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

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”

Supreme Court of Virginia Decides Issues Relating to Arbitrability and Res Judicata Effect of Arbitration Awards

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”

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

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”