Justia Construction Law Opinion Summaries

Defendants, an unlicensed residential builder; his businesses; and Denaglen Corp., a check-cashing service, appealed the Court of Appeals' decision to affirm the grant of summary judgment in favor of plaintiffs, homeowners who contracted to have their home restored following a flood. On appeal, this case raised four issues: (1) whether MCL 339.2412(1), which prohibited an unlicensed builder from "bring[ing] or maintain[ing] an action . . . for the collection of compensation," prevents an unlicensed builder from defending on the merits against claims asserted against him by a homeowner; (2) whether MCL 339.2412(1) provided a homeowner with an independent cause of action for damages arising from the statute's violation; (3) whether a contract for the services of an unlicensed builder was void ab initio or whether it may have some form of continuing legal existence; and (4) whether the trial court abused its discretion in refusing to set aside the default of defendant Denaglen Corp., the check-cashing service. In lieu of granting leave to appeal, the Supreme Court affirmed in part and reversed in part the judgment of the Court of Appeals and remanded the case for further proceedings. The Court found that the appellate court erred in granting summary judgment to the plaintiffs. While the Court of Appeals correctly held that MCL 339.2412(1) did not prevent an unlicensed builder from defending against a lawsuit on its merits and did not afford a homeowner an independent cause of action to seek damages for its violation. However, contracts between an innocent homeowner and an unlicensed residential builder were voidable by the homeowner and thereby effective in conveying rights and authorities to both parties and third parties. The Court of Appeals therefore erred when it declared the contract at issue void ab initio, "although that court's error was wholly understandable given the confusing state of applicable law." Finally, the trial court did not abuse its discretion by refusing to grant defendant Denaglen relief from its default. However, because the proper amount of damages remained in dispute, Denaglen was free to attempt to challenge the extent of its liability. View "Epps v. 4 Quarters Restoration, LLC" on Justia Law

HKS a Texas architecture firm, provided services for a luxury hotel in Mammoth Lakes under an Agreement that contained a Texas forum selection clause, requiring mediation, and a Texas choice of law provision.The Agreement authorized HKS to hire “[c]onsultants.” Vita, a California landscape design firm, submitted to HKS a Contract incorporating the terms of the Agreement. Neither Vita or HKS signed the Contract, but Vita performed work in 2008, during the “design phase” and sent invoices to HKS. Owner began having financial problems before construction commenced, leaving HKS with unpaid bills for its own services and those provided by “consultants.” HKS obtained a judgment against Owner in 2010 in Texas for $1,617,073.70 but was unable to recover anything. In 2013, Vita sued HKS, alleging breach of contract; unjust enrichment; quantum meruit; and breach of the implied covenant of good faith and fair dealing, seeking $370,650.53. After answering the complaint, HKS moved to enforce the forum selection clause and dismiss. The court of appeal reversed dismissal. HKS established the existence of a contract between HKS and Vita containing a forum selection clause, but Code of Civil Procedure 410.42 prohibits enforcement of construction contract provisions requiring disputes between contractors and California subcontractors to be litigated outside California. View "Vita Planning & Landscape Architecture, Inc. v. HKS Architects, Inc." on Justia Law

The Division of Capital Asset Management and Maintenance (DCAM), the owner of a construction project, entered into a contract with a designer to prepare the project’s designs. DCAM contracted with Gilbane Building Company to be the construction manager at risk (CMAR). Gilbane subcontracted with Coghlin Electrical Contractors, Inc. to perform electrical work. Coghlin later filed a complaint against Gilbane alleging that Gilbane breached the subcontract by causing Coghlin to incur additional costs resulting from design errors. Gilbane filed a third-party complaint against DCAM, asserting that DCAM breached its contract with Gilbane by refusing to pay Gilbane the amounts claimed by Coghlin. The trial court allowed DCAM’s motion to dismiss the third-party complaint. The Supreme Judicial Court vacated the superior court’s judgment, holding (1) a public owner of a construction management at risk project gives an implied warranty regarding the designer’s plans and specifications, but the scope of liability arising from that implied warranty is limited; (2) the construction management at risk contract in this case did not disclaim the implied warranty; and (3) the contract's indemnification provision did not prohibit Gilbane from filing a third-party complaint against DCAM seeking reimbursement of additional costs under the implied warranty for damages claimed by Coghlin caused by an insufficient or defective design. Remanded View "Coghlin Elec. Contractors, Inc. v. Gilbane Bldg. Co." on Justia Law

