Justia Construction Law Opinion Summaries

The Army Corps of Engineers retained JMR as general contractor for construction of a dental clinic at the Presidio of Monterey. JMR entered into separate electrical and plumbing subcontracts with EAR. SureTec issued separate bonds guaranteeing EAR’s performance. While the project was ongoing, JMR communicated with EAR about alleged delays, deficient and late submittals, and improper work, and retained certain funds otherwise due EAR. After the project was completed, JMR sued EAR and SureTec for breach of contract and for foreclosure of the bonds. EAR filed a cross-complaint to recover retention funds withheld under the subcontracts. JMR was awarded $315,631, which included an offset for retention funds. The court held that JMR was entitled to attorney fees for its successful defense of the cross-complaint; awarded JMR $90,644.07 in expert witness fees, concluding that JMR’s recovery exceeded its $375,000 pretrial settlement offers. The court of appeal affirmed the judgment but reversed the award of expert fees. The court upheld utilization of the Eichleay method to calculate extended home office overhead damages; use of the modified total cost method of calculating JMR’s disruption and delay damages; and finding SureTec liable under the bonds because formal notice of default was not a condition precedent to recovery. View "JMR Constr. Corp. v. Envtl Assessment & Remediation Mgmt., Inc." on Justia Law

The California Department of Transportation (CalTrans) and Papich Construction Company, Inc. appealed a trial court’s issuance of a writ of mandate to vacate the award of a public works contract to Papich. DeSilva Gates Construction submitted the second-lowest bid (the first bidder was disqualified for a non-responsive bid), and included the names and description of work by all subcontractors slated to perform work exceeding one-half of one percent of the bid amount. DeSilva later sent a letter to CalTrans noting DeSilva had inadvertently supplied CalTrans with additional information on the subcontractor list "above and beyond what was required." DeSilva explained it had not listed "All Steel Fence" as a subcontractor in its bid because the value of the bid items it would perform was less than one-half of one percent of the bid and the information for All Steel Fence (submitted within 24 hours of the bid) was additional information that was not required. Papich challenged DeSilva’s bid as having changed the subcontractor list. CalTrans rejected DeSilva’s bid as nonresponsive. DeSilva protested CalTrans’s determination that its bid was nonresponsive and protested Papich’s bid. The trial court granted the writ on grounds CalTrans erroneously rejected DeSilva's bid, and erred by awarding the contract to Papich despite Papich’s failure to comply with a material requirement of the information for bids. On appeal, CalTrans and Papich argued DeSilva’s bid was nonresponsive. Appellants also argued CalTrans had discretion to waive Papich’s mistake in failing to acknowledge the addendum to the information for bids. After review, the Court of Appeal concluded the trial court did not err. DeSilva’s disclosure of a subcontractor performing work amounting to only one-tenth of one percent of the total value of the contract was not required by the Public Contract Code or CalTrans’s information for bids. The additional information was accurate, albeit unnecessary, and did not render DeSilva’s bid nonresponsive. By contrast, CalTrans initially declared Papich’s bid to be nonresponsive and then waived Papich’s mistake and determined the bid to be responsive. The Court concluded CalTrans abused its discretion by awarding Papich the contract. Accordingly, the Court affirmed the trial court’s issuance of the writ of mandate. View "DeSilva Gates Construction, LP v. Dept. of Transportation" on Justia Law

In 2005 the Army Corps of Engineers invited bids on a federal reservoir project in Illinois. One of the successful bidders was Slurry, which leased from Pileco a trench cutter made by Bauer. Slurry was a prime contractor on the Corps of Engineers’ project; the Miller Act, 40 U.S.C. 3131, requires prime contractors on some government construction projects to post bonds. Slurry used Fidelity as surety. The bond insured against a failure by Slurry to pay subcontractors, such as Pileco. Contending that the cutter was defective, Slurry refused to pay the agreed rental price. Pileco sued Slurry and Fidelity, asserting breach of contract that Fidelity violated the Miller Act by failing to reimburse Pileco for costs associated with Slurry’s reneging on its obligation to pay. Slurry counterclaimed. A second trial resulted in a verdict in Pileco’s favor except for a $357,716 equitable adjustment in favor of Slurry, based on time that cutter was inoperable because of a defect attributable to Pileco. The net result was that Pileco was awarded $2.23 million against Slurry for breach of contract and the same amount against Fidelity for the Miller Act violation. The Seventh Circuit affirmed, except with respect to the denial of prejudgment interest and costs. View "Pileco, Inc. v. Slurry Systems, Inc." on Justia Law

Nagle and Fink were co-owners and executives of concrete manufacturing and construction businesses. The businesses entered into a relationship with a company owned by a person of Filipino descent. His company would bid for subcontracts on Pennsylvania transportation projects as a disadvantaged business enterprise. Federal regulations require states that receive federal transportation funds to set annual goals for participation in transportation construction projects by disadvantaged business enterprises, 49 C.F.R. 26.21. If his company won the bid for the subcontract, Nagle and Fink’s businesses would perform all of the work. Fink pled guilty to conspiracy to defraud the United States. A jury found Nagle guilty of multiple charges relating to the scheme. The Third Circuit affirmed Nagle’s conviction, upholding the admission of electronic evidence discovered during searches of the businesses’ offices, but vacated both sentences, based on loss calculation errors. View "United States v. Nagle" on Justia Law

