Justia Construction Law Opinion Summaries

In this breach of contract and breach of warranty case the Supreme Court affirmed the judgment of the district court granting Shelly Besel's motion for summary judgment and dismissing Shelly from the litigation with prejudice, holding that Shelly was properly dismissed from the litigation.Appellants hired Leonard Besel to remodel their home. Prior to completing the project Leonard terminated the contract. Appellants brought this action naming Shelly as a defendant and alleging that Shelly was a partner of her husband's contracting business. Shelly moved to dismiss herself from the lawsuit, disavowing any partnership interest in her husband's business. The district court granted Shelly's motion. The Supreme Court affirmed, holding that no material issue of fact existed based on the evidence as to Shelly's status vis a vis the business, and therefore, the record supported the district court's ruling dismissing Shelly from the litigation. View "Norris v. Besel" on Justia Law

Plaintiffs David and Lisa McDaniel petitioned the Alabama Supreme Court for a writ of mandamus to direct the Shelby Circuit Court to vacate its order staying the proceedings against defendants Southern Craftsman Custom Homes, Inc. ("SCCH"); Jeffrey Rusert; Larry Curry, Sr.; SouthFirst Bancshares, Inc., d/b/a SouthFirst Bank ("SouthFirst"); Mari Gunnels; and Danny Keeney. At the time of this opinion, Rusert was awaiting the outcome of a federal criminal investigation against him. In 2017, the McDaniels contacted Rusert for the purpose of entering into an agreement with SCCH to build a house. According to the McDaniels, Rusert represented himself as the president of SCCH. At some point, Rusert recommended that the McDaniels speak with Gunnels, who worked for SouthFirst, to secure a loan to pay for the construction of the new house. In November 2017, with Gunnels's assistance, the McDaniels began the process of applying for a construction loan with SouthFirst. The loan closing occurred on January 26, 2018. The McDaniels executed, among other agreements, a written construction-loan agreement, a promissory note, and a construction-loan disbursement agreement. The McDaniels met with Rusert to discuss some concerns they had with the ongoing construction. During that meeting, Rusert provided the McDaniels with a credit application from a local building-supply company and asked them to execute it so that, he said, he could use the McDaniels' credit to purchase building materials and supplies. The McDaniels learned that the company refused to do business with SCCH, Rusert, and Curry because all three had purportedly failed to pay significant amounts owed the company. The McDaniels immediately contacted Gunnels and placed a "stop-payment" order on the most recent draw request from SCCH and Rusert. Thereafter, the McDaniels sued SCCH, Rusert, Curry, SouthFirst, Gunnels, and Keeney. In their complaint, the McDaniels sought damages for negligence, suppression, fraudulent misrepresentation, civil conspiracy, conversion, and the infliction of emotional distress. The McDaniels further alleged breach-of-contract claims against SouthFirst, SCCH, Rusert, and Curry, as well as a claim of breach of fiduciary duties against SouthFirst. Finally, the McDaniels sought a judgment against SouthFirst, Gunnels, and Keeney declaring the loan agreement and mortgage void. Rusert and SCCH moved to stay the civil proceedings against them pending the outcome of a federal criminal investigation against Rusert, which the trial court granted. The Alabama Supreme Court determined, however, the McDaniels established a clear legal right to relief from the trial court's order. Accordingly, the Supreme Court granted the petition for a writ of mandamus and directed the trial court to vacate its order staying the underlying case. View "Ex parte David and Lisa McDaniel." on Justia Law

