Whiting-Turner Contracting Co. v Guar. Co. of N. Am. USA, 2019 BL 97923 (Colo. App. Mar. 21, 2019).

This construction dispute involved rights and obligations under a performance bond supplied for an office building construction project in Denver, Colorado.  Whiting-Turner Contracting Company was the general contractor, and it subcontracted Klempco Construction to construct an anchor system for the project’s underground parking garage.  Klempco provided performance and payment bonds for the project from Guarantee Company of North America USA (“GCNA”).  When Klempco fell behind schedule, it stopped paying its sub-subcontractors and directed Whiting-Turner to assume responsibility for its work and sub-subcontractors.

Continue Reading Colorado Court of Appeals Finds Contractor Satisfied Conditions Precedent Under Performance Bond

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

R&O Constr. Co. v. MBA Gen. Contracting, LLC, No. 1:18-cv-00042, 2019 BL 98680 (D. Utah Mar. 21, 2019)

On March 21, 2019, a Utah federal court granted Defendants MBA General Contracting, LLC and Cory Martin’s motion to dismiss R&O Construction Company’s claim for attorney fees.
R&O, as general contractor of a construction project, entered into two subcontracts with MBA to perform concrete work.  The first subcontract, entitled Master Subcontract Agreement, outlined general obligations between the parties.  The second, entitled Work Authorization Document, outlined more specific obligations.  R&O asserted various causes of action against MBA arising from MBA’s alleged breach of the subcontracts, including a claim for attorney fees.  MBA moved to dismiss the attorney fees claim, arguing that neither subcontract provides for such an award.

Continue Reading Utah Federal Court Dismisses Claim for Attorney Fees Finding That Neither the Indemnification Provision nor the Failure-To-Perform Provision Applies to a Lawsuit Between Contractor and Subcontractor

Hagen Constr. Inc. v. Whiting-Turner Contracting Co., No. JKB-18-1201, 2019 BL 36862 (D. Md. Feb. 04, 2019)

This case arises out of the construction of a pediatric outpatient center in southern New Jersey.  Plaintiff subcontractor Hagen Construction, Inc. (“Hagen”) filed suit in New Jersey state Court against defendant general contractor Whiting-Turner Construction Co. (“W-T”), seeking reimbursement for labor inefficiency costs incurred as a result of W-T’s alleged project mismanagement.  Hagen claimed it incurred additional costs to repeat work and remobilize to multiple areas because it was not afforded unimpeded access or timely supply of necessary materials and information.  Once the case was removed and transferred to Maryland federal Court, W-T moved for partial summary judgment on the portion of Hagen’s breach of contract claim reflecting labor inefficiency costs.
Continue Reading Federal Court in Maryland Holds Subcontractor Waived Right to Bring Labor Inefficiency Claim Despite Voicing ‘Expression[s] of Frustration’ and ‘General Complaints’ of Mismanagement Throughout Project

Ohio N. Univ. v. Charles Constr. Servs., 2018 Ohio LEXIS 2375 (Oct. 9, 2018)

This post was published in the National Association of Credit Management eNews on December 20, 2018.

This case arose out of the construction of an inn and conference center at Ohio Northern University (“ONU”).  After completion of the project, ONU discovered water damage and structural defects in the work and filed suit for breach of contract against its general contractor, Charles Construction Services, Inc. (“Charles”).  Charles, in turn, sought defense and indemnity from its commercial general liability insurer, Cincinnati Insurance Company (“CIC”).  As required by ONU, Charles’s policy contained a “products-completed operations-hazard” (“PCOH”) clause and terms specifically related to work performed by subcontractors.  Under Charles’ policy, the insurance covered “property damage” only if it was caused by an “occurrence,” defined as “[a]n accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  “Accident,” however, was not defined.  CIC intervened in ONU’s suit, seeking a declaratory judgment that it was not required to defend or indemnify Charles.

The trial court granted CIC summary judgment, holding that CIC had no duty to indemnify or defend Charles.  The trial court based its holding on Westfield Inc. Co. v. Custom Agri Sys., Inc., 979 N.E.2d 269, a 2012 decision in which the Ohio Supreme Court concluded that claims for faulty workmanship are not fortuitous, and therefore, not claims for “property damage” caused by an “occurrence” covered by a CGL policy.
Continue Reading The Buckeye State Bucks Recent Trend: Ohio Supreme Court Holds That Property Damage Caused by a Subcontractor’s Faulty Work Does Not Constitute an “Occurrence” Covered Under CGL Policies

U.S. Pipelining LLC v. Johnson Controls, Inc., No. 16-00132 HG-RLP, 2016 U.S. Dist. LEXIS 150767 (D. Haw. Oct. 31, 2016)

This action arose out of the renovation of a condominium complex on Maui (Project). Johnson Controls, Inc. (JCI) was the general contractor and U.S. Pipelining LLC (USP) was a subcontractor. While the parties disputed who was ultimately responsible for obtaining a license for the work, the Subcontract included a provision that required USP to “obtain[] all licenses and permits required for the prosecution of the Work.” Nonetheless, USP performed its work without obtaining a license from the State of Hawaii. During the Project, a dispute arose between the parties. USP filed a complaint alleging various claims against JCI and others, seeking payment for the additional work it allegedly performed.

