A.E. Rosen Elec. Co. v. Plank, LLC, No. 07862-7, 2019 BL 113951 (Sup. Ct. Mar. 01, 2019)

On March 1, 2019, the Supreme Court of New York, Albany County, granted a subcontractor’s motion for summary judgment on a payment dispute involving a “pay-when-paid” contract provision.

Defendant Plank, LLC (“Contractor”) entered into a construction contract with Dutch Village, LLC (“Owner”) to act as the general contractor for the construction of four apartment buildings (“Project”).  Thereafter, Contractor entered into a subcontract with Plaintiff A.E. Rosen Electrical, Inc. (“Subcontractor”) for electrical work on the Project.  After nine months of work on the Project, a payment dispute arose between the Owner and Contractor.  At that time, Contractor directed the Subcontractor to cease work on the Project.Continue Reading New York Supreme Court Granted Summary Judgment for Subcontractor Where Contractor Attempted to Utilize Contractual “Pay-When-Paid” Provision to Unreasonably Withhold Payment from Subcontractor

Hensel Phelps Constr. Co. v. Thompson Masonry Contractor, Inc., et. al., No. 151780, 2016 Va. LEXIS 166 (Va. Nov. 3, 2016)

The dispute arose from the construction of a student health and fitness center at Virginia Tech. The prime contractor, Hensel Phelps, and its subcontractors substantially completed their work in 1998, and Virginia Tech made final payment in 1999. In April 2012, Virginia Tech discovered defects in the work, elected to repair them, and then sought to recover the costs from Hensel Phelps. Despite the significant passage of time between completion of the work and Virginia Tech’s assertion of its claims, Hensel Phelps could not invoke the statute of limitations because under Virginia Code § 8.01-231, statutes of limitation do not apply to claims asserted by Commonwealth agencies such as Virginia Tech.  Ultimately, Hensel Phelps paid $3,000,000 to Virginia Tech to settle the defective work claims.

Hensel Phelps, in turn, sought to recover from the subcontractors that performed the defective work. When the subcontractors refused to pay, Hensel Phelps commenced an action alleging, among other things, breach of contract against the subcontractors and their sureties. All of the defendants argued that Hensel Phelps’ claims were barred by the applicable statute of limitations. The lower courts agreed. On appeal, the Virginia Supreme Court affirmed.Continue Reading Virginia Supreme Court Holds That Subcontractors Did Not Waive Statute of Limitations, With The Result That The General Contractor Was Liable To Owner For Defective Work But With No Recourse Against Subcontractors Who Performed The Work

Fed. Ins. Co. v. Empresas Sabaer, Inc.
2013 U.S. Dist. LEXIS 112930 (D.P.R. Aug. 9, 2013)

This action arose out of a surety’s claim for expenses incurred for correcting a subcontractor’s defective work. DTC Engineering and Constructors, LLC (“DTC”) and the U.S. Army Corps of Engineers (the “Corps”) entered into a contract for the design and construction of the Armed Forces Reserve Center at Fort Buchanan, located in Guaynabo, Puerto Rico. Federal Insurance Company (“Federal”) and DTC subscribed to a payment and performance bond as surety and principal, respectively, naming the government as obligee. DTC subsequently entered into a subcontract (the “Subcontract”) with Empresas Sabaer, Inc. (“Sabaer”) and BBS Developers, S.E. (“BBS”) (collectively the “Subcontractors”). The Subcontract provided that Sabaer was required to complete the work under Subcontract, while BBS was responsible for providing technical and economic support. United Surety and Indemnity Co. (“USIC”) and the Subcontractors, as surety and principal, respectively, subscribed to a payment and performance bond and named DTC as obligee. DTC assigned to Federal all of its rights emerging from the Subcontract and USIC’s bond.Continue Reading U.S. District Court in Puerto Rico, Applying Connecticut Law, Considers Application of Notice Requirements to Termination of Joint Subcontractors

Shelter Prods. v. Steelwood Constr., Inc.
307 P.3d 449 (Or. Ct. App. 2013)

This action arose from a payment dispute between a general contractor, Catamount Constructors, Inc. (“Catamount”), and one of its subcontractors, Steelwood Construction, Inc. (“Steelwood”). Catamount contracted with Steelwood (the “Subcontract”) to provide materials and perform work for the construction of a Home Depot distribution center in Salem, Oregon (the “Project”). Included in the Subcontract was a provision that allowed Catamount to terminate the Subcontract for convenience and “without cause.” In the event the Subcontract was terminated for convenience, Steelwood would be entitled to the cost of all work performed on the Project as of the date of termination.Continue Reading Oregon Court of Appeals Holds General Contractor Cannot Offset Costs of Repairing Subcontractor’s Defective Work After Subcontractor Is Terminated “For Convenience” Without an Opportunity to Cure

