Justia Construction Law Opinion Summaries

Keiland Construction, L.L.C. entered into a construction subcontract with Weeks Marine, Inc. for a project in Louisiana. Weeks terminated the contract for convenience, leading to a dispute over compensation. Keiland submitted pay applications and demobilization costs, which Weeks partially paid. The disagreement centered on whether the contract required lump-sum payments for work completed before termination or if it converted to a cost-plus basis upon termination.The United States District Court for the Western District of Louisiana held a bench trial and found the contract ambiguous. It construed the ambiguity against Keiland, the drafter, and ruled in favor of Weeks. The court awarded Keiland damages based on Weeks’s interpretation of the contract but denied Keiland’s claims for direct employee and demobilization costs. The court also awarded Weeks attorneys’ fees and costs, though less than requested, and denied Weeks’s motion for post-offer-of-judgment fees and costs.The United States Court of Appeals for the Fifth Circuit reviewed the case. It affirmed the district court’s findings, agreeing that the contract was ambiguous and that the ambiguity should be construed against Keiland. The appellate court upheld the district court’s rulings on damages, attorneys’ fees, and costs, including the denial of post-offer-of-judgment fees and costs. The court also affirmed the award of prejudgment interest to Keiland, finding no abuse of discretion.In summary, the Fifth Circuit affirmed the district court’s judgment in all respects, including the interpretation of the contract, the award of damages, attorneys’ fees, costs, and prejudgment interest. View "Keiland Construction v. Weeks Marine" on Justia Law

A commercial tenant and landlord entered into a contract for the construction and lease of a warehouse, with the landlord also acting as the general contractor. The contract included a waiver of subrogation, where both parties waived subrogation against each other for certain losses, including those caused by their subcontractors. After the warehouse sustained weather damage, the tenant’s insurer sought to recoup insurance payments by suing the subcontractors.The Circuit Court for Baltimore City granted summary judgment in favor of the subcontractors, concluding that they were intended beneficiaries of the waiver of subrogation in the contract between the tenant and landlord. The court did not consider any extrinsic evidence regarding the parties' intent. The Appellate Court of Maryland reversed this decision, finding that the waiver of subrogation in the contract did not unambiguously benefit the subcontractors and that the subcontractors were not intended third-party beneficiaries.The Supreme Court of Maryland reviewed the case and held that the waiver of subrogation in the contract between the tenant and landlord did not extend to the subcontractors. The court found that the language of the waiver was unambiguous and did not show an intent to benefit the subcontractors. However, the court found that the waiver of subrogation included in the subcontracts was ambiguous regarding whether it applied to the tenant’s insurer’s claims against the subcontractors. Therefore, the court held that extrinsic evidence was needed to determine the parties' intent regarding the scope of the subrogation waiver in the subcontracts.The Supreme Court of Maryland affirmed the Appellate Court's decision, reversing the Circuit Court's summary judgment in favor of the subcontractors, and remanded the case for further proceedings to consider extrinsic evidence. View "Lithko Contracting v. XL Insurance America, Inc." on Justia Law

Summit Construction filed a lawsuit against Jay Koontz and Jennie L. Kennette for breach of contract and unjust enrichment, alleging nonpayment for work performed on Mr. Koontz’s home based on an oral agreement. The work included an addition to the home and extensive renovations to the existing structure. The District Court rejected both claims, determining that there was no enforceable oral contract between the parties and that Summit did not sufficiently prove its damages for the unjust enrichment claim.The District Court found that the parties had not mutually agreed to sufficiently definite terms for an oral contract. The court noted that the project progressed without a clear understanding of the scope of work, how it would be paid for, and who would be responsible for payment. The court also found that Summit's invoices did not clearly define the terms of the contract. Furthermore, the court concluded that Summit had failed to prove the amount by which Mr. Koontz was unjustly enriched, i.e., its damages.Upon appeal, the Supreme Court of Wyoming affirmed the District Court's decision. The Supreme Court agreed that Summit had failed to show the existence of an enforceable oral contract with either Mr. Koontz or Ms. Kennette. The court also agreed with the lower court's finding that Summit had failed to establish its damages to a reasonable degree of certainty, which is necessary for an unjust enrichment claim. View "Summit Construction v. Koontz" on Justia Law

