Justia Construction Law Opinion Summaries

The Developer converted a vacant building into a residential condominium by gutting and refitting it. The Developer purchased Commercial Lines Policies covering bodily injury and property damage from Nautilus, covering periods from June 1998 through June 2000. The policies define occurrence as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions,” but do not define accident. The policies exclude damage to “that particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the ‘property damage’ arises out of those operations;” eliminate coverage for damage to “that particular part of any property that must be restored, repaired or replaced because ‘your work’ was incorrectly performed on it;” and contain an endorsement entitled “Exclusion—Products-Completed Operations Hazard.’ Construction was completed in 2000; the Developer transferred control to a board of owners. By May 2000, one homeowner was aware of water damage. In 2005, the Board hired a consulting firm, which found that the exterior brick walls were not fully waterproofed and concluded that the deterioration had likely developed over many years, even prior to the condominium conversion, but that the present water penetration was the result of inadequate restoration of the walls. The Board sued the Developer. Nautilus denied coverage and obtained a declaratory judgment. The Seventh Circuit affirmed, reviewing the policy and finding that the shoddy workmanship, of which the board complained, was not covered by the policies; that Nautilus did not unduly delay pursuing its declaratory suit; and that the alleged damage to residents’ personal property occurred after the portions of the building were excluded from coverage.View "Nautilus Ins. Co. v. Bd. of Dirs. of Regal Lofts Condo Ass'n" on Justia Law

In 2008, Plaintiff purchased a home in Bar Harbor, Maine from Defendants for $2.9 million. After his purchase, Plaintiff spent in excess of $1.5 million in repairs to the property. Plaintiff brought suit against Defendant to recover damages for the repairs, alleging, among other claims, breach of contract, fraud, and negligent misrepresentation. A federal district court entered summary judgment in favor of Defendants, concluding (1) Maine’s implied warranty of habitability did not apply under the circumstances of this case, and Defendants had no duty of disclosure; and (2) Defendants were not entitled to attorney’s fees. The First Circuit affirmed, holding that the district court (1) properly granted summary judgment for Defendants on Plaintiff’s breach of contract, fraud, and negligent misrepresentation claims; and (2) properly entered judgment on the record for Plaintiff on Defendants’ counterclaim for attorney’s fees. View "Thompson v. Miles" on Justia Law

The respondents, two developers and an architectural firm, Stevens & Wilkinson of South Carolina, Inc. (S&W), entered into a Memorandum of Understanding (MOU) with the City of Columbia as part of a larger project team to develop a publicly-funded hotel for the Columbia Metropolitan Convention Center. The City eventually abandoned its plan under the MOU, and the respondents brought suit on several causes of action including breach of contract and equitable relief. The City moved for summary judgment arguing the MOU was not a contract and therefore the contract claims failed. The circuit court agreed and, rejecting the equitable claims as well, granted summary judgment in favor of the City. The respondents appealed and the court of appeals affirmed in part and reversed in part. The Supreme Court reversed. Because the MOU was comprised of agreements to execute further agreements, there was no meeting of the minds on numerous material terms which had not yet been defined. Accordingly, the court of appeals was reversed with respect to that portion of the court's judgment; the Supreme Court held the MOU was unenforceable as a matter of law. The Supreme Court agreed with the circuit court and reinstated its judgment in favor of the City. View "Stevens & Wilkinson of South Carolina, Inc. v. City of Columbia" on Justia Law

