November 2018

IES Commercial, Inc. v. Manhattan Torcon, A Joint Venture, 2018 U.S. Dist. LEXIS 164973 (D. Md. Sept. 26, 2018)

In 2009, the Army Corps of Engineers hired Manhattan Torcon Joint Venture (“MT”) as general contractor to build a biological research facility at Fort Detrick, Maryland.  MT subcontracted with IES Commercial, Inc. (“IES”) to perform the electrical system work.

In August 2013, after IES had completed over 90% of its work, a fire destroyed or damaged more than half of the facility, including significant portions of IES’s work. MT ordered IES to perform significant fire remediation work in addition to the remainder of its base contract work. In November 2013, IES and MT entered into a subcontract amendment referred to as the “Fire Rider,” which included an agreed rate schedule for the fire remediation work, along with a procedure by which IES would perform work at MT’s direction, submit daily work tickets and monthly invoices, and be paid within ten days after MT received payment from its insurer.
Continue Reading A Fire Destroying More Than Half of the Project Is Not a Cardinal Change Where the Parties Entered into a Separate Agreement to Cover the Fire Remediation Work

Fid. & Deposit Co. of Md. v. T

ravelers Cas. & Sur. Co. of Am., 2018 U.S. Dist. LEXIS 162265 (D. Nev., September 21, 2018)
Clark County School District (“CCSD”) hired Big Town Mechanical (“Big Town”) as general contractor to perform HVAC upgrades at five schools.  Big Town in turn hired F.A.S.T. Systems (“FAST”) to complete low-voltage work at the schools.  Big Town obtained performance bonds from Travelers Casualty and Surety Company of America (“Travelers”) and FAST obtained performance bonds from Fidelity & Deposit Company of Maryland (“F&D”).

Following FAST’s default on its subcontracts, F&D opted to complete FAST’s work and hired a substitute subcontractor, Perini.  In May 2012, Perini notified Big Town that it had “substantially completed” all of FAST’s work.  After Big Town refused payment, F&D filed suit against Big Town and Travelers in early 2013.  In May of 2013, CCSD rejected Big Town’s final payment application, stating that the project was incomplete and claiming there were significant defects in the work.  CCSD then sued Travelers seeking specific performance and liquidated damages for delay.  Travelers eventually settled CCSD’s suit but through its counterclaim sought reimbursement from F&D for its settlement plus costs expended to complete the project.
Continue Reading Concurrent Delay: Surety—Standing in the Shoes of Subcontractor—Is Barred From Asserting Defense of Concurrent Delay Because Subcontractor Failed to Seek a Time Extension as Required by the Subcontracts

Gindel v. Centex Homes, 2018 Fla. App. LEXIS 13019 (Fla. 4th DCA Sept. 12, 2018)

 A group of townhome owners (the “Homeowners”) sued the contractor and a subcontractor (collectively, “Contractor”) who built their townhomes, alleging that Contractor performed defective work.  Contractor had completed construction and conveyed the townhomes to the Homeowners on March 31, 2004.  The Homeowners did not discover the alleged defect until years later.  On February 6, 2014, nearly ten years after Contractor completed the work, the Homeowners notified Contractor of the claimed construction defect.  The Homeowners provided that notice in accordance with Florida’s construction defect statute (Fla. Stat. §§ 558.003; 558.004) that requires pre-suit notice of construction defect claims.  The Homeowners completed the statutory pre-suit procedure and filed their lawsuit on May 2, 2014, more than ten years after taking possession of the townhomes.

Contractor argued that Florida’s ten-year statute of repose barred the lawsuit.  While acknowledging that they filed their lawsuit beyond the ten-year period, the Homeowners stressed that the claims were timely because the action truly had commenced within the ten year period when they submitted the pre-suit notice of claim.  The trial court agreed with Contractor and entered summary judgment in its favor.  The Homeowners appealed.
Continue Reading Submission of Pre-Suit Claim Notice Required by Construction Defect Statute Timely ‘Commences the Action’ Within the Meaning of the Florida Statute of Repose

Outokumpu Stainless USA, LLC v. Converteam SAS, 2018 U.S. App. LEXIS 24671 (11th Cir. Aug. 30, 2018)

On August 30, 2018, the Eleventh Circuit Court of Appeals reversed a lower court decision to compel arbitration between an Alabama steel plant owner and a French division of General Electric Co.  The case is noteworthy because the Court settled two questions of law within the Eleventh Circuit about the interpretation of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”) and the Federal Arbitration Act (“FAA”). The first question concerned the interpretation the FAA’s grant of removal jurisdiction to the federal courts.  The second concerned whether an entity could compel arbitration under the Convention despite the lack of a signed arbitration agreement.

Outokumpu Stainless, LLC (“OS”) operates a steel plant in Calver, Alabama that contains three cold rolling mills.  In 2007, OS entered into three separate agreements with an entity known as Fives for the purchase of the mills.  The Agreements each contained an arbitration clause which required all disputes be resolved via arbitration in Germany under the Rules of Arbitration of the ICC.  The Agreements also provided that Fives, and all of its subcontractors, would be treated as one and the same under the contracts.

Fives subcontracted with GE Energy (“GE”) to produce motors for the mills.  The motors were installed between 2011 and 2012.  By June 2014 they began to fail.
Continue Reading Deciding Arbitrability and Arbitration Agreements: Eleventh Circuit Refines Its Interpretation of the Federal Arbitration Act and United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards

Bridgwood v A.J. Wood Constr., Inc., 2018 Mass. Lexis 561 (Sup. Ct., Aug. 29, 2018)

On October 30, 2000, the city of Newburyport, through its housing rehabilitation program, awarded A.J. Wood a contract for the rehabilitation of Ms. Terry Bridgwood’s home in Newburyport.  Under the city’s contractor agreement for the housing program, Wood was required to comply with certain standards, including that all rehabilitation, alterations, repairs, or extensions be in compliance with all applicable Federal, State, and local codes.  The agreement also required that all contractors and subcontractors must obtain and maintain all necessary permits, and must certify that the work complied with all Federal, State, and local regulations of the Massachusetts home improvement law, among other things.  The work on the Bridgwood home was completed by Wood in 2001.

In 2012, Bridgwood’s home suffered a substantial fire.  She filed suit in the state superior court in 2016, under the Consumer Protection Statute, claiming that Wood and its electrical subcontractor failed to obtain a permit to replace or repair certain ceiling light fixtures on the premises.  Additionally, she alleged that none of the defendants gave proper notice to local inspectors, nor did they perform their work in compliance with the applicable Federal, State, or local codes, as required by the contractor agreement.
Wood moved to dismiss Bridgwood’s lawsuit as untimely under the statute of repose.  The Superior Court agreed and dismissed the suit.  Bridgwood appealed and the appeal was transferred to the Supreme Court.  A divided Supreme Court affirmed in a 4-3 decision.
Continue Reading Sharply Divided Massachusetts Supreme Court Holds That the Statute of Repose Bars a Homeowner’s Claim Against a Contractor Under the Consumer Protection Statute