Pennsylvania Supreme Court Holds Contractor May Recover in Quantum Meruit Where Home Improvement Contract Does Not Satisfy Statutory Requirements for Enforcement

Shafer Elec. & Constr. v. Mantia, 2014 Pa. LEXIS 1766 (Pa. July 21, 2014)

Homeowners Raymond and Donna Mantia contracted Shafer Electric & Construction (“Shafer”) to build a two-car garage addition onto their house. Shafer’s proposal was extremely detailed as to the work to be completed. Despite the detail in Shafer’s specifications, however, Shafer’s proposals did not comply with several requirements of the Home Improvement Consumer Protection Act, 73 P.S. §§ 517.1-517.18 (the “Act”). Specifically, pursuant to the Act, any home improvement contract must be legible, in writing, and satisfy thirteen other requirements. § 517.7(a). The contract satisfied only three of those requirements.

Notwithstanding the deficiencies, work began on the addition. During the subsequent months, a dispute arose concerning changes the Mantias made to the design of the addition. Other alterations became necessary as a result of excavation problems that arose during the work. The parties could not agree on a new contract, which Shafer believed was required due to the design changes. The parties agreed that Shafer would stop work and invoice the Mantias for the work it completed. When Shafer issued the final invoice, the Mantias refused to pay.

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Posted in Quantum Meruit

Federal District Court in New Jersey Holds that Economic Loss Rule Does Not Bar Contractor’s Tort Claims Against Architect Where Parties Were Not in Privity of Contract

Bedwell Co. v. Camden County Improvement Auth., 2014 U.S. Dist. LEXIS 95510 (D.N.J. July 14, 2014)

The University of Medicine and Dentistry of New Jersey contracted HDR Architects and Engineers, P.C. (“HDR”) to design a medical school building. After the project went to bid, the Bedwell Company (“Bedwell”) contracted with the owner’s development and contracting agent for the performance of foundation, structural steel, and other construction work.

Bedwell and HDR did not have a contract with each other. According to the allegations in Bedwell’s complaint, however, HDR was aware that the design documents that it prepared under its contract with the owner would be used by contractors like Bedwell in their estimation of costs and time for completion of the work. In its complaint, Bedwell alleged that defects in HDR’s design documents—which led to 212 Requests for Information and 469 Change Order Requests—caused unexpected costs and numerous delays.

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Posted in Economic Loss Defense, Malpractice, Negligence

New York Court Rules that Excavator’s Suit Against GC May Proceed Despite Releases It Provided with Progress Billings

Laquila Grp., Inc. v. Hunt Constr. Grp., Inc., 2014 N.Y. Misc. LEXIS 2824 (N.Y. Sup. Ct. June 25, 2014)

This action arose out of a payment dispute following construction of the Barclays Center in Brooklyn, New York.  General contractor Hunt Construction Group, Inc. (“Hunt”) retained Laquila Group, Inc. (“Laquila) as a subcontractor to perform excavation and foundation work for the project.  The parties executed a subcontract whereby Laquila would perform the work for $27.5 million with the understanding that the work had to be completed in a timely manner due to events at Barclays already scheduled around the completion date.  The subcontract further specified that Hunt was not liable to Laquila for any additional costs or changes in the work absent a written change order.

The project experienced various complications, which resulted in the parties entering into numerous change orders.  Hunt paid Laquila the money due under the original $27.5 million subcontract, plus payments covering the change orders.  Each change order executed by Laquila contained the clause, “[a]cceptance of this Change Order constitutes a waiver of any claim, additional compensation and time whatsoever in relationship to the items covered under this Change Order.”  Moreover, with each progress payment, Laquila submitted releases and a “Partial Waiver of Claims” including a waiver of liens that confirmed that it had been properly paid for its work.

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Posted in Releases, Subcontract, Waiver

District Court in Pennsylvania Concludes that CASPA Prompt Payment Act Does Not Override Unambiguous Forum Selection Clause

KNL Construction, Inc. v. Killian Construction Co., Inc., 2014 U.S. Dist. LEXIS 58269 (M.D. Pa. Apr. 28, 2014)

This action arose out of the construction of the Mohegan Sun Hotel in Luzerene County, Pennsylvania.  General contractor Killian Construction Co., Inc. (“Killian”) retained KNL Construction, Inc. (“KNL”) as a subcontractor to perform certain work on the project.  The parties executed a subcontract which contained a forum selection clause mandating that disputes thereunder be litigated in Greene County Missouri, or if federal jurisdiction is applicable, in the District Court for the Western District of Missouri.

A dispute arose over KNL’s performance under the subcontract, eventually leading to its termination.  In response, KNL brought suit in Pennsylvania state court for breach of contract and related claims premised on payments allegedly owed by Killian, including a claim under Pennsylvania’s Contractor and Subcontractor Payment Act (“CASPA”).  Killian removed the case to the Middle District of Pennsylvania on diversity grounds and filed a motion to dismiss for improper venue, or, in the alternative, transfer for forum non conveniens.  In support of its motion, Killian argued that the clear language of the forum selection clause designates Missouri as the exclusive venue for litigation.

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Posted in CASPA, Forum-selection clause, Prompt Payment Act

Winning Formula for Construction Litigation – Lessons Learned from a Recent Trial Win

Thank you if you registered for our webinar on “Winning Formula for Construction Litigation – Lessons Learned from a Recent Trial Win.” If you did not have an opportunity to hear the session live, below you will find a video on what was covered and a link to view the webinar as well as the PowerPoint slides presented.

If you attended and were interested in applying for CLE credit (CA, NY, PA, VA – pending, NJ credit available through reciprocity), please email Brian Dolan at dolanb@pepperlaw.com.

View the Webinar in Windows Media Player.

PDF file of the PowerPoint slides from the Webinar.

Posted in Uncategorized