Justia Construction Law Opinion Summaries

This case was one of a number of cases which have, in the aftermath of the "Great Recession" that hit Riverside and San Bernadino counties particarly hard. This appeal stemmed from the construction of a Kohl’s department store in Beaumont. The developer of the store was Inland-LCG Beaumont, LLC, and the general contractor was 361 Group Construction Services, Inc. Somewhere in the process of construction, the money dried up and 361 refused to pay its subcontractors for work they had done. Those subcontractors included Cass Construction, TNT Grading Inc., Palomar Grading & Paving and R3 Contractors. These four subcontractors recorded mechanic’s liens and sued to foreclose those liens. With one exception they obtained judgments of foreclosure. The one exception was TNT, who, by the time of the trial to foreclose its mechanic’s lien, was a suspended corporation and thus unable to prosecute an action. The two owners of the property, Kohl’s and Wells Fargo, appealed the judgments obtained by the three successful subcontractors, Cass, R3 and Palomar Grading. The Court of Appeal took a "soup-to-nuts" approach in reviewing the multiple issues presented on appeal, and affirmed in all respects except to the degree that liens of Palomar Grading and Cass should include prejudgment interest. To that degree the Court reversed the judgment and remanded it with instructions to the trial court to recalculate the prejudgment interest at 7 percent. On balance, Cass and R3 were still the prevailing parties in this appeal: Of 10 issues raised, they prevailed, either singly or together, in 9. They recovered their costs on appeal from Kohl’s and Wells Fargo. For Palomar Grading, the only issue on which it has appeared in this appeal was the issue of the proper rate of prejudgment interest, and on that issue it lost. "However, it would be unfair to allow Kohl’s and Wells Fargo to recover all their appellate costs from Palomar Grading because they won on the lone prejudgment interest rate issue. Most of this appeal has concerned their unsuccessful challenges to the foreclosure judgments obtained by Cass and R3." View "Palomar Grading v. Wells Fargo" on Justia Law

Defendants / cross-complainants Intervest-Mortgage Investment Company and Sterling Savings Bank (together Intervest) appealed a judgment in favor of plaintiff / cross-defendant Moorefield Construction, Inc. The parties' dispute stemmed from an uncompleted medical office building development in San Jacinto. Moorefield was the general contractor for the development, and Intervest was the construction lender. The developer, DBN Parkside, LLC, encountered financial difficulties toward the end of the project. As a result, DBN did not fully pay Moorefield for its construction services and defaulted on its construction loan from Intervest. Moorefield filed a mechanic's lien against the development property, and Intervest took title to the property in a trustee's sale under the construction loan. Moorefield's sought to foreclose on its mechanic's lien. Intervest's cross-complaint against Moorefield sought a declaration of the relative priority of the lien, equitable subrogation to a priority position over the lien, quiet title, and judicial foreclosure. After a bench trial, the court entered judgment in favor of Moorefield on the complaint and cross-complaint, declared Moorefield's mechanic's lien was superior in priority to Intervest's construction loan deed of trust, and ordered foreclosure and sale of the property to satisfy Moorefield's mechanic's lien. Intervest appealed, arguing: (1) the court erred in finding Moorefield's agreement to subordinate its mechanic's lien to the construction loan deed of trust was unenforceable; (2) the court should have applied the doctrine of equitable subrogation to give Intervest partial priority over Moorefield's mechanic's lien; (3) substantial evidence does not support the court's finding that Moorefield commenced work prior to the recording of Intervest's deed of trust; and (4) substantial evidence does not support the court's finding that Moorefield's mechanic's lien was timely filed following completion of construction. After review, the Court of Appeal concluded Moorefield's agreement to subordinate its mechanic's lien to the construction loan deed of trust was enforceable and therefore reversed the trial court's judgment. View "Moorefield Constr. v. Intervest-Mortgage" on Justia Law

Appellant Charles DeGroot and DeGroot Farms, LLC appealed the district court's grant of summary judgment on its claims against Standley Trenching, Inc. d/b/a Standley & Co., relating to the construction and installation of a manure handling system at the DeGroot dairy. Beltman Construction, Inc., d/b/a Beltman Weldling and Construction, was the general contractor for the project. Beltman subcontracted with Standley for the installation of the manure handling equipment. J. Houle & Fils, Inc. manufactured the manure handling equipment installed at the DeGroot dairy. Because of maintenance problems with the manure handling equipment, DeGroot initiated litigation against Standley and Houle. DeGroot then initiated litigation against Beltman. Beltman brought a third party complaint against Standley. Standley counterclaimed against DeGroot for amounts due for parts and services. The district court granted Standley summary judgment on its counterclaim, granted Standley summary judgment on DeGroot's claims, and granted Standley summary judgment on Beltman's third party complaint. DeGroot appealed. Finding no reversible error, the Supreme Court affirmed. View "DeGroot v. Standley Trenching, Inc." on Justia Law

