Pennsylvania Jury Awards Natural Gas Pipeline Builder $24.3 Million for Contract Breach

Utility Line Services, Inc. v. PVR Marcellus Gas Gathering, LLC
Court of Common Pleas for Delaware County, Pennsylvania, No. 12-4322

On April 17, 2014, a Delaware County, Pennsylvania, jury awarded contractor Utility Line Services, Inc., a $24.3 Million verdict against PVR Marcellus Gas Gathering, LLC, for breach of a contract for construction of a natural gas pipeline. The damages were for nonpayment of balances due and for wrongful termination of a portion of the contract. Bruce W. Ficken of Pepper Hamilton in Philadelphia, tried the case with fellow Pepper Hamilton attorneys Richard W. Foltz Jr. and Joseph T. Imperiale. The award is subject to further enhancement for attorneys fees and for 2% per month statutory interest and penalties on the portion of the award attributable to unpaid balances ($16.5 Million) pursuant to the Pennsylvania Contractors and Subcontractors Payment Act (“CASPA”).  The case is believed to be the largest recovery ever under CASPA.

Read more about the case in the Pittsburgh Post Gazette.

Federal Circuit Court Clarifies Standard for Establishing Government’s Breach of the Implied Duty of Good Faith and Fair Dealing in Addressing Claim for Differing Site Conditions

Metcalf Constr. Co. v. United States
742 F.3d 984 (Fed. Cir. 2014)

This action arose out of the design and construction of military housing units at a U.S. Navy facility in Hawaii.  Pre-bid documents for the project supplied by the government provided test information regarding soil conditions on the site.  The government also included a disclaimer that this information was “for preliminary information only” and the resulting contract required that the contractor conduct its own independent soil investigation.

Metcalf Construction Company (the “Contractor”) was awarded the contract.  When the Contractor conducted its independent soil investigation it discovered that the soil was not as represented.  The Contractor notified the government and discussions ensued.  In those discussions, the Contractor recommended a different design and construction approach to account for the newly uncovered conditions, while the government generally insisted on following construction requirements set out in the original contract.  After a year’s delay, the Contractor decided that the cost of waiting for the government to approve the design changes had become too high, and it began to implement those changes without a contract modification.  As a result, the Contractor spent approximately $26 million over the original contract amount to remedy the soil conditions and finish the project.

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Federal District Court for DC Rejects Subcontractor’s Pass-Through of General Contractor’s Claim to Sub-Subcontractor

Window Specialists, Inc. v. Forney Enterprises, Inc.,
2014 U.S. Dist. LEXIS 2014 U.S. Dist. LEXIS 34702 (D.D.C. March 18, 2014)

This dispute arises out of a construction contract to repair property at Fort McNair in Washington, D.C.  The Army contracted with a general contractor, IIU Consulting Institute, who in turn contracted with defendant subcontractor, Forney Enterprises.  Forney entered into a sub-subcontract with plaintiff Window Specialists, Inc. for the labor and materials to supply and install over 680 windows and over 60 doors on the project.  During the course of the project, the Army issued a 10-day cure notice identifying numerous issues with the general contractor’s demolition of existing windows and Window Specialists’ installation of new windows.  Ultimately, Forney terminated the contract with Window Specialists and the general contractor had to demolish, re-order, and re-install all of Window Specialists’ work on the project.

Window Specialists filed suit against Forney, the general contractor, the general contractor’s payment bond surety, and the Secretary of the Army, bringing claims for breach of contract, unjust enrichment, a payment bond claim, and for injunctive relief.  Forney filed two counterclaims against Window Specialists, one for breach of contract and one seeking indemnification related to the costs the general contractor incurred replacing Window Specialists’ work.

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