Justia Construction Law Opinion Summaries

In 2006, Richard Myers owned the property at issue in this case. At the time, the property was subject to a deed of trust in favor of First Horizon Home Loans. Myers enlisted Michael Horn and his company, Frontier Development Group (FDG) to build a residence on the property, which First Horizon financed. However, in April of 2007, Myers filed for bankruptcy, and First Horizon rescinded the construction loan and instructed FDG to halt construction when the project was only fifty percent complete. The structure was left exposed to the elements for fourteen months. Following Myers' bankruptcy, foreclosure proceedings were initiated, and Myers hired Kathleen Horn (Michael Horn's wife), of Windermere Real Estate/Teton Valley to list the property for sale. The Caravellas, who were Ohio residents, looking for property in the Teton Valley, contacted their real estate agent who put them in touch with Kathleen Horn who provided them with information on the stalled Myers project. Kathleen Horn eventually put the Caravellas in touch with Michael Horn. The Caravellas traveled to Idaho, met with Kathleen Horn, and spent two days inspecting the property. The Caravellas testified that Kathleen Horn minimized issues with the house, telling them that it was "in good shape,""structurally sound,"and a "great house."The Caravellas chose not to have a professional inspection performed and closed on May 5, 2008. After closing, the Caravellas and Michael Horn agreed that Horn would complete construction on the house in accordance with Myers' original plans. In reaching this agreement, the Caravellas testified that they believed they were dealing with Horn as an individual. The total contract price for the first phase of work that the Caravellas authorized was $88,500. However, the Caravellas paid FDG $138,097.24 for the first phase before refusing to pay any more. Much of the money that the Caravellas paid to FDG was for unauthorized work or work that was completed in a nonconforming or substandard manner. The Caravellas hired a second builder to complete the first phase and to remedy the substandard work. FDG initiated this action by filing a complaint to foreclose on a lien for construction services and building materials provided to, but not paid for by, the Caravellas. The Caravellas filed an amended counterclaim alleging that FDG and Horn: (1) breached the parties' contract; (2) breached the duty of good faith and fair dealing; (3) violated the Idaho Consumer Protection Act; (4) breached the implied warranty of habitability; (5) committed slander of title; (6) committed fraud and misrepresentation; (7) engaged in a civil conspiracy; and (8) acted negligently. The district court held that FDG's lien was defective and dismissed it. The district court also held that FDG breached its contract with the Caravellas by: (1) failing to complete agreed upon work in conformity with the plans and in a workmanlike manner; (2) charging the Caravellas for unauthorized and defective work; and (3) substantially overbilling the Caravellas for work and materials that were not authorized and never provided. As to the Caravellas' fraud counterclaim, the district court concluded that the Caravellas failed to establish all nine elements of fraud and dismissed the claim. The district court also concluded that Horn was not personally liable. The district court awarded the Caravellas $113,775.45 in attorney fees, $5,484.83 in costs as a matter of right, and $200.00 in discretionary costs. The Caravellas timely appealed. Upon review, the Supreme Court concluded the district court erred by applying the incorrect evidentiary standard to the Caravellas' fraud counterclaim, but that error was harmless. The Court affirmed that portion of the district court's judgment dismissing the Caravellas' fraud claim, and reversed that portion of the judgment dismissing the Caravellas' claims against Michael Horn personally. In all other respects, the Supreme Court affirmed the district court's decision. View "Frontier Development Grp v. Caravella" on Justia Law

Appellee, a construction company, filed a complaint for declaratory judgment against Appellants, the Arkansas State Claims Commission, the General Assembly’s Claims Review Subcommittee, the General Assembly’s Joint Budget Committee, the Arkansas State Highway Commission, and the Arkansas State Highway and Transportation Department. The circuit court granted in part and denied in part Appellants’ motion to dismiss. The Supreme Court reversed and remanded on direct appeal and granted Appellants’ motion to dismiss the cross-appeal, holding (1) Appellee’s equal-protection claim was barred by sovereign immunity; and (2) the Court lacked jurisdiction over Appellee’s cross-appeal. View "Ark. State Claims Comm'n v. Duit Constr. Co." on Justia Law

