Subcontract

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Federated Dep’t Stores, Inc. v. M.J. Clark, Inc.
2007 U.S. Dist. LEXIS 51826 (N.D. Ill. July 17, 2007)
After a flood caused by a leak in the sprinkler system during remodeling at a Bloomingdale’s store in Chicago damaged the first five floors of the store, plaintiffs, Bloomingdale’s and its owner Federated, sued defendant contractor, subcontractor, and building manager for breach of contract, negligence, and indemnification.
The agreement between the contractor and owner provided the contractor agreed to indemnify the owner. It further provided that each party waived all rights against the other for any loss or damage “for which property insurance is carried or required to be carried pursuant to [the parties’] Agreement.” Specifically excepted from the waiver were the contractor’s indemnification responsibilities. During the time of the flood, the owner was covered by an “all risk” insurance policy. Among other things, the policy excluded ordinary wear and tear and errors in design or faulty workmanship.

Dur v. Western Branch Diesel, Inc.
2007 U.S. App. LEXIS 16237 (4th Cir. July 9, 2007)
Following the precedent of the Supreme Court of Virginia in Sensenbreunner v. Rust. Orling & Neale, Architects, Inc., 374 S.E.2d 55 (Va. 1988), the Fourth Circuit Court of Appeals upheld the district court’s grant of a motion for summary judgment. The Court held that damage to an owner’s boat caused by an electrical fire fell within the scope of the contract between the owner’s general contractor and the subcontractor and amounted to nothing more than economic loss, which barred the owner from maintaining a cause of action for negligence against the subcontractor.

Mactec, Inc. v. Bechtel Jacobs Co., LLC and Demco, Inc. v. Mactec, Inc
2007 U.S. Dist. LEXIS 60377 (E.D. Tenn. August 16, 2007)
The United States District Court for the Eastern District of Tennessee held that a private contractor had no duty to verify the pricing of a bid received from a subcontractor.
Defendant Bechtel Jacobs, LLC (“Bechtel Jacobs”) entered into a contract with the United States Department of Energy’s Oak Ridge Operations to demolish and dispose of several radioactively contaminated buildings in the main area of the K-25 Gaseous Diffusion Plant. Bechtel Jacobs issued a request for proposal inviting proposals from subcontractors to demolish and dispose of several radioactively contaminated buildings from the main plant. In response, Plaintiff MACTEC submitted a proposal in the amount of $3.99 million, which was later adjusted to a final contract price of $5.36 million. Bechtel Jacobs internal estimate for the cost of the project was $8.20 million. The next lowest proposal was $8.44 million. Bechtel Jacobs did not inform MACTEC that its proposal was significantly lower than Bechtel Jacobs internal estimate and significantly lower than the next lowest bidder. Bechtel Jacobs awarded MACTEC the subcontract.

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…

Integrated Project Services v. HMS Interiors, Inc.
2007 Pa. Super 246, 2007 Pa. Super. LEXIS 2606 (Pa. Super Ct., April 16, 2007)
This is an appeal from a decision in the lower court wherein a general contractor, “Integrated Project Services, (“General Contractor”) sued a subcontractor, HMS Interiors, Inc. (“Subcontractor”) for a declaratory judgment that the Subcontractor was obligated to indemnify the General Contractor for the General Contractor’s negligence. The Subcontractor filed a motion for judgment on the pleadings which was granted by the lower court and the General Contractor appealed that decision.

Port Liberte Homeowners Association, Inc. v. Sordoni Construction Co.
2007 N.J. Super LEXIS 168, Docket No. A-2138-04T1 (App. Div. June 4, 2007)
The New Jersey Appellate Division was asked to consider whether a condominium and a homeowners association, not in existence at the time misrepresentations and fraudulent omissions were made to the developer of a condominium development, had standing to sue contractors or subcontractors who made such misrepresentations. Relying on the statutory scheme of the New Jersey Condominium Act, N.J.S.A. 46:8B-1 et seq., (“Condo Act”) and the Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 et seq. (“PREDFDA”), the Appellate Division held that the associations had standing to sue.

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.

Turner Constr. Co. v. Am. Mfrs. Mut. Ins. Co.
2007 U.S. Dist. LEXIS 32640 (S.D.N.Y. Apr. 30, 2007)
Plaintiff Turner Construction Company entered into a construction management agreement with Central Synagogue in Manhattan for renovation work which included the installation of central air conditioning. The HVAC contractor on the project was Trident Mechanical Systems, Inc. During the project, a fire broke out, started by an employee of the roofing contractor who had been using a propane torch. The fire, which ordinarily would have caused minimal damage, was accelerated by exhaust fans that had been installed in the roof, and caused several millions of dollars damage to the landmark Synagogue. The Synagogue’s insurer, Wausau, sued Turner and some of the project’s contractors, to recover amounts it paid the Synagogue. The trial was bifurcated, trying liability first, then damages. Liability was determined as: Turner 50%, the roofing contractor 30%, the general contractor 15%, and Trident 0%. A settlement was reached before the damages portion of the trial began.

Quality Trust Inc. v. Cajun Contractors, Inc.
2007 U.S. Dist. Lexis 25431 (D. Kan. 2007)
The District Court granted the prime contractor summary judgment on its right to terminate a subcontractor for failure to provide submittals and sufficient work force, while at the same time holding that the contractor was not entitled to summary judgment on the subcontractor’s claims for delay damages and contract balances.
Prime contractor, Cajun Contractors, Inc. (“Cajun”), entered into a general contract with the United States Army Corps of Engineers (“COE”) for the construction of a wastewater facility at Fort Riley, Kansas. The project entailed the partial demolition of an existing facility and the construction of a new facility. Cajun subcontracted with Quality Trust, Inc. (“QTI”) to erect eight metal buildings as part of the new facility. Under the subcontract, Cajun was to construct the concrete building pads, to procure the buildings through a third party supplier, and to provide the buildings for QTI to erect and finish.

Scandale Associated Builders & Engineers, Ltd. v. Bell Justice Facilities Corp.
No. 4:03-CV-1773, 2007 U.S. Dist. LEXIS 25112 (M.D. Pa. April 4, 2007)
In January 2001, Scandale Associated Builders & Engineers, Ltd. (“Scandale”) entered into a subcontract (“Subcontract”) with Bell Justice Facilities Corporation (“Bell”) for work on the construction of the U.S. Penitentiary/Federal Prison Camp at Canaan, Pennsylvania (“Prison”). The Subcontract required Scandale to perform cast-in-place concrete work on the Prison. Bell was the general contractor and the United States through the Federal Bureau of Prisons was the Owner.