Justia Contracts Opinion Summaries

Rainbow Cinemas, LLC ("Rainbow"), Ambarish Keshani, and Harshit Thakker (collectively, "the defendants") appealed a circuit court order denying their motion to compel arbitration of a contract dispute with Consolidated Construction Company of Alabama ("CCC"). In the contract at issue here, CCC agreed to provide specified services in constructing a movie theater for Rainbow. The parties signed the American Institute of Architects "Document A101-2007 -- Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum" ("the agreement"). The agreement incorporated by reference American Institute of Architects "Document A201-2007 -- General Conditions of the Contract for Construction" ("the general conditions"). In 2016, after having already initiated the arbitration process, CCC sued the defendants. Among other things, CCC alleged that the defendants had fraudulently induced it into entering into the contract. Specifically, CCC alleged that the defendants knew that the contract required an initial decision maker and that the defendants also "knew they had not contracted for [initial-decision-maker] services from the [initial decision maker]." CCC alleged that the defendants "failed to inform CCC ... that Rainbow had not contracted with [architect Hay] Buchanan to act as [the initial decision maker]." The Alabama Supreme Court reversed and remanded, finding that the contract incorporated the AAA's Construction Industry Arbitration Rules, which state that "[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement." Although the question whether an arbitration provision may be used to compel arbitration between a signatory and a nonsignatory is a threshold question of arbitrability usually decided by the court, here that question was delegated to the arbitrator. The arbitrator, not the court, had to decide that threshold issue. View "Rainbow Cinemas, LLC v. Consolidated Construction Company of Alabama" on Justia Law

Homeowners sued Builder for failing to construct their home in a good and workmanlike manner. Builder’s commercial general liability insurer (Insurer) refused to defend Builder in the suit. Judgment was granted in favor of Homeowners after a trial, and Builder assigned the majority of its claims against Insurer to Homeowners. Homeowners subsequently sought to recover the judgment from Insurer under the applicable policy. The trial court entered judgment in favor of Homeowners. The court of appeals affirmed. The Supreme Court reversed and, in the interests of justice, remanded the case to the trial court for a new trial, holding (1) the judgment against Builder was not binding on Insurer in this suit because it was not the product of a fully adversarial proceeding; but (2) this insurance litigation may serve to determine Insurer’s liability, although the parties in the case focused on other issues during the trial. View "Great American Insurance Co. v. Hamel" on Justia Law

Phoenix Pipeline filed a second amended complaint (SAC) alleging breach of contract claims related to SpaceX's failure to pay for its services from 2010 to October 2013. The trial court subsequently granted SpaceX's demurrer, which argued that the license issued to Phoenix Plumbing was not sufficient to satisfy the requirements of Business Code section 7031. The Court of Appeal held that Phoenix Pipeline's SAC failed to state a claim for construction related services because it did not allege that Phoenix Pipeline was a licensed contractor. The court explained that Phoenix Pipeline may not rely upon a license issued to another and that section 7031 was not limited to contracts with unsophisticated persons or homeowners. The court held, however, that Phoenix Pipeline adequately alleged that it provided some services for which no contractor license was necessary. Finally, the trial court acted within its discretion in declining to permit an amendment alleging that Phoenix Pipeline was an employee. Accordingly, the court reversed and remanded. View "Phoenix Mechanical Pipeline, Inc. v. Space Exploration Technologies Corp." on Justia Law

Appellant entered into a lease with a Mall to operate a restaurant. The lease required Mall to pay Appellant a finish allowance when certain provisions had been satisfied. The condition at the heart of this dispute required Appellant to provide the Mall evidence that any liens had been satisfied or waived and that “all work has been paid for” before the finish allowance became due. Appellant hired a general contractor to renovate the space. Appellant paid the general contractor in full, but the general contractor did not pay all of the subcontractors. When the Mall did not pay the finish allowance, Appellant filed this lawsuit alleging, inter alia, breach of contract. The district court granted summary judgment in favor of the Mall. The Supreme Court affirmed, holding that the unambiguous terms of the lease required evidence that the general contractor and subcontractors had been paid in full before the Mall was obligated to pay the finish allowance. View "P & N Investments, LLC v. Frontier Mall Associates, LP" on Justia Law

In 2009, Jacquelyn Jacks bought a manufactured home from CMH Homes, Inc., on an installment plan. The purchase was financed through CMH Homes under a manufactured home retail installment contract. The contract contained an arbitration agreement, which provides that all disputes arising from, or relating to, the contract would be resolved by binding arbitration. By its terms, the agreement also covered all co-signors and guarantors, and any occupants of the manufactured Home (as intended beneficiaries of the arbitration agreement. Jacks moved into the home with her husband and their children. Five years later, the Jacks family sued CMH Homes, CMH Manufacturing, and Vanderbilt Mortgage and Finance (not a party to this appeal). They claimed: (1) CMH negligently installed and repaired the manufactured home’s water system, which caused toxic mold to grow; (2) the manufactured home was unreasonably dangerous at the time it left the control of CMH; (3) the manufactured home was not fit for habitation. Jacks also sought to rescind her purchase of the manufactured home, along with her agreement to pay Vanderbilt Mortgage and Finance the indebtedness incurred to purchase the home. The CMH defendants removed the case from state to federal court and moved to compel arbitration and stay the court proceedings. The district court granted the motion to compel as to the claims of Jacks, but denied the motion as to the remaining plaintiffs who were not parties to the installment contract. Defendants had argued that Jacks’ husband and their children were likewise bound by the arbitration agreement, even though they never signed the contract. The district court held that “the single sentence in the Arbitration Agreement generically referencing ‘any occupants of the Manufactured Home (as intended beneficiaries of this Arbitration Agreement)’ was not sufficient to make the nonsignatory plaintiffs third party beneficiaries of the Arbitration Agreement and subject to being compelled to arbitration. The district court also rejected Defendants’ contention that the nonsignatory plaintiffs were “bound to arbitrate their claims” under “the doctrine of equitable estoppel.” Defendants timely appealed the district court’s partial denial of their motion to stay and to compel arbitration. The Tenth Circuit found no reversible error in the district court’s judgment and affirmed it. View "Jacks v. CMH Homes" on Justia Law