CBD designs and builds restaurants. Its client, Mongolian House, wanted to renovate an upscale Chicago restaurant called “Plan B.” CBD designed the interior and in 2006 filed blueprints to obtain a “repair and replace” building permit. CBD completed the construction work in 2007. In 2008 a CBD employee visited the city’s offices on other business and chanced upon blueprints for Plan B that were labeled with another architect’s name. The city refused to provide a copy, saying the blueprints were exempt from disclosure. Mongolian House defaulted on payments to CBD. In 2009 the city issued a new building permit for Plan B based on the 2008 blueprints. In 2012 CBD sued, alleging copyright infringement and state-law claims. The district court dismissed the claims under the Copyright Act’s three-year statute of limitations, 17 U.S.C. 507(b), reasoning that CBD was on “inquiry notice” of a possible copyright violation when its employee happened upon the 2008 blueprints. The Seventh Circuit reversed. The Supreme Court recently clarified that the Act’s limitations period establishes a “separate accrual rule” so that “each infringing act starts a new limitations period.” CBD’s complaint alleges potentially infringing acts within the three-year look-back period from the date of suit. View "Chicago Bldg. Design, P.C. v. Mongolian House Inc." 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

These consolidated writ petitions arose from a construction-defect action initiated by The Regent at Town Centre Homeowners’ Association against Oxbow Construction, LLC. Oxbow served as the general contractor of the Regent at Town Centre mixed-use community (Town Centre). The Association, on behalf of itself and the condominium unit-owners, served Oxbow with Nev. Rev. Stat. 40 notice, alleging construction defects in the common elements of the condominiums. The district court ultimately allowed claims seeking Chapter 40 remedies to proceed for alleged construction defects in limited common elements assigned to multiple units containing at least one “new residence.” Both parties filed writ petitions challenging the district court’s rulings. The Supreme Court denied both petitions, holding that the district court did not act arbitrarily or capriciously by (1) failing to perform a Nev. R. Civ. P. 23 class-action analysis; (2) determining that previously occupied units in Town Centre did not qualify for Chapter 40 remedies; and (3) concluding that the Association could pursue Chapter 40 remedies for construction defects in the common elements of buildings containing at least one previously unoccupied unit, i.e., a “new residence.” View "Oxbow Constr., LLC v. Eighth Judicial Dist. Court" on Justia Law

This case was one of a number of cases which have, in the aftermath of the "Great Recession" that hit Riverside and San Bernadino counties particarly hard. This appeal stemmed from the construction of a Kohl’s department store in Beaumont. The developer of the store was Inland-LCG Beaumont, LLC, and the general contractor was 361 Group Construction Services, Inc. Somewhere in the process of construction, the money dried up and 361 refused to pay its subcontractors for work they had done. Those subcontractors included Cass Construction, TNT Grading Inc., Palomar Grading & Paving and R3 Contractors. These four subcontractors recorded mechanic’s liens and sued to foreclose those liens. With one exception they obtained judgments of foreclosure. The one exception was TNT, who, by the time of the trial to foreclose its mechanic’s lien, was a suspended corporation and thus unable to prosecute an action. The two owners of the property, Kohl’s and Wells Fargo, appealed the judgments obtained by the three successful subcontractors, Cass, R3 and Palomar Grading. The Court of Appeal took a "soup-to-nuts" approach in reviewing the multiple issues presented on appeal, and affirmed in all respects except to the degree that liens of Palomar Grading and Cass should include prejudgment interest. To that degree the Court reversed the judgment and remanded it with instructions to the trial court to recalculate the prejudgment interest at 7 percent. On balance, Cass and R3 were still the prevailing parties in this appeal: Of 10 issues raised, they prevailed, either singly or together, in 9. They recovered their costs on appeal from Kohl’s and Wells Fargo. For Palomar Grading, the only issue on which it has appeared in this appeal was the issue of the proper rate of prejudgment interest, and on that issue it lost. "However, it would be unfair to allow Kohl’s and Wells Fargo to recover all their appellate costs from Palomar Grading because they won on the lone prejudgment interest rate issue. Most of this appeal has concerned their unsuccessful challenges to the foreclosure judgments obtained by Cass and R3." View "Palomar Grading v. Wells Fargo" on Justia Law

The Copper Sands Homeowners Association (the HOA) brought an action against the developer and general contractor (collectively, the Developers) of the Copper Sands common-interest community, alleging several claims for various construction defects. The Developers impleaded subcontractors who had performed work on the project into the action as third-party defendants. Eventually, the district court dismissed the HOA’s claims against the Developers, awarded the Developers attorney fees and costs, and awarded the third-party defendants costs against the HOA. The HOA appealed, arguing that the district court did not have the authority to award the third-party defendants costs. The Supreme Court reversed the costs award to the third-party defendants, holding that when a third-party defendant prevails in an action and moves for costs pursuant to Nev. Rev. Stat. 18.020, which mandates an award of costs for the prevailing party in a case, the district court must determine which party - plaintiff or defendant - is adverse to the third-party defendant and allocate the costs award accordingly. Remanded. View "Copper Sands Homeowners Ass’n, Inc. v. Flamingo 94, LLC" on Justia Law

