Justia Construction Law Opinion Summaries

Respondent supplied steel for projects on six properties. Respondent was not fully paid for the steel delivered to the properties, and consequently, Respondent perfected mechanics’ liens on the six properties. Respondent then filed a complaint for foreclosure against each property. Thereafter, surety bonds were posted and recorded for four properties. Respondent then amended its complaint to dismiss its lien foreclosure claims against those four properties, replacing them with claims against the sureties and principles on the surety bonds. The district court concluded that Respondent established liens on the six properties. The district court ordered the sale of all six properties without demonstrating that each surety bond was insufficient to pay the sum due on its respective property. The Supreme Court affirmed in part and reversed in part, holding (1) a materialman has a lien upon a property and any improvements thereon for which he supplied materials in the amount of the unpaid balance due for those materials; (2) in this case, Respondent established a materialman’s lien on each of the six properties for the unpaid balance due on the steel delivered; and (3) the district court erred by ordering the sale of all six properties. View "Simmons Self-Storage Partners v. Rib Roof, Inc." on Justia Law

The United States Bankruptcy Court for the District of Nevada certified three questions of law to the Supreme Court regarding the mechanic’s lien priority law, specifically, the visible-commencement-of-construction aspect of the law, which states that a mechanic’s lien takes priority over other encumbrances on a property that are recorded after construction of a work of improvement visibly commences. The Supreme Court answered (1) the Court’s holding in J.E. Dunn Northwest, Inc. v. Corus Construction Venture, LLC does not preclude a trier of fact from finding that grading property for a work of improvement constitutes visible commencement of construction; (2) the contract dates and permit issuance dates are irrelevant to the visible-commencement-of-construction test, even in this case where dirt material was placed on a future project site before building permits were issued and the general contractor was hired; and (3) the Court declined to answer the third certified question because it asked the Court to make findings of fact that should be left to the bankruptcy court. View "Byrd Underground, LLC v. Angaur, LLC" on Justia Law

Petitioners found allegedly defective plumbing parts in their residences. Petitioners provided Nev. Rev. Stat. Ch. 40 prelitigation notice to the general contractor/developer, Centex Homes, informing it of the alleged defect. Centex forwarded the notice to various subcontractors and suppliers, including Uponor, Inc. Uponor declined to make repairs. Petitioners filed a complaint against Centex, and Centex filed a third-party complaint against numerous subcontractors, including RCR Plumbing & Mechanical, Inc. RCR filed a fourth-party complaint against Uponor. The district court stayed the proceedings and directed RCR to provide Uponor notice of the construction defectsafter Uponor moved to dismiss the fourth-party complaint against it based on lack of notice. Once RCR provided notice, Uponor made repairs. Petitioners sought an extraordinary writ arguing that neither they nor RCR were required to give Uponor Chapter 40 notice and an opportunity to repair prior to RCR’s filing of its fourth-party complaint. The Supreme Court issued a writ of mandamus, holding that claimant homeowners or subcontractors are not required to give notice to other subcontractors, suppliers, or design professionals prior to commencing or adding an action against them. View "Barrett v. Eighth Judicial Dist. Court " on Justia Law

VP & PK purchased an insurance policy from Lexington Insurance Company for work on a construction site. Kila Kila, one of VP & PK’s subcontractors, purchased an insurance policy from Nautilus Insurance Company. Both policies contained an “other insurance” provision and included duties to defend and indemnify. When VP & PK and Kila Kila were sued for damages resulting from the construction, Nautilus funded the defense of both Kila Kila and VP & PK. Lexington satisfied the judgment against VP & PK but did not contribute to the defense costs. Nautilus filed a complaint seeking (1) a declaration that Lexington owed VP & PK a duty to defend, which it breached; and (2) equitable contribution from Lexington for defense costs. The U.S. district court granted summary judgment for Lexington, holding that Lexington’s policy was in excess to Nautilus’s policy, and therefore, Lexington’s duty to defend was not triggered. The Hawaii Supreme Court accepted certified questions from the court of appeals and held, inter alia, that (1) an “other insurance” clause purporting to release an otherwise primary insurer of the duty to defend if the insurer becomes excess as to liability is enforceable, but only as between two or more insurers seeking to allocate or recover defense costs; and (2) an otherwise primary insurer who becomes an excess insurer by operation of an “other insurance” clause has a duty to defend as soon as a claim is tendered to it and there is the mere possibility that coverage of that claim exists under its policy.View "Nautilus Ins. Co. v. Lexington Ins. Co." on Justia Law

