January 2006

LBL Skysystems (USA), Inc. v. APG-America, Inc.
No. 02-5379, 2005 U.S. Dist. LEXIS 19065 (E.D.Pa. Aug. 31, 2005)
In LBL Skysystems (USA), Inc. v. APG-America, Inc., No. 02-5379, 2005 U.S. Dist. LEXIS 19065 (E.D.Pa. Aug. 31, 2005), the District Court concluded that a subcontractor was contractually obligated to continue performance, despite its dispute with the contractor over alleged extra work. Further, the Court concluded that the subcontractor was in the wrong, as its course of performance demonstrated that certain steel work was, in fact, within the subcontractor’s original work scope. As a result, the Court concluded that the contractor’s decision to terminate the subcontract was proper.
Continue Reading Flow Down Provision Requires Subcontractor to Proceed During Pendency of Dispute Over Extra Work – A Dispute The Subcontractor Loses as a Result of Course of Performance

Daniel Marr & Son Co. v. Coreslab Structures, Inc. et al.
No. 03-1880, 2005 Mass. Super. LEXIS 545, (Mass. Supp. Nov. 21, 2005)
In Daniel Marr & Son Co. v. Coreslab Structures, Inc. et al., No. 03-1880, 2005 Mass. Super. LEXIS 545, (Mass. Supp. Nov. 21, 2005), plaintiff sub-subcontractor sued defendant subcontractor for various breaches of contract related to the construction and erection of precast concrete panels. The original scope of work dictated the erection of the precast panels would proceed on a floor-by-floor basis. During the project, the defendant order plaintiff to alter the erection sequence, requiring plaintiff to install the precast panels on an as-directed basis. Plaintiff subsequently asserted a claim for productivity inefficiencies related to the revised sequence and other issues. Defendant attacked Plaintiff’s damages calculations as an “unsegregated partial total cost claim.”
Continue Reading Massachusetts Court Equates Change in Construction Sequence with a Change in Scope, Awarding Inefficiency Damages Based on Modified Total Cost Claim

Richard F. Kline, Inc. v. Shook Excavating & Hauling, Inc.
165 Md. App. 262, 885 A.2d 381, 2005 Md. App. LEXIS 273 (Maryland Ct Spec. App., October 31, 2005)
Richard F. Kline, Inc. (“Kline”) contracted with the City of Frederick, Maryland (the “City”) for the construction of a flood control project. Kline subcontracted with Shook Excavating & Hauling, Inc. (“Shook”) to perform a portion of the excavation work. The subcontract did not contemplate Shook’s removal of any contaminated soils. When such soils were discovered, the City and project engineer directed Kline to begin remediation. Kline in turn requested that Shook perform this work, and Shook did so. Eventually, the Maryland Department of the Environment determined that the soils were not in fact contaminated. Disagreeing with this determination, however, Kline and Shook continued to remediate the soil before using it as backfill.
Continue Reading Maryland Court Holds that Subcontract Requirement of Passing Through Subcontractor’s Claims Against Owner Does Not Create “Pay-When-Paid” Condition; Prime Contractor Remains Liable for Payment

Environmental Energy Partners Inc. v. Siemens Building Technologies,Inc., et al.
Nos. 26521 & 26702, 2005 Mo. App. LEXIS 1568 (Mo. Ct. App., Oct. 25, 2005)
In Environmental Energy Partners Inc. v. Siemens Building Technologies, Inc., et al., Nos. 26521 & 26702, 2005 Mo. App. LEXIS 1568, a payment dispute arose between a contractor and its subcontractor on a hospital renovation project. When the contractor refused to pay the subcontractor the remaining subcontract balance ($201,178.75) on the basis that the subcontractor’s work was not completed, the subcontractor filed a mechanic’s lien against the property. The subcontractor then filed a petition to enforce its lien, naming the contractor and owner as defendants. Because of the subcontractor’s lien, the owner withheld the last installment payment of $148,475 due to the contractor under their agreement. Thereafter, and unbeknownst to the contractor, the subcontractor and the owner entered into a confidential “Settlement Agreement and Release” under which the owner agreed to pay directly to the subcontractor the $148,475 amount that it was withholding from the general contractor in exchange for a release of the lien upon entry of judgment in the litigation.
Continue Reading Missouri Court Holds Subcontractor Tortiously Interfered with Contractor’s Agreement with Owner by Seeking Payment Directly from Owner

American Rock Mechanics, Inc. v. N. Abbonizio Contractors, Inc. and Fidelity and Deposit Company of
2005 PA Super 390; 2005 Pa. Super. LEXIS 4086 (Pa. Super. Ct. 2005)
In American Rock Mechanics, Inc. v. N. Abbonizio Contractors, Inc. and Fidelity and Deposit Company of Maryland, 2005 Pa. Super. 390, (Pa. Super. Ct. 2005), the Court held that the terms of the parties’ subcontract concerning time for payment took precedence over the those set forth in the Commonwealth Procurement Code, 62 Pa.C.S. § 3933.
Continue Reading Subcontract Term Takes Precedence Over Prompt Pay Provision of Pennsylvania Commonwealth Procurement Code Less Favorable to Subcontractor

Nat’l Union Fire Ins. Co. v. David A. Bramble, Inc.
388 Md. 195, 879 A.2d 101 (Md. July 21, 2005)
In connection with construction of a resort hotel project, general contractor Clark Construction provided a payment bond securing its obligation to pay its subcontractors for all labor, material, and equipment required. The bond was a standard American Institute of Architects document A312 form, used without alteration to the form language, issued jointly by three sureties. In the event claim was made against the bond, it provided that the surety would “Send an answer to the Claimant, with a copy to the Owner, within 45 days after receipt of the claim, stating the amounts that are undisputed and the basis for challenging any amounts that are disputed.”
Continue Reading Surety Waives Defense to AIA A312 Payment Bond Claim by Failure to Object Within Bond’s 45- Day Limit