Contractor’s Third Party Beneficiary Claim Dismissed Against Designer Where Designer’s Contract with Owner Lacked Clear Intent to Benefit the Contractor

Arco Ingenierosm, S.A. v. CDM Int’l Inc., Civil Action No. 18-12348-PBS, 2019 BL 100779 (D. Mass. Mar. 22, 2019)

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Luke Nicholas Eaton

In November 2009, Tropical Storm Ida hit El Salvador, causing flooding, landslides, and the destruction of homes, roads, bridges, schools, health clinics, and other infrastructure.  The United States Agency for International Development (“USAID”) provided $25 million in funding to rebuild damaged infrastructure.  USAID retained Defendant CDM International Inc. (“CDM”) to conduct studies and assessment for the construction of eight schools and one health clinic (the “Projects”) and to create preliminary designs and technical specifications for these Projects.  These preliminary designs were intended to constitute at least thirty percent of final designs for the Projects.  Relying on the preliminary designs created by CDM, Plaintiff Arco Ingenieros, S.A. de C.V. (“ARCO”) submitted bids to act as the design-build contractor for the Projects.  USAID awarded the Projects to ARCO.

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Western District of Virginia Confronts Several Legal Issues That Frequently Impact Multi-Party Construction Disputes – Economic Loss, Damage to Other Property, Third Party Beneficiary Status, Warranties, Subrogation, and Third-Party Joinder

Allstate Insurance Company v. Structures Design/Build, LLC, 2016 U.S. Dist. LEXIS 34349 (WD VA March 17, 2016)

This construction dispute case arises from a failed pipe connector that caused water damage to a facility and insured personal property, which Hillel at Virginia Tech, Inc. (“Hillel”) owned in Blacksburg, Virginia. Hillel contracted Structures Design/Build, LLC (“Structures”) to design and construct the facility. Structures, in turn, subcontracted PJ Little Plumbing, Inc. (“PJ”) for plumbing and mechanical installation. PJ purchased the failed pipe connector from CMC Supply, Inc. (“CMC”). Allstate Insurance Company (“Allstate”) insured Hillel for the damage to the facility and the personal property.

As Hillel’s subrogee, Allstate filed a complaint against Structures and PJ. Allstate sued Structures for various state law claims. It sued PJ for negligence and breach of express and implied warranties. PJ filed a third-party complaint to join CMC on a breach of implied warranty theory. PJ and CMC moved to dismiss the claims against them. Continue reading “Western District of Virginia Confronts Several Legal Issues That Frequently Impact Multi-Party Construction Disputes – Economic Loss, Damage to Other Property, Third Party Beneficiary Status, Warranties, Subrogation, and Third-Party Joinder”

US District Court in New Jersey Holds Waiver of Subrogation in AIA General Conditions Applies to Post-Construction Policies and Losses

Argonaut Great Cent. Ins. Co. v. DiTocco Konstruction, Inc.
2007 U.S. Dist. LEXIS 93846 (D.N.J. Dec. 21, 2007)

After a fire destroyed a T.G.I. Friday’s restaurant and all of its equipment, the meaning of the subrogation continuation clause contained in the contract between the owner and the contractor who had performed renovations and remodeling of the restaurant five years earlier became the focal point of ensuing dispute.

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