Chapter 444 of the Hawaii Revised Statutes (the “Statute”) requires contractors to obtain a license before performing any renovation work on real property.


Continue Reading Federal Court in Hawaii Holds that an Unlicensed Subcontractor May Pursue Contract Claims Against Contractor Notwithstanding Statute Precluding Unlicensed Contractors from Recovering in a Civil Action

Fed. Ins. Co. v. Empresas Sabaer, Inc.
2013 U.S. Dist. LEXIS 112930 (D.P.R. Aug. 9, 2013)

This action arose out of a surety’s claim for expenses incurred for correcting a subcontractor’s defective work. DTC Engineering and Constructors, LLC (“DTC”) and the U.S. Army Corps of Engineers (the “Corps”) entered into a contract for the design and construction of the Armed Forces Reserve Center at Fort Buchanan, located in Guaynabo, Puerto Rico. Federal Insurance Company (“Federal”) and DTC subscribed to a payment and performance bond as surety and principal, respectively, naming the government as obligee. DTC subsequently entered into a subcontract (the “Subcontract”) with Empresas Sabaer, Inc. (“Sabaer”) and BBS Developers, S.E. (“BBS”) (collectively the “Subcontractors”). The Subcontract provided that Sabaer was required to complete the work under Subcontract, while BBS was responsible for providing technical and economic support. United Surety and Indemnity Co. (“USIC”) and the Subcontractors, as surety and principal, respectively, subscribed to a payment and performance bond and named DTC as obligee. DTC assigned to Federal all of its rights emerging from the Subcontract and USIC’s bond.


Continue Reading U.S. District Court in Puerto Rico, Applying Connecticut Law, Considers Application of Notice Requirements to Termination of Joint Subcontractors

Lasalle Group, Inc. v. JST Properties, LLC
2011 U.S. Dist. LEXIS 83548 (S.D. Mich. July 29, 2011)

LaSalle, as general contractor, obtained a contract for construction of a school building in Gulfport, Mississippi. LaSalle subcontracted the concrete work on the project to Gulf Coast. American Contractors Indemnity Company (“ACIC”) provided performance and payment bonds to support LaSalle’s obligations under the subcontract.


Continue Reading U.S. District Court in Michigan Denies Performance Bond Claim for Contractor’s Failure to Meet Conditions Precedent – Also Holds that Surety May Proceed with Overpayment Defense and Counterclaim

Weigand Construction Co., Inc. v. Stephens Fabrication, Inc.
2010 Ind. App. LEXIS 1109 (Ind. Ct. App. June 25, 2010)

Ball State University (BSU) contracted with Weigand Construction Co. (“Weigand) to act as the general contractor for its Music Instruction Building project. Weigand subcontracted the structural steel work to Stephens Fabrication, Inc. (“Stephens”). Stephens was to manufacture the steel, perform certain engineering and prepare shop drawings. Stephens contracted with sub-subcontractors, Argo and Wilson, to perform the engineering and prepare the shop drawings.


Continue Reading Indiana Court Holds Subcontractor Subject to Prime Contract Claim Notice Requirement via Flow-Down Provision – Its Claims Were Presented Too Late

Turnberry Pavillon Partners, L.P. v. M.J. Dean Construction, Inc.
2010 U.S. App. Lexis 9832 (9th Cir. May 13, 2010)

Developer built a luxury condominium tower and hired contractor to serve as both the construction manager and concrete subcontractor. A separate interior drywall and site wall subcontractor was also hired for the Project. A series of lawsuits arose. In the first lawsuit, construction manager was found liable for causing “lost production” and “uncompensated overtime” to site wall subcontractor due to its negligent concrete work as well as negligent construction management. While cross-appeals were pending on the matter Developer paid $2.1 to settle the site wall subcontractor’s claim. In a second case, condominium association sued Developer for construction defects. In turn, Developer filed a third-party complaint against construction manager as well as other subcontractors alleging that their negligence caused defects in the Project. Ultimately, the parties to the second suit reached a settlement whereby Developer and construction manager paid the condominium association $2 million and $600,000 respectively.


Continue Reading U.S. Court of Appeals for 9th Circuit Holds Release in Defect Case Does Not Bar Claims for Indemnity in Delay / Disruption Case