A general contractor, Graycor Construction Company Inc., was involved in a dispute with a subcontractor, Business Interiors Floor Covering Business Trust, over unpaid invoices for flooring work performed on a movie theater project. Business Interiors submitted three separate applications for periodic payments, which Graycor neither approved nor rejected within the time limit set by the Prompt Pay Act. As a result, the applications were deemed approved under the Act. Business Interiors sued Graycor for breach of contract and other claims in the Superior Court. The Superior Court granted Business Interiors's motion for summary judgment on its breach of contract claim and entered separate and final judgment. Graycor appealed.Graycor argued that the original contract was not a "contract for construction" within the meaning of the Act, and that it had a valid impossibility defense due to its failure to pay. The Supreme Judicial Court held that the Act defines its scope broadly, and the subcontract at issue was a "contract for construction" under the Act. The Court also held that common-law defenses are not precluded by the Act, but a contractor that does not approve or reject an application for payment in compliance with the Act must pay the amount due prior to, or contemporaneous with, the invocation of any common-law defenses in any subsequent proceeding regarding enforcement of the invoices. As Graycor sought to exercise its defenses without ever paying the invoices, it could not pursue the defenses. The Court also vacated and remanded the rule 54 (b) certification to the motion judge for reconsideration. View "Business Interiors Floor Covering Business Trust v. Graycor Construction Company Inc." on Justia Law

The Supreme Court of the State of Colorado was asked to review a case involving a dispute between the City of Aspen and the Burlingame Ranch II Condominium Owners Association, Inc. The dispute centered around alleged construction defects in an affordable housing project overseen by the City of Aspen. The Association claimed that Aspen had breached express and implied warranties, and Aspen argued that the claims were barred by the Colorado Governmental Immunity Act (CGIA), which provides immunity to public entities from claims for injury that lie in tort or could lie in tort.The lower court agreed with Aspen, ruling that the Association's claims sounded in tort, or could sound in tort, and were thus barred by the CGIA. The Association appealed, and the Colorado Court of Appeals reversed the lower court's decision. The appellate court reasoned that the Association's claims could only sound in contract, and thus were not barred by the CGIA. The court relied on the economic loss rule, which generally provides that a party suffering only economic loss from the breach of a contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law.The Supreme Court of the State of Colorado reversed the appellate court's decision. The court held that the economic loss rule has no bearing on whether the CGIA bars a plaintiff’s claims. The court clarified that the CGIA bars claims that could arise in both tort and contract, and that the economic loss rule cannot rescue an otherwise CGIA-barred claim. The case was remanded back to the lower court for further proceedings. View "City of Aspen v. Burlingame Ranch II" on Justia Law

In September 2019, Eleticia Garcia hired Ponagansett 2 LLC, doing business as Peter Bibby Heating & Air, to perform mechanical work on her property. The parties signed two contracts, one for the installation of gas lines, water heaters, and boilers, and another for the installation of baseboards. However, Garcia failed to make the agreed-upon payments, leading Ponagansett to file a mechanics' lien against her property. When Garcia did not respond to the complaint, the Superior Court entered a default judgment in favor of Ponagansett.The Superior Court denied Garcia's subsequent motions to vacate the entry of default, to file a counterclaim out of time, to quash the mechanics' lien, and to file an oral proof of claim. Ponagansett then filed a motion for entry of default judgment against Garcia and a petition for attorneys' fees. The Superior Court granted Ponagansett's request to enforce the mechanics' lien, awarded Ponagansett $20,000 plus interest, and granted attorneys' fees of $12,310.27.On appeal to the Supreme Court of Rhode Island, Garcia argued that the mechanics' lien was unenforceable because Ponagansett failed to provide notice of a possible mechanics' lien as required by law. She also contended that the decisions of the hearing justice to award Ponagansett the full payment of $20,000 and exclude the admission of a mechanical permit were reversible errors. The Supreme Court affirmed the judgment of the Superior Court, holding that Garcia had waived her enforceability argument by failing to timely respond to Ponagansett's complaint. The court also found no error in the hearing justice's award of damages and exclusion of the mechanical permit. View "Ponagansett 2 LLC v. Eleticia Garcia" on Justia Law

