Justia Construction Law Opinion Summaries

The case concerns a dispute between a homeowner and the builder of his residence. The homeowner entered into a purchase agreement in 2014 for a newly constructed home, which included a one-year residential warranty. Shortly after moving in, he noticed significant cold drafts, frost buildup, and temperature differences in the northwest corner of the home. He raised these concerns with the builder and a local home builders association within the first year, and specifically requested an insulation check before the warranty expired. The builder coordinated multiple inspections and minor repairs with a subcontractor and later, after a period of inactivity, continued to address the issues through additional inspections and proposed repairs. Nevertheless, the homeowner did not commence legal action until July 2022, after an independent inspection revealed ongoing insulation defects.The District Court of Cass County, East Central Judicial District, dismissed the homeowner’s claims for breach of warranty, breach of contract, and negligence on summary judgment. The court found the claims were time-barred under North Dakota’s six-year statute of limitations, ruling that the homeowner was on inquiry notice of potential claims as early as December 28, 2015, when he specifically identified insulation concerns. The court also rejected arguments that the builder had waived or forfeited the statute of limitations defense due to litigation conduct, or that equitable estoppel should apply based on ongoing repair efforts.The Supreme Court of North Dakota affirmed the district court’s decision. It held that the homeowner was on inquiry notice of his claims by December 28, 2015, making his 2022 action untimely under N.D.C.C. § 28-01-16(1). The Court further held that the builder neither waived nor forfeited its limitations defense, that ongoing repair and settlement discussions did not equitably estop the builder from asserting the defense, and that no duty-to-disclose exception applied. The summary judgment dismissal was affirmed. View "Hanson v. Dabbert Custom Homes" on Justia Law

A trade association representing licensed contractors sued a municipal government, alleging that the city violated North Dakota’s statutory competitive bidding requirements for certain public improvement projects. The association claimed that the city self-performed various tasks during a road improvement project, despite the project’s estimated cost exceeding the statutory threshold for mandatory public bidding. After the project was substantially completed, the city adopted a new ordinance authorizing it to self-perform routine street maintenance, including milling and overlaying, regardless of cost.The case was heard in the District Court of Cass County, East Central Judicial District. The district court granted leave for the association to supplement its complaint with factual allegations about the completed project, but denied leave to challenge the newly adopted ordinance, concluding the association lacked standing because it had not shown an actual or threatened injury from action under the ordinance. After a hearing, the district court dismissed the case as moot, reasoning that because the road project had been completed, there was no ongoing controversy or relief to be granted.The North Dakota Supreme Court reviewed the appeal. It held that the public interest exception to mootness applied, since litigation regarding competitive bidding statutes has statewide significance and guides the conduct of public officials across North Dakota. The Supreme Court further determined that the association had standing to challenge the city’s ordinance, because it alleged facts showing the ordinance threatened injury to its members—licensed contractors eligible to bid on public projects. The Supreme Court reversed the district court’s dismissal and remanded for further proceedings, instructing reconsideration of whether the association may amend its complaint to challenge the ordinance. View "Associated General Contractors of North Dakota v. City of West Fargo" on Justia Law

In February 2020, Shift Services, LLC (Shift) was contracted by Ames Savage Water Solutions, LLC (Ames) to repair a liner inside a water tank operated by Ames. The agreement was for a fixed price of $39,500.00, which included all labor, material, and travel time. When Shift began the work, they found a more significant amount of ice in the tank than initially observed. Shift communicated with Ames about the issue and decided to subcontract a hot oil truck company to melt the ice. Upon completion of the project, Ames paid the contracted amount but refused to pay an additional $31,705.00 bill from Shift related to the ice removal. Shift claimed that the contract was modified to include these additional costs, which Ames had allegedly approved. The district court dismissed Shift's breach of contract claim and terminated the construction lien it had placed on the property, finding that there was a lack of mutual assent to modify the contract.The Supreme Court of North Dakota affirmed the district court's decision. The court found that Shift did not provide sufficient evidence to demonstrate mutual assent for the modification of the original contract. The court pointed out that Shift had not disclosed to Ames that they intended to add an additional charge for the increased cost associated with the ice removal, nor did they discuss the details of the subcontractor, the equipment to be used, or the estimated number of hours that the removal would take. In conclusion, the court found no error in the district court's finding of a lack of mutual assent to modify the contract, thereby confirming that Ames did not breach the contract. View "Shift Services v. Ames Savage Water Solutions" on Justia Law

