Justia Construction Law Opinion Summaries

Plaintiff Skanska USA Building Inc. served as the construction manager on a renovation project for Mid-Michigan Medical Center–Midland (the Medical Center); plaintiff subcontracted the heating and cooling portion of the project to defendant M.A.P. Mechanical Contractors, Inc. (MAP). MAP obtained a commercial general liability insurance policy (the CGL policy) from defendant Amerisure Insurance Company (Amerisure). Plaintiff and the Medical Center were additional named insureds on the CGL policy. In 2009, MAP installed a steam boiler and related piping for the Medical Center’s heating system. MAP’s installation included several expansion joints. Sometime between December 2011 and February 2012, plaintiff determined that MAP had installed some of the expansion joints backward. Significant damage to concrete, steel, and the heating system occurred as a result. The Medical Center sent a demand letter to plaintiff, asserting that it had to pay for all costs of repair and replacement. Plaintiff sent a demand letter to MAP, asserting that MAP was responsible for all costs of repair and replacement. Plaintiff repaired and replaced the damaged property, at a cost of $1.4 million. Plaintiff then submitted a claim to Amerisure, seeking coverage as an insured. Amerisure denied the claim. The issue this case presented for the Michigan Supreme Court's review centered on whether the unintentional faulty subcontractor work that damaged an insured’s work product constituted an “accident” under a commercial general liability insurance policy. Because the Court concluded the answer was yes, it reversed the Court of Appeals’ judgment to the contrary. View "Skanska USA Building, Inc. v. M.A.P. Mechanical Contractors, Inc." on Justia Law

ACC, the subcontractor on a Corps flood protection project, filed suit against the prime contractor, Hirani, for breach of contract and the providers of Hirani's payment bond, Colonial, under the Miller Act for unpaid labor and materials. The district court entered judgment in favor of ACC and awarded damages against both defendants.The DC Circuit remanded the case to the district court to make findings of fact as to when the Prime Contract was terminated and whether ACC performed labor or supplied material on April 29 and/or April 30. In the event that Colonial and Hirani cannot meet their burden to show that ACC's Miller Act claim was untimely, then this court can resolve the parties' other Miller Act contentions. If Hirani and Colonial show that termination occurred before April 29 or that ACC performed no labor or supplied no material on April 29 or 30, the court can then address the Miller Act statute of limitations issue. The court affirmed the restitution damages award against Hirani on ACC's contract claim where ACC has not provided the court with any basis to deviate from the principle of D.C. law that restitution, not quantum meruit, is the proper remedy where there is an express contract between the parties. The court deferred addressing other issues raised by the parties. View "United States v. Hirani Engineering & Land Surveying, PC" on Justia Law

After defending the general contractor in two construction defect actions, general liability insurer St. Paul Mercury Insurance Company (St. Paul) sought reimbursement of defense costs under an equitable subrogation theory against six subcontractors (defendants) that had worked on the underlying construction projects and whose contracts required them to defend the general contractor in suits involving allegations related to their work. After a bench trial, the court denied St. Paul’s claim. Relying on Patent Scaffolding Co. v. William Simpson Constr. Co., 256 Cal.App.2d 506, 514 (1967), the trial court concluded St. Paul had not demonstrated it was fair to shift all of the defense costs to defendants because their failure to defend the general contractor had not caused the homeowners to bring the construction defect actions. St. Paul argued this conclusion misconstrued the law governing equitable subrogation and therefore constitutes an abuse of discretion. To this, the Court of Appeal agreed: (1) a cause of action based on equitable subrogation allowed an insurer to step into the shoes of its insured and recover only what the insured would be entitled to recover from the defendants; and (2) the appropriate inquiry should have been whether defendants’ failure to defend the general contractor caused St. Paul to incur the defense costs, not whether that failure caused the underlying lawsuits. Judgment was reversed and the matter remanded to the trial court to grant judgment in St. Paul's favor and for a determination of defense costs each defendant owed. View "Pulte Home Corp. v. CBR Electric, Inc." on Justia Law