In 2003, the City of Chicago contracted with Walsh Construction Company to manage the construction of a canopy and curtain wall system at O’Hare International Airport. Walsh subcontracted with LB Steel, LLC to fabricate and install steel columns to support the wall and canopy. Several years into the project, the City discovered cracks in the welds of the steel columns and sued Walsh for breaching its contract. Walsh, in turn, sued LB Steel under its subcontract. Walsh also asked LB Steel’s insurers to defend it in the City’s lawsuit, but they never did. Walsh eventually secured a judgment against LB Steel, which led it to declare bankruptcy. Walsh then sued LB Steel’s insurers to recover the costs of defending against the City’s suit and indemnification for any resulting losses.The district court granted summary judgment in favor of the plaintiff insurers on both issues. The court reasoned that, because the physical damage at issue was limited to LB Steel’s own products, it did not constitute “property damage” as that term appears in the policies, thereby precluding coverage. As for the duty to defend, the court determined that the Insurers had none, because the City’s underlying claims did not implicate potential coverage under LB Steel’s policies.The United States Court of Appeals for the Seventh Circuit affirmed the district court's decision. The court concluded that the defects in the welds and columns do not constitute “property damage” under LB Steel’s commercial general liability (CGL) policies. The court also found that the insurers had no duty to defend Walsh in the City’s underlying suit. The court further affirmed the district court's denial of Walsh’s request for sanctions under § 155. View "St. Paul Guardian Insurance Company v. Walsh Construction Company" on Justia Law

A homeowner, Mohammad Rafiei, sued his builder, Lennar Homes, alleging personal injuries due to a construction defect. The purchase contract between Rafiei and Lennar contained an agreement to submit disputes to arbitration under the Federal Arbitration Act, including issues of formation, validity, or enforceability of the arbitration agreement. Lennar moved to compel arbitration, but Rafiei argued that the arbitration agreement was unconscionable because the cost of arbitration was prohibitively high. The trial court denied Lennar's motion to compel arbitration.The Court of Appeals for the Fourteenth District of Texas affirmed the trial court's decision, holding that Rafiei had sufficiently demonstrated that the cost to arbitrate was excessive, making the arbitral forum inadequate to vindicate his rights. The court of appeals concluded that if Rafiei were required to pay more than $6,000, he would be precluded from pursuing his claims.The Supreme Court of Texas reversed the judgment of the court of appeals. The court held that the record failed to support a finding that the parties' delegation clause was itself unconscionable due to prohibitive costs to adjudicate the threshold issue in arbitration. The court noted that Rafiei had not provided sufficient evidence to show that he could not afford the cost of arbitrating the arbitrability question. The court also noted that Rafiei had not provided evidence of how the fee schedule would be applied to resolve the unconscionability issue. The court remanded the case to the trial court for further proceedings consistent with its opinion. View "Lennar Homes Of Texas Inc. v. Rafiei" on Justia Law

The Supreme Court of Louisiana considered whether an architect and contract administrator had duty of care towards an employee of a subcontractor under the terms of a construction contract. The employee, Gustavo Bonilla, had been injured during a demolition job and filed a suit alleging negligence against Verges Rome Architects (VRA) and Morphy Makofsky, Inc. (MMI). VRA had been hired as a consultant for design and contract administration services. The trial court ruled in favor of VRA, but the court of appeal reversed this decision.Upon review, the Supreme Court of Louisiana found that the contract terms were clear and unambiguous, and did not impose a duty on VRA to oversee, supervise, or maintain the construction site or Mr. Bonilla’s safety. VRA was required to make weekly site visits to ensure work was progressing according to specifications. However, the contract specifically stated that these visits should not be construed as supervision of actual construction. Responsibility for site safety and construction methods was allocated to the contractor.The Court concluded that VRA could not be held liable for failing to perform duties it was not contractually obligated to undertake. As a result, the Supreme Court reversed the court of appeal's decision and reinstated the trial court's judgment, which granted summary judgment in favor of VRA. View "BONILLA VS. VERGES ROME ARCHITECTS" on Justia Law

The Minnesota Supreme Court reversed a decision by the Court of Appeals, ruling that the district court did not abuse its discretion in certifying an order as a final partial judgment under Minnesota Rule of Civil Procedure 54.02. The case arose from a dispute between the City of Elk River and Bolton & Menk, Inc. over a large construction contract for a wastewater treatment plant improvement project. The City sued Bolton for alleged breach of contract and professional negligence. Bolton responded by filing a third-party complaint against three other parties involved in the contract. The district court dismissed Bolton's third-party complaint and Bolton sought to have the dismissal order certified as a final judgment for immediate appeal. The district court granted this certification, but the Court of Appeals dismissed Bolton's appeal, determining that the district court had abused its discretion in certifying the order as a final judgment. The Minnesota Supreme Court disagreed, finding that the district court had offered valid reasons for its certification, including that the third-party claims presented distinct issues from the principal claims and that the case was in its early stages at the time of certification. The Supreme Court therefore reversed the decision of the Court of Appeals and remanded the case for further proceedings. View "City of Elk River vs. Bolton & Menk, Inc." on Justia Law