Justia Construction Law Opinion Summaries

The Iowa Department of Transportation (IDOT) hired a general contractor, which was a “targeted small business” (TSB), for two public construction contracts. The general contractor subcontracted with three subcontractors, which the general contractor failed to pay in full. The subcontractors sued IDOT and the general contractor. The district court granted IDOT’s motion to dismiss and entered default judgments against the general contractor, ruling that, in absence of a bond, the subcontractors’ remedy against the state was limited to the funds IDOT retained on its contract with the general contractor. The subcontractors appealed, arguing that Iowa Code 573.2, the statute that governs subcontractors’ remedies for unpaid work on public improvements when the state waives the performance bond for a general contractor that is a TSB, allowed broader recovery rights and required IDOT to step into the TSB’s shoes to pay the balances owed them. The Supreme Court reversed, holding that section 573.2 operates as a waiver of sovereign immunity that allows subcontractors to recover from IDOT the unpaid balances TSBs owe for work on public improvements. Remanded.View "Star Equip., Ltd. v. State" on Justia Law

The New Jersey Prevailing Wage Act, N.J. Stat. 34:11-56.25 (PWA) provides that laborers on certain public works projects are to be paid the prevailing wage. Carpenters hired to work on the Revel Casino Project in Atlantic City claimed that the Revel Casino Project is a “public work” within the meaning of the PWA because it received financial assistance in the form of incentives, tax exemptions, and tax reimbursements from the New Jersey Economic Development Authority (EDA), which, they argued is a “public body” within the meaning of the Act. They assigned their claims for unpaid prevailing wages to the plaintiffs, employee benefit plans within the meaning of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, and trust funds within the meaning of the Labor Management Relations Act (LMRA), 29 U.S.C. 141. The district court held that the claims were completely preempted under ERISA section 502(a). Although it did not directly address LMRA complete preemption, the court also noted that the complaint “seeks interpretation of the collective bargaining agreement.” The Third Circuit vacated and remanded with instructions to remand to state court, holding that neither statute completely preempts the PWA. View "NJ Carpenters v. Tishman Constr. Corp. of NJ" on Justia Law

Morrison-Maierle, Inc. (MMI) was hired by two counties to provide engineering services and supervision on a road improvement contract. The counties retained JEM Contracting, Inc. (JEM) to provide the construction services on the project. JEM filed suit against MMI alleging detrimental reliance and fraudulent inducement for promises MMI allegedly made during the job that JEM would be paid for unanticipated costs incurred during pulverization of the old road. The district court granted summary judgment for MMI, concluding that JEM could not prove it had been harmed by MMI’s alleged representations. The Supreme Court affirmed, holding that the district court did not err by (1) concluding that JEM was required to continue performance pending approval of a change order under a certain contract provision, as the provision was not void as against public policy; and (2) granting summary judgment to MMI on the ground that JEM failed to show it was harmed by the representations made by MMI. View "JEM Contracting, Inc. v. Morrison-Maierle, Inc." on Justia Law

The Eastern Municipal Water District (EMWD) hired general contractor S.J. and Burkhardt, Inc. (SJB) for a public works construction project in 2006. Safeco Insurance Company (Safeco) executed performance and payment bonds for the project. Plaintiff Golden State Boring & Pipe Jacking, Inc. (GSB) was a subcontractor for the project, completing its work by September 2006, but it did not receive payment. In March 2008, SJB sent a voluntary default letter to Safeco. In July 2008, GSB sued SJB, EMWD, and Safeco for the unpaid amounts under the contract, separately seeking payment from Safeco under its payment bond. EMWD filed a cross-complaint to interplead retained sums. Safeco made a motion for summary judgment on the cause of action for payment under the bond on the ground that GSB’s claim was untimely. The trial court granted the motion, finding that there had been three cessations of labor that triggered GSB’s duty to file a stop notice in order to secure payment under Safeco's payment bond. At a subsequent court trial on the contract claims, GSB was awarded judgment against SJB, and Safeco was awarded judgment on the interpleader action. GSB appealed the summary judgment ruling, arguing: (1) the trial court erroneously overruled its objections to evidentiary matters presented in support of Safeco’s summary judgment; and (2) the court erred in finding the action was untimely. Finding no reversible error, the Court of Appeal affirmed. View "Golden State v. Eastern Municipal Water Dist." on Justia Law

In August, 2010, Appellants, Washington County residents Raymond and Donna Mantia, hired Appellee, West Virginia contractor Shafer Electric & Construction, to build a 34 foot by 24 foot, two-car garage addition onto their house. The proposals for the garage did not comply with several requirements of Section 517.7 of the Home Improvement Consumer Protection Act. Specifically, any home improvement contract, in order to be valid and enforceable against the owner of real property, had to be legible, in writing, and contain thirteen other specific requirements. Despite the detail in the specifications for the work to be completed, the contract here only complied with subsections (5), (7), and (8) of Section 517.7(a). Notwithstanding these deficiencies, work on the project began in October, 2010, when Appellants, who owned their own excavation business, began the foundation excavation. When Appellee commenced construction of the addition, it contended that problems surfaced because of Appellants' failure to complete the excavation work properly. During the subsequent months, Appellants eventually reexcavated the foundation area for the addition and, in the process (according to Appellee), changed the design of the addition several times. Negotiations into these design changes and other necessary alterations as a result of the excavation problems occurred, but ultimately failed when Appellants apparently refused to enter into a new contract with Appellee. Upon the breakdown of the negotiations, the parties mutually agreed that Appellee would invoice Appellants for the work completed, and that Appellee would discontinue efforts on the project. Appellants refused to pay the bill. Appellee responded by filing a mechanic's lien in the Washington County Court of Common Pleas. When Appellants still had failed to satisfy the outstanding balance, Appellee filed a civil action in the common pleas court, alleging both breach of contract and quantum meruit causes of action. The Supreme Court granted allowance of appeal in this matter to determine whether the Act barred a contractor from recovery under a theory of quantum meruit in the absence of a valid and enforceable home improvement contract as defined by the Act. The Superior Court held that the Act did not bar a cause of action sounding in quantum meruit and, for slightly different reasons, the Supreme Court affirmed. View "Shafer Electric & Construction v. Mantia" on Justia Law

