U.S. Court of Appeals for 11th Circuit Upholds Dismissal of EPC Contractor’s Claim for Damages Caused by Four Hurricanes, Concluding That Terms of Force Majeure Clause Barred Recovery of Increased Costs

S&B/BIBB Hines PB3 Joint Venture v. Progress Energy Florida, Inc.
2010 U.S. App. LEXIS 2875 (11th Cir. Feb. 11, 2010)

S&B/BIBB Hines PB3 Joint Venture, S&B Engineers and Contractors, LTD (“S&B) agreed to perform engineering, procurement and construction on a fixed-price basis (the “Contract”) for two electric generating plants in Polk County for the project owner and defendant, Project Energy Florida, Inc. (“Project Energy”). During the course of construction, four hurricanes struck Polk County resulting in a shortage of labor and materials and a corresponding increase in the cost of construction for S&B. S&B sought approximately $40 million in additional compensation as a result of this extraordinary event. S&B’s claim for additional compensation was denied by Project Energy and S&B filed suit. The district court dismissed the majority of S&B’s breach of contract and other claims on a Rule 12(b)(6) motion holding that the fixed price Contract precluded additional compensation beyond the Contract price. Continue reading “U.S. Court of Appeals for 11th Circuit Upholds Dismissal of EPC Contractor’s Claim for Damages Caused by Four Hurricanes, Concluding That Terms of Force Majeure Clause Barred Recovery of Increased Costs”

New Jersey Appellate Division Rules Conditional Character of Surety’s Commitment to Provide Performance Bond Made Contractor’s Bid Nonresponsive

Nova Crete, Inc. v. City of Elizabeth
2010 N.J. Super. Unpub. LEXIS 101 (N.J. Super. Ct. App. Div. Jan. 15, 2010)

The Court held that the consent of surety submitted by Nova Crete, Inc. (“Nova Crete”) did not comply with the bid specifications provided by the City of Elizabeth because its issuance was conditioned on an event other than the award of the contract to Nova Crete, and it therefore did not comply with the applicable New Jersey statute. Furthermore, this defect was material and could not be waived or cured. As a result, Elizabeth properly determined that Nova Crete was not the lowest responsible bidder on the project. Continue reading “New Jersey Appellate Division Rules Conditional Character of Surety’s Commitment to Provide Performance Bond Made Contractor’s Bid Nonresponsive”

U.S. District in New York Denies Architect’s Motion for Summary Judgment Seeking Dismissal of Claim By Surety of Defaulted Contractor for Damages Due to Architect’s Alleged Improper Certification of Contractor’s Payment Applications

American Manufacturers Mutual Insurance Co. v. Payton Lane Nursing Home, Inc.
2010 U.S. Dist. LEXIS 8537 (E.D.N.Y. Feb. 2, 2010)

The United States District Court for the Eastern District of New York (“EDNY”) recently considered whether a surety could maintain a breach of contract claim against a construction project owner’s architect based upon the architect’s alleged wrongful certification of payments occurring prior to the execution of a takeover agreement. In rendering its opinion, the EDNY concluded that expert opinions were not required where the claim sounded in contract, rather than in tort. The EDNY also found that summary judgment was defeated because there remained genuine issues of material fact as to the extent of the architect’s scope of construction phase services and whether the architect failed to satisfy its construction phase service obligations. Continue reading “U.S. District in New York Denies Architect’s Motion for Summary Judgment Seeking Dismissal of Claim By Surety of Defaulted Contractor for Damages Due to Architect’s Alleged Improper Certification of Contractor’s Payment Applications”