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

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

Raito, Inc. v. Cardi Corp.
2010 R.I. Super. LEXIS 108 (RI Super. Ct. July 14, 2010)

The Superior Court of Rhode Island was recently asked to reconsider its earlier ruling in which it found that a condition precedent to recovery under a performance bond was not satisfied and, therefore, summary judgment in favor of the surety was warranted. The Court found no reason to disturb its prior ruling and denied the motion for reconsideration.

Continue Reading Rhode Island Court Holds Notice of Default and Termination Prior to Completion a Condition to Claim on Subcontractor Performance Bond

James J. Gory Mechanical Contracting Inc. v. Travelers Casualty & Surety Co.
2010 Phila. Ct. Com. Pl. Lexis 20 (Phila. CCP Feb. 8, 2010)

In February 2005, Surety issued payment bond of over $45 million on behalf of the general contractor for construction of student housing project at Temple University. Under terms of the payment bond, any claim, suit or action had to be brought within two years of bond’s issuance. General contractor entered into plumbing subcontract with Plaintiff, who certified that its work was 100% complete in October 2006. However, general contractor only paid Subcontractor for 95% of the work it completed.

Continue Reading Pennsylvania Common Pleas Court Upholds Payment Bond Contractual Limitation Period

DuBaldo Electric, LLC v. Montagno Construction, Inc.
119 Conn. App. 423; 2010 Conn. App. LEXIS 55 (Conn. App. Feb. 23, 2010)

Subcontractor, DuBaldo Electric contracted with general contractor, Montagno Construction to perform electrical work in connection with the renovation of retail space leased by Burlington Coat Factory.
DuBaldo had estimated that it could complete the work in 3200 man hours over the scheduled ten week period. Issuance of the permit required for DuBaldo to commence its electrical work was delayed three weeks due to deficiencies in Burlington’s architectural design and understaffing at the City electrical inspector’s office. Unable to perform the electrical work without a permit, DuBaldo fell approximately three weeks behind. Nevertheless, Montagno refused to update the schedule. To make up for lost time, DuBaldo agreed to work 7 days a week with overtime. In addition, Montagno hired Globe Electric to work along side DuBaldo, and deducted from DuBaldo’s account the amount it paid to Globe for work performed within DuBaldo’s scope.

Continue Reading Connecticut Court Holds Termination Improper Where Subcontractor Substantially Performed; Also Holds Evidence Supported Subcontractor’s Inefficiency Claim

North Amer Spec Ins. Co. v. Ames Corp./Dawson Building Contractors, Inc. JV
2010 U.S. Dist. LEXIS 25748 (S.D. Fla. Mar. 10, 2010)

Defendant Ames Corporation/Dawson Building Contractors, Inc. (Ames/Dawson), as general contractor, engaged American Roofing, LLC (American Roofing) to perform roofing work at the Veterans Administration Medical Center located in West Palm Beach, Florida. Plaintiff North American Specialty Insurance Company (NAS), as surety, issued performance bonds on behalf of American Roofing, naming Ames/Dawson, as obligee.

Continue Reading U.S. District Court in Florida Rules Performance Bond Claims Barred By Obligee’s Failure to Declare Default and Its Performance of Corrective Work Without Affording Surety Opportunity to Cure

Law Co. v. Mohawk Construction & Supply Co. Inc.
2010 U.S. Dist. LEXIS 24302 (D. Kan. March 16, 2010)

The United States District Court for the District of Kansas recently considered the enforceability of a no-damages-for-delay clause in a construction subcontract. After finding that the clause was enforceable, the Court rejected each of the exceptions urged by the subcontractor.

The matter before the District Court involved a series of contracts entered into with regard to the construction of a Cessna C-10 Citation Service Center in Wichita, Kansas (the “Project”). The project owner, Cessna Aircraft Company, retained plaintiff, The Law Company, Inc. (“Law”), to provide general construction services in connection with the Project. In turn, Law, entered into a series of subcontract agreements, including one with Mohawk Construction and Supply Company, Inc. (“Mohawk”). Mohawk’s subcontract contained a no-damages-for-delay provision, particularly providing that Mohawk’s sole remedy for delay was an extension of time.

Continue Reading U.S. District Court in Kansas Eschews Application of Traditional Exceptions to No-Damages-For-Delay Clause

Dew Electric, Inc. v. Mass Electric Construction Co.
2010 U.S. Dist. LEXIS 19904 (W.D.N.C. Mar. 5, 2010)

Defendant Mass-Aldridge, a Joint Venture, (“MAJV”) entered into two contracts with the Charlotte Area Transit System (“CATS”) to construct CATS’ new South Corridor Light Rail Project. Under the first contract, MAJV agreed to construct the Traction Power & Overland Catenary System and under the second contract, MAJV agreed to construct the Train Control & Communication system (collectively the “Prime Contracts”). In furtherance of its work under the Prime Contracts, MAJV entered into a subcontract for each project (collectively the “Subcontracts”) with Plaintiff Dew Electric, Inc. (“Dew”).

Continue Reading U.S. District Court in North Carolina Construes Flow Down Provision Binding Subcontractor to Contractor’s Settlements With Owner

Universal Concrete Products Corp. v. Turner Construction Co.
595 F.3d 527 (4th Cir. Feb. 19, 2010)

Universal Concrete Products Corp. (“Universal”) sued Turner Construction Co. (“Turner”) for breach of contract and several other claims seeking payment for $885,507 worth of precast concrete work Universal had completed at the Granby Tower construction project in Norfolk, Virginia (“Project”).

Universal had entered into a written subcontract with Turner for the installation of precast concrete at the Project. Turner had a prime contract with the project owner’s to provide general construction work on the Project. The Project fell through in March 2008 when the owner could no longer finance it. By that point, however, Universal had already substantially completed all of its work at the Project. Turner, however, had not paid Universal for any of the work performed because Turner had not yet been paid by the owner. When Universal sought payment from Turner for the work performed, Turner refused citing a pay-when-paid provision in the subcontract.

Continue Reading U.S. Court Of Appeals for the Fourth Circuit Holds Pay-When-Paid Clause Valid and Enforceable, Excusing General Contractor From Paying Subcontractor Until Payment Received From Owner

Bell BCI Co. v. United States
570 F.3d 1337 (Fed. Cir. Jun. 25, 2009)

Plaintiff, Bell BCI Company (Bell), a general contractor, sued the United States (the “Government”) for damages plus interest under the Contract Disputes Act for the unpaid balance of the contract price, unresolved change order claims, delay damages, labor inefficiency costs and profit thereon. Bell also asserted claims on behalf of five subcontractors.

Continue Reading U.S. Court Of Appeals for the Federal Circuit Rules Contractor Cannot Pursue Claims for Cumulative Impact, Holds Release Terms in Modifications Were Unambiguous