Justia Construction Law Opinion Summaries

After a bank acquired an apartment complex by deed in lieu of foreclosure the bank discovered substantial black mold in the units. The bank sued the builder, alleging, inter alia, that the builder breached the implied warranty of workmanlike construction. The district court granted summary judgment to the builder on the implied warranty claim. The court of appeals affirmed. The Supreme Court affirmed, holding that the bank may not recover under the implied warranty of workmanlike construction, as the implied warranty of workmanlike construction does not extend to a lender acquiring apartment buildings by a deed in lieu of foreclosure. View "Luana Savings Bank v. Pro-Build Holdings, Inc." on Justia Law

The issue at the heart of this appeal to the Tenth Circuit centered on indemnity stemming from a promise by Martin K. Eby Construction Company’s predecessor to build a water pipeline. Eby engaged another company (the predecessor to Kellogg Brown & Root, LLC), promising to indemnify claims resulting from Eby’s work. While building the water pipeline, Eby accidentally hit a methanol pipeline, causing a leak. At the time, no one knew about the leak. It was discovered over two decades later, and the owner of the methanol pipeline had to pay for the cleanup. The owner of the methanol pipeline sued to recover the expenses from Kellogg and Eby. Kellogg and Eby prevailed, but Kellogg incurred over $2 million in attorneys’ fees and costs. Kellogg invoked Eby’s indemnity promise, suing Eby and its liability insurer, Travelers Casualty and Surety Co. The district court granted summary judgment to Eby and Travelers, leading Kellogg to appeal. To resolve the Kellogg-Eby portion of the appeal, the Tenth Circuit focused on the enforceability of Eby’s promise of indemnity: the promise was broad enough to cover the pipeline owner’s claims against Kellogg for its inaction after Eby caused the leak, but the indemnity clause was not conspicuous; thus, it was unenforceable. The Kellogg-Travelers appeal turned on Kellogg’s argument that Travelers’ insurance policy covered liabilities assumed by its insured (Eby). The Tenth Circuit concluded that because the indemnity clause was unenforceable, it is as if Eby never agreed to assume Kellogg’s liabilities. In the absence of Eby’s assumption of Kellogg’s liabilities, Travelers did not insure Kellogg. Accordingly, Kellogg was not entitled to indemnity from Eby or insurance coverage from Travelers, and Eby and Travelers were entitled to summary judgment. View "Martin K. Eby Construction v. OneBeacon Insurance" on Justia Law

Five Corners Rialto, LLC obtained a construction loan from Vineyard Bank to develop a 70-unit townhome project. Thomas DelPonti and David Wood, principals of Five Corners, guaranteed the loan. Five Corners contracted with general contractor Advent, Inc. to build the project in two phases. Everything went according to schedule for the first 18 months. However, when Phase I of the Project was nearly complete, the Bank stopped funding approved payment applications, preventing completion and sale of the Phase I units, which, in turn, caused Five Corners to default on the loan. The Bank reached an agreement with Five Corners, requiring Advent to finish Phase I so the units could be sold at auction, and promising to pay the subcontractors if they discounted their bills and released any liens. Advent paid the subcontractors out of its own pocket in order to keep the project lien-free, so the auction could proceed. However, the Bank foreclosed against Five Corners. Advent filed an unbonded stop notice. The Bank (through its assignee California Bank and Trust), sued Five Corners and the Guarantors under various theories for the deficiency following a Trustee’s Sale of the Deed of Trust, while Advent sued the developer and the Bank for restitution for the amounts it paid out of pocket. The cases were consolidated and tried. Advent amended its complaint to conform to proof to add causes of action for breach of the assigned contract and promissory estoppel. The trial court awarded judgment in favor of Advent on these causes of action. The court denied Advent judgment for enforcement of its stop notice claim. In the Bank’s action against the Guarantors, the court found that the Bank breached the loan contract, exonerating the Guarantors. The court awarded attorneys’ fees to Advent and the Guarantors. The Bank appealed the judgments against it; Advent appealed the portion of the judgment denying enforcement of the stop notice. Finding no reversible error, the Court of Appeal affirmed. View "Cal. Bank & Trust v. Del Ponti" on Justia Law

Plaintiff entered into a subcontract with a general contractor to perform work on a public construction project. The general contractor provided a payment bond with Defendant, a surety on the project. Plaintiff later submitted to the general contractor a request for equitable adjustment to the subcontract to recoup additional costs allegedly incurred as a result of the general contractor’s deficient performance. When the general contractor did not respond to the claims, Plaintiff sent Defendant notice of its claim. Defendant failed either to pay or to deny notice of the claim within ninety days as required by Conn. Gen. Stat. 49-42(a). Plaintiff subsequently sued Defendant in federal district court, alleging that Defendant had waived any substantive defenses, and Plaintiff was therefore entitled to judgment in the full amount of the claim. The district court certified questions of law to the Supreme Court regarding the correct interpretation of section 49-42(a). The Supreme Court answered that a surety’s failure to pay or deny a claim under section 49-42(a) within the ninety day deadline is tantamount to a denial of the claim and does not constitute a waiver of the surety’s right to defend the claim on the merits. View "Elec. Contractors, Inc. v. Ins. Co. of State of Penn." on Justia Law