L&C Expedition, LLC (“L&C”) appealed the grant of summary judgment in favor of International Fidelity Insurance Company (“IFIC”) and denying summary judgment to L&C. L&C contracted with Unlimited Excavating (“Unlimited”) to perform work on a residential development project. Unlimited completed its work in November 2016 and received final payment in July 2017. In 2019, L&C learned of major problems in the construction and notified Unlimited it needed to make repairs. Unlimited did not make the repairs and L&C demanded IFIC arrange for performance of Unlimited’s work per the terms of the performance bond. IFIC refused to arrange for performance. L&C subsequently initiated suit against IFIC in May 2020 arguing L&C is entitled to recover $393,000 under the terms of the performance bond. The performance bond provided the following: “[a]ny suit under this bond must be[] [i]nstituted before the expiration of two years from the date on which final payment under the subcontract falls due.” The parties do not dispute the district court’s finding L&C initiated its action outside the limitation period provided within the terms of the bond. L&C argued the district court erred in finding a contractual limitation on the period to assert a claim was enforceable, erred in failing to apply N.D.C.C. § 9-08-05 to preclude modification of the applicable statute of limitations, and erred in interpreting N.D.C.C. § 22-03-03 as providing an exception to the prohibition against modifying the applicable statute of limitations. Finding no reversible error, the North Dakota Supreme Court affirmed. View "L&C Expedition, et al. v. Swenson, Hagen and Co., et al." on Justia Law

Justin Shafer appealed a district court judgment confirming an arbitration award against Diamond Development & Custom Homes, L.L.C. Shafer argued the district court erred by failing to increase the amount of damages he was awarded. He also argued the North Dakota Supreme Court should narrowly expand the standard for reviewing an arbitration award. The Court declined Shafer’s request to expand the standard of review, and concluded the district court did not err in confirming the arbitration award. View "Shafer v. Scarborough, et al." on Justia Law

Blue Appaloosa, Inc., appealed a judgment affirming an Industrial Commission order determining it violated N.D. Admin. Code ch. 43-02-03 by beginning construction of a treating plant prior to obtaining a permit or filing a bond with the Commission. Finding no reversible error, the North Dakota Supreme Court affirmed. View "Blue Appaloosa v. NDIC" on Justia Law

Koch Construction, Inc.; Marilyn Koch, Personal Representative of the Estate of Michael P. Koch; and Koch Property Investments, Inc. (collectively “appellants”) appealed the judgment and amended judgment entered in favor of Toman Engineering Company (“Toman”). Michael Koch owned and operated Koch Construction and Koch Property Investments (“KPI”). Toman provided engineering services to Koch Construction on various projects, including designing a stormwater management system for the Koch Meadow Hills residential development project in Dickinson, North Dakota. Michael died in August 2017. The stormwater management system included a detention pond referred to as the Marilyn Way Stormwater Pond, which was the detention pond at issue in this case. In 2016, Janet Prchal, Dean Kubas, and Geraldine Kubas, owners of property near the Koch Meadow Hills development, sued the City of Dickinson and KPI for damages, alleging the development of Koch Meadow Hills caused water to drain and collect on their properties. The Prchal lawsuit was settled in September 2018, and the settlement required modifications to be made to the Marilyn Way Stormwater Pond before June 30, 2019. The reconstruction work on the detention pond occurred during the summer and fall of 2019. Toman served a summons and complaint on Koch Construction and Marilyn Koch, to collect unpaid amounts for engineering services Toman provided to the defendants in 2017. Toman filed the complaint in the district court in June 2019. The appellants argued the district court erred in deciding they committed intentional spoliation of evidence and dismissing their counterclaim as a sanction. After review of the district court record, the North Dakota Supreme Court concluded the district court abused its discretion when it dismissed the appellants’ counterclaim as a sanction for spoliation of evidence. Judgment was reversed and the matter remanded for a new trial. View "Toman Engineering Co. v. Koch Construction, et al." on Justia Law

