payment dispute

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ACE Constructors, Inc. v. U.S.
2007 U.S. App. Lexis 22309 (Fed. Cir. September 19, 2007)
The US Court of Appeals for the Federal Circuit upheld a contractor’s claim for additional compensation due to differing site conditions.
ACE Constructors, Inc. (“Contractor”) entered into a contract with the United States Army Corps of Engineers (“Government”) to build a structure designated as the Ammo Hot-Load Facility, at Biggs Army Airfield at Fort Bliss in El Paso, Texas. The project included construction of a loading area for cargo planes, various roadways, buildings, a storage pad, a loading apron, and a taxiway for airplanes. The site contained hills and other terrain that needed to be excavated, leveled, and filled. The bid solicitation materials included architectural drawings and engineering specifications prepared for the government by the engineering firm of Crawford, Murphy & Tilly, Inc., which plans were incorporated into the contract.

U.S. ex. rel. Straightline Corp. v. American Casualty Corp.
2007 U.S. Dist. LEXIS 50688 (N.D. W. Va 2007)
The United States District Court for the Northern District of West Virginia held that a “pay-if-paid” clause was not a valid defense to a Miller Act claim. Straightline, involved a contract dispute…

S.M. Wilson & Company v. Urban Concrete Contractors
2007 Tex. App. LEXIS 3747, No. 04-06-00227-CV (Tex. Ct. App., May 16, 2007)
A Texas Court of Appeals held that an oral change order agreement to pay for work which was, in fact, within the scope of the original contract was unenforceable for lack of consideration.
S.M. Wilson & Company (“Wilson”) entered into a contract with the Target Corporation to construct a Target Store in Austin, Texas (the “Project”). Wilson then solicited bids from subcontractors for various aspects of the Project. Urban Concrete Contractors, Ltd. (“Urban”) submitted a bid to Wilson to perform concrete work on the Project. During the pre-bid process, Wilson sent a proposed contract including Work Package 03300, which identified the scope of concrete work that Urban would be responsible for. Work Package 03300 referred to two sets of plans describing the concrete work to be performed which were not included in the package but were available to Urban for review at no charge prior to bidding.

Charles T. Driscoll Masonry Reconstruction Co., Inc. v. County of Ulster
2007 N.Y. App. Div. LEXIS 6068 (N.Y. App. Div., May 17, 2007)
The Appellate Division of the Supreme Court of New York held that a construction contract must be enforced according to its terms and, therefore, oral modifications of an agreement which specifically calls for modifications to be in writing will be unenforceable. Although recognizing that written modification clauses may be waived based upon the conduct of the parties, the court found that the conduct of the parties in this case did not support a waiver.

Hutton Contacting Company, Inc. v. City of Coffeyville
2007 U.S. App. LEXIS 9914, (10th Cir., April 30, 2007)
Contractor contracted to construct power and fiber-optic lines for the City. Upon completion of the project, the City refused to pay the final balance of the contract price, claiming that it was entitled to the funds as liquidated damages because the project was not completed on time. The Contractor sued to obtain the unpaid contract balance. The trial court ordered the City to pay the Contractor the retainage due minus $85,000 in liquidated damages. On appeal, the United States Court of Appeals for the Tenth Circuit, applying Kansas law, considered: 1) whether the contract’s force-majeure clause excused the Contractor for delays caused by late deliveries from its pole supplier; 2) whether the contract’s liquidated-damages provision was enforceable; and 3) whether the contract’s liquidated damages provision allowed the District Court to apportion delays between the Contractor and the City.

DGS v. Pittsburgh Building Co.
2007 Pa. Commw. LEXIS 160 (Pa. Commw. Ct. April 5, 2007)
The Pennsylvania Commonwealth Court held that a contractor was entitled to recover penalty interest and attorney fees under the Pennsylvania Prompt Payment Act from the Department of General Services (“DGS”) when DGS had engaged in arbitrary and vexatious conduct by withholding payment for costs associated with a five-month suspension and unsuitable soil conditions when DGS was aware of, yet failed to disclose, problematic soil conditions.

Titan Stone, Tile & Masonry v. Hunt Construction Group, Inc.
Civ. No. 05-3362, 2007 U.S. Dist. LEXIS 19489 (D.N.J. March 19, 2007)
The Court decided several motions for summary judgment filed by a prime contractor to claims of a subcontractor. Among the motions decided, the Court addressed the duty of good faith and fair dealing attendant to an obligation to evaluate payment applications, the breadth of a “pay-if-paid” clause, whether a monthly release executed with a payment application barred claims for extra work performed after the pay period in the attendant payment application and whether the plaintiff adequately plead its claim for violation of the New Jersey Trust Fund Act.

MidAmerica Construction Management, Inc. v. MasTec North America, Inc., et al.
2006 U.S. App. Lexis 3022 (10th Cir. 2006)
In MidAmerica Construction Management, Inc. v. MasTec North America, Inc., et al., 2006 U.S. App. Lexis 3022 (10th Cir. 2006), the Court held that a subcontract agreement contained a “pay-if-paid” clause, and that the clause in question was enforceable under both Texas and New Mexico law. As a result, general contractors did not need to pay the subcontractor for the work that the subcontractor performed under the contract, because the general contractors had not been paid by the project owner for that work.

Ed Kimber Heating & Cooling, Inc. v. Travelers Casualty & Surety Co.
No. 3:03cv2111 (SRU), 2006 U.S. Dist. LEXIS 3323 (D. Conn. Jan. 26, 2006)
Trataros Construction, Inc. (“Trataros”), the general contractor on a school addition and renovation project, subcontracted with Ed Kimber Heating & Cooling, Inc. (“Kimber”) for the performance of HVAC and plumbing work. Travelers Casualty & Surety Co. (“Travelers”) issued payment and performance bonds as the surety for Trataros.

Appeal of M.A. Mortenson Company
No. 53761, 2006 ASBCA LEXIS 4 (ASBCA Jan. 26, 2006)
Appeal of M.A. Mortenson Company, No. 53761, 2006 ASBCA LEXIS 4 (ASBCA Jan. 26, 2006) held that the Severin doctrine did not prevent the prime contractor’s claims on behalf of its subcontractor where (1) there was contemporaneous evidence that the subcontractor expressed an intention to seek compensation in addition to amounts afforded via change order and (2) the prime contractor did not contend that such a claim was barred by the language of the change order.