Justia Construction Law Opinion Summaries

Shake Out, LLC entered into a contract with Clearwater Construction, LLC (“Clearwater”), to repair the building Shake Out’s restaurant occupied. The relationship between the parties quickly deteriorated, resulting in Shake Out filing a lawsuit against Clearwater. The parties attempted to mediate their dispute but were unsuccessful. After the case had proceeded for some time, Clearwater sought to compel arbitration pursuant to the contract. Shake Out objected, asserting that Clearwater had waived its right to enforce the arbitration clause because it had participated in the litigation for almost ten months before seeking to compel arbitration. The district court concluded Clearwater had not waived its right to seek arbitration and entered an order compelling arbitration and staying the proceedings. Finding no reversible error in that judgment, the Idaho Supreme Court affirmed. View "Shake Out, LLC v. Clearwater Construction, LLC" on Justia Law

A project labor agreement (PLA) is a collective-bargaining agreement between a project owner, contractors, and unions, setting the terms and conditions of employment for a particular construction project. The terms can include recognizing a union as the workers’ exclusive bargaining representative and paying the workers union wages—even if they are not union members. The plaintiffs claim the project labor agreements violate the First and Fourteenth Amendments, the National Labor Relations Act, and the Sherman Act.The Third Circuit affirmed the dismissal of the claims, citing lack of standing. Concreteness and particularity are two Article III standing requirements but those concrete injuries must also be actual or imminent. The contractor-plaintiffs declared they never have and never will bid on PLA-covered projects, admitting they never experienced and never will experience a compelled association or economic harm. To the extent the contractors’ declarations are a proxy for determining the actuality or imminence of harm to their employees, the contractors indicate they have not and will not bid on PLA-covered projects. The employees did not plead that they did or plan to work on PLA-covered public projects. The mere fact that the contractors claim they are “able and ready” to bid or work on PLA-covered public projects does not cure their failure to bid in the past and admitted refusal to bid. View "Associated Builders & Contractors of Western Pennsylvania v. Community College of Allegheny County" on Justia Law

Cope, injured on a Kentucky job site, filed a workers’ compensation claim. The subcontractor who hired him for the project, CMC, is based in Southern Indiana, and had an insurance policy with AFICA. Schultheis Insurance Agency procured the policy for CMC, but failed to inform AFICA that CMC did business in Kentucky. AFICA sought a declaration that its policy does not cover Cope’s claim.The district court granted AFICA summary judgment. The Seventh Circuit affirmed. The plain text of the policy is unambiguous: because CMC failed to notify AFICA until after Cope’s accident that it was working in Kentucky, AFICA is not liable for Cope’s workers’ compensation claim. The policy states : “If you have work on the effective date of this policy in any state [other than Indiana], coverage will not be afforded for that state unless we are notified within thirty days.” View "Accident Fund Insurance Co. v. Schultheis Insurance Agency, Inc." on Justia Law

The United States Federal District Court for the Western District of Washington certified a question of law to the Washington Supreme Court. Cox Construction was the general contractor of a remodeling project. Cox hired Baker & Son Construction, Inc. as a subcontractor. A Baker employee allegedly caused a two-by-four to fall from a railing and strike Ronnie Cox, owner of Cox Construction, who later died from his injury. Baker allegedly called an insurance agent to alert them of the incident. The agent told Baker that no action needed to be taken because at that time, no claim existed. A few months later, Baker received a wrongful death claim from an attorney representing Cox’s widow. Baker notified its insurer, Preferred Contractors Insurance Company (PCIC) of the claim. PCIC denied coverage, but agreed to defend Baker under a reservation of rights. The certified question to the Washington Supreme Court related to the “claims-made” nature of the policy and the timing of Baker’s tender of Ms. Cox’s claim. The Supreme Court replied to the certified question that in light of RCW 18.27, a contractor’s commercial general liability insurance policy that requires the loss to occur and be reported within the same policy year, and provides neither neither prospective nor retroactive coverage violates Washington’s public policy. View "Preferred Contractors Ins. Co. v. Baker & Son Constr., Inc." on Justia Law