Grinnell Mutual Reinsurance Company appealed a district court judgment ordering it to pay Larry Pavlicek $214,045.55 under a commercial general liability insurance (CGL) policy Grinnell had with JRC Construction. Grinnell argued the district court misinterpreted the insurance policy, and that it was not required to indemnify JRC Construction because its work product was defective. In 2013, Pavlicek hired a contractor to construct a steel building on his property. JRC Construction installed the concrete floor and floor drain for the project. Another subcontractor installed the in-floor heating system for the concrete floor. After JRC completed the floor drain, it failed to properly install the concrete floor, and its attempts to repair the concrete damaged the drain. Pavlicek sued JRC for breach of contract relating to the defective work. In February 2020, Pavlicek filed a supplemental complaint against Grinnell, alleging it was required to satisfy the judgment as JRC’s insurer. Grinnell claimed it had no obligation to indemnify JRC under the CGL policy. The district court concluded JRC’s defective work on the concrete floor was not covered under the CGL policy, but damage to the floor drain was covered. Because removal and replacement of the floor and in-floor heat were necessary to repair the drain the court concluded the CGL policy covered all of those costs. The North Dakota Supreme Court found that although the CGL policy provided coverage to repair the floor drain, it did not cover the cost of replacing the concrete floor because that damage was the result of JRC’s defective work. The district court erred in finding the CGL policy covered the entire concrete floor replacement because replacement of the floor was the only way to repair the floor drain. Further, the Supreme Court found the district court erred in concluding the CGL policy provided coverage for replacement or repair of the in-floor heating system beyond that which may be necessary to repair the drain. View "Pavlicek v. American Steel Systems, Inc., et al." on Justia Law

Jeanne and Nevin Tergesen appealed a judgment dismissing their complaint and awarding Nelson Homes, Inc. damages for its breach of contract counterclaim. The Tergesens argued the district court erred in dismissing their rescission and breach of contract claims, and the court erroneously found the Tergesens breached the contract. After review, the North Dakota Supreme Court concluded the district court did not err in dismissing the Tergesens’ claims or finding the Tergesens breached the contract, but the court did err in calculating the amount of prejudgment interest on Nelson Homes’ damages. View "Tergesen, et al. v. Nelson Homes" on Justia Law

Tioga Properties, LLC, appealed a district court judgment awarding Wades Welding, LLC $27,669.90 relating to Wades Welding’s lawsuit for enforcement of construction liens and unjust enrichment. Janice Ellsworth owned Tioga Properties. Tioga Properties owned a restaurant and home (referred to by the parties as a “mobile home”) adjacent to each other in Tioga, North Dakota. Susan Gordon leased the restaurant from Tioga Properties. Gordon delivered rent payments to John Ellsworth Jr., Janice Ellsworth’s son. Gordon resided in the home but had no written lease for that property. In late 2016 and early 2017, Gordon hired Wades Welding to repair the home and restaurant. Wades Welding performed $19,840 of work on the home and $2,500 of work on the restaurant. Wades Welding delivered the invoices for its work to Ellsworth Jr. A day after Wades Welding completed its work at the home, Ellsworth evicted Gordon from the restaurant and home. Ellsworth Jr. supervised the eviction and Gordon left both properties within 48 hours. In December 2017, Wades Welding recorded construction liens against the properties after Tioga Properties failed to pay for the repairs. Tioga Properties sold the restaurant in July 2019. In September 2019, Tioga Properties served on Wades Welding a demand to enforce the home lien. In October 2019, Wades Welding sued Tioga Properties for breach of contract, foreclosure of the construction liens and unjust enrichment. Tioga Properties denied the allegations, claiming it did not authorize Wades Welding's work on the properties. The district court found Wades Welding's construction liens on both properties were valid, and ordered foreclosure of the home lien. The court found the lien on the restaurant was unenforceable due to a service error, but nonetheless awarded Wades Welding the amount of the repaired under the doctrine of unjust enrichment. Finding no reversible error in the district court's judgment, the North Dakota Supreme Court affirmed judgment in favor of Wades Welding. View "Wades Welding v. Tioga Properties" on Justia Law