Defendant Nationwide Mutual Fire Insurance Company ("Nationwide") appealed a judgment entered in favor of plaintiff The David Group, Inc. ("TDG"), which held TDG was entitled to coverage and indemnification under a commercial general- liability ("CGL") insurance policy issued by Nationwide. Under the terms of that CGL policy, Nationwide agreed to "pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies." According to the policy, its coverage applied to "bodily injury" and "property damage" only if "[t]he 'bodily injury' or 'property damage' is caused by an 'occurrence.'" In October 2006, while TDG's CGL policy with Nationwide was in effect, Saurin and Valerie Shah purchased a newly built house from TDG. After they moved in, the Shahs began experiencing problems with their new house. Despite TDG's efforts at correcting the problems, however, in February 2008, the Shahs sued TDG. Although Nationwide initially defended TDG against the Shahs' action, Nationwide withdrew its defense after conducting its own investigation into the Shahs' allegations. It concluded that it had no duty either to defend or to indemnify TDG because, according to Nationwide, the damage the Shahs complained of did not constitute an "occurrence" so as to trigger coverage under the CGL policy. The Alabama Supreme Court concluded the trial court erred in finding that TDG was entitled to coverage and indemnification under its CGL policy with Nationwide. Thus, the Court reversed the trial court's judgment and remanded the case for further proceedings. View "Nationwide Mutual Fire Insurance Company v. The David Group, Inc." on Justia Law

Jessie and Rickey Castleberry appealed a circuit court order dismissing their claims against Angie's List, Inc., based on a forum-selection clause in a contract between Angie's List and the Castleberrys. The Castleberrys, who are father and son, became members of Angie's List in 2014. They claim that they used their membership with Angie's List to locate a contractor, Dream Baths of Alabama, LLC ("Dream Baths"), which the Castleberrys hired to renovate a bathroom in Jessie Castleberry's house to make it handicapped accessible. According to the Castleberrys, Dream Baths was not properly licensed and poorly performed the work it contracted to do. The Alabama Supreme Court found the Castleberrys simply pointed out in the argument section of their brief that, in addition to suing Angie's List, they also sued Dream Baths. They asserted that "[t]his action pertains not only to the agreement between the Castleberrys and Angie's List, but to improper work performed upon a home located in Montgomery County, Alabama by defendant Dream Baths." The Castleberrys provided no significant discussion of the specific claims against Dream Baths and Angie's List. To the Supreme Court, it appealred that the Castleberrys' claims against Angie's List and Dream Baths were based on different categories of wrongdoing that were only tangentially related. The trial court, therefore, did not err in enforcing the forum-selection clause simply because the Castleberrys also sued Dream Baths. View "Castleberry v. Angie's List, Inc." on Justia Law

The Supreme Court reversed the order of the district court awarding attorney's fees to TCH Builders and Remodeling, holding that the district court abused its discretion by assessing all of TCH's attorney fees against the construction lien bond posted by Homes For Our Troops (HFOT).TCH filed a construction lien against HFOT's property and initiated this action claiming, among other things, breach of contract and foreclosure of the construction lien bond. The district court dismissed all claims against HFOT except for TCH's lien claim against HFOT's bond. A jury found in favor of TCH. The district court entered an order ruling that all attorney fees incurred by TCH throughout the course of the proceeding were payable from the bond posted by HFOT. The Supreme Court reversed and remanded for redetermination of the amount of fees to be assessed against HFOT's bond, holding that the assessment of the entirety of TCH's attorney fees against HFOT's bond was inequitable, arbitrary, and not reasonable. View "TCH Builders v. Elements of Construction, Inc." on Justia Law

In this construction dispute, the Court of Chancery granted Defendant’s motion to dismiss Plaintiffs’ complaint seeking to vacate or modify an arbitration award for failure to state a claim and denying Plaintiffs’ motion for summary judgment, holding that the arbitrator did not exceed the scope of his authority or act in manifest disregard of the law when he awarded Defendant damages.In their first claim, Plaintiffs argued that the arbitrator’s interpretation of the provisions in the contract between the parties regarding the total cost of the construction project evidences a manifest disregard for the law. In their second claim, Plaintiffs argued that the arbitrator exceeded his authority and acted in manifest disregard of the law when he issued an award for fees and expenses to Defendant. The Court of Chancery disagreed, holding that the arbitrator did not act in manifest disregard of the law in either respect. View "Stempien v. Marnie Properties, LLC" on Justia Law

