Federal Court in Maryland Holds Subcontractor Waived Right to Bring Labor Inefficiency Claim Despite Voicing ‘Expression[s] of Frustration’ and ‘General Complaints’ of Mismanagement Throughout Project

Hagen Constr. Inc. v. Whiting-Turner Contracting Co., No. JKB-18-1201, 2019 BL 36862 (D. Md. Feb. 04, 2019)

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John J. Gazzola

This case arises out of the construction of a pediatric outpatient center in southern New Jersey.  Plaintiff subcontractor Hagen Construction, Inc. (“Hagen”) filed suit in New Jersey state Court against defendant general contractor Whiting-Turner Construction Co. (“W-T”), seeking reimbursement for labor inefficiency costs incurred as a result of W-T’s alleged project mismanagement.  Hagen claimed it incurred additional costs to repeat work and remobilize to multiple areas because it was not afforded unimpeded access or timely supply of necessary materials and information.  Once the case was removed and transferred to Maryland federal Court, W-T moved for partial summary judgment on the portion of Hagen’s breach of contract claim reflecting labor inefficiency costs. Continue reading “Federal Court in Maryland Holds Subcontractor Waived Right to Bring Labor Inefficiency Claim Despite Voicing ‘Expression[s] of Frustration’ and ‘General Complaints’ of Mismanagement Throughout Project”

The Buckeye State Bucks Recent Trend: Ohio Supreme Court Holds That Property Damage Caused by a Subcontractor’s Faulty Work Does Not Constitute an “Occurrence” Covered Under CGL Policies

Ohio N. Univ. v. Charles Constr. Servs., 2018 Ohio LEXIS 2375 (Oct. 9, 2018)

This post was published in the National Association of Credit Management eNews on December 20, 2018.

This case arose out of the construction of an inn and conference center at Ohio Northern University (“ONU”).  After completion of the project, ONU discovered water damage and structural defects in the work and filed suit for breach of contract against its general contractor, Charles Construction Services, Inc. (“Charles”).  Charles, in turn, sought defense and indemnity from its commercial general liability insurer, Cincinnati Insurance Company (“CIC”).  As required by ONU, Charles’s policy contained a “products-completed operations-hazard” (“PCOH”) clause and terms specifically related to work performed by subcontractors.  Under Charles’ policy, the insurance covered “property damage” only if it was caused by an “occurrence,” defined as “[a]n accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  “Accident,” however, was not defined.  CIC intervened in ONU’s suit, seeking a declaratory judgment that it was not required to defend or indemnify Charles.

The trial court granted CIC summary judgment, holding that CIC had no duty to indemnify or defend Charles.  The trial court based its holding on Westfield Inc. Co. v. Custom Agri Sys., Inc., 979 N.E.2d 269, a 2012 decision in which the Ohio Supreme Court concluded that claims for faulty workmanship are not fortuitous, and therefore, not claims for “property damage” caused by an “occurrence” covered by a CGL policy. Continue reading “The Buckeye State Bucks Recent Trend: Ohio Supreme Court Holds That Property Damage Caused by a Subcontractor’s Faulty Work Does Not Constitute an “Occurrence” Covered Under CGL Policies”

Federal Court in Hawaii Holds that an Unlicensed Subcontractor May Pursue Contract Claims Against Contractor Notwithstanding Statute Precluding Unlicensed Contractors from Recovering in a Civil Action

U.S. Pipelining LLC v. Johnson Controls, Inc., No. 16-00132 HG-RLP, 2016 U.S. Dist. LEXIS 150767 (D. Haw. Oct. 31, 2016)

This action arose out of the renovation of a condominium complex on Maui (Project). Johnson Controls, Inc. (JCI) was the general contractor and U.S. Pipelining LLC (USP) was a subcontractor. While the parties disputed who was ultimately responsible for obtaining a license for the work, the Subcontract included a provision that required USP to “obtain[] all licenses and permits required for the prosecution of the Work.” Nonetheless, USP performed its work without obtaining a license from the State of Hawaii. During the Project, a dispute arose between the parties. USP filed a complaint alleging various claims against JCI and others, seeking payment for the additional work it allegedly performed.

Chapter 444 of the Hawaii Revised Statutes (the “Statute”) requires contractors to obtain a license before performing any renovation work on real property. Continue reading “Federal Court in Hawaii Holds that an Unlicensed Subcontractor May Pursue Contract Claims Against Contractor Notwithstanding Statute Precluding Unlicensed Contractors from Recovering in a Civil Action”