If You Want to Avoid Prejudgment Interest You Have to Expressly Say So in the Contract, Merely Striking the Interest Provision From the Contract May Not Work

G&G Mech. Constructors, Inc. v. Jeff City Indus., Inc., No. WD80840, 2018 Mo. App. LEXIS 271 (Mar. 20, 2018).

This case arose out of a project in Columbia, Missouri on which Jeff City Industry, Inc. (“JCI”) was the general contractor and G&G Mechanical Constructors, Inc. (“G&G”) was a subcontractor.

The draft subcontract contained an interest provision which provided that overdue payments “shall bear interest at the annual rate of 18% or the highest rate allowed by law, if lower. Retainage shall not be held out of payment.”  JCI struck through this provision, wrote “5% Retiange [sic]” in the margin, initialed it, and sent it to G&G.  G&G also initialed the revision.

When JCI failed to pay G&G for its work, G&G sued JCI for breach of contract, unjust enrichment, and violation of Missouri’s Prompt Pay Act.  A jury returned a verdict against JCI, and the trial court entered a judgment against it which included prejudgment interest at the rate of 9% pursuant to Missouri Revised Statute § 408.020. Continue reading

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Evidence That Government Internally Considered Additional Modifications After the Parties Had Signed Earlier Modifications May Negate a Finding That the Earlier Modifications Were an Accord and Satisfaction of All Claims

Meridian Eng’g Co. v. United States, 2018 U.S. App. LEXIS 7024 (Fed. Cir., Mar. 20, 2018)

Meridian Engineering Company (“Meridian”) was hired by the United States (“Government”) to construct flood control structures on the Chula Vista Project.  Meridian encountered what it considered to be differing site conditions on the project.  The Government issued two contract modifications in response to Meridian’s claims.  Later, structural failures occurred and the Government ultimately terminated Meridian.  Meridian filed suit in the Court of Federal Claims.

The court held that Meridian failed to establish a compensable differing site condition because the bid documents sufficiently notified contractors of potential water conditions at the site that could result in the conditions claimed.  Also, the court held that Meridian was charged with knowledge of the conditions that a pre-bid site visit would have revealed, which included the conditions in question.  The Court of Appeals affirmed the trial court on that issue. Continue reading

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How Much Control Is Too Much Control? Federal Court in Florida Holds Designers’ Supervision of Project and Issuance of Design Documents Creates Control Over—And Potential Tort Liability To—Project Contractors

Suffolk Constr. Co. v. Rodriguez & Quiroga Architects Chtd., 2018 U.S. Dist. LEXIS 42652 (S.D. Fla. Mar. 15, 2018)

This case arises out of the design and construction of a science museum in Miami, Florida (the “Project”).  Museum of Science, Inc. (“MSI”), the Project owner, executed several agreements relating to the Project, including: (i) an agreement with Defendant Rodriguez and Quiroga Architects Chartered (“R&Q”) to serve as executive architect; (ii) an agreement with Defendant Grimshaw Architects P.C. (“Grimshaw”) to serve as the design architect; (iii) a construction services contract with Plaintiff Suffolk Construction Co. (“Suffolk”); and (iv) a direct contract with Suffolk’s subcontractor, Plaintiff Baker Concrete Construction, Inc. (“Baker”) for construction services after MSI terminated Suffolk for convenience.  After execution of these agreements, R&Q executed contracts with Defendant Fraga Engineers, LLC (“Fraga”) for mechanical, electrical, and plumbing design services, and with Defendant DDA Engineers, P.A. (“DDA”) for structural design and engineering services.

Suffolk and Baker (collectively, “Plaintiffs”) filed suit for negligence against R&Q, Grimshaw, Fraga, and DDA (collectively, “Defendants”), claiming that by issuing deficient design documents, Defendants breached their duties owed to Plaintiffs causing Plaintiffs to incur economic losses.  All Defendants but R&Q moved to dismiss the claims, arguing that they had no supervisory role or control over Plaintiffs, as demonstrated by the fact that their contracts with MSI did not designate them as “supervisory architects,” and thus, owed no duty to Plaintiffs. Continue reading

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Are Consent Awards Under the New York Convention Enforceable in U.S. Courts? Federal Court in Texas Says Yes

Transocean Offshore Gulf of Guinea VII Ltd. v. Erin Energy Corp., 2018 U.S. Dist. LEXIS 39494 (S.D. Tex. Mar. 12, 2018)

On March 12, 2018, in Transocean Offshore Gulf of Guinea VII Ltd. v. Erin Energy Corp., the U.S. District Court for the Southern District of Texas became the second U.S. court to recently determine that the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), as codified in the Federal Arbitration Act (“FAA”), applies to consent awards.  Although seemingly inconsequential at first glance, the question of whether consent awards—i.e., settlement agreements recorded by arbitral tribunals as awards—are subject to the New York Convention, has remained the subject of much debate within the field of international arbitration for many years.

In Transocean, the petitioners, Transocean Offshore Gulf of Guinea VII Limited and Indigo Drilling Limited, entered into an agreement to provide drilling equipment, personnel, and services in the waters off the coast of Nigeria to the respondent, Erin Energy Corporation.  Prior to the completion of the contract, a dispute arose and, pursuant to an arbitration clause, the petitioners initiated an arbitration under the rules of the London Court of International Arbitration (“LCIA”).  Before the tribunal made a decision on the merits, the parties reached a settlement and, at the parties’ request, the tribunal issued a consent award setting forth the terms of the parties’ settlement.    Continue reading

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Federal Court Holds That it Lacks Subject Matter Jurisdiction to Review VA’s Decision to Begin Debarment Proceedings Since That Decision Is Not a Final Agency Action

Hope v. Dep’t of Veterans Affairs, 2018 U.S. Dist. LEXIS 28479 (E.D. Ark. Feb. 22, 2018)

This matter involved a motion for temporary restraining order and preliminary injunction (the “Motion”) filed by Richard Alan Hope (“Hope”) and his HVAC company, Powers of Arkansas (“Powers”), asking the District Court to prohibit the Department of Veterans Affairs (“VA”) from continuing debarment proceedings against them.  In 2012, Federal agents began investigating Hope for fraudulently presenting DAV Construction Company, Inc. as a legitimate service-disabled, veteran-owned small business in order to obtain government construction contracts.  Hope was indicted in 2016 for conspiracy to defraud, among other things.  The VA thereafter suspended Hope and Powers from government contracting based on the indictment.  The indictment was ultimately dismissed after the Court declared a mistrial.  In January of 2018, the VA lifted the suspensions, but issued notices of proposed debarment to Hope and Powers.  While debarment proceedings are pending, a contractor may not be awarded government contracts.

The Court first analyzed jurisdiction.  Absent waiver, sovereign immunity shields the VA from suit.  However, the Administrative Procedure Act (“APA”) waives sovereign immunity to allow judicial review of final agency actions.  The Court held that it lacked jurisdiction here because there was no final agency decision as to the proposed debarment.  Indeed, the VA has established procedures for debarment decisions and the proposal for debarment is only the first step.  The Court found that because the VA’s decision-making process had only just begun, and there had been no final agency action, the APA did not authorize the Court to review the merits of the proposed debarment at this time.  Continue reading

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