Void Means Void – Municipal Contract That Did Not Conform to Statute Is Void and No Claim for Breach or Quasi-Contract or Unjust Enrichment Is Permitted

Aquatic Renovations Sys. v. Vill. of Walbridge, 2018 Ohio App. Lexis 1581 (April 13, 2018)

On May 2, 2012, Aquatic Renovations Systems, Inc. (“Aquatic”) entered into a contract with the Village of Walbridge (“the Village”) for the installation of a new pool liner (“Contract 1”).  Prior thereto, the Village council adopted an ordinance which authorized the mayor to enter into Contract 1 (“Ordinance”).  On April 12, 2013, the mayor signed a new contract for the balance of the work (“Contract 2”).  A few days after Aquatic completed its work, the pool liner began to lift.  The Village then refused to pay Aquatic for the completed and approved work.

Aquatic sued the Village for non-payment, alleging the Village breached Contract 2.  Aquatic also alleged that the Village was liable under a theory of quantum meruit and unjust enrichment.  The trial court granted the Village’s motion for summary judgment, holding that Contract 2 was not valid because it did not comply with the Ohio Revised Statute which required the mayor, the clerk, and the Village administrator to authorize all Village Contracts.  Thus, because Contract 2 was unenforceable, Aquatic could not recover under a breach of contract, quantum meruit or unjust enrichment theory.    Continue reading

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Nevada Supreme Court Rules That Arbitration Clause in Common-Interest Community’s Covenants, Conditions, and Restrictions Binds Homeowners  

United States Home Corp. v. Ballesteros Trust, 2018 Nev. LEXIS 28 (Nev. Apr. 12, 2018)

United States Home Corporation (“U.S.H.”) built homes in a Nevada common-interest community, subject to a Covenant, Conditions, and Restrictions agreement (“CC&R”), which provided that any dispute would be resolved by arbitration.

Between August 2013 and February 2015, twelve home purchasers filed pre-litigation notices against U.S.H. for alleged construction defects.  Three of the purchasers had direct purchase and sales agreements with U.S.H. that contained arbitration clauses; the remaining homeowners did not sign such agreements, but took title subject to the CC&R.  U.S.H. demanded arbitration, but the homeowners brought claims in a Nevada district court seeking damages for breach of contract and other claims.  U.S.H. moved to compel arbitration.  The court held that the transaction did not involve interstate commerce, so the Federal Arbitration Act (“FAA”) did not apply, and invalidated the arbitration agreements as unconscionable. Continue reading

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Federal Court in New Hampshire Holds That Subcontractor May Pursue a Mechanics’ Lien Despite Signing Written Lien Waivers and Releases Because General Contractor Had Actual Notice of Subcontractor’s Intent to Claim at Time Waivers Were Executed

Fraser Eng’g Co. v. IPS-Integrated Project Servs., LLC, 2018 US Dist. LEXIS 51392 (D.N.H. March 27, 2018)

IPS-Integrated Project Services, LLC (“IPS”) was the general contractor on a project to design and construct a manufacturing facility in Portsmouth, New Hampshire. IPS subcontracted with Fraser Engineering Company (“Fraser”) for the project’s mechanical and plumbing scope of work. Shortly after award, IPS notified Fraser that it may be directed to accelerate its work. In response, Fraser put IPS on notice that acceleration would result in labor inefficiencies for which it expected to be reimbursed.  Thereafter, IPS directed Fraser to accelerate and Fraser complied by using extra overtime over the next several months. During that time, the parties communicated numerous times about Fraser’s claim for labor inefficiencies.

Under its subcontract with IPS, Fraser was required to submit lien waivers with each of its payment applications. According to the court, the waivers at issue “do not merely release lien rights, but also ‘all claims, demands, or causes of action . . . which [Fraser] has, or might under any present or future law, assert against [IPS] or [the owner] relating to the Partial Payment and/or the labor services, materials or equipment for which the partial payment has been made.’” During its work, Fraser submitted eight such waivers. Continue reading

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Divided Delaware Supreme Court Holds Highway Contractor Owes a Common Law Duty to Provide for the Safety of the Traveling Public, Above and Beyond Its Approved Traffic Control Plan

Pavik v. George & Lynch, Inc., No. 160, 2017, 2018 Del. LEXIS 133 (Mar. 23, 2018)

This case arises out of a highway reconstruction project and a car accident which occurred on the highway during non-working hours.  The Delaware Department of Transportation (“DelDOT”) hired George & Lynch, Inc. (“G&L”) to repave Omar Road.  The contract obligated G&L to perform its work in a manner that would provide reasonably safe passage to the traveling public and to provide for the protection and safety of the general public.  DelDOT approved G&L’s traffic control plan, which provided for placement of temporary warning signs during working hours and permanent warning signs advising travelers of road work ahead.  As part of its work, G&L performed cold in-place recycling, a process by which asphalt is removed, recycled, and reapplied as a base layer.  As the recycled asphalt cures, the road surface can support traffic, but there is a risk that raveling—a condition in which the base layer breaks apart—can occur.

It was during a curing period that the accident occurred.  On Friday, after asphalt had been installed and began to cure, the road was reopened.  On Saturday, after a thunderstorm, DelDOT received complaints of potholes on the road.  On Sunday, DelDOT patched the potholes and later that night, the driver lost control of her car and ran off the road.  Plaintiffs claimed the accident was caused by raveling and that G&L was negligent because it failed to provide warning signs about the road’s condition during the non-working hours.  G&L argued that it had no duty to erect additional signs and that DelDOT’s repairs broke the chain of causation. Continue reading

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A Project Consisting of Several Component Projects Is a Single Project or “Product Purchased by the Owner” Within the Meaning of the Indiana Economic Loss Rule; Only Damage to Pre-Exiting Property at the Site May Be Subject to Recovery in Negligence

City of Whiting v. Whitney, Bailey, Cox & Magnani, LLC, 2018 U.S. Dist. LEXIS 44943 (N.D. Ind. Mar. 20, 2018)

The City of Whiting, Indiana (the “City”) undertook a 26-acre lakefront development project.  It hired an engineering firm to serve as the consultant for the project.  The consultant subcontracted with a subconsultant for marine engineering services, including design of a rock revetment on the lakefront for shoreline protection.  According to the City, the revetment failed on three occasions, resulting in damage to the City’s property at the project site, including a walking path, landscaping and existing trees, a gazebo, and an existing Gun Club structure, which the City had planned to convert to a restaurant.

After accepting assignment of the consultant’s contract with the subconsultant, the City filed a six-count complaint and alleged that the subconsultant’s negligent revetment design caused damage to the City’s property.  The subconsultant moved for summary judgment on the City’s negligence claim, arguing that the economic loss rule precluded liability against it in tort.  The court noted that Indiana’s economic loss rule bars tort liability when there is damage only to the product contracted for itself, but that the rule does not preclude tort liability if there is personal injury or damage to “other property.” Continue reading

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