Pennsylvania Commonwealth Court Holds Enforceable School District’s Oral Promise to Pay Subcontractor for Returning to Job after Prime Contractor’s Termination

Zacherl, Inc. v. Flaherty Mechanical Contractors, LLC, 131 A.3d 1030, 2016 Pa. Commw. LEXIS 22 (Jan. 6, 2016)

The West Allegheny School Board (the “School Board”) voted to approve the School District’s (the “District’s”) plan to renovate its high school building (the “Project”).  The District contracted with Flaherty Mechanical Contractors, LLC (“Flaherty”) to act as the prime contractor.  Flaherty submitted the names of its subcontractors for the School Board’s review.  When the School Board raised no objections to Flaherty’s submission, Flaherty subcontracted with F. Zacherl, Inc. (“Zacherl”) to perform sheet metal work at the Project.

During the Project, the District made timely payments to Flaherty, but Flaherty failed to make timely payments to its subcontractors, including Zacherl.  The District terminated Flaherty’s contract in part as a result of Flaherty’s payment issues.  Flaherty, in turn, terminated Zacherl’s contract. Continue reading “Pennsylvania Commonwealth Court Holds Enforceable School District’s Oral Promise to Pay Subcontractor for Returning to Job after Prime Contractor’s Termination”

Federal Court in Georgia Holds Specific Contractual Intent to Benefit Required for Tenant to Be Third-Party Beneficiary of Construction Contract

J.C. Penney Props. v. Hiram LL, LLC, 2016 U.S. Dist. LEXIS 8027 (N.D. Ga. Jan. 25, 2016)

In January 2008, Hiram LL, LLC (“Hiram”) leased property to J.C. Penney Properties, Inc. (“J.C. Penney”) for the construction and operation of a J.C. Penney retail store.  Pursuant to the lease, Hiram was required “to design and construct certain improvements on the property” to prepare the site on which J.C. Penney planned to build its store.  Based on plans and specifications prepared by an architect, Hiram entered into a contract (the “Contract”) with Benning Construction Company (“Benning”) to construct the site.  The Contract was based on two AIA forms:  the A101 standard agreement and the A201 general conditions.  Benning completed its construction work and J.C. Penney eventually opened the store for business. Continue reading “Federal Court in Georgia Holds Specific Contractual Intent to Benefit Required for Tenant to Be Third-Party Beneficiary of Construction Contract”

Maryland Appellate Court Holds Economic Loss Doctrine Bars Contractor’s Tort Claims Against Government’s Design Professional on Public Construction Project

Balfour Beatty Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP, 226 Md. App. 420, 130 A.3d 1024, 2016 Md. App. LEXIS 3 ( Md. Ct. Spec. App. Jan. 28, 2016)

The City of Baltimore retained a design professional, Rummel Klepper & Kahl (“RK&K”), to produce a design for construction of a wastewater treatment plant.  The City then invited bids for construction of the plant, and contractor Balfour Beatty Infrastructure (“Balfour Beatty”) was the successful bidder.  RK&K and Balfour Beatty each had a separate contract with the City, but did not have a contract with one another.  After alleged defects in RK&K’s design caused Balfour Beatty to incur delays and increases to the cost of its work, it sued RK&K, but not the City. Continue reading “Maryland Appellate Court Holds Economic Loss Doctrine Bars Contractor’s Tort Claims Against Government’s Design Professional on Public Construction Project”