Justia Construction Law Opinion Summaries

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

Construction Manager subcontracted with Subcontractor to do work on a construction project. After the project was substantially complete, Subcontractor recorded a mechanic’s lien for unpaid work on the project. Subcontractor then filed a complaint against Construction Manager as the general contractor of the project, the owner of the property (Landowner), and the bank that financed the project (Bank) to enforce its mechanic’s lien. Construction Manager did not enter an appearance in the case. The circuit court subsequently granted an application filed by Landowner and Bank and released the real estate that had been subject to Subcontractor’s mechanic’s lien. Bank filed a motion to dismiss the mechanic’s lien claim on the basis that Subcontractor failed to timely serve Construction Manager, who it alleged to be a necessary party to the mechanic’s lien enforcement action. The circuit court agreed and dismissed the mechanic’s lien claim with prejudice. The Supreme Court reversed, holding that Construction Manager, as the general contractor, was not a necessary party to Subcontractor’s mechanic’s lien enforcement action. Remanded. View "Synchronized Constr. Servs., Inc. v. Prav Lodging, LLC" on Justia Law

Plaintiff-construction company filed suit asserting that Defendant-homeowners breached the parties’ contract in which Plaintiff agreed to complete construction work on Defendants’ home. Further, Plaintiff alleged that Defendants were unjustly enriched in failing to pay the balance owed to Plaintiff. The trial justice awarded Plaintiff $55,455 in damages plus prejudgment interest on an offer of judgment that had been deposited in the Registry of the Superior Court. Defendants appealed the decision to award prejudgment interest, and Plaintiff cross-appealed the damages award. The Supreme Court dismissed the appeals of both parties and affirmed the judgment, holding that the trial justice was not clearly wrong in awarding statutory interest in the offer of judgment and in his conclusion that Plaintiff was entitled to $55,455. View "Raiche v. Scott" on Justia Law

America's Home Place, Inc. ("AHP") appealed a Circuit Court order denying AHP's motion to compel arbitration of the claims brought by the plaintiff below, Gregory Rampey. In August 2012, Rampey and AHP entered into a contract, the terms of which provided that AHP would construct a house for Rampey in Chambers County. AHP constructed the house; however, after he took possession of the house, Rampey began to notice "settlement and sinking of the foundation," which, according to Rampey, resulted in significant structural and other damage to the house. AHP attempted to stabilize the foundation and to repair the damage to the house that had occurred as a result of the unstable foundation; those efforts were unsuccessful. Upon review of the parties' arguments on appeal, the Supreme Court concluded the trial court erred in denying AHP's motion to compel arbitration. Therefore, the Court reversed the trial court's order and remanded the case with instructions to vacate the order denying the motion to compel arbitration and to enter an order granting AHP's motion to compel arbitration. View "America's Home Place, Inc. v. Rampey" on Justia Law

