August 2017

TK Servs., Inc. v. RWD Consulting, LLC, 2017 U.S. Dist. Lexis 97239 (D.D.C., June 23, 2017)

This litigation arose from a dispute between TK Services, Inc. (“TKS”), as sub-subcontractor, and RWD Consulting, LLC (“RWD”), as prime subcontractor, in connection with a sub-subcontract (the “Subcontract”), whereby TKS agreed to be responsible for managing operation and maintenance-related services (the “Services”) for the Environmental Protection Agency headquarters in Washington DC (the “Project” or the “EPA Building”) in exchange for a monthly fixed fee and a percentage of profits derived from reimbursable projects performed at the EPA Building.  Pursuant to the Subcontract, all funds received by RWD as payment for the Services performed at the Project and all working capital provided by TKS were to be deposited into a joint bank account to which both TKS and RWD were signatories.

In its complaint, TKS alleged that RWD (1) breached the Subcontract by failing to properly compensate TKS and excluding TKS from accessing the EPA Building, (2) converted the funds in the joint bank account by unilaterally closing the account, and (3) was unjustly enriched by its improper conduct.  TKS also moved for a preliminary injunction to sequester the profits received by RWD in connection with the Project, prevent RWD from excluding TKS from the EPA Building and the joint bank account, and reinstate TKS to its prior role under the Subcontract.

Universal Acad. v. Berkshire Dev., 2017 Mich. App. LEXIS 975 (Ct. App. June 20, 2017)

The dispute arose out of an agreement between Universal Academy (“Universal”) and Berkshire Development (“Berkshire”), under which Berkshire agreed to provide demolition services to Universal and Hamadeh Education Services (“HES”).  The agreement also contained an arbitration provision which provided in part:

In the event of a dispute between Contractor and the Owner that cannot be resolved, the parties agree to binding arbitration with the American Arbitration Association in accordance with the Construction Industry’s Rules of the American Arbitration Association in effect as of the date of this Agreement.

The agreement was terminated by Universal, alleging material breaches by Berkshire.  Following termination, subcontractors for the project filed a complaint against Berkshire, Universal, and HES, requesting foreclosure of construction liens and payment for services.  In response, Berkshire filed a cross-complaint against Universal and HES, requesting foreclosure of its lien and asserting claims of promissory estoppel and fraudulent inducement.  Five months after it filed the cross-complaint, Berkshire filed a motion to enforce the arbitration agreement between it and Universal.

Girolametti v. Michael Horton Assoc., 2017 Conn. App. Lexis 228 (June 6, 2017)

A General Contractor brought claims for unpaid added work, via mandatory arbitration, against a building owner who asserted defective work claims in response.  The Owner abandoned the arbitration mid-process after a partial presentation of its claims.  The arbitrator ruled in favor of the General Contractor, awarding $508,597 in damages, which was affirmed by the Superior Court and Appellate Court.  The Owner then attempted to bring the same defective work claims in state court against the General Contractor, its subcontractors, and the Owner’s testing company on the project.  The defendants all filed motions for summary judgment asserting the defenses of collateral estoppel and res judicata.
The trial court granted the General Contractor’s motion but denied the subcontractors’ and testing company’s motions on the basis that both collateral estoppel and res judicata required privity between those entities and the General Contractor.

The Court of Appeals discussed each motion in detail.  As to the Owner’s claims against the General Contractor, the Court found that the Owner’s complaint involved the same claims of design and installation defects as had been raised or could have been raised in the arbitration.  The Owner had a full and fair opportunity to present his claims against the General Contractor in arbitration.  Thus, the trial court’s grant of summary judgment was affirmed on the basis of res judicata.

P&N Invs. v. Frontier Mall Assocs., 2017 Wyo. LEXIS 62 (Wyo. 2017)

This payment dispute arose over conditional language in a lease agreement between a mall and a restaurant operator.  P&N Investments (“P&N”) leased space from Frontier Mall Associates, LP (“Mall”) to operate a restaurant.  The lease contained a “finish allowance” under which Mall agreed to cover some of P&N’s costs to renovate the space, up to $150,180.

The finish allowance was conditioned on the following provision:

[P&N] shall have furnished evidence satisfactory to Mall from its general contractor and any subcontractors that any and all liens that have been, or may be, filed have been satisfied of record or waived and an affidavit that all work has been paid for.

P&N hired CCI as its general contractor, and CCI in turn hired subcontractors, to renovate the space.  P&N paid CCI in full once CCI and its subcontractors completed the work.  The amount paid was $308,930.  CCI, however, failed to pay its subcontractors in full.  The unpaid amount was approximately $90,000.  Mall refused to pay P&N the finish allowance despite the fact that P&N paid CCI in full and submitted an affidavit stating that no liens were, or could be, filed because of time limitations for liens had expired.

City of Dardenne Prairie v. Adams Concrete & Masonry, LLC, No. ED104982, 2017 Mo. App. LEXIS 533 (Mo. Ct. App. May 30, 2017)

This case arises out of a construction project in which the City of Dardenne Prairie (the “City”) purchased bricks for its construction of two buildings—a new city hall and a parks maintenance building—from Adams Concrete & Masonry, LLC (“ACM”).  In October 2008, the City enacted two ordinances authorizing the construction of the new city hall, but did not enact any ordinances authorizing the construction of the parks maintenance building.  Such authorization—and approval—by the City’s Board of Aldermen (“Board”) is required by law for public projects in Missouri.  Nevertheless, the City executed an agreement with ACM for the purchase of bricks and provision of masonry work for both projects.  In November 2009, the City paid ACM in full for all of the bricks.  But in December 2010, the City decided not to construct its parks maintenance building and thus, the bricks for it were never delivered.

In 2014, the City contacted ACM regarding the location of the undelivered bricks.  Upon learning that ACM’s fabricator had already resold the bricks, the City sued ACM for breach of contract to recover the cost of the undelivered bricks, averring that ACM had breached its purchase agreement by failing to deliver the materials.  ACM counterclaimed for breach of contract, claiming that the City was in breach by cancelling the construction of the parks maintenance building, thereby preventing ACM from completing its masonry work.  The City raised an affirmative defense, asserting that its agreement with ACM had not been approved by the City’s Board as required and thus was not enforceable.  ACM seized on the City’s assertion and moved for judgment on the pleadings arguing that, through this affirmative defense, the City admitted that its Board had not approved the agreement, and thus, the agreement was void and the City, too, was barred from recovering for breach of a contract that never existed.  The trial court sustained ACM’s motion and dismissed the claim and counterclaim.