other projects.  In December 2012, Safeco filed a lawsuit against Balkenbush to recover its losses resulting from the claims on the four other performance bonds.  One month later, in January 2013, Balkenbush filed a bankruptcy petition and Safeco’s counsel entered their appearance in that proceeding.

DCK TTEC, LLC v. Postel Industries, Inc., 2015 U.S. App. LEXIS 2775 (3d Cir. Feb. 25, 2015)

This action arose out of the construction of two maintenance hangars at the Marine Corps Air Station in Yuma, Arizona (the “Project”).  The Navy hired DCK TTEC, LLC (“DCK”) as the general contractor for the construction of the Project.  In November 2010, Postel Industries, Inc. (“Postel”) submitted a bid to DCK to supply and erect fabricated steel for the Project, and in May 2011, Postel and DCK met and signed a letter of intent.

Total Eng’g, Inc. v. United States, 2015 U.S. Claims LEXIS 30 (Fed. Cl. Jan. 26, 2015) 

The United States Army Corps of Engineers (the “Government”) awarded a contract to Total Engineering, Inc. (“Total”) for preliminary site construction work for the United States Army Medical Research Institute of Chemical Defense Replacement Facility.  When failures occurred in a steam line system that Total had installed, the contracting officer issued a cure notice and ultimately terminated Total for default.
Total’s contract required it to construct a steam line system, consisting of steam and condensate lines anchored to parallel concrete piers inside a concrete trench.  During a hydrostatic pressure test, the Government noted cracks in the piers, pipe detachment from several concrete piers, and damage to an anchor support.  The parties disputed the cause of the failures.  Total contended that the Government’s faulty design caused the failures, and the Government alleged that deficiencies in Total’s work were to blame.

An amended version of this post was published in the March 16, 2015 AGC Construction Law in Brief, the weekly newsletter for the Associated General Contractors of America.

Since 1994, Pennsylvania law has provided enhanced remedies for prevailing in a payment dispute arising out of a construction project.  The prevailing party in a recent jury trial discovered uncertainty in the precise contours of those available remedies.  There was no clear precedent governing recovery of fees of a testifying expert, necessary to overcome the complex accounting and delay claims asserted by the defendant in response to the invoice dispute, and the method of calculating pre-judgment and post-judgment interest and penalty interest under the statute.  Because of the large sums at issue, the difference in calculation methods was significant.  Entitlement to these matters was unclear in spite of 20 years of precedent under the Pennsylvania Contractor and Subcontractor Payment Act.

U.W. Marx, Inc. v. Koko Contracting, Inc., No. 518611, 2015 N.Y. App. Div. LEXIS 600 (N.Y. App. Div. Jan. 22, 2015)

The Appellate Division of the Supreme Court of New York affirmed judgment in favor of a subcontractor holding that although the subcontractor failed to comply with a contractual provision requiring it to give timely notice of its intent to stop work due to contractor’s failure to make payment, the contractor’s prior failure to make three consecutive progress payments to subcontractor constituted an uncured, material breach that relieved the subcontractor from performing its remaining obligations under the parties’ contract.

Hill International, Inc. v. Atlantic City Board of Education, 2014 N.J. Super. LEXIS 177 (App. Div. Dec. 30, 2014)

The Superior Court of New Jersey, Appellate Division held that, in order to support of claim of professional malpractice or professional negligence, New Jersey’s Affidavit of Merit Statute, NJSA 2A:53A-26 to -29, requires that the affidavit of merit must be signed by an affiant who is licensed within the same profession as the defendant.

Transportation Eng’g, Inc. v. Cruz, 2014 Fla. App. LEXIS 18273 (Fla. Dist. Ct. App. 5th Dist. Nov. 7, 2014)

The Florida Department of Transportation (“DOT”) hired Transportation Engineering, Inc. (“TEI”) to design, and D.A.B. Constructors, Inc. (“DAB”) to install, median guardrails along the Florida Turnpike.  After the installation project, a woman was killed when a vehicle in which she was a passenger struck an uncushioned guardrail end in a “clear zone,” an area next to a road where drivers can attempt to regain control of errant vehicles.  The woman’s estate filed suit against DOT, TEI, and DAB, alleging, in relevant part, that TEI and DAB negligently designed and constructed the guardrail ends without “crash cushions.”