July 1996

Hancock Electronics Corp. v. Washington Metropolitan Area Transit Authority, 81 F.3d 451 (4th Cir. 1996).
In the spring of 1994, the Washington Metropolitan Area Transit Authority (“WMATA”) awarded Hancock Electronics Corporation (“Hancock”) a contract to provide replacement braking systems for approximately 300 rail cars. The contract required Hancock to design, manufacture and install the braking systems. The contract further required Hancock to demonstrate its contract performance to WMATA and provide certain technical data about the braking systems.
Because it apparently did not possess the ability to monitor the testing of the brake systems’ software, WMATA subcontracted the testing function to a third party. In addition, as part of the testing process, WMATA requested Hancock to provide certain technical documentation, including the brake systems’ software. WMATA sought Hancock’s permission to provide the technical data to the third party responsible for testing, who had agreed to enter into a lifetime nondisclosure agreement. Hancock refused.
Continue Reading United States Court of Appeals for the Fourth Circuit Holds Recovery on Contractor’s Claim for Wrongful Termination Limited by Provisions of Termination for Convenience Clause; Contractor’s Suit Dismissed Because Claim Was Subject to Contractually Prescribed Disputes Procedures

Waterfront Marine Construction, Inc. v. North End 49ers Sandbridge Bulkhead Groups A, B and C, 251 Va. 417; 468 S.E.2d; 1996 Va.
In 1988, the North End 49ers Sandbridge Bulkhead Group (49ers) entered into a contract with Waterfront Marine Construction, Inc. (WMC) after accepting its bid to construct a bulkhead. The agreement included a provision providing for arbitration of any controversy or claim “arising out of or relating to the Contract or the breach thereof.”
An engineering firm in 1989 inspected the installed bulkhead and pronounced it to be defective, whereupon the 49ers filed a demand for arbitration with the American Arbitration Association (AAA) seeking damages, and WMC filed a demand seeking to recover the unpaid balance of the construction price. In 1991, following a hearing, the AAA panel entered an award denying the 49ers’ claim and granting the WMC’s claim, conditional that WMC perform certain work within a certain time limit to the satisfaction of an independent engineer. Unable to agree on the independent engineer, WMC did not perform the specified work and later on that year severe storms hit the bulkhead, causing damage.
Continue Reading Supreme Court of Virginia Decides Issues Relating to Arbitrability and Res Judicata Effect of Arbitration Awards

Urban Masonry Corporation, Appellant, N&N Contractors, Inc., Appellee,
676 A.2d 26 (D.C. App. 1996)
In November 1990, Urban Masonry Corporation (Urban) subcontracted with N&N Contractors, Inc., (N&N) to install concrete panels on a major construction project in the District of Columbia. Urban was the subcontractor of the general contractor, Blake Construction Company, and N&N was a subcontractor of Urban. The panels were to be supplied by Blake.
Upon installation of the concrete panels it became obvious that the panels were smaller than anticipated, therefore, additional pieces would be needed to complete the project. Because this was beyond the scope of the original agreement, it was agreed between Urban and N&N, that Urban would pay additional compensation for installing extra panels. In fact, Urban’s Project Manager sent a “speed memo” affirming the compensation, and Urban’s President sent a letter acknowledging the request for compensation and promised to pass on the claim to the general contractor (Blake). Subsequently, Urban made a settlement with Blake which did not include compensation for N&N’s claims in November 1991.
Continue Reading District of Columbia Court of Appeals Holds Prime Contractor Cannot Rely on "Pay-if-paid" Clause If it Fails to Protect Subcontractor’s Interest in Settlement with General Contractor

Thermocor, Inc. v. United States,
1996 U.S. Claims LEXIS 68 (Cl. Ct. 1996).
On October 16, 1989, the United States Army Corps of Engineers (“Corps”) awarded ThermoCor, Inc. (“ThermoCor”) a contract in the amount of $15,500,000 to excavate and treat soils contaminated with polychlorinated biphenyls (“PCB’s”) in Erie County, New York. In part, the contract provided for estimated quantities, from which ThermoCor submitted a unit price bid. The contract also provided a Variance in Estimated Quantity Clause (“VEQ”), which provided, in pertinent part:
If the quantity of a unit-priced item in this contract is an estimated quantity and the actual quantity of the unit-priced item varies more than 15 percent above or below the estimated quantity, an equitable adjustment in the contract price shall be made upon demand of either party. The equitable adjustment shall be based upon any increase or decrease in costs due solely to the variation above 115 percent or below 85 percent of the estimated quantity. 48 C.F.R. [[section]] 52.212-11 (1989) (emphasis supplied).
Continue Reading Federal Claims Court Holds That A Variance In Estimated Quantities Clause Affords A Contractor Relief Only To The Extent That The Contractor Can Prove An Increase In Unit Costs Due Solely To Increased Quantities

Valley View Enterprises, Inc. v. United States,
35 Fed. Cl. 378 (1996).
On September 22,1992, the Department of the Army awarded plaintiff Valley View Enterprises, Inc. (“Valley View”) a contract to replace seventeen steam lines located at the United States Military Academy in West Point, New York in connection with the installation of an underground,

R.W. Dunteman Company v. The Village of Lombard,
1996 Ill. App. LEXIS 375.
R.W. Dunteman Co. (Dunteman), entered into a construction contract with the Village of Lombard (Village), including the terms that Dunteman would remove and replace some road-way within the Village. The contract provided two different rates potentially applicable for the removal of pavement:

Electro Assocs., Inc. v. Harrop Constr. Co., Inc.,
908 S.W.2d 21 1995 Tex. App. LEXIS 1968 (Tex. Ct. App. August 24, 1995).
Because the contractor-subcontractor relationship is not a “special relationship” giving rise to common law duty to act in good faith, subcontractor’s suit against general contractor for breach of duty sounds in contract only,

Grange Mutual Casualty Co. v. Robert Locker Builder, Inc.; Panzica Constr. Co. v. Ohio Ins. Casualty
1996 Ky. App. LEXIS 8 (Ky. Ct. App., Jan. 19, 1996); 1996 Ohio App. LEXIS 1975 (Ohio Ct. App., May 1
Provision in the standard broad form endorsement to comprehensive general liability insurance policy, which excludes coverage for the

Kit-San-Azusa v. United States,
1996 U.S. App. LEXIS 10370 (Fed. Cir. Ct. App., May 7, 1996).
Government contractor’s differing site conditions claim based on the discovery of unanticipated boulders during excavation was upheld even though the Government’s general description of the site stated that cobbles and boulders were present at site; the contractor properly considered