Justia Construction Law Opinion Summaries

In this case, the Court of Appeal of the State of California Third Appellate District was asked to determine two key issues. The first issue pertained to whether K&S Staffing Solutions, Inc., a staffing company, could be considered a “laborer” within the meaning of the mechanics’ lien law. The second issue was whether the payment bonds issued for two state projects were subject to the mechanics’ lien law’s requirements. The staffing company had been contracted by a subcontractor, Titan DVBE Inc., to fulfill its staffing needs for two road maintenance projects awarded by California’s Department of Transportation (Caltrans) to VSS International, Inc. (VSSI). When Titan failed to pay K&S all the amounts owed for the projects, K&S sued VSSI and the Western Surety Company, which had issued payment bonds for the projects. K&S argued that it was a “laborer” within the meaning of the mechanics’ lien law and was therefore entitled to recover against the payment bonds. The trial court disagreed, finding that K&S was not a “laborer” as it failed to show it was the employer of the laborers. On appeal, the Court of Appeal affirmed the trial court’s decision, interpreting the term “laborer” as defined in the mechanics’ lien law to mean “a person who, acting as an employee, performs labor upon, or bestows skill or other necessary services on, a work of improvement.” The court concluded that K&S was not a “laborer” as it was not acting as an employee in any capacity. The court also affirmed the trial court’s award of attorney fees to the defendants under a provision in the mechanics’ lien law. Although K&S argued that this provision was inapplicable because the payment bonds for the projects were not “payment bonds” within the meaning of the mechanics’ lien law, the court rejected this argument. The court concluded that the general requirements of the mechanics’ lien law for payment bonds applied both to state projects that required a bond under the Public Contract Code and other “public entity” projects that required a bond under the mechanics’ lien law. View "K & S Staffing Solutions v. The Western Surety Co." on Justia Law

In the case before the Court of Appeal of the State of California Second Appellate District Division Eight, the plaintiff, a construction company, sued the defendant, a homeowner, for defamation after the homeowner posted critical comments about the company online. The homeowner had hired the construction company to repair her home after it was damaged by a fallen tree. Dissatisfied with the work, the homeowner reported the company to the Contractors State License Board and began posting negative reviews of the company on her blog and Yelp. In response to the defamation lawsuit, the homeowner filed a special motion to strike, arguing that her comments were protected by the litigation privilege. The trial court denied the motion, and the homeowner appealed.The appellate court affirmed the lower court's decision, holding that the homeowner's online posts were not covered by the litigation privilege. The court explained that the litigation privilege applies only to communications made in judicial or quasi-judicial proceedings that have some connection to the litigation. The homeowner's posts were public criticisms of the construction company, some of which did not even mention the Contractors State License Board. Therefore, the court found that the posts were akin to press releases and lacked the necessary connection to the proceedings before the board. The court also rejected the homeowner's arguments that the construction company failed to plead that her statements were unprivileged, that her statements were true, and that her statements were merely her opinions. View "Paglia & Associates Construction v. Hamilton" on Justia Law

In this case, the United States Court of Appeals for the Fifth Circuit considered an appeal by Colony Insurance Company against First Mercury Insurance Company related to a settlement agreement for an underlying negligence case. Both companies had consecutively insured DL Phillips Construction, Inc. (DL Phillips) under commercial general liability insurance policies. After the settlement, Colony sued First Mercury, arguing that First Mercury needed to reimburse Colony for the full amount of its settlement contribution, as it contended that First Mercury's policies covered all damages at issue. The district court granted summary judgment in favor of First Mercury, prompting Colony's appeal.In the underlying negligence case, DL Phillips was hired to replace the roof of an outpatient clinic in Texas. Shortly after completion, the roof began leaking, causing damage over several months. The clinic's owner sued DL Phillips for various claims, including breach of contract and negligence. A verdict was entered against DL Phillips for over $3.7 million. Both Colony and First Mercury contributed to a settlement agreement, and then Colony sued First Mercury, arguing it was responsible for all the property damage at issue.The appellate court held that under the plain language of First Mercury's policies and relevant case law, First Mercury was only liable for damages that occurred during its policy period, not all damages resulting from the initial roof defect. The court also found that Colony failed to present sufficient evidence to create a genuine dispute of material fact about whether there was an unfair allocation of damages, which would be necessary for Colony's contribution and subrogation claims. As such, the court affirmed the district court's decision to grant summary judgment in favor of First Mercury and denied summary judgment for Colony. View "Colony Insurance Company v. First Mercury Insurance Company" on Justia Law