Downing, Thorpe & James Design, Inc. (DTJ) was an architectural firm incorporated in Colorado. Thomas Thrope, one of DTJ’s three founding principals, was allowed to practice individually as a foreign architect in Nevada, but DTJ was not allowed to practice as a foreign corporation in Nevada. In 2004, DTJ contracted with a Nevada developer to provide architectural services for a Las Vegas subdivision owned by Prima Condominiums, LLC (Prima). Prima obtained a loan from First Republic Bank in exchange for a promissory note secured by a deed of trust on one of the subdivision’s units. After Prima defaulted on its payments, DTJ recorded a notice of mechanic’s lien against the property for unpaid services. First Republic then foreclosed and purchased the property. DTJ subsequently brought an action against First Republic for lien priority and unjust enrichment. The district court granted summary judgment for First Republic. The Supreme Court affirmed, holding (1) because DTJ had failed to comply with Nevada’s statutory registration and filing provisions, it was barred from maintaining an action in Nevada for compensation for its architectural services; and (2) Thorpe’s individual status had no bearing on whether DTJ could bring or maintain an action for compensation for its services.View "DTJ Design, Inc. v. First Republic Bank" on Justia Law

In 2002, the Navy awarded Metcalf a contract to design and build 212 housing units in Hawaii by October, 2006, for $50 million. Problems arose involving soil conditions. The request for proposals stated that the “soil reconnaissance report” was “for preliminary information only” and required that the contractor conduct independent soil investigation, incorporating 48 C.F.R. 52.236-2, concerning site conditions that differ materially from those disclosed. Discussions delayed construction for a year. Metcalf implemented its preferred changes by over-excavating and using non-expansive fill, without a contract modification. The Navy denied that there was any material difference between pre-bid and post-award soil assessments, but approved some modifications. Metcalf was about 200 days behind schedule and began using “post-tension” concrete, which was more expensive but avoided the additional time and cost of over-excavation. The Navy amended the contract to approve use of post-tension concrete slabs. Metcalf claims additional delays resulting from the presence of more of a chemical contaminant than was expected. With respect to contamination, the Navy granted a 286-day extension and reimbursed $1,493,103. The Navy accepted the buildings in March, 2007. Metcalf alleged that its final cost was $76 million. The government paid less than $50 million. The Claims Court ruled in favor of the government, under the Contract Disputes Act, 41 U.S.C. 7104. The Federal Circuit vacated, holding that the court misconstrued what Metcalf needed to show to prove that the government breached its duty of good faith and fair dealing and misinterpreted certain contractual provisions.View "Metcalf Const. Co., LLC v. United States" on Justia Law

ICI Homes, Inc. (ICI) had a general liability insurance policy with General Fidelity Insurance Company. In 2007, Katherine Ferrin, the owner of a residence constructed by ICI, was injured while using stairs installed by Custom Cutting, Inc. Ferrin filed suit against ICI. ICI, in turn, sought indemnification from Custom Cutting. The parties agreed to a $1.6 million settlement of Ferrin’s claim. ICI accepted $1 million from Custom Cutting’s insurer to settle its indemnification claim, which it paid to Ferrin. ICI and General Fidelity then claimed the other was responsible for paying Ferrin the remaining $600,000. Both parties paid $300,000 to Ferrin to settle Ferrin’s claim. ICI then filed suit against General Fidelity seeking return of the $300,000 ICI paid above the $1 million indemnification payment. General Fidelity counterclaimed seeking return of the $300,000 it had paid to Ferrin. The district court entered judgment for General Fidelity. The court of appeals certified two questions to the Supreme Court for resolution. The Supreme Court answered (1) the General Fidelity policy allowed ICI to apply indemnification payments received from Custom Cutting’s insurer towards satisfaction of its $1 million self-insured retention; and (2) the transfer of rights provision in the policy did not abrogate the made whole doctrine.View "Intervest Constr. of Jax, Inc. v Gen. Fidelity Ins. Co." on Justia Law

