Justia Construction Law Opinion Summaries

In 2008, plaintiffs Byron and Margo Guillory filed suit against several defendants, including Pelican Real Estate, Inc. and its professional liability insurer, St. Paul Fire and Marine Ins. Co. Essentially, plaintiffs alleged the home they purchased contained a redhibitory defect. At issue in these consolidated applications was whether the court of appeal erred in reversing the judgment of the district court which dismissed plaintiffs’ suit as abandoned. For the reasons that follow, the Supreme Court concluded the suit was abandoned, and therefore reversed the judgment of the court of appeal. View "Guillory v. Pelican Real Estate, Inc." on Justia Law

Atwood Health Properties, LLC contracted with Calson Construction Company to construct a medical office building. Calson engaged Gem Plumbing & Heating Co., Inc. (GEM) as a subcontractor to design and install a heating, ventilation, and air conditioning (HVAC) system. Five years after the project was completed, Atwood sold the building to Atwood Medical Properties, LLC (AMP). When AMP experienced compressor failures in the HVAC system, AMP filed suit against Atwood. Atwood paid for a new HVAC system and initiated arbitration proceedings against Calson to recover its costs. Calson, in turn, initiated an arbitration proceeding against GEM for indemnification under the parties’ contract. The two arbitration proceedings were consolidated. The arbitrator concluded that Calson should pay Atwood $358,223 and that GEM should pay Calson that same amount. The superior court confirmed the arbitration award. GEM appealed. The Supreme Court affirmed, holding that the trial justice properly confirmed the arbitration award. View "Atwood Health Props., LLC v. Calson Constr. Co." 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

The Department of Agriculture’s Rural Utilities Service (RUS) made a $267 million loan to Open Range to finance construction of wireless broadband networks in 540 RUS-approved markets. Open Range subcontracted with G4S. The FCC suspended a permit, so that Open Range lost the spectrum rights necessary to operate the planned network. RUS gave notice of its intent to terminate remaining funds on the loan unless Open Range could obtain replacement rights. Open Range began failing to meet its obligations to subcontractors. The Secretary of Agriculture made loan money available, provided a press release, and offered to reassure subcontractors, but Open Range was unable to regain the full spectrum rights necessary to complete the original project. RUS and Open Range executed an amendment to reflect a loan amount reduced to $180 million, and 160 RUS-approved markets, but Open Range remained unable to satisfy its debts and filed for bankruptcy. G4S filed suit. The Claims Court held that G4S was not a third party beneficiary to the agreement. The Federal Circuit affirmed, stating that G4S asked that the government incur liability simply because it talked to the individuals in charge of a failing project in an attempt to fix the problems. View "G4S Tech., LLC v. United States" on Justia Law

In 2003, the VA entered into a contract with Reliable for electrical improvements at a VA medical center, requiring installation of three backup generators, “new and of the most suitable grade.” Federal Acquisition Regulation 52.211-5, incorporated by reference, requires that supplies be “new, reconditioned, or remanufactured,” and defines “new” as “composed of previously unused components.” Reliable sub-contracted to Fisk, which contracted with DTE. In 2004, DTE delivered two Cummins Power Generation generators to the construction site. The VA’s senior resident engineer inspected the generators and determined that they were not “new.” He wrote to Reliable, stating: They show a lot of wear and tear including field burns to enlarge mounting holes. Are they new and will you certify them as such? I cannot pay you … without that certification. Fisk and Reliable initially agreed that the generators did not meet the contract specification. After investigation, they concluded that the generators, manufactured in 2000, had been previously purchased by others but never used. Fisk obtained different generators, which were accepted by the VA. In 2007, Reliable submitted a claim, seeking $1,100,000 for additional costs incurred as a result of rejection of the original generators. In 2013, the Board of Contract Appeals denied Reliable’s claim. The Federal Circuit vacated, holding that the Board erred in its interpretation of the contract. View "Reliable Contracting Grp., LLC v. Dep't of Veterans Affairs" on Justia Law

