Atlantic City Associates, LLC v. Carter & Burgess Consultants, Inc., et al
2011 U.S. App. LEXIS 9191 (3rd Cir. May 4, 2011)

* Please note that the Third Circuit issued this opinion as a non precedential opinion pursuant to Third Circuit Internal Operating Procedure Rule 5.7.

Atlantic City Associates (“ACA”) hired Carter & Burgess Consultants, Inc. (“C&B”) to oversee construction of a development in Atlantic City, New Jersey. Following numerous delays, ACA sued C&B and obtained a total recovery, including attorneys’ fees, costs and interest, of nearly $13 million. On appeal, C&B argued that the District Court failed to apply several clauses of the parties’ agreement waiving consequential damages, and failed to enforce an additional clause limiting C&B’s total liability to its compensation.

Continue Reading Third Circuit, Applying NJ Law, Revisits Distinction Between Direct and Consequential Damages and Holds Indemnification Obligation Only Applies When Seeking Damages for Third-Party Losses

Trevdan Building Supply v. Toll Brothers, Inc.
2010 PA Super. 100, 996 A.2d 520 (May 28, 2010)

On May 28, 2010 the Pennsylvania Superior Court filed a ruling that is significant to project owners as well as subcontractors and suppliers. In Trevdan Building Supply v. Toll Brothers, Inc., the Court held that an unpaid supplier had an “equitable lien” on contract funds that the owner had interpleaded into Court; and that the contractor, its bankruptcy estate and its secured bank creditor did not have a cognizable interest in the contract funds because, under the terms of the construction contract, the contractor did not earn the funds until it had both performed the work and paid its suppliers. The Court considered the unpaid supplier’s rights to be so clear that the Court denied the owner’s statutory claim to be reimbursed its attorneys’ fees for filing the interpleader action, stating that the owner was guilty of “delay” and acted “unreasonably” by “ignoring” the supplier’s equitable claim and refusing “to exercise its undisputed contractual right to pay” the supplier (this despite two judges in the same case – the trial judge and a dissenting Superior Court judge – having decided the case differently).

Continue Reading Pennsylvania Superior Court Holds Unpaid Supplier’s Right to Contract Funds is Superior to Rights of Failed Contractor’s Secured Bank Creditor and Bankruptcy Estate – Owner’s Recovery of Attorneys’ Fees in Interpleader Disallowed

Circle Y Construction, Inc. v. WRH Realty Services, Inc.
2010 U.S. Dist. LEXIS 67812 (N.D. Ga. July 8, 2010)

Circle Y Construction, Inc. contracted with WRH Hidden Colony to perform certain renovation work at nine unoccupied apartment units. The contract designated Brown, vice president of construction services for WRH Realty Services, as the person responsible for administering the contract on behalf of WRH Hidden Colony and stated that Brown was the only person authorized to approve changes to the scope of work. The contract further provided that “all extra or changed work shall be authorized by a written change order.”

Continue Reading U.S. District Court in Georgia Holds Written Change Order Requirement Waived By Course of Conduct

Kuhn Construction Company v. Ocean and Coastal Consultants, Inc.
2010 U.S. Dist. LEXIS 71057 (D. Del. July 15, 2010)

Diamond State Port Corporation (“DSPC”) engaged Ocean and Costal Consultants, Inc. (“OCC”) to prepare engineered drawings, plans, and specifications for a project at the Port of Wilmington in Delaware. In soliciting bids, DSPC utilized the bid documents designed and prepared by OCC. Kuhn Construction Company (“Kuhn”) relied upon those documents to prepare its bid for work on the project. As the lowest bidder, Kuhn entered into a contract with DSPC.

Continue Reading U.S. District Court in Delaware Allows Contractor’s Tort Claims Against Engineer to Proceed – Also Holds Owner Not an Indispensable Party

Weigand Construction Co., Inc. v. Stephens Fabrication, Inc.
2010 Ind. App. LEXIS 1109 (Ind. Ct. App. June 25, 2010)

Ball State University (BSU) contracted with Weigand Construction Co. (“Weigand) to act as the general contractor for its Music Instruction Building project. Weigand subcontracted the structural steel work to Stephens Fabrication, Inc. (“Stephens”). Stephens was to manufacture the steel, perform certain engineering and prepare shop drawings. Stephens contracted with sub-subcontractors, Argo and Wilson, to perform the engineering and prepare the shop drawings.