Plaintiff filed suit against BHDR under the Fair Housing Act (FHA), 42 U.S.C. 3601 et seq., alleging that by failing to remedy certain flaws in the design and construction of the District Universal Boulevard Apartments (the District), BHDR discriminated against people with handicaps in violation of 42 U.S.C. 3604(f)(1)-(2). The court held that the FHA's design-and-construction guidelines do not provide a standard for determining whether discrimination under section 3604(f)(1) and (f)(2) exists outside of the design and construction contexts. Despite the fact that BHDR was not involved in the design or construction of the District, all of plaintiff's claims that BHDR violated subsections (f)(1) and (f)(2) were alleged through the lens of the design-and-construction guidelines in subsection (f)(3). The court held that an FHA plaintiff cannot establish the discrimination of a defendant who was uninvolved in the design or construction of a dwelling by reference to the guidelines at section 3604(f)(3)(C). Therefore, the district court did not err in granting summary judgment to BHDR. View "Harding v. Orlando Apartments, LLC, et al." on Justia Law

Guardian Builders, LLC, and E. Wayne Tackett appealed a Circuit Court order denying their motion to vacate or modify an arbitration award entered in favor of Randy Uselton and his wife Melissa. In 2010, the Useltons sued Guardian alleging several claims arising from Guardian's construction of a house for the Useltons. Guardian subsequently filed a motion to compel arbitration, and the circuit court granted that motion. In late 2011, the arbitrator entered a final award in favor of the Useltons. Guardian subsequently filed a motion to vacate or modify the arbitration award to the circuit court, to which it attached a copy of the arbitration award. The Useltons filed a 'motion to confirm' the arbitration award. The circuit court entered an order purporting to deny Guardian's motion to vacate or modify the arbitration award, purporting to grant the Useltons' motion to confirm the arbitration award, and purporting to order Guardian to pay $1,421.75 in Better Business Bureau fees and facility costs related to the arbitration. Guardian objected only to a subset of the damages that were awarded the Useltons that were not directly related to the poorly constructed house, specifically, attorney fees and arbitration fees (including both the arbitrator fee and the forum fee charged by the Better Business Bureau of North Alabama ("the BBB"), which administered the arbitration). Furthermore, Guardian argued the arbitrator lacked the authority to award the Useltons attorney fees and arbitration fees. The Supreme Court agreed that the arbitrator exceeded his authority by awarding those remedies. The trial court's judgment was reversed and the case remanded for the trial court to enter a modified judgment subtracting attorney fees and arbitration fees from the award made to the Useltons. View "Guardian Builders, LLC v. Uselton " on Justia Law

Defendants / cross-complainants Intervest-Mortgage Investment Company and Sterling Savings Bank (together Intervest) appealed a judgment in favor of plaintiff / cross-defendant Moorefield Construction, Inc. The parties' dispute stemmed from an uncompleted medical office building development in San Jacinto. Moorefield was the general contractor for the development, and Intervest was the construction lender. The developer, DBN Parkside, LLC, encountered financial difficulties toward the end of the project. As a result, DBN did not fully pay Moorefield for its construction services and defaulted on its construction loan from Intervest. Moorefield filed a mechanic's lien against the development property, and Intervest took title to the property in a trustee's sale under the construction loan. Moorefield's sought to foreclose on its mechanic's lien. Intervest's cross-complaint against Moorefield sought a declaration of the relative priority of the lien, equitable subrogation to a priority position over the lien, quiet title, and judicial foreclosure. After a bench trial, the court entered judgment in favor of Moorefield on the complaint and cross-complaint, declared Moorefield's mechanic's lien was superior in priority to Intervest's construction loan deed of trust, and ordered foreclosure and sale of the property to satisfy Moorefield's mechanic's lien. Intervest appealed, arguing: (1) the court erred in finding Moorefield's agreement to subordinate its mechanic's lien to the construction loan deed of trust was unenforceable; (2) the court should have applied the doctrine of equitable subrogation to give Intervest partial priority over Moorefield's mechanic's lien; (3) substantial evidence does not support the court's finding that Moorefield commenced work prior to the recording of Intervest's deed of trust; and (4) substantial evidence does not support the court's finding that Moorefield's mechanic's lien was timely filed following completion of construction. After review, the Court of Appeal concluded Moorefield's agreement to subordinate its mechanic's lien to the construction loan deed of trust was enforceable and therefore reversed the trial court's judgment. View "Moorefield Constr. v. Intervest-Mortgage" on Justia Law