Justia Contracts Opinion Summaries

Using a form provided by CGS, the general contractor for construction of an 18-story Milwaukee office building, PNA submitted a $12,675,421 bid to provide a glass curtainwall--a nonstructural outer covering for weatherproofing and aesthetics. The contract manual provided by CGS stated that “[t]he bidder must accept all terms of the [standard CGS] subcontract as a condition for submitting a bid.” After CGS chose PNA’s bid, PNA repeatedly expressed a need to review the finalized prime contract before it would execute a formal subcontract. CGS and PNA engaged in a “value engineering process” during which they refined the price and other terms of the subcontract. PNA regularly updated the proposed price and communicated the updates to CGS. Several times, PNA raised concerns about subcontract terms. CGS never indicated to PNA that, in CGS’s view, there was already an agreement in place. The parties never entered into a formal subcontract. CGS had to use a different subcontractor at a higher price. CGS filed suit. The district court granted PNA summary judgment, finding that the parties did not intend to be bound until the execution of a formal subcontract. The Seventh Circuit affirmed, agreeing that the parties never entered into a binding contract and that CGS’s promissory estoppel claim fails as a matter of law. View "C.G. Schmidt Inc. v. Permasteelisa N. Am." on Justia Law

Plaintiff signed a contract with Defendant for the construction of a house. The contract contained an arbitration clause. Plaintiff later brought suit against Defendant, claiming that there were defects in the house. Defendant filed a motion to dismiss and compel arbitration. The circuit court denied the motion, finding that the arbitration clause was unconscionable. Defendant appealed, arguing that the circuit court erred by ruling on questions of arbitrability despite the existence of a delegation provision in the arbitration agreement that vested the arbitrator with authority to determine issues of arbitrability relating to the dispute. The Supreme Court determined that the circuit court was within its rights not to enforce the delegation language because the language did not reflect the parties’ clear and unmistakable intention to delegate issues about the validity, revocability, or enforceability of the arbitration agreement to an arbitrator. The United States Supreme Court granted Defendant’s requested writ of certiorari, vacated the Supreme Court’s opinion, and remanded for further consideration in light of their decision in DIRECTV, Inc. v. Imburgia. The Supreme Court reversed the circuit court’s order, holding that because Plaintiffs never specifically challenged the delegation language before the circuit court or Supreme Court, Plaintiffs waived any right to challenge the delegation language. Remanded for arbitration. View "Schumacher Homes of Circleville v. Spencer" on Justia Law

Cashman sued, alleging Cardi provided defective cofferdams for construction of the Sakonnet River Bridge. Cofferdams are temporary watertight enclosures that are pumped dry to expose the bottom of a body of water so that construction can occur. During discovery, Cashman sought, and Cardi refused to produce, computer models and draft reports that had been “considered by” its testifying engineering expert to determine “certain stress and loads that are going to be placed on certain points on this cofferdam,” including models “that [the expert] created which [he] may not have relied on but certainly would’ve considered” and draft reports. Cardi argued that Rule 26(b)(4)(A) of the Superior Court Rules of Civil Procedure does not allow discovery of materials “considered by” an expert in forming an expert opinion. The hearing justice concluded that he did not have the authority to compel production of the material. The Rhode Island Supreme Court affirmed, after considering interpretations of the corresponding Federal Rule. The state rule is “clear and unambiguous” and is confined to discovery through interrogatories or deposition. It does not provide for the disclosure of documents. View "Cashman Equip. Corp., Inc. v. Cardi Corp., Inc." on Justia Law

Travelers Property Casualty Company of America (Travelers) petitioned for review of a court of appeals judgment affirming the district court’s denial of its motion for directed verdict in a lawsuit brought by its insured, Stresscon Corporation. Stresscon, a subcontracting concrete company, filed suit against Travelers, alleging, among other things, that Travelers acted in bad faith, unreasonably delaying or denying its claim for covered insurance benefits; and Stresscon sought awards of two times the covered benefits along with fees and costs, as prescribed by statute. Stresscon’s claims for relief arose from a serious construction accident in July 2007, which was caused by a crane operator employed by a company that was itself a subcontractor of Stresscon. Stresscon’s general contractor, Mortenson, sought damages from Stresscon, asserting Stresson’s contractual liability for the resulting construction delays, and Stresscon in turn sought indemnification from Travelers. Although there was much dispute over the factual and legal import of Travelers’ reservation of rights and other of its communications with both Stresscon and Mortenson concerning Mortenson’s claim, there was no dispute that by December 31, 2008, Travelers had not paid the damages asserted by Mortenson. The appellate court rejected Travelers’ contention that the no-voluntary-payments clause of their insurance contract relieved it of any obligation to indemnify Stresscon for payments Stresscon had made without its consent. Instead, the court of appeals found that the Colorato Supreme Court's opinion in "Friedland v. Travelers Indemnity Co.," (105 P.3d 639 (2005)) had effectively overruled prior “no voluntary payments” jurisprudence to the contrary and given Stresscon a similar opportunity. The Supreme Court found that its adoption of a notice-prejudice rule in "Friedland" did not overrule any existing “no voluntary payments” jurisprudence in Colorado, and because the Court declined to extend notice-prejudice reasoning in Friedland to Stresscon’s voluntary payments, made in the face of the no-voluntary-payments clause of its insurance contract with Travelers, the judgment of the court of appeals was reversed. View "Travelers Prop. Cas. Co. v. Stresscon Co." on Justia Law