In this home construction contract dispute, the Supreme Court (1) affirmed the district court’s decision awarding contractual damages to Contractor and dismissing Homeowners’ counterclaims for damages and attorney’s fees; but (2) reversed the district court’s denial of Contractor’s right to foreclose its construction lien placed on Homeowners’ property and the court’s decision to deny Contractor attorney’s fees pursuant to the lien foreclosure statute. The Court held that the district court erred as a matter of law when it reasoned that Contractor was not entitled to a favorable judgment for the foreclosure of the construction lien on the basis of Homeowners’ dissatisfaction with the work performed. Remanded. View "Vintage Construction, Inc. v. Feighner" on Justia Law

In 1990, after Denver determined that it needed a new airport, a group of citizens formed the Stapleton Redevelopment Foundation to develop the former Stapleton International Airport. The Stapleton Redevelopment Foundation created a master plan to convert the former airport site. In 1995, the private, nonprofit Stapleton Development Corporation (“SDC”) was formed to lease and sell the former airport property. SDC selected Forest City as the master developer for redevelopment of the property. Forest City sold the vacant residential lot at issue here to a professional home builder, Infinity Home Collection at Stapleton, LLC (Infinity), with whom Respondent/Cross-Petitioner Tad Rogers had contracted to build a home. When Infinity purchased the lot from Forest City, the lot was vacant, did not have utilities, and still needed to be graded to its final configurations. Rogers ultimately purchased the lot and the home from Infinity. The home included a foundation drain system designed to collect ground water into a sump pit and to pump that water into the yard by way of a sump pump. Because of the high water table beneath his house, coupled with calcite leaching from the recycled concrete aggregate base course used to construct the roads, calcite built up in the foundation drain around Rogers' house. In turn, this water and calcite buildup made his basement uninhabitable and caused his sump pump to run and discharge more water. This case presented an issue of whether contractual privity was necessary for a home buyer to assert a claim for breach of the implied warranty of suitability against a developer. The Colorado Supreme Court held that, because breach of the implied warranty of suitability was a contract claim, privity of contract was required in such a case. Here, because the home buyer did not have contractual privity with the developer, he could not pursue a claim against the developer for breach of the implied warranty of suitability. View "Forest City v. Rogers" on Justia Law

Escobar was an employee of O’Donnell, a sub-subcontractor of Bayside, which was a subcontractor of Oltmans, the general contractor on a Menlo Park construction project. Escobar sued Oltmans and the property owner, alleging that Oltmans negligently cut and left unsecured a skylight opening in the building under construction, through which Escobar fell while installing scaffolding that O’Donnell was erecting for Bayside. Oltmans filed a cross-complaint against the subcontractors, alleging a right to contractual indemnity and breach of Bayside’s contractual obligation to provide certificates of insurance certifying that Oltmans was covered as an additional insured under liability policies the subcontractors were obligated to obtain. The subcontract provided indemnity to Oltmans for injury claims arising out of the scope of the subcontractor’s work “except to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct” of Oltmans. Reversing the trial court, the court of appeal ruled in favor of Oltmans. Under such a provision the general contractor is precluded from recovering indemnity for liability incurred as a result of its own active negligence but may be indemnified for the portion of liability attributable to the fault of others. The court noted the same question arises as to the meaning of Civil Code section 2782.05, which renders unenforceable an indemnity provision “to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct of that general contractor.” View "Oltmans Construction Co. v. Bayside Interiors, Inc." on Justia Law

Lend Lease (US) Construction was the general contractor on a project, and Rossi Electric Company, Inc. was a subcontractor. An employee of Rossi’s subcontractor was injured while working on the project and filed a negligence claim against Lend Lease. Lend Lease filed a third-party complaint against Rossi, alleging that, under the terms of a contract between the parties, Rossi was required to defend and indemnify Lend Lease. The superior court entered an order granting summary judgment for Rossi. The Supreme Court vacated the judgment of the superior court, holding that issues of material fact remained to be determined, and therefore, this case was not ripe for summary judgment. Remanded. View "Walsh v. Lend Lease (US) Construction" on Justia Law

Contractor and Homeowner entered into an agreement whereby Contractor agreed to furnish materials and supply labor in connection with renovations to Homeowner’s residence. After the renovation project was largely complete, the parties began to dispute the amounts that Homeowner owed Contractor. Contractor then brought this action claiming, inter alia, breach of contract and unjust enrichment. Homeowner raised the special defense that Contractor’s claims were barred because the agreement did not comply with the Home Improvement Act. In response, Contractor argued that Homeowner was precluded from relying on the Act because his refusal to pay Contractor was in bad faith. The trial court agreed with Contractor and rendered judgment for Contractor. The Appellate Court affirmed. The Supreme Court reversed, holding that Homeowner did not act in bad faith, and therefore, the trial court improperly found that Homeowner was barred from invoking the protection of the Act. Remanded with direction to render judgment for Homeowner. View "Burns v. Adler" on Justia Law