In 1998 the Gillespie School District hired Wight under for services preliminary to the actual designing and construction of a new elementary school building. Wight agreed to perform a “site mine investigation.” Wight hired Hanson Engineers to assess the potential for coal mine subsidence. A physical engineer at Hanson sent a letter to Wight, noting recorded subsidence events, including five to six events since 1979, affecting more than 40 structures in the area. The letter stated: “No one can predict when or if the land above the roof-and-pillar mine will subside… The owner should consider the fact that there is no economically feasible corrective action… to guarantee against future subsidence… it can be intuitively concluded that there is a relatively high risk of subsidence in the Benld/Gillespie area. The letter was not attached to the report, which noted some of its highlights. The school was built and occupied, but in 2009 was severely damaged as the result of subsidence and was condemned. The District sued Wight, alleging professional negligence, breach of implied warranty, and fraudulent misrepresentation by concealment of material fact. The court entered summary judgment in favor of Wight, based on statutes of limitations applicable to the claims. The appellate court affirmed. The Illinois Supreme Court affirmed, noting that it was expressing no opinion concerning the merits of various claims.View "Gillespie Cmty. Unit Sch. Dist. No. 7 v. Wight & Co." on Justia Law

The Cote Corporation filed a mechanic’s lien against real property owned by Kelley Earthworks, Inc. Cote subsequently brought a complaint to enforce the lien against Kelley. Kelley did not respond to the complaint or to Cote’s motion for summary judgment. The superior court entered Kelley’s default and then entered judgment for Cote, plus interest and attorney fees, and ordered that the property be sold to satisfy the judgment. Kelley appeared ten days after the judgment was entered on the docket and filed motions to set aside its default and for relief from the judgment. The court declined to set aside the default but did strike its order to sell the real property, instead awarding Cote a money judgment. The Supreme Court vacated the judgment, holding that the court erred in striking the provision of its order requiring a sale of the property. Remanded for entry of an order for the sale of at least a portion of Kelley’s land. View "The Cote Corp. v. Kelley Earthworks, Inc." on Justia Law

A.E.M. Electric Services Corporation, a general contractor, contracted with Transtar Electric, Inc., a subcontractor, to provide electrical services for the installation of a pool at Holiday Inn. A.E.M. did not pay Transtar for its last three invoices because the owner of the project had failed to pay A.E.M. for the work performed by Transtar. A.E.M. alleged that the contract between the parties, which used the phrase “receipt of payment by contractor from the owner for work performed by subcontractor is a condition precedent to payment by contractor to subcontractor for that work”, was sufficient to establish a pay-if-paid payment provision. The court of appeals concluded that the payment provision in the contract was not specific enough to show that both parties understood and agreed that the risk of the owner’s nonpayment would be borne by Transtar instead of A.E.M. The Supreme Court reversed, holding that the use of the term “condition precedent” was an explicit statement of the parties’ intent to transfer the risk of the project owner’s nonpayment from A.E.M. to Transtar. View "Transtar Elec., Inc. v. A.E.M. Elec. Servs. Corp." on Justia Law

Ewing Construction Company entered into a contract with a school district to serve as general contractor on a project. The school district later filed suit against Ewing for faulty construction. Ewing tendered defense of the underlying suit to Amerisure Insurance Company, Ewing's insurer under a commercial package policy that included commercial general liability coverage. Amerisure denied coverage, and Ewing filed suit in federal district court seeking a declaration that Amerisure breached its duty to defend and indemnify Ewing for damages awarded in the underlying suit. The district court granted summary judgment for Amerisure, concluding that the policy’s contractual liability exclusion applied to exclude coverage because Ewing assumed liability for its own construction work pursuant to the contract such that it would be liable for damages arising out of its defective work. On appeal, the court of appeals certified questions to the Texas Supreme Court, which answered that “a general contractor that enters into a contract in which it agrees to perform its construction work in a good and workmanlike manner, without more specific provisions enlarging this obligation, does not ‘assume liability’ for damages arising out of the contractor’s defective work so as to trigger the contractual liability exclusion.” View "Ewing Constr. Co., Inc. v. Amerisure Ins. Co." on Justia Law

Ayer Properties, LLC (Ayer) purchased and converted a building into condominiums. Trustees of the Market Gallery Condominium Trust (trustees) filed an action against Ayer seeking damages stemming from Ayer’s negligent construction of elements of the building. A superior court judge found Ayer was negligent in its construction of window frames, masonry, and roof. However, the judge concluded that the economic loss rule precluded the trustees from recovering for damage resulting from the defective masonry work because it did not cause damage to any individual units. The Supreme Judicial Court (1) affirmed the judge’s decision as to the window frames and roof and remanded for entry of an order awarding additional damages for the negligently constructed masonry; but (2) reversed the judge’s decision to reduce the repair and replacement damages by twenty percent and remanded for entry of judgment in the full amount of damages established at trial. View "Wyman v. Ayer Props., LLC" on Justia Law