In April 2003, the City of Columbia entered into a Memorandum of Understanding (MOU) with Stevens & Wilkinson of South Carolina, Inc. (S&W) and several other parties, to develop a publicly-funded hotel adjacent to the Columbia Metropolitan Convention Center. As architect, S&W was to complete sufficient preliminary design work to determine a guaranteed maximum price for the project, which would be used by the City to obtain municipal bond funding to cover the cost of the hotel. Pursuant to the MOU, the construction company was to pay S&W directly. On June 26, 2003, the City received a letter stating S&W would complete its preliminary design on July 10, 2003, and would then stop working until the bond financing for the hotel was finalized. Realizing this could delay the start of construction, S&W offered to continue working the remaining ninety days until the anticipated bond closing date of October 13, 2003, but required assurance it would be compensated for the work it performed during this time frame. It provided an estimate requiring $650,000 and $75,000 per week after that. On July 30, the City approved "$650,000 for interim architectural design services for a period of 90 days prior to bond closing." The bond closing did not occur as scheduled, but S&W nevertheless continued to work. S&W submitted an invoice to the City for $697,084.79 for work that took place from July 10 to December 15, 2003. By letter dated December 17, 2003, S&W informed the construction company that the City had voted that day "to advance [$705,000.000] to the design team for design services and expenses. Because under the MOU the construction company was to pay S&W, not the City, the construction company agreed to reimburse the City for the funds paid to S&W after the bond closing. The City paid S&W's invoice. S&W continued to work on the project, but in March 2004, the City abandoned its plans under the MOU and ended its relationship with S&W. S&W received no further compensation and sued the City for breach of contract under the MOU and the July 2003 agreement. The City argued there was no separate agreement and the payment of interim fees was merely an advance on fees under the MOU and furthermore, the MOU provided that S&W was to be paid by the construction company, not the City. The trial court granted partial summary judgment in favor of S&W, finding a contract existed between it and the City. On certiorari, the City conceded a contract exists, but argued the contract terms have been satisfied. The Supreme Court found the City's arguments were unpreserved and affirmed as modified. View "Stevens & Wilkinson of South Carolina, Inc. v. City of Columbia" on Justia Law

In September 2003, appellant The Cutler Group, Inc. sold a new house in Bucks County to Davey and Holly Fields. After living in the house for three years, the Fields sold the house to appellees Michael and Deborah Conway. In 2008, Appellees discovered water infiltration around some of the windows in the home, and, after consultation with an engineering and architectural firm, concluded that the infiltration was caused by several construction defects. In 2011, Appellees filed a one-count complaint against Appellant, alleging that its manner of construction breached the home builders' implied warranty of habitability. Appellant filed a demurrer, arguing, inter alia, that, as a matter of law, the warranty rextended from the builder only to the first purchaser of a newly constructed home because there was no contractual relationship between the builder and second or subsequent purchasers of the home. Recognizing that courts have traditionally required a showing of privity of contract before permitting a party to proceed with a warranty claim, the trial court concluded that the question presented was "one of policy as to who will bear the burden for damages caused by latent defects [in] relatively new residential dwellings." The trial court sustained Appellant's demurer based on lack of privity, and dismissed Appellees' complaint with prejudice. After an unsuccessful appeal to the Superior Court, appellees petitioned the Supreme Court. Finding no reversible error, the Supreme Court affirmed, holding that a subsequent purchaser of a previously inhabited residence may not recover contract damages for breach of the builder's implied warranty of habitability. View "Conway v. The Cutler Group, Inc." on Justia Law

The Andrews, a married couple, contracted to purchase a newly constructed home from Appellants, Joe Seneshale and his company, Legacy Builders, LLC (together, Legacy). After the Andrews took possession of the property, they discovered that the house had numerous structural and cosmetic flaws. The Andrews filed a complaint against Legacy alleging breach of contract and breach of implied warranty of habitability. The trial court entered judgment in favor of the Andrews and awarded a total of $319,302 in damages. The Supreme Court affirmed but remanded with instructions to correct the damage award, holding (1) when the cost of repairs in a homeowners’ construction case alleging breach of contract and breach of warranty may be disproportionate to the loss in value to the home resulting from the breach, the plaintiff has the burden of proving damages at trial, and the defendant has the burden of challenging the reasonableness or disproportionality of the plaintiff’s method; and (2) the district court did not commit clear error when it relied upon the majority of the Andrews’ cost of repair expert’s testimony and when it found that expansive soils caused damages to the home’s foundation. View "Legacy Builders, LLC v. Andrews" on Justia Law

Plaintiff contracted with the Town of Bethel to perform electrical work in connection with the Town’s renovation of its high school. Plaintiff later sued the Town, alleging breach of contract and unjust enrichment and claiming that the Town must reimburse it for additional costs incurred due to the Town’s ongoing asbestos abatement work at the school. The trial court rendered judgment for the Town in part, concluding that the Town's conduct did not fall within either of two judicial created exceptions to the enforcement of “no damages for delay” clauses adopted by the Court in White Oak Corp. v. Dep’t of Transportation. The Supreme Court affirmed the trial court’s decision that Plaintiff was not entitled to compensation under any of the “no damages for delay” exceptions at issue, holding (1) the term “active interference,” as used in the contract, did not require a showing of bad faith or gross negligence; but (2) the Town’s conduct in this case did not rise to the level of active interference or fall within either of the White Oak exceptions. View "C & H Elec., Inc. v. Town of Bethel" on Justia Law