In this case, the Supreme Court of the State of Idaho was required to interpret aspects of Idaho’s mechanic’s lien statutes. Datum Construction, LLC, was the general contractor for a commercial construction project, and subcontracted part of the work to Elmore Welding and Steel, who rented equipment from RE Investment Co., LLC, dba Pro Rentals & Sales. Elmore Welding and Steel failed to pay Pro Rentals for the equipment rental, resulting in Pro Rentals filing a mechanic's lien. Datum then purchased a bond and petitioned the district court to release the lien. Pro Rentals did not oppose this petition and the district court released the lien. Datum argued that Pro Rentals had failed to begin proceedings to enforce its claim of lien within six months. The district court granted Datum’s motion to release the bond. Pro Rentals appealed this decision.The Supreme Court of the State of Idaho ruled in favor of Pro Rentals, determining that the district court had erred in applying a six-month statute of limitations from the mechanic’s lien statutes to a bond action. The court held that the bond replaced the lien, and the six-month period to enforce a lien was not applicable once the lien was released. The court determined that the appropriate statute of limitations for an action against the bond was two years under Idaho Code section 5-219. Therefore, the court reversed the district court’s decision to release the bond. View "Datum Construction, LLC v. Re Investment Co." on Justia Law

In February 2020, Shift Services, LLC (Shift) was contracted by Ames Savage Water Solutions, LLC (Ames) to repair a liner inside a water tank operated by Ames. The agreement was for a fixed price of $39,500.00, which included all labor, material, and travel time. When Shift began the work, they found a more significant amount of ice in the tank than initially observed. Shift communicated with Ames about the issue and decided to subcontract a hot oil truck company to melt the ice. Upon completion of the project, Ames paid the contracted amount but refused to pay an additional $31,705.00 bill from Shift related to the ice removal. Shift claimed that the contract was modified to include these additional costs, which Ames had allegedly approved. The district court dismissed Shift's breach of contract claim and terminated the construction lien it had placed on the property, finding that there was a lack of mutual assent to modify the contract.The Supreme Court of North Dakota affirmed the district court's decision. The court found that Shift did not provide sufficient evidence to demonstrate mutual assent for the modification of the original contract. The court pointed out that Shift had not disclosed to Ames that they intended to add an additional charge for the increased cost associated with the ice removal, nor did they discuss the details of the subcontractor, the equipment to be used, or the estimated number of hours that the removal would take. In conclusion, the court found no error in the district court's finding of a lack of mutual assent to modify the contract, thereby confirming that Ames did not breach the contract. View "Shift Services v. Ames Savage Water Solutions" on Justia Law

In this case, Nova Group/Tutor-Saliba (“NTS”) was awarded a construction contract by the United States Department of the Navy to build a new aircraft carrier maintenance pier at a naval base. The contract required NTS to demolish an old pier, design and build a replacement pier, and construct a new structure known as the Mole Quaywall, which would be designed by the government. During construction, NTS encountered unexpected subsurface soil conditions that complicated and increased the cost of the project. NTS sought additional compensation from the government alleging differing site conditions.The United States Court of Appeals for the Federal Circuit affirmed the decision of the United States Court of Federal Claims which had denied NTS's claim for additional compensation. The Court of Federal Claims found that NTS had not established a Type I differing site condition because the contract documents disclosed that NTS would encounter unpredictable subsurface conditions and possible obstructions. It also found that NTS had failed to prove a Type II differing site condition, as it had not demonstrated that any of the potential causes for hard driving were unknown or unusual in the region or materially different from comparable work. The Court of Appeals agreed with these findings and also ruled that the parol evidence rule had not been violated as NTS claimed. The Court of Appeals found that the parol evidence rule does not prevent a party from presenting evidence that a recital of fact in an integrated agreement may be untrue, and the challenged evidence was not introduced to modify any term of the contract. Therefore, the appeal by NTS was denied and the decision of the Court of Federal Claims was affirmed. View "NOVA GROUP/TUTOR-SALIBA v. US " on Justia Law