Appellant Edged in Stone, Inc. (EIS) sought damages for breach of contract, breach of warranty, breach of implied covenant of good faith and fair dealing, negligence and unjust enrichment when a skid loader it purchased experienced mechanical problems. The district court dismissed all of EIS's claims except breach of contract and unjust enrichment. Later, the district court entered a judgment in favor of Northwest Power Systems, LLC (NWPS), dismissing EIS's remaining claims and awarded NWPS attorney's fees and costs. EIS appealed to the Supreme Court, arguing arguing that the district court erred in granting summary judgment to NWPS. After careful consideration of the trial court record, the Supreme Court found no reversible error and affirmed that court's grant of summary judgment.View "Edged In Stone v. NW Power Systems" on Justia Law

At issue in this case was whether Washington State courts have jurisdiction over a civil case arising out of a contract in which the tribal corporation waived its sovereign immunity and consented to jurisdiction in Washington State courts. The Washington Supreme Court held that it did not infringe on the sovereignty of the tribe to honor its own corporation's decision to enter into a contract providing for jurisdiction in Washington State courts. View "Outsource Servs. Mgmt. v. Nooksack Bus. Corp." on Justia Law

The respondents, two developers and an architectural firm, Stevens & Wilkinson of South Carolina, Inc. (S&W), entered into a Memorandum of Understanding (MOU) with the City of Columbia as part of a larger project team to develop a publicly-funded hotel for the Columbia Metropolitan Convention Center. The City eventually abandoned its plan under the MOU, and the respondents brought suit on several causes of action including breach of contract and equitable relief. The City moved for summary judgment arguing the MOU was not a contract and therefore the contract claims failed. The circuit court agreed and, rejecting the equitable claims as well, granted summary judgment in favor of the City. The respondents appealed and the court of appeals affirmed in part and reversed in part. The Supreme Court reversed. Because the MOU was comprised of agreements to execute further agreements, there was no meeting of the minds on numerous material terms which had not yet been defined. Accordingly, the court of appeals was reversed with respect to that portion of the court's judgment; the Supreme Court held the MOU was unenforceable as a matter of law. The Supreme Court agreed with the circuit court and reinstated its judgment in favor of the City. View "Stevens & Wilkinson of South Carolina, Inc. v. City of Columbia" on Justia Law

In April 2003, the City of Columbia entered into a Memorandum of Understanding (MOU) with Stevens & Wilkinson of South Carolina, Inc. (S&W) and several other parties, to develop a publicly-funded hotel adjacent to the Columbia Metropolitan Convention Center. As architect, S&W was to complete sufficient preliminary design work to determine a guaranteed maximum price for the project, which would be used by the City to obtain municipal bond funding to cover the cost of the hotel. Pursuant to the MOU, the construction company was to pay S&W directly. On June 26, 2003, the City received a letter stating S&W would complete its preliminary design on July 10, 2003, and would then stop working until the bond financing for the hotel was finalized. Realizing this could delay the start of construction, S&W offered to continue working the remaining ninety days until the anticipated bond closing date of October 13, 2003, but required assurance it would be compensated for the work it performed during this time frame. It provided an estimate requiring $650,000 and $75,000 per week after that. On July 30, the City approved "$650,000 for interim architectural design services for a period of 90 days prior to bond closing." The bond closing did not occur as scheduled, but S&W nevertheless continued to work. S&W submitted an invoice to the City for $697,084.79 for work that took place from July 10 to December 15, 2003. By letter dated December 17, 2003, S&W informed the construction company that the City had voted that day "to advance [$705,000.000] to the design team for design services and expenses. Because under the MOU the construction company was to pay S&W, not the City, the construction company agreed to reimburse the City for the funds paid to S&W after the bond closing. The City paid S&W's invoice. S&W continued to work on the project, but in March 2004, the City abandoned its plans under the MOU and ended its relationship with S&W. S&W received no further compensation and sued the City for breach of contract under the MOU and the July 2003 agreement. The City argued there was no separate agreement and the payment of interim fees was merely an advance on fees under the MOU and furthermore, the MOU provided that S&W was to be paid by the construction company, not the City. The trial court granted partial summary judgment in favor of S&W, finding a contract existed between it and the City. On certiorari, the City conceded a contract exists, but argued the contract terms have been satisfied. The Supreme Court found the City's arguments were unpreserved and affirmed as modified. View "Stevens & Wilkinson of South Carolina, Inc. v. City of Columbia" on Justia Law

