Justia Construction Law Opinion Summaries

Wilson Paving & Excavating, Inc. was one of several subcontractors retained to perform services in connection with a renovation project at Sand Springs Memorial Stadium at Charles Page High School. Specifically, Wilson Paving contracted to dig trenches and lay pipe for a storm drainage system being installed under the athletic field. Wilson Paving utilized a local staffing agency, Labor Ready, to secure temporary workers to assist on the project. Steven Broom went to the offices of Labor Ready to obtain employment. Broom was directed by Labor Ready to work with Wilson Paving at Sand Springs High School. He reported to the high school and, at the instruction of Wilson Paving, began work laying pipe. The trench in which Broom was working collapsed twice - the first time covering him in dirt to his waist and the second time covering him in dirt to his neck. People on the job site freed Broom from the neck to the waist while waiting on emergency personnel to arrive. Once on the scene, emergency personnel could not enter the trench to rescue Broom until the trench was safely reinforced. During this time, Broom remained buried from the waist down. Emergency personnel eventually removed Broom from the trench, and he was transported to the hospital where he was treated for serious injuries, including rib fractures, collapsed lungs, pulmonary contusions, blood within the chest, fluid around the spleen and kidney, and a left kidney laceration. Before the trench collapsed, one of Wilson Paving's employees, Jack Bailey, was using a backhoe to dig the trench and to retrieve pipe from an area adjacent to the trench. Wilson Paving believed the trench collapse was due to the work of another contractor who had allegedly removed a monument and flag pole near the area of the collapse but failed to alert Bailey of such before he began digging the trench. Broom pursued and received workers' compensation benefits from Labor Ready for the injuries he sustained in the accident. Broom also sued Wilson Paving for his injuries in a third-party action to collect for his injuries as a result of Wilson's employee. The trial court found in favor of Broom and entered judgment against Wilson Paving for $1,150,000.00. Broom then sought post-judgment garnishment of Wilson Paving's Commercial General Liability Policy issued by Mid-Continent Casualty Company. The trial court entered summary judgment in favor of Mid-Continent, finding that coverage for Broom's injuries was precluded under the "earth movement" exclusion clause in Mid-Continent's policy. The Court of Civil Appeals found that the earth movement exclusion clause did not prevent coverage for Broom's injuries, but affirmed summary judgment on different grounds. Upon review, the Supreme Court held that Mid-Continent's Commercial General Liability Policy provided coverage for Broom's injuries. View "Broom v. Wilson Paving & Excavating" on Justia Law

After discovering a number of defects in their home, plaintiffs Hugh and Katherine Carithers filed suit against their homebuilder, Cronk Duch, in state court. Cronk Duch’s insurance company, Mid-Continent Casualty Company, refused to defend the action on behalf of Cronk Duch. The Carithers and Cronk Duch then entered into a consent judgment in the underlying action for approximately $90,000, in favor of the Carithers. The consent judgment also assigned to the Carithers Cronk Duch’s right to collect the judgment amount from Mid-Continent. The Carithers then filed this action against Mid-Continent in state court to collect from Mid-Continent on the settlement. Mid-Continent removed the case to the Middle District of Florida. The Carithers are the Plaintiffs in this action due to Cronk Duch’s assignment of its rights to them. The Fifth Circuit, after careful consideration, affirmed in part, and reversed in part, addressing a number of coverage issues related to damage from the completed house caused by the defective work of subcontractors. View "Carithers v. Mid-Continent Casualty Company" on Justia Law