The Supreme Court of the State of Alaska was asked to determine whether the question of a deceased worker's status as an employee or independent contractor under the Alaska Worker's Compensation Act should be determined by a jury or a judge. The lawsuit was initiated by the estate of Nicholson Tinker, a worker who was killed in a construction accident while working for Mark Welty, doing business as North Country Services. Welty had no workers' compensation coverage at the time of the accident. Tinker's estate argued that he was an employee and that under the Act, Welty was presumed negligent because he had no compensation coverage. Welty argued that Tinker was an independent contractor, hence the Act did not apply.The superior court decided that the question of employee status was an issue for the jury to decide. The estate appealed this decision, arguing that the Supreme Court's earlier decision in Benson v. City of Nenana determined that a judge, not a jury, should decide the issue of a worker's status under the Act.The Supreme Court of the State of Alaska agreed with the estate, holding that the superior court must determine whether Tinker was an employee or independent contractor under the Act as a preliminary issue before trial. The Court reasoned that the applicability of the Act is a legal determination with factual underpinnings that the court should decide as a preliminary matter. The Court also noted that determining the employee status promptly is significant due to its potential impact on basic issues such as the type of action a party can bring or the burden of proof for negligence. Therefore, the Court reversed the superior court’s order that the jury decides the issue of employee status and remanded for further proceedings. View "Leona Seal, Personal Representative of the Estate of Nicholson J. Tinker v. Mark C. Welty D/B/A North Country Services" on Justia Law

In the case before the Supreme Court of the State of Alaska, the petitioner, Eric McDonald, an employee of a subcontractor, suffered injuries during the renovation of a high school. He sued Architects Alaska, Inc. and BBFM Engineers, Inc., alleging that they negligently failed to exercise reasonable care in the design, supervision, implementation, and specifications of the demolition of the renovation project. Before trial, the parties’ attorneys discussed the possibility of a settlement, and the defendants moved to enforce a “walk-away” settlement they claimed had been reached through email correspondence. McDonald, unrepresented at this point, did not file a substantive response to the defendants’ motion. The superior court granted the defendants’ motion and dismissed the case.About a year later, McDonald moved for relief from judgment under Alaska Rule of Civil Procedure 60(b), arguing that he had never given his attorney authority to settle the case. A different superior court judge granted the motion, finding that factual issues precluded summary judgment on whether a settlement agreement existed, that the earlier dismissal was erroneous as a law matter, and that extraordinary circumstances otherwise entitled McDonald to Rule 60(b) relief. The defendants petitioned for review, and the Supreme Court of the State of Alaska reversed the ruling on the ground that McDonald’s Rule 60(b) motion was not filed within a reasonable time. View "BBFM Engineers, Inc. v. McDonald" on Justia Law

The Homeowners Association alleged that M/I’s subcontractors caused construction defects in a Hanover Park development by using defective materials, conducting faulty workmanship, and failing to comply with building codes. The Association alleged that it would be required to repair the defects and “damage to other property caused by the [d]efects.” M/I demanded a defense from Acuity as the additional insured on a commercial general liability policy that Acuity issued to one of its subcontractors on which M/I was an additional insured. Acuity sought a declaratory judgment, arguing that the complaint failed to allege any “property damage” caused by an “occurrence” as those terms are defined by the policy and interpreted by Illinois law. The circuit court granted Acuity summary judgment.The Illinois Supreme Court held that the allegations sufficiently fall within the initial grant of coverage requirement that there be “property damage” caused by an “occurrence.” The court remanded for further consideration of whether policy exclusion bar coverage. To hold that all construction defects that result in property damage to the completed project are always excluded would mean that the exclusions in the policy related to business risk become meaningless. The business risk exclusions contemplate that some construction defects that result in property damage are covered and some are not, depending on various factors. View "Acuity v. M/I Homes of Chicago, LLC" on Justia Law

Stronghold and the city entered into a 2015 contract to renovate the Monterey Conference Center. Before filing a lawsuit asserting a claim for money or damages against a public entity, the Government Claims Act (Gov. Code 810) requires that a claim be presented to the entity. Without first presenting a claim to the city, Stronghold filed suit seeking declaratory relief regarding the interpretation of the contract, and asserting that the Act was inapplicable.Stronghold presented three claims to the city in 2017-2019, based on its refusal to approve change orders necessitated by purportedly excusable delays. Stronghold filed a fourth amended complaint, alleging breach of contract. The court granted the city summary judgment, reasoning that the declaratory relief cause of action in the initial complaint was, in essence, a claim for money or damages and that all claims in the operative complaint “lack merit” because Stronghold failed to timely present a claim to the city before filing suit.The court of appeal reversed. The notice requirement does not apply to an action seeking purely declaratory relief. A declaratory relief action seeking interpretation of a contract is not a claim for money or damages, even if the judicial interpretation sought may later be the basis for a separate claim for money or damages which would trigger the claim presentation requirement. View "Stronghold Engineering, Inc. v. City of Monterey" on Justia Law