In Spring 2008, Williams Company Construction, Inc. entered into a construction contract to remodel the Friendly Smiles Cosmetic Dentistry Office owned by Dr. Brenda Barfield. Dr. Barfield previously leased the building from Williams Company owner Glen Williams for approximately five years before she purchased the property from him in 2008. Dr. Barfield hired Williams to remodel the building because of its construction experience and familiarity and knowledge of the building. When Dr. Barfield hired Williams, she did not know whether the remodeling work would be done by Williams or subcontractors. Dr. Barfield did not deal directly with any subcontractors during the remodeling project nor did she direct Williams to hire any specific subcontractors. During the remodel, Williams served as the general contractor and hired subcontractors to do various construction tasks. In December 2008, a section of a copper water pipe froze and burst. The frozen water pipe caused minor water damage and was repaired by plumbing subcontractor Home Heating. During the repair process, a Home Heating employee cut a hole in the wall to locate the leak and discovered that the air in the plumbing wall was cold. The employee was concerned the pipe could freeze again and notified the Friendly Smiles Cosmetic Dentistry Office about the cold air. Dr. Barfield contacted Williams to express her concern about the pipes re-freezing from the cold air. According to testimony, Williams told Dr. Barfield not to worry about the pipes freezing again because of circulating warm air around the hole. Dr. Barfield also wanted the hole in the wall patched, but had difficulty in securing Williams or Home Heating to fix it. Dr. Barfield made repeated requests for Williams or Home Heating to resolve the cold air issue, but they did not fix the problem. Approximately one week after the pipe was fixed, the water pipe froze and broke again, this time causing extensive water damage to the dental office. Dr. Barfield and her insurance company, Travelers Insurance, brought suit against Williams, Home Heating (and other subcontractors) for negligence, and breach of contract. Before trial, the parties stipulated that the total amount of damages was $220,046.09. Williams requested the trial court to include a jury instruction concerning the independent contractor distinction (C-55.25), and a jury instruction pertaining to the failure of a party to produce witnesses (C-80.30). The court denied the two requests. At the pretrial hearing, the parties stipulated that the case would be tried before the jury based on comparative fault. The jury was given a special verdict form and found Williams seventy percent at fault, Home Heating twenty-five percent at fault, and Dr. Barfield five percent at fault. Judgment was entered against Williams. Williams subsequently filed a motion for a new trial arguing the court erred in denying its requested jury instructions and there was insufficient evidence for the jury to find Williams seventy percent at fault for the damages. Following a hearing, the district court denied the motion. Williams appealed the district court's judgment, but finding no reversible error, the Supreme Court affirmed. View "Travelers Cas. Ins. Co. of America v. Williams Co. Construction" on Justia Law

In 2001 KBR agreed to provide the Army with logistics support services during Operation Iraqi Freedom. Individual task orders required KBR to install, operate and maintain dining services near Mosul, Iraq on a cost-plus-award-fee basis. KBR selected ABC, a subcontractor, to build a prefabricated metal dining facility and to provide dining services for a camp population of 2,573. In June 2004, the Army ordered KBR to stop construction of the metal facility and begin construction of a reinforced concrete facility for an estimated 2,573 to 6,200+ persons. Instead of requesting bids for the new work, KBR kept ABC as the subcontractor due to the urgency of the request. ABC submitted a new proposal with a total monthly cost about triple the monthly cost initially quoted. ABC attributed the increased costs to additional labor and equipment to serve a larger population and to a drastic increase in the cost of labor and a severe shortage of staff willing to work in Iraq. Due to a calculation error, it was determined that ABC’s proposal was reasonable. KBR’s management reviewed and approved a change order, embodying ABC’s proposal. In 2005 the subcontract ended and title to the dining facility passed to the Army. In 2007, the Defense Contract Auditing Agency suspended payment of certain costs paid by KBR to ABC pursuant to the change order. KBR prepared a new price justification for the concrete dining facility and ultimately filed suit, seeking recovery of the $12,529,504 in costs disapproved for reimbursement. The Claims Court awarded $6,779,762. The Federal Circuit affirmed.View "Kellogg Brown & Root Servs. v. United States" on Justia Law

The Utah Occupational Safety and Health Division (UOSH) cited and fined Hughes General Contractors, which oversaw a construction project involving over 100 subcontractors, for a subcontractor’s violation on the project. In determining that Hughes was responsible for safety conditions for the subcontractor’s employees, the UOSH invoked the multi-employer worksite doctrine, which makes a general contractor responsible for the occupational safety of all workers on a worksite, including those who are not the contractor’s employees. Both an administrative law judge and the Labor Commission’s Appeals Board upheld the citation and the multi-employer worksite doctrine, which federal OSHA regulations have adopted and federal courts have upheld. The Supreme Court reversed the citation and penalty, holding (1) the multi-employer worksite doctrine is incompatible with the governing Utah statute, Utah Code 34A-6-201(1; (2) the responsibility for ensuring occupational safety under the governing statute is limited to an employer’s responsibility to its employees; and (3) because Hughes was not an employer of the workers in question in this case, Hughes was improperly cited and sanctioned.View "Hughes Gen. Contractors, Inc. v. Utah Labor Comm’n" on Justia Law