West Bay Builders, Inc. and Safeco Insurance Company of America (Safeco) appealed the trial court’s denial of their motion for attorney fees under Business and Professions Code section 7108.5 and Public Contract Code sections 7107 and 10262.5 (prompt payment statutes). West Bay and Safeco were sued by James L. Harris Painting & Decorating, Inc. for breach of contract and violation of the prompt payment statutes. In turn, West Bay filed a cross-complaint against Harris for breach of contract arising out of the same construction project. After years of litigation, the jury found both West Bay and Harris had failed to perform and thus did not award damages to either side. Safeco also did not recover because it was sued only in its capacity as issuer of a bond to West Bay for the construction project. Although West Bay and Safeco did not recover any damages, they moved for attorney fees under the fee shifting provisions of the prompt payment statutes. The trial court denied their motion, finding there was no prevailing party in this case. On appeal, West Bay and Safeco argued the trial court lacked discretion to refuse an award of mandatory attorney fees under the prompt payment statutes because they prevailed at trial. After review, the Court of Appeal disagreed, finding that under the prompt payment statutes, the trial court has discretion to determine there is no prevailing party in an action. And in this case, the trial court did not abuse its discretion in concluding there was no prevailing party. View "James L Harris Painting v. West Bay" on Justia Law

General Contractor hired several subcontractors to assist in contracting an IMAX theater. After the theater was completed and three of the subcontractors (“Subcontractors”) had not been paid in full for their services, the Subcontractors filed mechanic’s liens against the IMAX property and sued the General Contractor to foreclose on their respective liens in the amount due on their contracts. The trial court awarded the Subcontractors judgments against the General Contractor and awarded attorney’s fees. At issue in this case was whether, under Indiana’s mechanic’s lien statute, the Subcontractors were entitled to collect attorney’s fees incurred in foreclosing on their liens from the General Contractor, which posted a surety bond and filed an undertaking obligating it to pay attorney’s fees upon recovery of a judgment against it. The Supreme Court affirmed the trial court’s fee award, holding that the trial court did not abuse its discretion in awarding the Subcontractors attorney’s fees incurred in their foreclosure suits under the circumstances of this case. View "Goodrich Quality Theaters, Inc. v. Fostcorp Heating & Cooling, Inc." on Justia Law

The Judicial Council of California, (JCC) entered into a contract with Jacobs Facilities, a wholly owned subsidiary of Jacobs. Performance of the contract required a license under the Contractors’ State License Law. Facilities was properly licensed when it commenced work. Later, Jacobs, as part of a corporate reorganization, transferred the employees responsible for the JCC contract to another subsidiary and caused the new subsidiary to obtain a contractor’s license, while permitting the Facilities license to expire. Facilities remained the signatory on the JCC contract until a year later, when the parties entered into an assignment to the new, licensed subsidiary. JCC sued under Bus. & Prof. Code 7031(b), which requires an unlicensed contractor to disgorge its compensation. Defendants contended that Facilities had “internally” assigned the contract to the new subsidiary prior to expiration of its license; JCC ratified the internal assignment when it consented to the assignment to the new subsidiary; and Facilities had “substantially complied” with the law. After the jury found for defendants on the other defenses, the substantial compliance issue was not decidedd. The court of appeal reversed, concluding Facilities violated the statute when it continued to act as the contracting party after its license expired, and remanded for a hearing on substantial compliance. View "Judicial Council of Cal. v. Jacobs Facilities, Inc." on Justia Law