The Illinois Department of Labor sent Jack’s Roofing a notice of investigation of possible violation of the Employee Classification Act, 820 ILCS 185/3.25 by misclassifying employees as independent contractors. Jack’s provided the Department with requested information. Preliminary determination found misclassification of 10 individuals for eight to 160 days and calculated a potential penalty of $1,683,000. The Department requested a response within 30 days for consideration before final determination. Less than a month later, the Department sent notice of a second investigation Jack's sought injunctive relief and a declaratory judgment that the Act is unconstitutional as violating: the special legislation clause of the Illinois Constitution because it subjects the construction industry to more stringent employment standards than other industries; the due process clauses of the U.S. and Illinois Constitutions because it does not provide an opportunity to be heard and is impermissibly vague; the U.S. Constitution's prohibition against bills of attainder because it is a legislative act that inflicts punishment without a judicial trial; and the equal protection clauses of both constitutions because no other industry is subjected to the same standards when seeking to hire independent contractors. On remand, the court denied relief, finding the Act valid and enforceable. The appellate court affirmed. The Illinois Supreme Court affirmed in part, rejecting facial constitutional challenges. A procedural due process challenge to enforcement provisions has been rendered moot by the recent amendments to the Act, which must be applied to plaintiffs in the future. The court also affirmed that section 10 of the Act is not unconstitutionally vague. Remaining constitutional challenges to the Act were forfeited. View "Bartlow v. Costigan" on Justia Law

This case arose out of plaintiff Ferguson Fire's efforts to obtain payment for materials it supplied to defendant Preferred Fire Protection, LLC for defendant Immedion's data center. In 2007, Immedion, a telecommunications company, hired Rescom, L.L.C. to be the general contractor for improvements planned for its data center on property Immedion leased in Greenville. Rescom, in turn, hired Preferred Fire, a fire sprinkler company, as a subcontractor. In addition, Immedion directly hired Preferred Fire under a separate contract to install a special "pre-action" fire suppression system1 in its data center. To complete this work, Preferred Fire purchased materials from Ferguson Fire. Ferguson Fire began delivering materials to Preferred Fire in August, 2007, and the deliveries continued through October. In September, while its deliveries were in progress, Ferguson Fire sent a "Notice of Furnishing Labor and Materials" to Immedion advising it in relevant part that it had been employed by Preferred Fire to deliver labor, services, or materials with an estimated value of $15,000.00 to Immedion's premises. The Notice of Furnishing advised that it was being given as "a routine procedure to comply with certain state requirements that may exist," and that it was not a lien, nor any reflection on Preferred Fire's credit standing. Immedion paid Preferred approximately half of the contract price for installation of the system before receiving Ferguson Fire's Notice of Furnishing. After receiving the Notice, Immedion issued two additional checks to Preferred Fire for the unpaid balance of the contract price. Immedion paid everything it owed to Rescom, and it also paid its contractor Preferred Fire in full under the separate contract for the fire suppression system. However, Preferred Fire never paid Ferguson Fire for the materials it furnished. Ferguson brought a mechanic's lien foreclosure action against Immedion and Preferred Fire. Ferguson Fire contended (and the Supreme Court agreed) that the Court of Appeals erred in adding requirements to S.C Code Ann. 29-5-40 (2007) (governing a notice of furnishing) that were not in the statute itself and in concluding Ferguson Fire did not establish an effective lien upon which a foreclosure action could be premised. The Supreme Court reversed and remanded for further proceedings. View "Ferguson Fire v. Preferred Fire" on Justia Law

Gambro Renal Products, Inc. hired The Facility Group, Inc. ("TFG"), as the general contractor for the construction of a facility designed to produce kidney dialysis filters in Opelika. TFG contracted with the Hardy Corporation for specialized piping work on the project. Absolute Welding Services, Inc. ("AWS"), is a subsidiary of Rayco Industrial, Inc., a subsubcontractor hired by Hardy. Although the negotiations on the subcontract at issue in these appeals were between AWS and Hardy, the subcontract was executed by Rayco and Hardy. A dispute arose over whether the exclusion of "passivation" and the installation of piping in Rayco's offer was incorporated into its subcontract. Rayco filed a complaint against Hardy, Gambro and 15 fictitiously named parties, seeking an accounting, a declaratory judgment, a reformation of the contract, and perfection of a lien. Rayco asserted claims for damages for breach of contract, unjust enrichment/quantum meruit, and "work and labor done." Both parties unhappy with the eventual trial court order resolving the dispute, appealed the order. After careful consideration of the contracts and the trial court record, the Supreme Court reversed in part, and affirmed in part. The case was remanded with instructions for further proceedings.View "Hardy Corporation v. Rayco Industrial, Inc. " on Justia Law