Rad and D’Aprile, Inc. v. Arnell Construction Corp, No. 502464/14, 2019 BL 131606 (NY. Sup. Ct. April 3, 2019)

In June of 2001, Arnell Construction Corp. (“Arnell”) entered into a prime contract to build two sanitation garages in Brooklyn for the New York City Department of Sanitation (the “City”).  Arnell subcontracted the project’s masonry work to Rad and D’Aprile, Inc. (“Rad”).  After execution of the subcontract, Rad was informed that the start of work would be delayed because the City had not yet obtained ownership or access to all portions of the site.  When its work did commence, only limited portions of the site were available.  This caused inefficiencies in Rad’s work and caused it to incur increased costs.

Continue Reading New York Court Holds Contractor’s Failure to Timely Pass Through Subcontractor Delay Claim to the Owner Constitutes Breach of the Covenant of Good Faith and Fair Dealing

Westfield Ins. Co. v. Weaver Cooke Constr., LLC, 2019 BL 129431 (E.D.N.C. Apr. 11, 2019)

This case arises out of the alleged defective construction of a condominium complex in North Carolina.  In 2009, the developer on the project filed suit for the alleged construction defects.  This related coverage lawsuit then ensued between the parties’ insurers regarding a duty to defend the general contractor.

Continue Reading Federal Court in North Carolina Enforces Insurers’ Duty to Defend a General Contractor as an Additional Named Insured Under the Subcontractor’s Commercial General Liability Policy

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

SMJ Gen. Constr., Inc. v. Jet Commer. Constr., LLC, No. S-16785/16985, 2019 BL 131640 (Alaska Apr. 12, 2019)

In 2016, Jet Commercial Construction, LLC (“Jet”) entered into a subcontract with SMJ General Construction, Inc. (“SMJ”) to supply materials and labor for the construction of a restaurant in Hawaii.  The subcontract contained a dispute resolution provision that required the parties to first mediate any dispute and then submit it to arbitration if mediation was unsuccessful.  It also included a choice-of-law and venue provision designating Oklahoma Law and the courts of Cleveland County, Oklahoma for any lawsuits pertaining to the Agreement’s enforcement.

Continue Reading Alaska’s Supreme Court Holds That Executing a Settlement Agreement Releases Parties from Contractual Obligation to Arbitrate Disputes

Skyrise Construction Group, LLC v. Annex Construction, LLC, 2019 BL 55071 (E.D. Wis. Feb. 20, 2019)

Subcontractor Skyrise Construction, Inc. (“Skyrise”) sued general contractor Annex Construction, Inc. (“Annex”) for breach of contract, promissory estoppel, negligent misrepresentation, and violations of Wisconsin and Illinois trade practices statutes.  Skyrise primarily based its claims on an assertion that the parties entered into a subcontract, which Annex breached when it removed Skyrise from the project and completed the work with an alternative subcontractor.  Both Skyrise and Annex filed motions for summary judgment.  The District Court denied Skyrise’s motion and granted Annex’s motion.

Continue Reading District Court in Wisconsin Finds That Counteroffer and Repeated Negotiations Concerning a Construction Contract Do Not Create Contractual Relationship

Int’l Fidelity Ins. Co. v. Americaribe-Moriarty JV, 2017 U.S. App. LEXIS 3628 (11th Cir. Feb. 28, 2017)

Americaribe-Moriarty Joint Venture (“Americaribe”) entered into a subcontract with Certified Pool Mechanics I, Inc. (“CPM”) for construction of a pool in a mixed-use development that Americaribe was building in Miami, Florida. CPM provided a performance bond, issued by International Fidelity Insurance Company and Allegheny Casualty Company (collectively, “Fidelity”) as security for performance of the pool subcontract.  According to Americaribe, CPM failed to perform its obligations under the pool subcontract.  As a result, Americaribe terminated CPM, made a claim on the performance bond, and contemporaneously hired a replacement contractor (“Dillon”) to complete CPM’s scope of work.

In the event of default by CPM, the subcontract required three days’ written notice before undertaking completion of CPM’s work. The bond incorporated the subcontract by reference and also required a further, but undefined, period of time after CPM’s termination during which Fidelity could evaluate options for responding to CPM’s alleged default.  In the event that Fidelity did not conduct such an evaluation with reasonable promptness, Americaribe could declare a default by Fidelity upon seven days’ written notice.  Although Americaribe provided the written notices of default, it proceeded to complete CPM’s work with Dillon before the notice periods expired.