Lydon-Millwright, Inc. v. Ernest Bock & Sons, Inc.
2013 U.S. Dist. LEXIS 65019 (E.D. Pa. May 7, 2013)

This case arises out of a construction project at the Philadelphia International Airport to install a baggage handling system. Bock was the general contractor. Bock contracted Lydon to install the mechanical portion of the baggage handling system. The parties’ purchase order required Lydon to submit a release of liens and claims with each monthly payment application. Over the course of the project, Lydon submitted 54 payment applications, all of which contained the required release of liens and claims.Continue Reading U.S. District Court in Pennsylvania Denies GC’s Motion for Summary Judgment, Holding Issue of Fact Existed as to Whether GC’s Conduct During Settlement Discussions Waived Its Right to Rely on Claim Releases Submitted with Monthly Invoices

Maisel v. Erickson Construction, Inc.
2012 U.S. Dist. LEXIS 108726 (D. Colo. August 3, 2012)

Plaintiff contracted with Charles Cunniffe & Assoc. Architects (“CCA”) for architectural services. Plaintiff separately contracted with Erickson Construction, Inc. (“Erickson”) for construction and general contractor services. No contract existed between CCA and Erickson.

Plaintiff sued both CCA and Erickson for various defects and design deficiencies, and asserted claims for breach of contract, breached of implied warranties, negligence and vicarious liability. Erickson cross-claimed against CCA for negligence, breach of contract (on a third-party beneficiary theory), indemnification and contribution.Continue Reading U.S. District Court in Colorado Dismisses Contractor’s Negligence, Third-Party Beneficiary and Indemnity Claims, But Not Its Contribution Claim, Against Architect

Genesee/Wyoming YMCA v. Bovis Lend Lease LMB, Inc
2012 N.Y. App. Div. LEXIS 6358(N.Y. App. Div. Sept. 28, 2012)

The Genesee/Wyoming YMCA (“YMCA”) contracted with Bovis Lend Lease LMB, Inc. (“Bovis”) and Thomas Associates Architects & Engineers (“Thomas”) for the construction of a new swimming complex. Bovis was the construction manager for the project, and Thomas was the architect. Shortly after the project was completed, defects were discovered in the roof and insulation system. An inspection indicated that the roof and insulation system were defectively designed and that improper materials had been selected.Continue Reading New York Appellate Division Rejects Construction Manager’s Claim Seeking Common Law Indemnity from Architect Where Construction Manager’s Liability Was Not Purely Vicarious

Josef Gartner USA LP v. Consigli Construction Co., Inc.
2011 U.S. Dist. LEXIS 62492 (D. Mass. June 10, 2011)

Consigli Construction and J. F. White Contracting, as joint venturers and general contractors, contracted with Josef Gartner USA for the design, fabrication, and installation of a curtain wall at the Cambridge Public Library. This subcontract provided for periodic payments to Gartner, contingent upon Gartner’s submission of evidence to Consigli/JFW that all known indebtedness connected with Gartner’s work had been satisfied. The subcontract also provided that Gartner would be entitled to additional compensation due to delays and out-of-sequence work.Continue Reading U.S. District Court in Massachusetts Declines Summary Judgment Based on Releases Submitted with Pay Requests – Holds Issue of Fact Exists as to Interpretation

SNC-Lavalin America, Inc. v. Alliant Techsystems, Inc.
2011 U.S. Dist. LEXIS 118312 (W.D. Va. Oct. 13, 2011)

SNC-Lavalin America, Inc. and Alliant Techsystems, Inc. (“ATK”) entered into a contract under which SNC would provide engineering, procurement, and construction services for the construction of a nitric acid and sulfuric acid concentration plant at the Radford, Virginia arsenal operated by ATK. SNC claimed that ATK’s delay in choosing an appropriate acid-resistant concrete for the ground floor and ATK’s denial of SNC’s request for an extension of time for severe winter weather each damaged SNC.

ATK moved for partial summary judgment, seeking to bar, among others, SNC’s claims (1) resulting from ATK’s delay in choosing a material and (2) resulting from severe winter weather.Continue Reading U.S. District Court for Western District of Virginia Allows Constructive Acceleration Claim to Proceed

First Gen. Constr. Corp., Inc. v. Kasco Constr. Co., Inc.
2011 U.S. Dist. LEXIS 55349 (E.D. Pa. May 24, 2011)

Kasco was the general contractor for a shopping center expansion. Kasco subcontracted the concrete work to First General. The subcontract included a term requiring First General to submit, upon request, releases of liens, with its payment applications. The Contract also required written approval of extra work, timely written notice of claims within ten days of their occurrence, and the submission of written backup information.Continue Reading U.S. District Court In Pennsylvania Holds Extra Work Claims Barred By Releases Submitted With Periodic Payment Requests And By Noncompliance With Requirements For Submission Of Documentation For Extra Work Claims