Federal Court in Hawaii Holds that an Unlicensed Subcontractor May Pursue Contract Claims Against Contractor Notwithstanding Statute Precluding Unlicensed Contractors from Recovering in a Civil Action

U.S. Pipelining LLC v. Johnson Controls, Inc., No. 16-00132 HG-RLP, 2016 U.S. Dist. LEXIS 150767 (D. Haw. Oct. 31, 2016)

This action arose out of the renovation of a condominium complex on Maui (Project). Johnson Controls, Inc. (JCI) was the general contractor and U.S. Pipelining LLC (USP) was a subcontractor. While the parties disputed who was ultimately responsible for obtaining a license for the work, the Subcontract included a provision that required USP to “obtain[] all licenses and permits required for the prosecution of the Work.” Nonetheless, USP performed its work without obtaining a license from the State of Hawaii. During the Project, a dispute arose between the parties. USP filed a complaint alleging various claims against JCI and others, seeking payment for the additional work it allegedly performed.

Chapter 444 of the Hawaii Revised Statutes (the “Statute”) requires contractors to obtain a license before performing any renovation work on real property. Continue reading

Posted in Licensing, Subcontract | Tagged , , , , ,

Federal Court in North Carolina Holds That Impracticability of Arbitration Clause Which Required Decision Within 30 Days of Selection of Arbitrators Did Not Render It Invalid Because Incorporated AAA Rules Allowed for Extension of Arbitration Period

Tribal Casino Gaming Enterprise v. W.G. Yates & Sons Constr. Co., 2016 U.S. Dist. LEXIS 86100 (W.D. NC July 1, 2016)

Tribal Casino Gaming Enterprise (the “Casino”) contracted with joint general contractors, W.G. Yates & Sons Construction Company and Rentenback Constructors Inc. (the “Contractor”) for an expansion of the Casino’s facility in Cherokee, North Carolina.  Following completion, two parking decks constructed during the project partially collapsed.  The Casino contended that the parking deck failures resulted from the Contractor’s faulty work.

The Casino submitted a demand for arbitration with the American Arbitration Association (“AAA”), asserting contractual, tort, and statutory claims against the Contractor.  The Contractor filed a motion with the Western District of North Carolina seeking to stay the AAA arbitration.  Citing the doctrine of contractual impossibility and due process concerns, the Contractor argued that the arbitration clause in the parties’ contract was unenforceable because it required that the arbitral panel issue an award within 30 days, which the Contractor contended was unreasonable under the circumstances of the complex dispute. Continue reading

Posted in Arbitration

New Jersey Federal District Court Holds That Arbitration Clause In AIA A201-1997 Does Not Apply To Post Construction Disputes

Blackman & Co., Inc., v. GE Bus. Fin. Servs., Inc., 2016 U.S. Dist. LEXIS 87904 (D.N.J. July 7, 2016)

Grove Street Realty Urban Renewal, LLC (“Grove Street”) contracted with Blackman & Co., Inc. (“Blackman”) to manage a project (the “Project”) to construct a four-story apartment building in West Deptford, New Jersey between 2007 and 2009 (the “Contract”).  The Contract incorporated AIA Document A201-1997General Conditions of the Contract for Construction.

GEBFS acquired the Project from Grove Street pursuant to foreclosure proceedings in 2012.  Three years after it acquired the Project (and six years after construction was complete), GEBFS filed a $4,000,000 Demand for Arbitration with the American Arbitration Association (“AAA”) against Blackman for alleged post-construction defects, asserting claims for breach of contract and breach of implied warranty.  Blackman filed an action in response to GEBFS’ Demand for Arbitration, seeking a judgment that the dispute was not governed by any agreements to arbitrate. Continue reading

Posted in Arbitration

Supreme Court of Pennsylvania Holds That Under Prompt Payment Act, Imposition of Penalty and Attorneys’ Fees Is Discretionary, Not Mandatory, Upon Finding of Bad Faith

Scott Enters., Inc. v. City of Allentown, 2016 Pa. LEXIS 1503 (Pa. July 19, 2016)

The Supreme Court of Pennsylvania reversed an order of the Commonwealth Court and held that the prompt payment provisions of the Commonwealth Procurement Code, 62 Pa. C.S. §3931-3939 (the “Prompt Payment Act”), do not mandate an award of penalty interest and attorneys’ fees upon a finding that the government withheld payments from the contractor in bad faith. Continue reading

Posted in Prompt Payment Act

US Supreme Court False Claims Act Decision in Escobar Has Significant Implications for Contractors

Marion T. Hack, Partner
John H. Conrad, Associate

On June 16, 2016, the U.S. Supreme Court ruled in the matter of Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), changing the legal landscape for False Claims Act qui tam claims concerning the implied false certification theory of liability. This article will discuss the Escobar holding and examine relevant considerations for contractors in light of this ruling. Continue reading

Posted in False Claims Act