VP & PK purchased an insurance policy from Lexington Insurance Company for work on a construction site. Kila Kila, one of VP & PK’s subcontractors, purchased an insurance policy from Nautilus Insurance Company. Both policies contained an “other insurance” provision and included duties to defend and indemnify. When VP & PK and Kila Kila were sued for damages resulting from the construction, Nautilus funded the defense of both Kila Kila and VP & PK. Lexington satisfied the judgment against VP & PK but did not contribute to the defense costs. Nautilus filed a complaint seeking (1) a declaration that Lexington owed VP & PK a duty to defend, which it breached; and (2) equitable contribution from Lexington for defense costs. The U.S. district court granted summary judgment for Lexington, holding that Lexington’s policy was in excess to Nautilus’s policy, and therefore, Lexington’s duty to defend was not triggered. The Hawaii Supreme Court accepted certified questions from the court of appeals and held, inter alia, that (1) an “other insurance” clause purporting to release an otherwise primary insurer of the duty to defend if the insurer becomes excess as to liability is enforceable, but only as between two or more insurers seeking to allocate or recover defense costs; and (2) an otherwise primary insurer who becomes an excess insurer by operation of an “other insurance” clause has a duty to defend as soon as a claim is tendered to it and there is the mere possibility that coverage of that claim exists under its policy.View "Nautilus Ins. Co. v. Lexington Ins. Co." on Justia Law

Downing, Thorpe & James Design, Inc. (DTJ) was an architectural firm incorporated in Colorado. Thomas Thrope, one of DTJ’s three founding principals, was allowed to practice individually as a foreign architect in Nevada, but DTJ was not allowed to practice as a foreign corporation in Nevada. In 2004, DTJ contracted with a Nevada developer to provide architectural services for a Las Vegas subdivision owned by Prima Condominiums, LLC (Prima). Prima obtained a loan from First Republic Bank in exchange for a promissory note secured by a deed of trust on one of the subdivision’s units. After Prima defaulted on its payments, DTJ recorded a notice of mechanic’s lien against the property for unpaid services. First Republic then foreclosed and purchased the property. DTJ subsequently brought an action against First Republic for lien priority and unjust enrichment. The district court granted summary judgment for First Republic. The Supreme Court affirmed, holding (1) because DTJ had failed to comply with Nevada’s statutory registration and filing provisions, it was barred from maintaining an action in Nevada for compensation for its architectural services; and (2) Thorpe’s individual status had no bearing on whether DTJ could bring or maintain an action for compensation for its services.View "DTJ Design, Inc. v. First Republic Bank" on Justia Law

In 2002, the Navy awarded Metcalf a contract to design and build 212 housing units in Hawaii by October, 2006, for $50 million. Problems arose involving soil conditions. The request for proposals stated that the “soil reconnaissance report” was “for preliminary information only” and required that the contractor conduct independent soil investigation, incorporating 48 C.F.R. 52.236-2, concerning site conditions that differ materially from those disclosed. Discussions delayed construction for a year. Metcalf implemented its preferred changes by over-excavating and using non-expansive fill, without a contract modification. The Navy denied that there was any material difference between pre-bid and post-award soil assessments, but approved some modifications. Metcalf was about 200 days behind schedule and began using “post-tension” concrete, which was more expensive but avoided the additional time and cost of over-excavation. The Navy amended the contract to approve use of post-tension concrete slabs. Metcalf claims additional delays resulting from the presence of more of a chemical contaminant than was expected. With respect to contamination, the Navy granted a 286-day extension and reimbursed $1,493,103. The Navy accepted the buildings in March, 2007. Metcalf alleged that its final cost was $76 million. The government paid less than $50 million. The Claims Court ruled in favor of the government, under the Contract Disputes Act, 41 U.S.C. 7104. The Federal Circuit vacated, holding that the court misconstrued what Metcalf needed to show to prove that the government breached its duty of good faith and fair dealing and misinterpreted certain contractual provisions.View "Metcalf Const. Co., LLC v. United States" on Justia Law