The Subletting and Subcontracting Fair Practices Act governs public works projects, requires a prime contractor to obtain the awarding authority's consent before replacing a subcontractor listed in the original bid (Pub. Contract Code 4107(a)), and limits the awarding authority’s ability to consent. If the original subcontractor objects to being replaced, the awarding authority must hold a hearing. San Francisco entered a contract with prime contractor Ghilotti for a major renovation of Haight Street. Consistent with its accepted bid, Ghilotti entered a contract with subcontractor Synergy for excavation and utilities work. After Synergy broke five gas lines and engaged in other unsafe behavior, the city invoked a provision of its contract with Ghilotti to direct Ghilotti to remove Synergy and substitute a new subcontractor. Under protest, Ghilotti terminated Synergy and identified two potential replacement contractors. Synergy objected. A hearing officer determined that Synergy’s poor performance established a statutory ground for substitution. Synergy and Ghilotti argued that the hearing officer lacked jurisdiction because Ghilotti had not made a “request” for substitution. The trial court agreed. The court of appeal reversed. Although the statute contemplates that the prime contractor will normally be the party to seek substitution, the procedure followed here “complied in substance with every reasonable objective of the statute.” View "Synergy Project Management, Inc. v. City and County of San Francisco" on Justia Law

In the underlying action, a plaintiff filed a tort action against the subcontractor and developer for injuries allegedly arising from the subcontractor's work. The subcontractor did not defend the developer, and the jury found that plaintiff's injuries were not caused by the subcontractor's work.The court held that, where plaintiff in an underlying tort action alleges that his injuries arose out of the subcontractor's work, the developer is entitled as a matter of law to a defense under the indemnity clause. In this case, the trial court erred by submitting the question of the subcontractor's duty to defend to a jury. The court also held that the developer was entitled to a jury trial in its action for damages alleging breach of the covenant to provide insurance. Accordingly, the court reversed the trial court's judgment and remanded. View "Centex Homes v. R-Help Construction Co., Inc." on Justia Law

Dorothy Smith sued her homeowner's insurance carrier, Mississippi Farm Bureau Casualty Insurance Company (“Farm Bureau”), after Farm Bureau denied her claim based on the earth-movement exclusion in the policy. Smith filed suit against her home builder, Larry Brown, d/b/a Brown’s Construction Company, and Farm Bureau after learning that her home’s foundation was defective. Smith filed a claim for the repair of the foundation. Farm Bureau filed a motion for summary judgment, which was denied by the trial court. Farm Bureau then filed a petition for interlocutory appeal by permission, which the Mississippi Supreme Court granted. The Supreme Court found the trial court erred in denying Farm Bureau’s motion for summary judgment: the earth-movement exclusion was unambiguous and excluded coverage for the property damage suffered by Smith. View "Mississippi Farm Bureau Casualty Insurance Company v. Smith" on Justia Law

Appellants, Sorokine and Koudriavtseva, are husband and wife. DBS and Kornach are California licensed contractors; DBS worked on their San Rafael house, while Kornach did not. Kornach, a longtime friend of Sorokine’s, had purchased materials for DIY projects at the property because of the discounts afforded to licensed general contractors. Sorokine does not speak English; Kornach often interpreted for Sorokine. After Koudriavtseva fired DBS, she hired unlicensed builders to complete the work and remedy alleged defects. DBS sued, alleging breach of contract and foreclosure of mechanic’s lien. Appellants’ response named as cross-defendants DBS, Komach, and ACIC, which had issued a surety bond to Kornach. The court of appeal reversed a directed verdict against appellants on a claim they violated an Internal Revenue Code provision and awarding $20,000 in sanctions and $122,995 in attorney fees against them. There was no evidence that appellants knew that 1099s issued to Komach were incorrect. The court also reversed directed verdicts against appellants on claims they had asserted against others; appellants were unable to prove damage because the trial court had granted a motion in limine preventing appellants from introducing evidence of payments made to an unlicensed contractor. The court also reversed an award of cost of proof damages to Kornach based on requests for admissions propounded by a different party. View "Design Built Systems v. Sorokine" on Justia Law