Continue Reading Indiana Court Holds Subcontractor Subject to Prime Contract Claim Notice Requirement via Flow-Down Provision – Its Claims Were Presented Too Late

Turnberry Pavillon Partners, L.P. v. M.J. Dean Construction, Inc.
2010 U.S. App. Lexis 9832 (9th Cir. May 13, 2010)

Developer built a luxury condominium tower and hired contractor to serve as both the construction manager and concrete subcontractor. A separate interior drywall and site wall subcontractor was also hired for the Project. A series of lawsuits arose. In the first lawsuit, construction manager was found liable for causing “lost production” and “uncompensated overtime” to site wall subcontractor due to its negligent concrete work as well as negligent construction management. While cross-appeals were pending on the matter Developer paid $2.1 to settle the site wall subcontractor’s claim. In a second case, condominium association sued Developer for construction defects. In turn, Developer filed a third-party complaint against construction manager as well as other subcontractors alleging that their negligence caused defects in the Project. Ultimately, the parties to the second suit reached a settlement whereby Developer and construction manager paid the condominium association $2 million and $600,000 respectively.

Continue Reading U.S. Court of Appeals for 9th Circuit Holds Release in Defect Case Does Not Bar Claims for Indemnity in Delay / Disruption Case

Blesi-Evans Co. v. Western Mechanical Service, Inc.
2010 U.S. Dist. LEXIS 36302 (S.D. April 13, 2010)

Defendant Western Mechanical Services, Inc. entered into a contract with the state of South Dakota to replace boilers on the South Dakota School of Mines and Technology campus Western, in turn, solicited bids for the boilers. Western accepted Plaintiff Blesi-Evans Co.’s proposal to supply one of the boilers. A dispute arose out of the delay in the production and delivery of that boiler.

Continue Reading U.S. District Court in South Dakota Denies Summary Judgment on Contractor’s Set-off Defense Based on Delay in Delivery to Supplier’s Claim for Payment On Grounds That Material Issues of Fact Existed Regarding Time for Delivery and UCC Notice to Supplier

Acme Contracting, Ltd. v. Toltest, Inc.
2010 U.S. App. LEXIS 6144 (6th Cir. Mar. 24, 2010)

The Court of Appeals for the Sixth Circuit affirmed a District Court decision that a “no damage for delay” clause was void and unenforceable pursuant to Section 4113.62 of the Ohio Revised Code. The clause contained provisions requiring that any “delay must be reported in writing and an extension of time shall be the sole and exclusive remedy of Contractor for any such delays or suspensions, but only to the extent that a time extension is obtained from the Owner,” and that “no claims will be accepted for costs incurred due to delays caused by others except to the extent that such delays exceed four (4) months.”

Continue Reading U.S. Court of Appeals for Sixth Circuit Holds Ohio Statute Precludes Application of “No Damage for Delay” Clause

Penava Mechanical Corp. v. Afgo Mechanical Services, Inc.
2010 N.Y. App. Div. LEXIS 1973 (N.Y. App. Div. March 16, 2010)

In a contract dispute, the trial court granted motions for summary judgment filed by the general contractor and owner, dismissing counterclaims asserted by the subcontractor, and denied the subcontractor’s motion for summary judgment as to liability for such counterclaims. On appeal, the Appellate Division reversed the trial court’s order to the extent it granted the general contractor’s and owner’s motions for summary judgment.

Continue Reading New York Appellate Division Holds Oral Directions to Perform Extra Work May Override Contract Provisions Requiring Written Authorization

Excel Construction, Inc. v. HKM Engineering, Inc.
2010 WY 34 (Wyo. Mar. 23, 2010)

The Supreme Court of Wyoming recently reexamined its prior ruling barring a contractor’s assertion of negligence claims against design professionals economic loss rule.

The case pertained to a construction project for the replacement and improvement of water and sewer lines in the Town of Lovell, Wyoming. The Town of Lovell entered into an engineering services agreement with HKM Engineering, Inc. The Town also entered into a construction agreement with Excel Construction, Inc. No contract existed between HKM and Excel.

Continue Reading Supreme Court of Wyoming Declines to Modify Precedent Barring Claims by Contractor Against Design Professional Under the Economic Loss Rule