The Alaska Department of Revenue audited a non-resident corporation doing business in Alaska. The Department issued a deficiency assessment based in part on an Alaska tax statute requiring an income tax return to include certain foreign corporations affiliated with the taxpaying corporation. The taxpayer exhausted its administrative remedies and then appealed to the superior court, arguing that the tax statute the Department applied was facially unconstitutional because: (1) it violated the dormant Commerce Clause by discriminating against foreign commerce based on countries’ corporate income tax rates; (2) it violated the Due Process Clause by being arbitrary and irrational; and (3) it violated the Due Process Clause by failing to provide notice of what affiliates a tax return must include, and therefore is void for vagueness. The superior court rejected the first two arguments but ruled in the taxpayer’s favor on the third argument. The Department appealed, claiming the superior court erred by concluding that the statute was void for vagueness in violation of the Due Process Clause. The taxpayer cross-appealed, asserting that the court erred by concluding that the statute did not violate the Commerce Clause and was not arbitrary. After review, the Alaska Supreme Court reversed the superior court’s decision that the statute was facially unconstitutional on due process grounds, and affirmed the court’s decision that it otherwise was facially constitutional. View "Alaska Dept. of Revenue v. Nabors International Finance, Inc. et al." on Justia Law

Cal-Am, a developer and operator of RV and mobile-home parks leased the Yuma Sundance RV Resort from its owner, intending to construct a new banquet and concert hall on the property. The property owner provided the funding for the construction. Cal-Am managed the project. Cal-Am hired a contractor, Nickle, to design and construct the hall, who then hired Edais Engineering to survey the property and place construction stakes to mark the Hall’s permitted location. No contract existed between Edais and Cal-Am. Edais acknowledges that its placement of the stakes was defective. Cal-Am was forced to adjust its site plan, eliminating eight RV parking spaces. Cal-Am sued Edais for claims including negligence. The trial court granted Edais summary judgment on the negligence claim finding that Cal-Am could not recover its purely economic damages. The court of appeals affirmed.The Arizona Supreme Court affirmed, repudiating its 1984 Donnelly Construction holding that a design professional’s duty to use ordinary skill, care, and diligence in rendering professional services extends both to persons in privity with the professional and to persons foreseeably affected by a breach of that duty. Under Arizona’s current framework, which repudiated foreseeability as a basis for duty, design professionals lacking privity of contract with project owners do not owe a duty to those owners to reimburse purely economic damages. View "Cal-Am Properties, Inc. v. Edais Engineering, Inc." on Justia Law

In a case of first impression, the Pennsylvania Supreme Court granted review to determine whether the Commonwealth Court properly calculated the “cost” of steel products under the Steel Products Procurement Act (“Steel Act” or “the Act”), which required that “75% of the cost of the articles, materials and supplies [of a steel product] have been mined, produced or manufactured” in the United States. G. M. McCrossin, Inc. (“McCrossin”), a contracting and construction management firm, served as the general contractor for the Lycoming County Water and Sewer Authority (“Authority”) on a project known as the Montoursville Regional Sewer System Waste Water Treatment Plan, Phase I Upgrade (“Project”). In July 2011, McCrossin entered into an agreement with the Authority to supply eight air blower assemblies, which move air from one area to another inside the waste treatment facility. United Blower, Inc. (“UBI”), became a subcontractor on the Project. UBI was to supply the eight blowers required by the original specifications and was to replace the three digestive blowers as required by a change order. UBI prepared a submittal for the blowers which McCrossin in turn submitted to the Authority’s Project engineer, Brinjac Engineering (“Brinjac”). As part of the submittal, McCrossin provided Brinjac and the Authority with a form, which verified that 75% of the cost of the blowers was attributable to articles, materials, and supplies (“AMSs”) that were mined, produced, or manufactured in the United States. The total amount McCrossin paid UBI for the blower assemblies and digestive blowers was $239,800. The amount paid by the Authority to McCrossin for these items was $243,505. Authority employees began to question whether McCrossin and UBI provided products that complied with the Steel Act. The Supreme Court held the Commonwealth Court improperly calculated the cost of the steel products at issue, thereby reversing and remanding for further proceedings. View "United Blower, et al. v Lycoming Water & Sewer" on Justia Law