Electrical Wholesale Supply Co. (EWS) filed this action seeking payment for electrical materials it supplied to a commercial building remodel. EWS sued, among other defendants, Alane Fraser, the owner of the commercial property, and M.J. Bishop Concrete & Construction, Inc. (Bishop Construction), the general contractor, for foreclosure of a construction lien, breach of contract, unjust enrichment, and third party beneficiary. The circuit court denied EWS’s claims. The district court affirmed. The Supreme Court affirmed in part, reversed in part, and remanded, holding that the circuit court (1) applied the wrong statute to the lien notice issue and erred by granting summary judgment in favor of Fraser on the lien claim; but (2) did not err in concluding that EWS did not prove its unjust enrichment claim against Fraser and Bishop Construction. View "Elec. Wholesale Supply Co., Inc. v. Fraser" on Justia Law

This case arose from a dispute over the adequacy of concrete work Nordic PCL Construction, Inc. performed on a condominium construction project as a subcontractor to LPIHGC, LLC. The parties proceeded to arbitration. An arbitrator selected by the parties issued an arbitration award in favor of LPIHGC. LPIHGC moved to confirm, and Nordic moved to vacate, the arbitration award. The circuit court denied the motion to vacate and granted the motion to confirm. The Intermediate Court of Appeals (ICA) vacated the arbitration award on the grounds that the arbitrator failed to disclose various relationships with the law firms of LPIHGC’s attorneys. The Supreme Court vacated the ICA’s judgment on appeal and the circuit court’s final judgment, thereby vacating the associated orders granting LPIHGC’s motion to confirm the arbitration award and denying Nordic’s motion to vacate the arbitration award, holding that because the factual and/or legal bases upon which the circuit court denied the motion to vacate were unascertainable, the Supreme Court was unable to appropriately review the circuit court’s ruling. Remanded for an evidentiary hearing and entry of findings of fact and conclusions of law on Nordic’s motion to vacate. View "In re Arbitration of Nordic PCL Constr., Inc. v. LIPHGC, LLC" on Justia Law

Duit, an Oklahoma highway contractor, contracted with the Arkansas State Highway and Transportation Department (ASHTD) to reconstruct I-30 between Little Rock and Benton. Duit encountered soil conditions that, it alleges, differed materially from information provided by the ASHTD during bidding. Duit’s claims for compensation were denied by the ASHTD, the Arkansas State Claims Commission, and the General Assembly. Duit sued under 42 U.S.C. 1983, citing the “in re Young” exception to Eleventh Amendment immunity. Duit alleged violations of the Federal Aid Highway Act, 23 U.S.C. 101, and the Due Process and Equal Protection clauses and sought to “enjoin Defendants from accepting federal aid … until . . . they fully comply with the federally mandated differing site clause.” The court dismissed the FAHA claim because that statute is enforced exclusively by an executive agency, dismissed the due process claim because Duit’s interest in future highway contracts is not a protected property interest and because the state appeals process for claim denials satisfies procedural due process requirements. The court declined to dismiss the equal protection claim, concluding Duit sufficiently alleged that the Commission treated out-of-state-contractor Duit differently from similarly situated in-state contractors without a rational reason. The Eighth Circuit held that Duit lacks standing to bring its equal protection claim and that the court erred in not dismissing that claim. View "Duit Constr. Co. Inc. v. Bennett" on Justia Law

Plaintiffs, property owners, entered into an oral contract with Defendant, a construction firm, for the assembly of a prefabricated house on a lot that they owned. The parties subsequently entered into a second oral agreement for the assembly of a smaller and cheaper home. Defendant failed to complete construction of Plaintiffs’ home as agreed. Citing diversity of citizenship, Plaintiffs filed suit in federal district court alleging breach of contract. Defendant counterclaimed for breach of contract. The jury found Defendant to have defaulted on its contractual obligations and awarded $150,000 in damages. Defendant appealed, challenging the sufficiency of the evidence. The First Circuit affirmed, holding that it could not be said that no rational jury could have found in favor of Plaintiffs. View "Magee v. BEA Constr. Corp." on Justia Law