A large commercial development in Kansas City, Missouri was aborted in the middle of construction due to cost overruns. When the developer would not cover the shortfall, the construction lender stopped releasing committed loan funds, and contractors filed liens against the property for their unpaid work on the unfinished project. Bankruptcy followed, and the contractors’ liens were given priority over the lender’s security interest in the failed development, leaving little recovery for the lender. The lender looked to its title insurer for indemnification. The title policy generally covers lien defects, but it also contains a standard exclusion for liens “created, suffered, assumed or agreed to” by the insured lender. The Seventh Circuit affirmed judgment in favor of the title company. The exclusion applies to the liens at issue, which resulted from the lender’s cutoff of loan funds, so the title insurer owed no duty to indemnify. The liens arose from insufficient project funds, a risk of loss that the lender, not the title company, had authority and responsibility to discover, monitor, and prevent. View "BB Syndication Servs, Inc. v. First Am. Title Ins. Co" on Justia Law

This action involved a dispute arising from the construction of a large house. Interstate Mechanical, Inc. initiated an arbitration action to recover payments it claimed as a result of its work on the house project. Abbey/Land LLC and Glacier Construction Partners LLC (collectively, Plaintiffs) then filed suit against Interstate in Montana District Court in Flathead County. Thereafter, Glacier asserted counterclaims in the Interstate arbitration proceeding and obtained a positive arbitration award against Interstate. Abbey/Land subsequently filed an amended complaint dismissing Glacier as a plaintiff and naming it as a defendant. Glacier tendered the Abbey/Land claims to its insurer, James River Insurance Company. James River refused to provide defense or indemnity. Glacier and Abbey/Land settled the Flathead County action as between themselves. James River moved to intervene in the Flathead County action to challenge the reasonableness of the confessed judgment against Glacier. Meanwhile, Abbey/Land and Glacier entered settlements with all other parties. The district court never ruled on James River’s motion to intervene and entered final judgment against Glacier. The Supreme Court reversed, holding that the district court erred in entering judgment without considering either its motion to intervene or the reasonableness of the confessed judgment. View "Abbey/Land LLC v. Interstate Mechanical, Inc." on Justia Law

During a highway paving project a storm caused recently applied primer to emulsify in rainwater. The oil splashed onto passing vehicles, causing damage. The vehicle owners brought claims against the State, which the State paid. A.M. Welles, Inc. (Welles), the general contractor on the job, reimbursed the State for what it paid to the vehicle owners. The State then sued Liberty Mutual Fire Insurance Co. (Liberty), the insurer for the job, seeking indemnification for the costs that Welles did not cover. Welles, in turn, sued the subcontractors for the project, Montana Materials, Inc., RSJ, Inc., and GLJ, Inc. (collectively, “Jensen”), seeking indemnification under the subcontract. The district court granted summary judgment for Jensen on Welles’s indemnification claim and dismissed the State’s action against Liberty for failure to prosecute. The Supreme Court vacated and remanded, holding that the district court (1) erred in denying Welles’s motion for summary judgment, as Welles was entitled to indemnification under the subcontract; and (2) abused its discretion by dismissing the State’s action against Liberty for failure to prosecute. Remanded. View "A.M. Welles, Inc. v. Mont. Materials, Inc." on Justia Law

The issue at the heart of this appeal to the Tenth Circuit centered on indemnity stemming from a promise by Martin K. Eby Construction Company’s predecessor to build a water pipeline. Eby engaged another company (the predecessor to Kellogg Brown & Root, LLC), promising to indemnify claims resulting from Eby’s work. While building the water pipeline, Eby accidentally hit a methanol pipeline, causing a leak. At the time, no one knew about the leak. It was discovered over two decades later, and the owner of the methanol pipeline had to pay for the cleanup. The owner of the methanol pipeline sued to recover the expenses from Kellogg and Eby. Kellogg and Eby prevailed, but Kellogg incurred over $2 million in attorneys’ fees and costs. Kellogg invoked Eby’s indemnity promise, suing Eby and its liability insurer, Travelers Casualty and Surety Co. The district court granted summary judgment to Eby and Travelers, leading Kellogg to appeal. To resolve the Kellogg-Eby portion of the appeal, the Tenth Circuit focused on the enforceability of Eby’s promise of indemnity: the promise was broad enough to cover the pipeline owner’s claims against Kellogg for its inaction after Eby caused the leak, but the indemnity clause was not conspicuous; thus, it was unenforceable. The Kellogg-Travelers appeal turned on Kellogg’s argument that Travelers’ insurance policy covered liabilities assumed by its insured (Eby). The Tenth Circuit concluded that because the indemnity clause was unenforceable, it is as if Eby never agreed to assume Kellogg’s liabilities. In the absence of Eby’s assumption of Kellogg’s liabilities, Travelers did not insure Kellogg. Accordingly, Kellogg was not entitled to indemnity from Eby or insurance coverage from Travelers, and Eby and Travelers were entitled to summary judgment. View "Martin K. Eby Construction v. OneBeacon Insurance" 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