After a jury trial in 1983, Petitioner was found guilty of murder in the first degree and aggravated robbery. Petitioner was sentenced as a habitual offender to an aggregate term of life imprisonment. In 2005, Petitioner filed a pro se petition requesting permission to proceed in the trial court with a petition for writ of error coram nobis. The petition was denied. Petitioner then filed a second petition requesting permission to proceed in the trial court with a petition for writ of error corm nobis. The Supreme Court denied the petition, holding (1) to the extent Petitioner again alleged a Brady violation and asserted that erroneous evidence was used to establish that he was a habitual offender, these two claims were asserted in Petitioner’s first petition and were an abuse of the writ; (2) Petitioner’s remaining claims were either without merit or outside the purview of a coram-nobis proceeding; and (3) even if Petitioner had presented grounds sufficient to support issuance of the writ, his failure to act with due diligence would constitute good cause to deny the petition. View "Williams v. State" on Justia Law

In 2004, Berkeley issued a use permit for construction of a building with 51 residential rental units and ground floor commercial space. Permit condition 10 provides: “Before submission for building permit, the applicant shall submit floor plans and schedules … showing the location of each inclusionary unit and the sales or rental prices…. and that the unit rent or sales price complies with Chapter 23C.12” (Inclusionary Housing Ordinance). The Ordinance was designed to comply with Government Code section 65580, requiring a general plan to contain a housing element stating how the local agency will accommodate its share of regional need for affordable housing. The ordinance requires that 20 percent of all newly constructed residential units be reserved for households with below-median incomes and rented at below-market prices. The development took more than seven years. The city sought a declaration that the condition was valid, conceding that the ordinance has been preempted by the Costa-Hawkins Rental Housing Act (Civ. Code, 1954.50), but arguing that it may enforce the condition, the validity of which was not previously challenged. The court of appeal affirmed judgment in favor of the city. View "City of Berkeley v. 1080 Delaware, LLC" on Justia Law

Lydig Construction was the general contractor on a large public works project. Martinez Steel was the original steel supply subcontractor on the project. Lydig sued Martinez for additional costs Lydig incurred because Martinez failed to timely supply steel for the project; Lydig, with the public agency's approval, had been required to replace Martinez as the steel supplier. Lydig moved for a right to attach order and a writ of attachment and presented the trial court with its business records and declarations from its employees. Martinez opposed Lydig's motion and presented declarations from one of its employees that set forth its contention Lydig owed it for, among other items, steel Martinez had delivered to the project. Martinez filed a cross-complaint in which it alleged claims that, if successful, would entirely offset Lydig's claims against it. The trial court granted Lydig's motion and issued writs of attachment in the amount of $203,315. The court of appeal affirmed, rejecting Martinez's contentions that its cross-complaint, as a matter of law, prevented the trial court from issuing a writ of attachment against it and that Lydig's application for a writ of attachment was not supported by substantial evidence. View "Lydig Constr., Inc. v. Martinez Steel Corp." on Justia Law

Belasco bought a new Manhattan Beach residence in 2004 from the builder (Wells). In 2006, Belasco filed a complaint with the Contractors State License Board, alleging construction defects. Belasco and Wells settled the dispute in 2006, with Wells paying $25,000 and Belasco executing a release and a Civil Code 15241 waiver of all known or unknown claims. In 2012, Belasco sued, based on an alleged roof defect discovered in 2011. The trial court entered summary judgment, finding the action barred by the settlement. The court of appeal affirmed, rejecting arguments that: the 2006 general release and waiver for patent construction defects is not a “reasonable release” of a subsequent claim for latent defects under section 929 and the Right to Repair Act (section 895); a reasonable release can only apply to a “particular violation” and not to a latent defect under section 945.5(f), and the 2006 settlement was too vague to be a valid; section 932 authorizes an action on “[s]ubsequently discovered claims of unmet standards;” public policy prohibits use of a general release and section 1542 waiver to bar a subsequent claim for latent residential construction defects; and a genuine issue of fact existed concerning fraud and negligence claims that would void the settlement under section 1668. View "Belasco v. Wells" on Justia Law