Colorado Center Development, LLC, the owner of certain property in Denver, Colorado, hired J.E. Dunn Construction Company to construct an office building (the Project). Colorado Center purchased from Defendant Liberty Mutual Fire Insurance Company a Builder’s Risk insurance policy (the Policy). The Policy provided protection against “direct physical loss or damage caused by a covered peril to ‘buildings or structures’ while in the course of construction, erection, or fabrication.” J.E. Dunn hired plaintiff Rocky Mountain Prestress, LLC (RMP) as a subcontractor to perform work including “engineer[ing], supply[ing,] and install[ing] all precast concrete components, connections, and erections aids” and “[s]upply[ing] and install[ing] grout and/or patching of all connections required by the engineering for the structural integrity of the precast.” Because of “potential concerns that arose at another project” relating to “sinking pillars/columns,” J.E. Dunn requested RMP to retain a third-party engineering firm to investigate “potential structural issues” with RMP’s work on the Project. The engineering firm concluded that the Project required “repairs to insufficiently grouted joints between precast concrete column and pilaster elements” at 264 locations throughout the structure. The engineering firm began its investigation in August 2016, and the final grouting repair work was completed in February 2017. In the meantime, in November 2016, RMP submitted a claim to Liberty seeking coverage under the Policy. The district court granted summary judgment in favor of the insurance company on three independent grounds: (1) RMP had not shown that the claimed loss was fortuitous; (2) the claimed loss did not constitute “direct physical loss or damage” as required for coverage under the policy; and (3) even if there might otherwise have been coverage, the claimed loss fell within the policy’s exclusion for defective workmanship. After review, the Tenth Circuit affirmed the district court’s decision based on the defective-workmanship exclusion. View "Rocky Mountain Presstress v. Liberty Mutual Fire Insurance" on Justia Law

Subcontractor Construction Drilling, Inc. (CDI) appealed a trial court’s judgment on the merits in its breach-of-contract claim against Engineers Construction, Inc. (ECI). CDI contended the trial court erred in: (1) holding that the terms of the parties’ subcontract required CDI to request a change order before it billed ECI for “drilling in obstructions” in excess of CDI’s bid price; (2) denying CDI’s motions to reopen the evidence and for a new trial; and (3) awarding ECI $234,320 in attorneys’ fees under the Prompt Payment Act. ECI cross-appealed, arguing the trial court improperly allowed CDI’s owner to offer opinion testimony absent a finding of reliability under Vermont Rule of Evidence 702 and maintaining that his testimony could not have met this standard in any event. Therefore, should the Vermont Supreme Court reverse the trial court’s denial of CDI’s breach-of-contract claim, ECI asserted the matter had to be remanded for a new trial without such testimony. The Court affirmed the trial court, and therefore did not reach the issue raised in ECI’s cross-appeal. View "Construction Drilling, Inc. v. Engineers Construction, Inc." on Justia Law

The Supreme Court affirmed the judgment of the trial court holding that a general contractor was liable for construction materials provided by a supplier to one of the general contractor's subcontractors, holding that the distinct circumstances of this case permitted the supplier to obtain relief for the general contractor's unjust enrichment.General Contractor contracted with Subcontractor to assist with a residential condominium project. Subcontractor agreed to purchase materials from Supplier and to pay Supplier for materials delivered. General Contractor and Subcontractor entered into a joint check agreement specifying a method for how Supplier would be paid for the materials it shipped to the job. Supplier ultimately shipped $252,062 in materials for which it was not paid due to the Subcontractor's financial difficulties. General Contractor ultimately used those materials to complete the project. Supplier sued General Contractor and Subcontractor alleging breach of contract and unjust enrichment. Supplier obtained a default judgment against Subcontractor. After a trial, the court ruled for Supplier in its claim of unjust enrichment against General Contractor. The Supreme Court affirmed, holding (1) the joint check agreement did not foreclose relief; (2) General Contractor was not being compelled to pay twice for the materials; and (3) Supplier was permitted to obtain relief for General Contractor's unjust enrichment. View "Davis Construction Corp. v. FTJ, Inc." on Justia Law