The Georgia Department of Corrections (GDOC) entered into a construction contract with Lewis Walker Roofing (Walker Roofing) to re-roof several buildings at Valdosta State Prison. The Contract contained two “no assignment” clauses, and as a prerequisite to contracting with GDOC, Walker Roofing was required to obtain payment and performance bonds. It obtained such payment and performance bonds from Developers Surety and Indemnity Company. Walker Roofing did not complete its work within the time frame required by the Contract, and GDOC declared Walker Roofing in default. Developers Surety did not notify GDOC within 25 days of receipt of GDOC's notice of default regarding whether it would remedy the default or perform the contract. However, approximately three months after the declaration of default, Developers Surety gave GDOC the option of entering into a contract with another company for the completion of the work. GDOC then contracted with that company to finish the project. Under the payment and performance bonds and prior to Walker Roofing's default, Developers Surety had provided financial assistance to Walker Roofing. Developers Surety filed suit against GDOC for breach of contract and for a declaratory judgment that it had no obligation under the payment and performance bond it issued to Walker Roofing on behalf of GDOC. GDOC filed a counterclaim for breach of contract. The parties filed cross-motions for summary judgment, and the trial court determined that Developers Surety's claims were not barred by sovereign immunity and that GDOC had breached the construction contract as a matter of law. It concluded that GDOC waived its sovereign immunity by entering into the contract with Walker Roofing, and that the doctrine of equitable subrogation gave Developers Surety the ability to file suit against GDOC once it incurred liability and paid the obligations of its principal under the bond. Consequently, the trial court granted summary judgment to Developers Surety and denied it to GDOC; in the same order, the trial court entered judgment in favor of Developers Surety in the amount equal to the "financial assistance" Developers Surety provided to Walker Roofing. The Supreme Court granted certiorari to the Court of Appeals to consider whether the State’s sovereign immunity was waived for the claim Developers Surety made on its contract with the State. The Supreme Court found that immunity was indeed waived in this instance, and accordingly, it affirmed the judgment of the Court of Appeals. View "Georgia Dept. of Corrections v. Developers Surety & Indemnity Co." on Justia Law

The general contractor of a Wisconsin construction project, hired Harsco to supply scaffolding. Krien, injured in a fall when a plank on a scaffold on which he was standing, broke, sued Harsco. The parties settled his claim for $900,000. Harsco filed a third‐party complaint against the contractor, seeking indemnification plus interest and attorneys’ fees. The district judge granted the contractor summary judgment. The Seventh Circuit reversed and remanded after examining the complex provisions of the contract between the two. The plank may or may have been supplied by Harsco and may or may not have been defective, as claimed by Krien, who could not sue Riley in tort, because against his employer his only remedy for a work‐related accident was a claim for workers’ compensation, but there has never been judicial resolution of these questions, because Krien’s suit was settled before there was any judgment. Indemnification, however, is a form of insurance, and could apply even if the party seeking indemnification was negligent. Riley’s duty to indemnify Harsco extends to legal expenses incurred by Harsco in defending against Krien’s suit and in litigating this suit. View "Krien v. Harsco Corp." on Justia Law

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