In 2006, Richard Myers owned the property at issue in this case. At the time, the property was subject to a deed of trust in favor of First Horizon Home Loans. Myers enlisted Michael Horn and his company, Frontier Development Group (FDG) to build a residence on the property, which First Horizon financed. However, in April of 2007, Myers filed for bankruptcy, and First Horizon rescinded the construction loan and instructed FDG to halt construction when the project was only fifty percent complete. The structure was left exposed to the elements for fourteen months. Following Myers' bankruptcy, foreclosure proceedings were initiated, and Myers hired Kathleen Horn (Michael Horn's wife), of Windermere Real Estate/Teton Valley to list the property for sale. The Caravellas, who were Ohio residents, looking for property in the Teton Valley, contacted their real estate agent who put them in touch with Kathleen Horn who provided them with information on the stalled Myers project. Kathleen Horn eventually put the Caravellas in touch with Michael Horn. The Caravellas traveled to Idaho, met with Kathleen Horn, and spent two days inspecting the property. The Caravellas testified that Kathleen Horn minimized issues with the house, telling them that it was "in good shape,""structurally sound,"and a "great house."The Caravellas chose not to have a professional inspection performed and closed on May 5, 2008. After closing, the Caravellas and Michael Horn agreed that Horn would complete construction on the house in accordance with Myers' original plans. In reaching this agreement, the Caravellas testified that they believed they were dealing with Horn as an individual. The total contract price for the first phase of work that the Caravellas authorized was $88,500. However, the Caravellas paid FDG $138,097.24 for the first phase before refusing to pay any more. Much of the money that the Caravellas paid to FDG was for unauthorized work or work that was completed in a nonconforming or substandard manner. The Caravellas hired a second builder to complete the first phase and to remedy the substandard work. FDG initiated this action by filing a complaint to foreclose on a lien for construction services and building materials provided to, but not paid for by, the Caravellas. The Caravellas filed an amended counterclaim alleging that FDG and Horn: (1) breached the parties' contract; (2) breached the duty of good faith and fair dealing; (3) violated the Idaho Consumer Protection Act; (4) breached the implied warranty of habitability; (5) committed slander of title; (6) committed fraud and misrepresentation; (7) engaged in a civil conspiracy; and (8) acted negligently. The district court held that FDG's lien was defective and dismissed it. The district court also held that FDG breached its contract with the Caravellas by: (1) failing to complete agreed upon work in conformity with the plans and in a workmanlike manner; (2) charging the Caravellas for unauthorized and defective work; and (3) substantially overbilling the Caravellas for work and materials that were not authorized and never provided. As to the Caravellas' fraud counterclaim, the district court concluded that the Caravellas failed to establish all nine elements of fraud and dismissed the claim. The district court also concluded that Horn was not personally liable. The district court awarded the Caravellas $113,775.45 in attorney fees, $5,484.83 in costs as a matter of right, and $200.00 in discretionary costs. The Caravellas timely appealed. Upon review, the Supreme Court concluded the district court erred by applying the incorrect evidentiary standard to the Caravellas' fraud counterclaim, but that error was harmless. The Court affirmed that portion of the district court's judgment dismissing the Caravellas' fraud claim, and reversed that portion of the judgment dismissing the Caravellas' claims against Michael Horn personally. In all other respects, the Supreme Court affirmed the district court's decision. View "Frontier Development Grp v. Caravella" on Justia Law

Neumann Homes was the developer of two Antioch subdivisions. The Village entered into infrastructure agreements with Neumann to make public improvements in the subdivisions; Neumann provided four substantially identical surety bonds issued by Fidelity, totaling $18,128,827. The bonds did not contain specific “payment bond” language. A payment bond generally provides that if the contractor does not pay its subcontractors and material suppliers, the surety will pay them. In contrast, a “completion bond” or “performance bond” provides that if the contractor does not complete a project, the surety will pay for its completion. Lake County Grading (plaintiff) and Neumann entered into agreements for plaintiff to provide labor and materials for the improvements. Plaintiff completed the work, but was not paid in full. Neumann defaulted on its contract with the Village and declared bankruptcy. Plaintiff served Neumann and the Village with notices of a lien claim and ultimately filed suit, alleging breach of contract because the surety bonds did not contain language guaranteeing payment to subcontractors compliant with the first paragraph of section 1 of the Bond Act, 30 ILCS 550/1, and that it became a third-party beneficiary of the contracts between the Village and Neumann because the Act’s requirements are read into every public works contract for the benefit of subcontractors. The circuit court entered summary judgment on those counts. The appellate court affirmed. The Illinois Supreme Court reversed, holding that the bonds were sufficient and did not violate the Act, so that the Village did not breach any contractual obligation. View "Lake Cnty. Grading Co. v. Vill. of Antioch" on Justia Law

This case was one of a number of cases which have, in the aftermath of the "Great Recession" that hit Riverside and San Bernadino counties particarly hard. This appeal stemmed from the construction of a Kohl’s department store in Beaumont. The developer of the store was Inland-LCG Beaumont, LLC, and the general contractor was 361 Group Construction Services, Inc. Somewhere in the process of construction, the money dried up and 361 refused to pay its subcontractors for work they had done. Those subcontractors included Cass Construction, TNT Grading Inc., Palomar Grading & Paving and R3 Contractors. These four subcontractors recorded mechanic’s liens and sued to foreclose those liens. With one exception they obtained judgments of foreclosure. The one exception was TNT, who, by the time of the trial to foreclose its mechanic’s lien, was a suspended corporation and thus unable to prosecute an action. The two owners of the property, Kohl’s and Wells Fargo, appealed the judgments obtained by the three successful subcontractors, Cass, R3 and Palomar Grading. The Court of Appeal took a "soup-to-nuts" approach in reviewing the multiple issues presented on appeal, and affirmed in all respects except to the degree that liens of Palomar Grading and Cass should include prejudgment interest. To that degree the Court reversed the judgment and remanded it with instructions to the trial court to recalculate the prejudgment interest at 7 percent. On balance, Cass and R3 were still the prevailing parties in this appeal: Of 10 issues raised, they prevailed, either singly or together, in 9. They recovered their costs on appeal from Kohl’s and Wells Fargo. For Palomar Grading, the only issue on which it has appeared in this appeal was the issue of the proper rate of prejudgment interest, and on that issue it lost. "However, it would be unfair to allow Kohl’s and Wells Fargo to recover all their appellate costs from Palomar Grading because they won on the lone prejudgment interest rate issue. Most of this appeal has concerned their unsuccessful challenges to the foreclosure judgments obtained by Cass and R3." View "Palomar Grading v. Wells Fargo" on Justia Law

