A Case to Watch: Highway Contractor Appeals $663M False Claims Act Judgment

Kristin H. Jones, Pepper Hamilton LLP, Partner
Thomas J. Madigan, Pepper Hamilton LLP, Partner

On August 31, 2015, highway contractors Trinity Industries, Inc. and Trinity Highway Products, LLC (collectively, Trinity) appealed to the U.S. Court of Appeals for the Fifth Circuit a $663,360,750 final judgment entered against them under the federal False Claims Act (FCA). At the conclusion of a six-day trial that commenced on October 13, 2014, the jury rendered a unanimous verdict, finding Trinity “knowingly made, used, or caused to be made or used, a false record of statement material to a false or fraudulent claim” in violation of the FCA. The jury unanimously found that the U.S. government suffered damages in the amount of $175,000,000 as the result of Trinity’s FCA violations. Continue reading “A Case to Watch: Highway Contractor Appeals $663M False Claims Act Judgment”

Federal District Court in California Holds that Subcontract Provision Binding Subcontractor to Result of Dispute Resolution under Prime Contract Was Not an Effective Waiver of Miller Act Rights

DVBE Trucking and Construction Co., Inc. v. McCarthy Building Companies, Inc., 2015 U.S. Dist. LEXIS 90052 (N.D. Cal. July 10, 2015)

This payment dispute case arises out of a Veterans Affairs (“VA”) construction project located in Palo Alto, California.  McCarthy Building Companies, Inc. (“McCarthy”) was the prime contractor, Federal Insurance Company and Travelers Casualty and Surety provided the performance and payment bonds on behalf of McCarthy mandated by the Miller Act, and DVBE Trucking and Construction Company, Inc. (“DVBE”) was McCarthy’s subcontractor.  Section 11.1 of DVBE’s subcontract required that, for any dispute involving the VA, it would follow the dispute resolution procedures agreed to by McCarthy in its contract with the VA, and agreed to be bound by the result of any such dispute resolution procedures to the same degree as McCarthy. Continue reading “Federal District Court in California Holds that Subcontract Provision Binding Subcontractor to Result of Dispute Resolution under Prime Contract Was Not an Effective Waiver of Miller Act Rights”

Federal District Court in Florida Holds that Contract Provision Giving General Contractor Discretion to Apportion Damages Does Not Confer Authority to Determine That Subcontractor Caused Delay

Davis Group, Inc. v. Ace Electric, Inc., 2015 U.S. Dist. LEXIS 83368 (M.D. Fla. June 26, 2015)

This action arose out of a construction project to build a new Radar Approach Control Facility at Seymour Johnson Air Force Base in Goldsboro, North Carolina (“Project”). The United States Army Corps of Engineers (“COE”) contracted with general contractor Davis Group, Inc. (“TDG”) to construct the Project. TDG entered into a subcontract with Ace Electric, Inc. (“Ace”) to perform the electrical work on the Project (the “Subcontract”).

The Subcontract included various provisions addressing delays in completion of the work. In particular, the parties agreed that Ace was entitled to a reasonable extension of time and/or additional compensation if its work was delayed, through no fault of Ace, by the COE, TDG or other subcontractors. If on the other hand, Ace was responsible for a delay in completion of the work, then the parties agreed that Ace would “reimburse [TDG] for the entire cost and expense suffered or incurred as a result of” the delay, including any liquidated or other damages the COE might assess against TDG for delays to the Project as a whole. The Subcontract further provided that, if “such damages are caused by [Ace] and another person or entity,” TDG could “reasonably apportion such damages between the parties, and any such apportionment shall be final and binding upon [Ace].” Continue reading “Federal District Court in Florida Holds that Contract Provision Giving General Contractor Discretion to Apportion Damages Does Not Confer Authority to Determine That Subcontractor Caused Delay”