Justia Construction Law Opinion SummariesArticles Posted in US Court of Appeals for the Fifth Circuit
Colony Insurance Company v. First Mercury Insurance Company
In this case, the United States Court of Appeals for the Fifth Circuit considered an appeal by Colony Insurance Company against First Mercury Insurance Company related to a settlement agreement for an underlying negligence case. Both companies had consecutively insured DL Phillips Construction, Inc. (DL Phillips) under commercial general liability insurance policies. After the settlement, Colony sued First Mercury, arguing that First Mercury needed to reimburse Colony for the full amount of its settlement contribution, as it contended that First Mercury's policies covered all damages at issue. The district court granted summary judgment in favor of First Mercury, prompting Colony's appeal.In the underlying negligence case, DL Phillips was hired to replace the roof of an outpatient clinic in Texas. Shortly after completion, the roof began leaking, causing damage over several months. The clinic's owner sued DL Phillips for various claims, including breach of contract and negligence. A verdict was entered against DL Phillips for over $3.7 million. Both Colony and First Mercury contributed to a settlement agreement, and then Colony sued First Mercury, arguing it was responsible for all the property damage at issue.The appellate court held that under the plain language of First Mercury's policies and relevant case law, First Mercury was only liable for damages that occurred during its policy period, not all damages resulting from the initial roof defect. The court also found that Colony failed to present sufficient evidence to create a genuine dispute of material fact about whether there was an unfair allocation of damages, which would be necessary for Colony's contribution and subrogation claims. As such, the court affirmed the district court's decision to grant summary judgment in favor of First Mercury and denied summary judgment for Colony. View "Colony Insurance Company v. First Mercury Insurance Company" on Justia Law
Liberty Mutual Insurance Co. v. Housing Authority of New Orleans
The Housing Authority of New Orleans (HANO) agreed to pay Parkcrest $11 million to build affordable housing. Liberty was Parkcrest’s surety. HANO terminated Parkcrest before the project was done. Parkcrest sued, alleging breach of contract. Liberty and HANO executed a “Takeover Agreement,” incorporating the original contract; Liberty stepped into Parkcrest’s shoes to finish the project. Liberty hired Parkcrest as its completion contractor. HANO claimed that Liberty had forfeited any right to continue working on the project and requested that it relinquish control of the site. Liberty claimed the termination was wrongful. Rather than following the contract’s dispute resolution procedures, Liberty filed a complaint-in-intervention in the HANO-Parkcrest litigation.The district court concluded that HANO had breached the Takeover Agreement and the underlying HANO Contract by terminating Liberty for convenience after Liberty had substantially completed the project, awarded Liberty and Parkcrest damages, and held HANO liable to Liberty for attorney’s fees, but left those fees unquantified. The Fifth Circut affirmed but concluded it lacked jurisdiction to consider the fee award because a fee award is not a final judgment under 28 U.S.C. 1291 until reduced to a sum certain. The district court then awarded Liberty $526,192.25 in fees. The Fifth Circuit reversed. Liberty’s claim for fees arises from the contract, which authorizes fee-shifting “upon the receipt by [HANO] of a properly presented claim.” Liberty breached the contract’s dispute-resolution procedures, this breach was unexcused, so Liberty is entitled to nothing. View "Liberty Mutual Insurance Co. v. Housing Authority of New Orleans" on Justia Law
Siplast, Inc. v. Employers Mutual Casualty Insurance Co.
In 2012, the Archdiocese purchased a roof membrane system from Siplast, for installation at a Bronx high school. Siplast guaranteed that the system would “remain in a watertight condition for a period of 20 years.” In 2016, school officials observed water damage in the ceiling tiles after a rainstorm and notified the installing contractor and Siplast. A designated Siplast contractor unsuccessfully attempted to repair the damage and prevent leaks. The Archdiocese ultimately obtained an estimate for remediation and replacement of approximately $5,000,000.The ensuing lawsuit alleged “Breach of the Guarantee” Siplast submitted a claim to its insurer, EMCC, asserting coverage under commercial general liability policies that covered “property damage” caused by an “occurrence,” defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The policies were subject to exclusions for “Your Product/Your Work” and “Contractual Liability.” The district court granted EMCC summary judgment, finding that while the complaint did allege property damage that was caused by an “occurrence,” the alleged damage fit within the Your Product/Your Work Exclusion. The Fifth Circuit reversed, finding that EMCC had a duty to defend. The underlying complaint contains allegations of damage to property other than Siplast’s roof membrane as part of the claim against Siplast; the exclusion does not apply. View "Siplast, Inc. v. Employers Mutual Casualty Insurance Co." on Justia Law
Sayers Construction, LLC v. Timberline Construction, Inc.