Guardian Builders, LLC, and E. Wayne Tackett appealed a Circuit Court order denying their motion to vacate or modify an arbitration award entered in favor of Randy Uselton and his wife Melissa. In 2010, the Useltons sued Guardian alleging several claims arising from Guardian's construction of a house for the Useltons. Guardian subsequently filed a motion to compel arbitration, and the circuit court granted that motion. In late 2011, the arbitrator entered a final award in favor of the Useltons. Guardian subsequently filed a motion to vacate or modify the arbitration award to the circuit court, to which it attached a copy of the arbitration award. The Useltons filed a 'motion to confirm' the arbitration award. The circuit court entered an order purporting to deny Guardian's motion to vacate or modify the arbitration award, purporting to grant the Useltons' motion to confirm the arbitration award, and purporting to order Guardian to pay $1,421.75 in Better Business Bureau fees and facility costs related to the arbitration. Guardian objected only to a subset of the damages that were awarded the Useltons that were not directly related to the poorly constructed house, specifically, attorney fees and arbitration fees (including both the arbitrator fee and the forum fee charged by the Better Business Bureau of North Alabama ("the BBB"), which administered the arbitration). Furthermore, Guardian argued the arbitrator lacked the authority to award the Useltons attorney fees and arbitration fees. The Supreme Court agreed that the arbitrator exceeded his authority by awarding those remedies. The trial court's judgment was reversed and the case remanded for the trial court to enter a modified judgment subtracting attorney fees and arbitration fees from the award made to the Useltons. View "Guardian Builders, LLC v. Uselton " on Justia Law

Debtors contracted with Builder to finish construction on a house. After Debtors defaulted on progress payments, Builder sued Debtors and Bank, claiming that Defendants falsely represented or concealed material information about whether Debtors could pay for the work. The district court sustained Defendants’ motions for summary judgment on Builder’s fraud and conspiracy claims. Debtors then confessed judgment on Builder’s breach of contract claim. After a bench trial, the district court ruled for Defendants on Builder’s equitable and promissory estoppel claims. The Supreme Court affirmed in part and reversed in part, holding (1) the court erred in granting summary judgment to Debtors on Builder’s fraud claim and to Debtors and Bank on Builder’s civil conspiracy claim; and (2) during trial, the court did not err in finding that Builder had failed to prove by clear and convincing evidence that Bank promised to fund Builder’s work that was definite enough to induce Builder’s foreseeable reliance on the statement, but these factual findings did not preclude Builder’s proof of the same facts for its fraud claims. Remanded. View "deNourie & Youst Homes, LLC v. Frost" on Justia Law

The Minnesota Laborers Health and Welfare Fund (“the Funds”) filed a declaratory judgment action against Granite Re, Inc. seeking clarification of their right to payment on a surety bond. The district court granted summary judgment to Granite Re, concluding, among other things, that the Funds’ lawsuit was time-barred because the Funds failed to commence litigation within the one-year contractual limitations period set out in the bond. The court of appeals reversed and remanded, concluding that fraudulent concealment by the bond principal tolled the limitations period set out in the bond. The Supreme Court affirmed, holding (1) fraudulent concealment can be applied to a surety that was not involved in the fraudulent concealment by the principal; and (2) therefore, the one-year contractual limitations period set out in the bond may be tolled against Granite Re.View "Minn. Laborers Health & Welfare Fund v. Granite Re, Inc." on Justia Law