The trial court found that a general contractor, Jeff Tracy, Inc., doing business as Land Forms Construction, did not have a valid license while performing work on a project for City of Pico Rivera. Therefore, the court ordered Land Forms to disgorge all compensation paid to it by the City. Land Forms appealed, contending that the trial court improperly denied it a jury trial. The court concluded that Land Forms was entitled to a jury trial on these issues, and therefore reversed the judgment. However, the court found that Land Forms is not entitled to any apportionment where Business and Professions Code section 7031, subdivision (b) does not allow apportionment as a matter of law. Accordingly, the court reversed the trial court's judgment. View "Jeff Tracy, Inc. v. City of Pico Rivera" 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

Dunnet, a highway construction company, is prequalified to bid and work on Illinois Department of Transportation (IDOT) projects and competes for federally assisted highway construction contracts. Dunnet is owned and controlled by two white males. Between 2007 and 2009, its average annual gross receipts were over $52 million. To receive federal-aid funds for highway contracts, IDOT must have a “disadvantaged business enterprise” (DBE) participation program. A DBE is a for-profit small business concern that is at least 51% owned and controlled by one or more socially and economically disadvantaged individuals. There is a rebuttable presumption that women and members of racial minority groups are socially and economically disadvantaged, but an individual owner of any race or gender may qualify as “socially and economically disadvantaged.” A firm is not an eligible DBE if the firm (including affiliates) has had average annual gross receipts over its previous three fiscal years, greater than $22.41 million. Illinois has not met its DBE participation goals. Dunnet was denied a goal waiver and was not awarded a major expressway project. The Seventh Circuit affirmed summary judgment rejecting Dunnet’s claim that IDOT’s DBE Program discriminates on the basis of race, concluding that Dunnet lacked standing to raise an equal protection challenge based on race and that the Program survived the constitutional and other challenges. View "Dunnet Bay Constr. Co. v. Borggren" 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

In 2010, the United States Department of the Navy entered into an agreement with Contracting Systems, Inc. II ("CSI"), per which CSI served as the general contractor for the construction of an addition to, and renovations of, the Navy/Marine Corps Reserve Training Center in the Lehigh Valley. CSI, in turn, subcontracted with Appellee, Clipper Pipe & Service, Inc. for the performance of mechanical and heating, ventilation, and air conditioning work. Clipper filed suit against CSI and its surety, the Ohio Casualty Insurance Company (collectively "Appellants"), in the United States District Court for the Eastern District of Pennsylvania, asserting that CSI had failed to pay approximately $150,000 to Clipper, per the terms of their agreement. Among other claims, Clipper advanced one under the Contractor and Subcontractor Payment Act (CASPA). Appellants moved for summary judgment, arguing that CASPA did not apply to public works projects, because a governmental entity does not qualify as an "owner" under the statutory definition, as such an entity is neither a "person" nor an "other association." The federal district court denied relief on Appellants' motion. Among other aspects of its holding, the court followed "Scandale Associated Builders & Eng'rs, Ltd. v. Bell" which held that a governmental entity may be an "owner" under CASPA, since the statutory definition of "person" does not exclude the federal government, and the purpose of CASPA is to protect contracting parties. Clipper prevailed at the subsequent jury trial, and the district court awarded interest, penalties, and attorney fees. Appellants appealed to the United States Court of Appeals for the Third Circuit. The Pennsylvania Supreme Court accepted certification from the Third Circuit to determine whether a CASPA applied to the public works project in this case. After review, the Supreme Court concluded that CASPA did not apply to a construction project where the owner was a governmental entity. View "Clipper Pipe v. Ohio Casualty Ins." on Justia Law

Appellant submitted a bid for a highway project in Sublette County, Wyoming and was the low bidder. The Board of County Commissioners of Sublette County awarded the contract to another bidder, a contractor that was from Sublette County. Appellant filed a complaint in the district court alleging that by not entering into the contract with Appellant, the Commissioners violated Wyo. Stat. Ann. 16-6-102(a). The district court found in favor of the Commissioners on all claims. On appeal, the Supreme Court held section 16-6-102(a) inapplicable and remanded the case for a determination of whether the award was appropriate. On remand, the district court held generally in favor of the Commissioners, finding that the Commissioners’ award was within their discretion and appropriate. The Supreme Court reversed, holding that the Commissioners’ utilization of an undisclosed preference for Sublette County contractors in awarding the public contract opened for competitive bid constituted an illegal exercise of discretion. Remanded for a determination of damages. View "W. Wyo. Constr. Co., Inc. v. Bd. of County Comm’rs" on Justia Law