A federal district court in Texas does not have jurisdiction to vacate an arbitration award in Florida. The Fifth Circuit affirmed the district court's dismissal of the action based on lack of personal jurisdiction over the subcontractors. The court held that the subcontractors did not have the minimum contacts in Texas such that a Texas court could exercise specific personal jurisdiction over them. In this case, the place of contractual performance was Florida—not Texas, after plaintiff allegedly failed to pay its subcontractors' invoices, the parties met in Florida to discuss the dispute, then they arbitrated the dispute in Florida, and Florida's courts have determined that Florida is a proper venue for the subcontractors to seek enforcement of the arbitration awards. Therefore, the subcontractors did not purposefully avail themselves to being sued in Texas courts. View "Sayers Construction, LLC v. Timberline Construction, Inc." on Justia Law
Team Contractors, LLC v. Waypoint NOLA, LLC
Waypoint, the project owner, entered into a construction contract with Team Contractors, the general contractor, and entered into an architectural contract with HCA. HCA then retained KLG as the project's engineer. Team filed suit and subsequently prevailed against the engineers and architects for negligence, but not against the owner for breach of contract. After a finding that the initial verdict had an irreconcilable conflict, a second trial was held just on the breach of contract claim. The jury then reached a verdict for the general contractor, and the owner appealed.The Fifth Circuit vacated the district court's judgment and remanded for the district court to reinstate the original verdict. The court held that if the answers to written questions require jurors to apply the instructed law to their fact-findings, thereby fully explaining who prevails on all claims against a single defendant, and if relevant, the amount of any monetary award, that is sufficient for a Federal Rule of Civil Procedure 49(b) verdict. Though in this case the jurors were not given, as Rule 49(b) states, "forms for a general verdict" and also for answers to written questions, jurors applied their instructions on the law to their fact finding and found there had been no breach of contract. The court held that the result fully resolved the claim against Waypoint. The court stated that the general verdict is incomplete in Rule 49(b) terms, but it is sufficient. The court also held that Team waived any argument to have the verdict set aside. Finally, the court remanded for the district court to consider attorneys' fees. View "Team Contractors, LLC v. Waypoint NOLA, LLC" on Justia Law
D2 Excavating, Inc. v. Thompson Thrift Construction, Inc.
D2 filed suit for breach of contract, quantum meruit, violations of the Texas prompt pay statute, and to foreclose on a statutory and constitutional lien. Thompson, in turn, alleged that D2 breached the excavation contract between the parties. The district court held in D2's favor on all claims and ordered Thompson to pay for unpaid work and for "excess" excavating work, as well as interest and attorneys' fees.The Fifth Circuit held that the district court did not clearly err by finding that management of the site was so deficient that D2 had to regrade the same areas as many as six times and was unable to complete its work in other parts of the site, justifying D2's cessation of work. Therefore, the court affirmed the district court's judgment for the $81,068 in unpaid work and the related prompt payment statute and lien remedies for that breach of contract. However, the court held that neither breach of contract nor quantum meruit allows D2 to recover for "excavation of unanticipated excess soil." Thus, the court reversed the district court's judgment of $257,588.53 for the "excavation of unanticipated excess soil" and rendered judgment for Thompson on those breach of contract and quantum meruit claims. The court remanded for modification of the judgment. View "D2 Excavating, Inc. v. Thompson Thrift Construction, Inc." on Justia Law
Koerner v. CMR Construction & Roofing, LLC
The Fifth Circuit affirmed the district court's decision setting aside CMR's default, grant of summary judgment in CMR's favor, and denial of plaintiff's Rule 59(e) motions for reconsideration. The court held that the district court did not abuse its discretion in setting aside the entry of default and partial default judgment, because the district court did not err when it chose to credit CMR's President's affidavit over plaintiff's evidence that CMR had notice of the lawsuit. The court also held that plaintiff was not entitled to the extraordinary relief that Rule 59(e) provided, because the evidence plaintiff wished to bring forward was already available before final judgment was entered. Finally, the court held that the district court did not err in granting summary judgment on the fraud claim stemming from the 2006 purchase of plaintiff's roof; the claims related to the 2011 repairs; and the negligence, fraud, and detrimental reliance claims surrounding the 2012 repairs. View "Koerner v. CMR Construction & Roofing, LLC" on Justia Law
Acosta v. Hensel Phelps Construction Co.