Several insurance companies (the Insurers) appealed the denial of their motions to intervene in a construction defect action between a property owners' association (the Association) and a number of construction contractors and subcontractors (the Insureds). The underlying construction defect action proceeded to trial, resulting in a verdict for the Association. After review, the South Carolina Supreme Court determined the Insurers were not entitled to intervene as a matter of right, and the trial court did not abuse its discretion in denying them permissive intervention. However, the Court held the Insurers had a right to a determination of which portions of the Association's damages are covered under the commercial general liability (CGL) policies between the Insurers and the Insureds. The Court also recognized that the Insurers had the right and ability to contest coverage of the jury verdict in a subsequent declaratory judgment action. "In that action, the Insurers and the Insureds will be bound by the existence and extent of any jury verdict in favor of the Association in the construction defect action. However, they will not be bound as to any factual matters for which a conflict of interest existed, such as determining what portion of the total damages are covered by any applicable CGL policies." View "Builders Mutual Insurance Company" on Justia Law

In August 2013 the Alaska Department of Transportation and Public Facilities (DOT) entered into a contract with Osborne Construction Company to upgrade the Aircraft Rescue and Fire Fighting building at the Fairbanks International Airport to withstand damage in the event of an earthquake. The DOT appealed a superior court decision reversing the agency's decision in an administrative appeal. The agency denied a contractor’s claim for additional compensation because the claim was filed outside the filing period allowed by the contract. After applying its independent judgment to interpret the contract, the Alaska Supreme Court agreed with the DOT that the contractor failed to file its claim within the period allowed. The Supreme Court therefore reversed the superior court’s decision and reinstated the agency’s. View "Alaska, Dept. of Transportation & Public Facilities v. Osborne Construction Co." on Justia Law

In this construction contract dispute, the Supreme Court held that the San Antonio River Authority possessed the authority to agree to arbitrate claims under Texas Local Government Code Chapter 271 and exercised that authority in the contract and that the judiciary, rather than an arbitrator, retains the duty to decide whether a local government has waived its governmental immunity.The River Authority hired Austin Bridge and Road L.P. for a construction project. The parties agreed to submit any disputes about the contract to arbitration. Austin Bridge invoked the contract's arbitration provisions when disagreements about the scope of work and payment arose. After the arbitrator denied the River Authority's plea of governmental immunity, the River Authority sued Austin Bridge, arguing that it lacked the authority to agree to the contract's arbitration provisions. The trial court concluded that the arbitration provisions in the contract were enforceable. The court of appeals agreed that the River Authority had the authority to agree to arbitrate but concluded that a court, rather than an arbitrator, must decide whether the River Authority was immune from the claims against it. The Supreme Court affirmed, holding that chapter 271 waived the River Authority's immunity from suit for Austin Bridge's breach of contract claim. View "San Antonio River Authority v. Austin Bridge & Road, L.P." on Justia Law

Teed promoted himself online as a real estate agent with “over 25 years of experience as a building contractor” with “an extensive background in historic restorations.” Moore believed that Teed was a general contractor. Moore toured homes that Teed had renovated and retained Teed as his agent. Moore bought a large San Francisco fixer-upper house for $4.8 million. The home was built in 1912 and was last updated in the 1950s. Moore borrowed significantly. Teed received a commission from the sale. Teed was not a licensed contractor; his team of contractors gutted large parts of the house and excavated the lot but the foundation was defective. After Moore became aware of the defects, he halted all work and engaged consultants, who concluded, despite Teed's strong resistance, that the foundation had to be torn out and replaced. Teed’s structural engineer agreed and privately apologized to Moore. Moore had paid about $265,000 of the $900,000 promised cost for Teed’s renovations. A jury awarded Moore his out-of-pocket expenses for replacing the foundation and benefit-of-the-bargain damages for the additional cost he incurred in obtaining the promised renovations. Conceding liability, Teed challenged the award. The court of appeal affirmed that benefit-of-the-bargain damages are available to fully compensate a plaintiff for all the detriment proximately caused by a fraudulent fiduciary’s actions and the award of statutory attorney fees and costs based on the jury’s special verdict finding that Teed violated the Contractors’ State License Law. View "Moore v. Teed" on Justia Law