The Sellers bought an Oakland property to “flip.” After Vega renovated the property, they sold it to Vera, providing required disclosures, stating they were not aware of any water intrusion, leaks from the sewer system or any pipes, work, or repairs that had been done without permits or not in compliance with building codes, or any material facts or defects that had not otherwise been disclosed. Vera’s own inspectors revealed several problems. The Sellers agreed to several repairs Escrow closed in December 2011, but the sewer line had not been corrected. In January 2012, water flooded the basement. The Sellers admitted that earlier sewer work had been completed without a permit and that Vega was unlicensed. In 2014, the exterior stairs began collapsing. Three years and three days after the close of escrow, Vera filed suit, alleging negligence, breach of warranty, breach of contract, fraud, and negligent misrepresentation. Based on the three-year limitations period for actions based on fraud or mistake, the court dismissed and, based on a clause in the purchase contract, granted SNL attorney’s fees, including fees related to a cross-complaint against Vera’s broker and real estate agent.The court of appeal affirmed. Vera’s breach of contract claim was based on fraud and the undisputed facts demonstrated Vera’s claims based on fraud accrued more than three years before she filed suit. Vera has not shown the court abused its discretion in awarding fees related to the cross-complaint. View "Vera v. REL-BC, LLC" on Justia Law

The Contractors’ State License Law (Bus. & Prof. Code 7031), allows any person who utilizes the services of unlicensed building contractors to sue for disgorgement of all compensation paid for the performance of any act or contract, even when the work performed is free of defects. CDC brought a section 7031(b) claim for disgorgement against Obayashi in 2017, more than eight years after the completion of construction of the InterContinental Hotel in San Francisco. The issue of licensure came to light during litigation concerning construction defects.The trial court dismissed, citing Code of Civil Procedure 340(a), the one-year limitations period for statutory forfeiture or penalty causes of action. The court of appeal affirmed. The one-year statute of limitations applies to disgorgement claims brought under section 7031, and the discovery rule and other equitable doctrines do not. Even if such doctrines applied to statutory disgorgement claims, they would not apply under the circumstances presented under the pleadings. The court also upheld the trial court’s award of $231,834 in contractual attorney fees; the parties’ agreement contemplated the recovery of attorney fees for non-contractual causes of action that are initiated because of an alleged breach of the parties’ contract. View "San Francisco CDC LLC v. Webcor Construction L.P." on Justia Law

This case arises from the parties' dispute concerning a construction project to expand the Manhattan Village Shopping Center in Manhattan Beach, California. The parties' predecessors executed the Construction, Operation and Reciprocal Easement Agreement (the COREA) in 1980. The parties resolved disputes in a Settlement Agreement in 2008 where, under the terms of the settlement agreement, RREEF agreed not to oppose Hacienda's plan to convert office space into restaurants and Hacienda agreed not to oppose RREEF's expansion project subject to certain limitations in the Agreement. At issue is RREEF's project.The Ninth Circuit affirmed the district court's grant of summary judgment on the nuisance claim and reversed the district court as to the remaining claims. In regard to the claim for breach of contract, the panel concluded that RREEF has discretion to pursue the project and alter the site plan, and Hacienda's objections to the city are limited to RREEF's material changes. That RREEF has discretion to revise the site plan does not mean that Hacienda gave up its rights under the COREA, especially considering that the Settlement Agreement, by its own terms, does not amend the COREA. In regard to the claim for interference with easement rights, the panel concluded that the Settlement Agreement does not extinguish plaintiffs' easement rights under the COREA, and the district court erred in holding otherwise. In regard to the claim for breach of the covenant of good faith and fair dealing, the panel concluded that plaintiffs have presented sufficient evidence to raise a triable issue as to whether RREEF's construction of the North Deck was contrary to "the contract's purposes and the parties' legitimate expectations." In regard to the claim for interference with business and contractual relations, the panel concluded that plaintiffs have raised triable issues concerning whether defendants' construction interfered with Hacienda's tenant contracts, and whether defendants acted with the knowledge that "interference is certain or substantially certain to occur as a result of [their] action."The panel also reversed the district court's grant of summary judgment as to plaintiffs' request for declaratory relief. In regard to RREEF's counterclaims, the panel concluded that policy considerations weighed against applying the litigation privilege. Finally, the panel concluded that the attorneys' fee question was moot and vacated the district court's order denying the parties' motions for attorneys' fees. View "3500 Sepulveda, LLC v. RREEF America REIT II Corp. BBB" on Justia Law