In 2005, Masterklad built a house in Glenview, including a brick patio that extended off the rear of the house. Because the ground underneath the patio sloped down, dirt and gravel were placed underneath it to support the bricks and make them level with the house's rear entrance. A retaining wall was built to contain the fill. In 2007, the house was sold by Masterklad to a Lubeck for $1,710,000. In the contract Lubeck “knowingly, voluntarily, fully and forever,” waived the implied warranty of habitability in exchange for an express warranty provided by Masterklad, with a one-year term. In 2010, Lubeck sold the house to Fattah, for $1,050,000, with a document stating that the house was being sold “as is” and that the seller made no representations or warranty regarding its condition. In 2011, parts of the retaining wall around the rear patio gave way and part of the patio collapsed. The owner sued. The circuit court found that the patio wall had given way due to latent defects in its construction, but that plaintiff could not recover because Masterklad had executed a valid, enforceable waiver of the implied warranty of habitability with Lubeck. The appellate court reversed. The Illinois Supreme Court reversed. The implied warranty of habitability may not be extended to a second purchaser of a house when a valid, bargained-for waiver of the warranty has been executed between the builder-vendor and the first purchaser. View "Fattah v. Bim" on Justia Law

GSS appealed the district court’s dismissal of its second attempt to confirm a $44 million arbitral award entered against the Port Authority for breach of a construction contract. GSS first tried to confirm the award, but the district court found that it had no personal jurisdiction over the Port Authority. Then GSS filed its second petition, also naming the Republic of Liberia, which owns the Port Authority, as respondents. The district court again dismissed GSS’s petition, finding that issue preclusion barred relitigating its personal jurisdiction over the Port Authority and that GSS failed to demonstrate that Liberia was liable for the Port Authority’s alleged breach. The court affirmed the district court's dismissal of the claims against Liberia for lack of subject matter jurisdiction under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. 1330 et seq.; affirmed the district court's dismissal of GSS's petition against the Port Authority on sovereign immunities grounds; and concluded that the district court did not abuse its discretion by dismissing GSS's petition before allowing jurisdictional discovery. View "GSS Group Ltd. v. Republic of Liberia" on Justia Law

In 2009 and 2010, the south wing of the Detroit Public Library was renovated. Defendant KEO & Associates, Inc. (KEO) was the principal contractor for this project. Defendant Westfield Insurance Company supplied KEO with a payment bond worth $1.3 million, as required by the public works bond act (PWBA). KEO was identified as the principal contractor and Westfield as the surety on the bond. KEO subcontracted with defendant Electrical Technology Systems, Inc. (ETS) to provide labor and materials for electrical work. The agreement between KEO and ETS included a pay-if-paid clause, obliging KEO to pay ETS only after KEO had been paid for the relevant portion of work performed. ETS in turn subcontracted with Wyandotte Electric Supply Company for materials and supplies, making Wyandotte a sub-subcontractor from KEO’s perspective. ETS and Wyandotte first formed a relationship in 2003, when they entered into an “open account” agreement that governed ETS’s purchases from Wyandotte. Over the course of the project, ETS paid Wyandotte only sporadically and the unpaid balance grew. Initially, Wyandotte supplied materials on credit and credited ETS’s payments to the oldest outstanding balance, but eventually Wyandotte began to ship materials only for cash on delivery. Wyandotte sent certified letters to KEO and Westfield asking for a copy of the payment bond related to the library renovation project. The letter, on Wyandotte’s letterhead, referred to the “Detroit Public Library South Wing with [ETS.]” According to Wyandotte, KEO provided a copy of the payment bond the next day. Wyandotte also sent KEO a 30-day “Notice of Furnishing” in accordance with MCL 129.207, explaining that it was one of ETS’s suppliers. Wyandotte also sent copies of the letter to Westfield, the library, and ETS. The issue this case presented for the Supreme Court's revie centered on whether actual notice was required for a sub-subcontractor to recover on a payment bond when that sub-subcontractor complied with the notice requirements set forth in MCL 129.207. Furthermore, this case raised the question of whether a PWBA claimant could recover a time-price differential and attorney fees that were provided for by the claimant’s contract with a subcontractor, but were unknown to the principal contractor holding the payment bond as well as the principal’s surety. The Supreme Court concluded that the PWBA contained no actual notice requirement for claimants that comply with the statute, that the trial court properly awarded a time-price differential and attorney fees on past-due invoices to Wyandotte, and that the trial court erred in awarding postjudgment interest under MCL 600.6013(7). Accordingly, the Court affirmed the Court of Appeals with regard to the first two issues and reversed with regard to the third. View "Wyandotte Electric Supply Co. v. Electrical Technology Systems, Inc." on Justia Law