AIDG Properties, LLC, a real-estate holding company managed by Anjan Dutta-Gupta, purchased property. AIDG obtained loans from BankNewport (Defendant) to finance the purchase and to perform improvements. Dutta-Gupta personally guaranteed the loans. Emond Plumbing & Heating, Inc. and Tecta America New England, LLC (collectively, Plaintiffs) served as subcontractors on the project. Plaintiffs substantially completed the renovations, and BankNewport deposited the loan proceeds into AIDG’s account. After Dutta-Gupta was arrested, Defendant declared Dutta-Gupta to be in default and accelerated the loans. Defendant then set off the deposit it made previously by reversing it. As a result, AIDG was unable to pay Plaintiffs for the work they had performed. Defendant, who was granted possession of the property, later foreclosed. Plaintiffs filed a complaint seeking to recover compensation for their work under the theory of unjust enrichment. The superior court granted summary judgment for Defendant. The Supreme Court affirmed, holding that due to the absence of a relationship between Plaintiffs and Defendant and the lack of any allegation that Defendant engaged in any type of misconduct or fraud, Defendant’s retention of the property, including the improvements, was not inequitable under the Court’s jurisprudence on unjust enrichment. View "Emond Plumbing & Heating, Inc. v. BankNewport" on Justia Law

Tender Care Veterinary Hospital, Inc. ("TCVH"), appealed the grant of summary judgment entered in favor of First Tuskegee Bank on breach-of-fiduciary-duty and fraud claims stemming from a construction loan TCVH received from First Tuskegee in September 2004. The gravamen of those claims was that TCVH was injured by First Tuskegee's alleged insistence that TCVH use PJ Construction as the general contractor on the project although PJ Construction was not licensed as a general contractor in Alabama, that PJ Construction's work product was below what one would expect from a properly licensed general contractor, and that using PJ Construction resulted in delays, cost overruns, and, TCVH argued, the ultimate failure of its business. However, because TCVH's claims accrued in approximately July 2005 and TCVH did not formally assert them until after it initiated this action in April 2009, those claims were barred by the two-year statute of limitations that governed them. Accordingly, the summary judgment entered by the trial court in favor of First Tuskegee was affirmed. View "Tender Care Veterinary Hospital, Inc. v. First Tuskegee Bank " on Justia Law

R. Suzanne Smith hired Michael Ead to construct an addition onto her home. After receiving notice that the construction was in violation of the local zoning ordinance, Smith ceased construction and decided to sell the property. Raymond Wells and his wife offered to purchase the property on the condition that they remove the addition. Wells enlisted Plaintiff to help demolish the newly constructed addition. While working at the site, Plaintiff fell from the roof and was injured. Plaintiff sued Smith and Ead (together, Defendants), alleging negligence, among other claims. The trial justice granted summary judgment for Defendants. The Supreme Court affirmed, holding that the trial justice did not err in granting summary judgment as to (1) Plaintiff’s claim of negligent hiring against Smith, as Smith had no duty to ensure that what Ead built would be safe for a demolition; and (2) Plaintiff’s claims of negligent design, construction, and inspection against Ead, as Ead did not have a legal duty to make the roof safe for dismantling. View "Wells v. Smith" on Justia Law

BCC Construction, LLC (“BCC”) hired Sweet’s Contracting, Inc. (“SCI”) to perform work on a construction project. The parties entered into a subcontract that contained a pay-if-paid clause. After a dispute arose regarding how much compensation SCI was owed under the subcontract, SCI filed a materialmen’s lien against the project. BCC filed a bond in contest of the lien, and Travelers Casualty & Surety Company (“Travelers”) issued a lien-release bond as surety on behalf of BCC. SCI sued BCC and Travelers seeking recovery under the lien-release bond. The circuit court dismissed the claims against BCC, concluding that the pay-if-paid clause in the subcontract barred recovery from BCC because there was no evidence that BCC had been paid by the owner for the work it allegedly performed. A jury subsequently awarded damages against Travelers. The circuit court denied Travelers’ motion for directed verdict and entered judgment against it. The Supreme Court affirmed in part and reversed in part, holding that the circuit court (1) did not err in granting BCC’s motion for directed verdict; and (2) erred in denying Travelers’ motion for directed verdict, as Travelers, the surety, could not be liable where BCC, the principal, was not liable. View "Travelers Cas. & Sur. Co. of Am. v. Sweet's Contracting Inc." on Justia Law

This case consolidated several individual cases dealing with claims for nonpayment against the developer of the Summer Wind at Orchard Hills residential and golf course development in Canyon County. Stanley Consulting, Inc. appealed the district court’s decision as to the priority date for Stanley’s engineer’s lien. Integrated Financial Associates, Inc. (“IFA”) cross-appealed the district court’s decision granting Knife River’s summary judgment motion based on the court’s decision that Knife River had a valid priority lien for paving work it did on roadways and golf cart paths without having to designate the lien between the two projects. After its review of the claims, the Supreme Court concluded the district court erred when it determined an engineer’s priority under Idaho Code section 45-506 for rendering professional services dates back to when the first on-site professional services were rendered. Furthermore, the Court held the district court erred when it granted summary judgment in favor of Knife River on its lien claim priority. Accordingly, the district court’s judgments were vacated and the case is remanded for further proceedings. View "Stanley Consultants v. Integrated Financial Associates" on Justia Law

Defendant pleaded not guilty to driving under the influence of alcohol, obstructing a peace officer, and driving while license suspended. Defendant filed two motions to dismiss for lack of a speedy trial, contending that the City had not diligently prosecuted the case. The municipal court denied both motions, concluding that Defendant’s conduct had caused the delay. After a jury trial, Defendant was found guilty of obstructing a police officer and driving while license suspended. The district court affirmed the municipal court’s orders. The Supreme Court affirmed, holding that the municipal court did not err in denying Defendant’s motions to dismiss, as Defendant’s rights to a speedy trial were not violated. View "City of Kalispell v. Gabbert" on Justia Law