Continue Reading Eleventh Circuit Affirms Decision Under Florida Law Barring Contractor’s Performance Bond Claim for Failure to Comply With Notice Provisions in the Bond and in the Subcontract

Liberty Mut. Fire Ins. Co. v. Kay & Kay Contr.
2013 U.S. App. LEXIS 23587 (6th Cir. Nov. 19, 2013)

This action arose out of a commercial general liability (“CGL”) policy issued by Liberty Mutual Fire Insurance Co. (“Liberty Mutual”) to MW Builders, Inc. (“MW Builders”) and Kay and Kay Contracting, LLC (“Kay & Kay”) for the construction of a Wal-Mart store in Morehead, Kentucky. Wal-Mart Stores, Inc. (“Wal-Mart”) contracted with MW Builders as general contractor for the construction of the building. MW Builders then entered into a subcontract with Kay & Kay to perform site preparation work and construct the building pad beneath the structure. Liberty Mutual issued the CGL policy to Kay & Kay, with MW Builders as an additional insured (the “Policy”). The Policy was the standard ISO (Insurance Services Office, Inc.) policy containing the standard coverage language. Specifically, the Policy provided: “This insurance applies to ‘bodily injury’ and ‘property damage’ only if… [t]he ‘bodily injury’ or ‘property damage’ is caused by an ‘occurrence’ that takes place in the ‘coverage territory’…” The Policy defined “occurrence” to mean “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The term “accident” was not defined in the Policy.


Continue Reading Sixth Circuit Court of Appeals, Applying Kentucky Law, Holds Subcontractor’s Allegedly Faulty Construction of a Building Pad and the Resulting Damages Is Not an “Occurrence” Under a Commercial General Liability Policy

United States ex rel. Tymatt Indus. v. Allen & Shariff Constr. Servs.
2013 U.S. Dist. LEXIS 114015 (D. Md. Aug. 13, 2013)

This action arose out of a subcontractor’s Miller Act claim for unpaid contract balances on a federal construction project. Allen & Shariff Construction Services, LLC (“Allen & Shariff”) was the prime contractor on a federal contract for the construction of a dam in Bethesda, Maryland, and related remediation (the “Project”). United States Security Company (“USSC”) was the surety on the Miller Act payment bond for the Project. Allen & Shariff subcontracted with Tymatt Industries, Inc. (“Tymatt”) to perform work on the Project (the “Subcontract”). The Subcontract contained a default provision stating that “should Tymatt fail to perform, after giving three days written notice Allen & Shariff had the option to terminate the [S]ubcontract for default if the defective performance was not cured.” Allen & Shariff issued three such notices to Tymatt, the last of which was issued on November 11, 2011. When Tymatt failed to cure, USSC sent Tymatt a termination notice on November 18, 2011 stating that the “[S]ubcontract…has been terminated due to lack of performance effective immediately.” Additionally, Allen & Shariff notified Tymatt that its “base access privilege [would] be terminated on November 23, 2011,” and requested that its equipment be removed prior to that date. Tymatt subsequently alleged that Allen & Shariff failed to pay $107,665.26 in amounts owed for work performed under the Subcontract. On Monday, November 26, 2012, Tymatt filed a Miller Act claim against USSC, as surety, to recover the monies allegedly due and owing.


Continue Reading U.S. District Court in Maryland Holds Work Performed After Termination Does Not Delay Commencement of One-Year Miller Act Statute of Limitations

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

United States of America ex rel Duncan Pipeline, Inc. v. Walbridge Aldinger Co.
2013 U.S. Dist. LEXIS 45982 ( S.D. Ga. Mar. 29, 2011)

This action arose out of a subcontractor’s claim for additional compensation for extra work. Walbridge Aldinger Co. (“Walbridge”), general contractor for the U.S. Army Corps of Engineers on construction project at Fort Stewart in Georgia (the “Project”), entered into a subcontract with Duncan Pipeline, Inc. (“Duncan”). Pursuant to the subcontract, Duncan was to supply labor and material for the Project’s water distribution system. Duncan began its work in August 2009, and shortly thereafter, Walbridge ordered work that Duncan considered to be outside the scope of the subcontract, including installation of bell restraints, additional excavation work, and remobilization of crews because of interferences encountered during excavation. Duncan performed the allegedly extra work in August and September 2009, and submitted a bond claim to Walbridge and its surety in May 2010.


Continue Reading U.S. District Court in Georgia Considers Effect of Releases Submitted with Applications for Payment, Notice Requirement as to Extra Work and Defective Specification Claims and No-Damage for Delay Provision