Lamar Contractors, Inc. was general contractor on a construction project, and entered into a subcontract with Kacco, Inc. to provide metal framing and drywall work on the project. The subcontract included a “pay-if-paid” payment provision, which afforded Lamar ten days to remit payment to its subcontractors after receipt of payment from the owner. Kacco began work on the project but experienced recurring problems with providing manpower and paying for supplies. Kacco submitted an invoice for work that reflected that forty-five percent of the work had been performed. Lamar paid the invoice prior to receiving payment from the owner. Lamar sent Kacco an email noting its concerns with whether Kacco would be able to perform under the subcontract. Kacco notified Lamar that Kacco was waiting on another payment so that it could order and pay for supplies to finish the project. Lamar had received payment from the owner on January 26; however, pursuant to the subcontract, Lamar was not required to make payment to Kacco until February 9, ten business days later. Lamar officially terminated Kacco’s subcontract in a letter dated February 5. After termination of the subcontract with Kacco, Lamar hired another contractor to complete the work. Lamar then sued Kacco for breach of the subcontract. Kacco countersued Lamar for allegedly failing to pay for work performed under the contract, and that failure to pay caused it to breach. After a bench trial, the district court entered judgment on the main demand for Lamar for $24,116.67 with interest, $7,681.75 for attorney’s fees, and $3,105.81 in costs. Additionally, the district court entered a judgment in the amount of $60,020.00 plus interest in favor of Kacco on its countersuit. Lamar appealed but the court of appeal affirmed. Under the circumstances of this case, it was clear to the Supreme Court that Lamar did not violate any obligation owed under the contract to make payment to Kacco and could not have negligently contributed to Lamar’s breach of its obligations under the contract. Accordingly, the district court erred in reducing Lamar’s award of damages. The case was remanded for further proceedings. View "Lamar Contractors, Inc. v. Kacco, Inc." on Justia Law

This matter stemmed from a public works project for the construction of a gymnasium in Terrytown. JaRoy Construction Inc. served as the general contractor, and pursuant to statute, furnished a surety bond to Jefferson Parish. Ohio Casualty Insurance Company was the surety. JaRoy entered into a written subcontract with Pierce Foundations, Inc. to provide and install pilings for the project. Once finished, Pierce alleged JaRoy failed to pay certain funds due under the subcontract. Pierce sued both JaRoy and Ohio Casualty Insurance, alleging they were jointly and severally liable to Pierce. JaRoy filed for bankruptcy, leaving only Ohio Casualty Insurance as party to the suit. When the project was substantially completed, the Jefferson Parish government filed a notice of acceptance of work with the Jefferson Parish mortgage records office. This occurred over a year after Pierce amended its lawsuit to add Ohio Casualty as a defendant. Pierce never filed a sworn statement of claim in the mortgage records. Ohio Casualty filed a motion for summary judgment, contending that Pierce was required to comply with statutory notice and recordation, and because it failed to do so within 45 days of Jefferson Parish’s acceptance of the project, Pierce could not recover from Ohio Casualty. Pierce argued that the statute did not affect its right to proceed in contract. After a bench trial, the trial court rendered judgment in favor of Pierce for sums owed under the contract plus judicial interest from the date of the original judgment. Ohio Casualty appealed, arguing that the trial court erred in not dismissing Pierce's claims. The court of appeal reversed and ruled in Ohio Casualty's favor. The Supreme Court, however, disagreed and affirmed the trial court judgment. View "Pierce Foundations, Inc. v. JaRoy Construction, Inc." on Justia Law

Stresscon Corporation, a subcontracting concrete company, filed suit against Travelers Property Casualty Company of America, alleging, among other things, that Travelers acted in bad faith, unreasonably delaying or denying its claim for covered insurance benefits; and Stresscon sought awards of two times the covered benefits along with fees and costs, as prescribed by statute. Stresscon’s claims for relief arose from a 2007 serious construction accident which was caused by a crane operator employed by a company that was itself a subcontractor of Stresscon. Stresscon’s general contractor, Mortenson, sought damages from Stresscon, asserting Stresson’s contractual liability for the resulting construction delays, and Stresscon in turn sought indemnification from Travelers. Travelers petitioned for review of the court of appeals’ judgment affirming the district court’s denial of its motion for directed verdict in a lawsuit brought by its insured, Stresscon. Much as the district court had done, the appellate court rejected Travelers’ contention that the no-voluntary-payments clause of their insurance contract relieved it of any obligation to indemnify Stresscon for payments Stresscon had made without its consent. Instead, the court of appeals found that the Colorado Supreme Court's opinion in "Friedland v. Travelers Indemnity Co.," (105 P.3d 639 (2005)) had effectively overruled the Court's prior “no voluntary payments” jurisprudence to the contrary and given Stresscon a similar opportunity. The Supreme Court reversed, finding that its adoption of a notice-prejudice rule in "Friedland" did not overrule any existing “no voluntary payments” jurisprudence. The Court declined to extend a notice-prejudice reasoning to Stresscon’s voluntary payments, made in the face of the no-voluntary-payments clause of its insurance contract with Travelers. View "Travelers Prop. Cas. Co. v. Stresscon Co." on Justia Law