Subcontract

Subscribe to Subcontract via RSS

Acme Contracting, Ltd. v. TolTest, Inc
2008 U.S. Dist. LEXIS 36355 (E.D. Mich. May 5, 2008)
The United States District Court for the Eastern District of Michigan recently had to interpret an Ohio statute (O.R.C. §4113.62) which statute dealt with the enforceability of no damages for delay provisions in construction contracts. Relying on prior cases interpreting the applicable statute, the District Court found that the subcontract which limited delay claims to a time extension only was prohibited under the statute and, therefore, void and unenforceable. Although the District Court permitted the subcontractor to recover delay damages, it also concluded that the subcontractor had not proven that it was entitled to extended home office overhead costs using the Eichleay formula and refused to award such damages.

Bell BCI Company v. United States
81 Fed. Cl. 617; 2008 U.S. Claims LEXIS 116, (April 21, 2008)
Note: This case was affirmed in part, vacated in part, and remanded in Bell BCI Co. v. United States, 570 F.3d 1337 (Fed. Cir. 2009), to be discussed in a a future issue of Constructlaw.
Plaintiff, Bell BCI Company (Bell), a general contractor, sued the Government for $6,200,672 in damages plus interest under the Contract Disputes Act for unpaid balance of the price, unresolved changes, delay damages, labor inefficiency costs and profit thereon. Bell also asserted claims on behalf of five subcontractors.

Sloan Constr. Co. v. Southco Grassing, Inc.
2008 S.C. LEXIS 99 (S.C. Mar. 24, 2008)
The South Carolina Department of Transportation (SCDOT) contracted with general contractor Southco Grassing, Inc. in connection with state highway maintenance project and, in accordance with the applicable statutory bond requirements, Southco provided a payment bond for the benefit of its subcontractors and suppliers in the full contract amount. Subsequently, Southco entered into a subcontract with subcontractor Sloan to perform asphalt paving work. In June 2001, before the paving work was completed, Southco’s payment bond was cancelled when the bond’s issuer became insolvent. Notice of the insolvency and cancellation was provided to SCDOT and SCDOT requested in writing that the Southco provide a replacement bond within seven days. Southco did not reply. In the meantime, Sloan completed its work, but in January 2002 notified SCDOT that it still had not received payment from Southco for its subcontract valued at approximately $52,000 and that the payment bond had never been replaced. In March 2003, despite that it had not made full payment to Sloan, Southco advised SCDOT that it had made all payments on the project, and SCDOT released final retainage to Southco.

Atlantic City Associates LLC v. Carter & Burgess Consultants, Inc.
2008 U.S. Dist. LEXIS 25144 (D.N.J. Mar. 27, 2008)
The United States District Court for the District of New Jersey recently had to decide whether it was proper for a general contractor to set off potential claims on a private project against amounts owed to the same subcontractor on a public project. Relying upon the New Jersey Public Works Bond Act and New Jersey Trust Fund Act, the District Court concluded that it was improper for the general contractor to set off the amounts because a contractual setoff provision was insufficient to rise to the level of a waiver of the subcontractor’s rights under the Acts.

Current Builders of Florida, Inc. v. First Sealord Surety, Inc.
2008 Fla. App. LEXIS 4698 (April 2, 2008)
The Court of Appeals of Florida held that a jury finding that a contractor which terminated a subcontractor failed to provide notice in accordance with the terms of a performance bond was sustainable, given that the contractor did not tender the remaining contract balance to the surety or give it an opportunity to provide for the completion of the work. Accordingly, the surety’s obligations under the bond were not triggered.

Hunt Construction Group, Inc. v. National Wrecking Corp.
2008 U.S. LEXIS 27859 (D.D.C. Apr. 8, 2008)
The United States District Court for the District of Columbia discussed the split of authority on the issue of when a surety’s obligations are triggered under a performance bond, ultimately holding that a surety is liable only if timely notice is given of the obligee’s default, allowing the surety to exercise its options under the performance bond.
Hunt Construction Group (“Hunt”) was the prime contractor on a hotel construction project in Washington, D.C. National Wrecking Corporation (“NWC”) subcontracted with Hunt to perform excavation and other work on the hotel project. In April 2004, approximately five months after entering into the subcontract, NWC completed the work. Hunt alleged that NWC delayed in completing the excavation work, and as a result, Hunt was required to accelerate other parts of the work, so that it incurred costs in excess of $800,000 due to NWC’s delay.

Regent Ins. Co. v. Storm King Contr., Inc.
2008 U.S. Dist. LEXIS 16513 (S.D.N.Y. Feb. 26, 2008)
In June 1999, the owner of The Emerson Inn hired Storm King to act as its general contractor in the remodeling and rebuilding of the Inn. Under their agreement, Storm King was not responsible for the design of the project or for compliance with applicable law, building codes, or regulations, and it was agreed that the remedy for any defective work would be limited to correction of the defects. Storm King entered into a subcontract with Sullivan Fire Protection for the installation of a fire sprinkler system. The subcontract incorporated the terms of the agreement between the owner and Storm King. Its scope of work section provided that Sullivan’s work was to be performed in accordance with the plans and specifications prepared by the design professional.

URS Group, Inc. v. Tetra Tech FW, Inc. and Foster Wheeler Environmental Corporation
2008 Colo. App. LEXIS 159 (February 7, 2008)
The Court of Appeal of Colorado held that the plaintiff subcontractor did not assume the risk of differing site conditions and thus its claims for differing site conditions and mutual mistake were viable. Moreover, the Court held that the economic loss rule did not bar plaintiff’s negligent misrepresentation claim, because the alleged misrepresentation occurred during negotiations before the contract was formed.

John A. Russell Corp. v. Fine Line Drywall, Inc. and Acstar Insurance Co.
2008 U.S. Dist. LEXIS 13098 (D. Vt., February 21, 2008)
The United States District Court for the District of Vermont held that only a material breach of contract constitutes a default triggering the year-long period provided by 8 V.S.A. § 3663 for commencing an action.
In John Russell Corp., Subcontractor began work on the metal framing and gypsum drywall systems of a project in November 2003 and ceased work on November 10, 2004. Prior to beginning work, Subcontractor secured a performance and payment bond (the “Bond”) with Contractor as obligee. During the Fall of 2004, Subcontractor’s presence at the job site was sporadic. Daily work logs indicated that Subcontractor was absent from the job site on six occasions during September and October 2004, the periods of absence ranging from one to five days. After November 10, 2004, Subcontractor never returned to the work site. Contractor made repeated attempts to contact Subcontractor to determine whether it planned to complete performance of its obligations under the Subcontract. Subcontractor did not respond to any of those attempts and had no further communication with Contractor. By early December 2004, Contractor “suspected [that Subcontractor had] abandoned the project.”

Dugan Construction Company, Inc. v. New Jersey Turnpike Authority
941 A.2d 622 (N.J. Super. Ct. App. Div. 2008)
The Superior Court of New Jersey, Appellate Division, recently had to decide whether a contractor was entitled to the contractual per unit price for the removal of substantial quantities of groundwater where the estimated quantity in the bid documents was grossly understated and contractor failed to bring the error to the public entities’ attention. Analyzing the case utilizing principles of patent ambiguity and reformation, the Court held that the mistake in the bid documents warranted reformation of the contract and the contractor was only permitted to recoup the actual value of the work performed.