Hensel, the general contractor building a new Austin public library, maintained control over the worksite through on-site management personnel, Hensel's subcontractor, HEW, worked on the project’s East Screen Wall. HEW's sub-subcontractor, CVI, was to complete demolition and excavation for the Wall. A nearly vertical 12-foot wall of “Type C” soil developed. Occupational Safety and Health Administration (OSHA) regulations mandate systems to protect employees from cave-ins. No protective systems were in place. On a rainy morning in 2015, CVI was to reinstall rebar at the base of this wall of soil, preliminary to pouring concrete footings. Concerned about the weather and the instability of the wall, CVI owner Daniels sent his employees to work on another area. Hensel's superintendent instructed Daniels to return his employees to the excavation. Daniels sent an email to HEW’s senior project manager, who gave only a cursory reply. Daniels sent his employees back to the excavation. That day, an OSHA compliance officer discovered CVI employees working at the unprotected wall. The city inspector, Hensel’s superintendent, and HEW’s superintendent were present. OSHA cited CVI and Hensel for violating 29 C.F.R. 1926.652(a)(1), pursuant to its multi-employer citation policy. OSHA considered Hensel a “controlling employer” An ALJ agreed but found that Fifth Circuit precedent that “OSHA regulations protect only an employer’s own employees,” foreclosed the citation. The Fifth Circuit reversed, deferring to OSHA’s construction of 29 U.S.C. 651, as granting authority to issue citations to controlling employers. View "Acosta v. Hensel Phelps Construction Co." on Justia Law
Satterfield and Pontikes Construction v. US Fire Insurance Co.
A general construction contractor, S&P, filed suit against its secondary insurance provider, US Fire, after US Fire refused to cover damages S&P incurred when a courthouse construction project went awry. The Fifth Circuit affirmed the district court's grant of summary judgment to US Fire, holding that US Fire's policy allowed it to count the arbitration agreements as "Other Insurance." The court explained that an indemnity agreement fell under the plain language of the "Other Insurance" provision of US Fire's policy because it was a mechanism by which an insured arranged for funding of legal liabilities for which US Fire's policy also provided coverage. Under the reasoning of RSR Corp. v. International Insurance Co., 612 F.3d 851 (5th Cir. 2010), settlement proceeds resulting from an indemnity agreement also counted as "Other Insurance." The court also held that S&P failed to meet its burden to show allocation of the settlement proceeds between covered and noncovered damages. View "Satterfield and Pontikes Construction v. US Fire Insurance Co." on Justia Law
Fisk Electric Co. v. DQSI, LLC
The Fifth Circuit reversed the district court's grant of summary judgment in favor of a general contractor in an action by the subcontractor, alleging that the general contractor fraudulently induced it into entering a settlement agreement that released the general contractor from any claims for liability under the Miller Act. In this case, Fisk was the subcontractor and DQSI was the general contractor on a post-Hurricane Katrina federal construction project. The court held that there was a genuine issue of material fact as to whether Fisk justifiably relied on DQSI's representations about Fisk's Request for Equitable Adjustment at settlement, which was an element of Fisk's fraudulent-inducement. Therefore, the court remanded for further proceedings. View "Fisk Electric Co. v. DQSI, LLC" on Justia Law