Justia Contracts Opinion Summaries

Continental Partners bought a lot with two building pads from Yellowstone Development that was part of the Yellowstone Club subdivision. The purchase and sale agreement included an assurance that the houses Continental intended to build on the lot would have ski-in and gravity ski-out access built by the Yellowstone Club. During construction, Continental sold the homes to separate buyers, including the managing member of WLW Realty Partners, LLC. Before construction on the ski-out access on the two homes had begun, the Yellowstone Club filed for bankruptcy protection. The subsequent owners of Yellowstone Club informed the new owners that ski-out access to the homes would not be constructed. WLW Realty filed this action against Continental, alleging, inter alia, negligent misrepresentation and violation of the Montana Consumer Protection Act (MCPA). After a bench trial, the district court entered judgment for WLW Realty. The Supreme Court reversed, holding that the district court erred by (1) imposing liability on Continental for negligent misrepresentation, as WLW Realty failed to satisfy the first and second elements of the tort; and (2) finding that Continental had violated the MCPA, as Continental did not engage in unfair or deceptive acts or practices. View "WLW Realty Partners, LLC v. Continental Partners VIII, LLC" on Justia Law

High Noon at Arlington Ranch Homeowners Association filed a complaint against D.R. Horton, Inc. alleging breach of implied warranties of workmanlike quality and habitability, breach of contract, breach of express warranties, and breach of fiduciary duty. High Noon moved, ex parte, for a stay and enlargement of time for service of the complaint until the Nev. Rev. Stat. Chapter 40 prelitigation process for constructional defect cases was complete. The district court granted High Noon’s motion. The Chapter 40 process was still not complete more than eight years later. In these original petitions for extraordinary relief, D.R. Horton argued that the district court erred when it initially granted the ex parte stay and further erred when it denied a motion to dismiss the underlying complaint pursuant to the five-year rule in Nev. R. Civ. P. 41(e) when the Chapter 40 process was still not complete. The Supreme Court denied both of these petitions for a writ of prohibition or mandamus, concluding (1) the district court’s order granting a stay was not in error; and (2) the five-year period was tolled under the Boren exception to Rule 41(d). View "D.R. Horton, Inc. v. Eighth Judicial Dist. Court" on Justia Law

In 2005 the Army Corps of Engineers invited bids on a federal reservoir project in Illinois. One of the successful bidders was Slurry, which leased from Pileco a trench cutter made by Bauer. Slurry was a prime contractor on the Corps of Engineers’ project; the Miller Act, 40 U.S.C. 3131, requires prime contractors on some government construction projects to post bonds. Slurry used Fidelity as surety. The bond insured against a failure by Slurry to pay subcontractors, such as Pileco. Contending that the cutter was defective, Slurry refused to pay the agreed rental price. Pileco sued Slurry and Fidelity, asserting breach of contract that Fidelity violated the Miller Act by failing to reimburse Pileco for costs associated with Slurry’s reneging on its obligation to pay. Slurry counterclaimed. A second trial resulted in a verdict in Pileco’s favor except for a $357,716 equitable adjustment in favor of Slurry, based on time that cutter was inoperable because of a defect attributable to Pileco. The net result was that Pileco was awarded $2.23 million against Slurry for breach of contract and the same amount against Fidelity for the Miller Act violation. The Seventh Circuit affirmed, except with respect to the denial of prejudgment interest and costs. View "Pileco, Inc. v. Slurry Systems, Inc." on Justia Law

Plaintiffs, homeowners, brought this action against Defendants, the company that constructed Plaintiffs’ home and the developer of the lot on which the home was built, alleging negligent construction of the home. Defendants moved for summary judgment, asserting that the action was barred by the four-year statute of limitations set forth in Neb. Rev. Stat. 25-223. The district court granted summary judgment in favor of Defendants. The court of appeals affirmed as to the developer but reversed as to the construction company, finding the action against it was not barred by section 25-223. The Supreme Court reversed and remanded with directions to affirm the judgment of the district court, holding that the court of appeals erred in concluding that the statute of limitations began to run on Plaintiffs’ claims at the expiration of the express one-year limited warranty issued by the construction company instead of the date the home was substantially completed. View "Adams v. Manchester Park" on Justia Law

A certified question of Oregon law was certified to the Oregon Supreme Court from the United States Court of Appeals for the Ninth Circuit. The question arose out of a construction contract dispute in which a homeowner's association sued a builder in state court for construction defects. The homeowner's association and the builder settled, and the settlement included an unconditional release and covenant not to execute against the builder. When the homeowner's association attempted to garnish the builder's liability insurance policy, however, the insurer claimed that it had no liability because the settlement unconditionally released its insured from any liability. The state trial court agreed, and the builder appealed. Meanwhile, in response to the state trial court's conclusion that the settlement agreement eliminated the insurer's liability, the homeowner's association and the builder amended their settlement agreement to eliminate the unconditional release and covenant not to execute. Pursuant to the new agreement, the builder initiated this action in federal court against its insurer. In the federal court action, the insurer argued that the state court already had determined that, given the terms of the original settlement, the builder could not recover under its insurance policy and that the parties lacked authority to create any new insurance coverage obligation by amending their settlement agreement. The federal district court agreed. On appeal, the Ninth Circuit certified a question on whether the homeowner's association and the builder could amend their settlement agreement in such a way as to revive the liability of the builder's insurer. After review, the Oregon Court concluded that, although the parties possessed authority to amend the terms of their settlement agreement, they could not do so in a way that retroactively revived the liability that was eliminated in their original agreement (at least not on the basis of the legal theories that they proposed). View "A&T Siding, Inc. v. Capitol Specialty Ins. Corp." on Justia Law

Defendants, an unlicensed residential builder; his businesses; and Denaglen Corp., a check-cashing service, appealed the Court of Appeals' decision to affirm the grant of summary judgment in favor of plaintiffs, homeowners who contracted to have their home restored following a flood. On appeal, this case raised four issues: (1) whether MCL 339.2412(1), which prohibited an unlicensed builder from "bring[ing] or maintain[ing] an action . . . for the collection of compensation," prevents an unlicensed builder from defending on the merits against claims asserted against him by a homeowner; (2) whether MCL 339.2412(1) provided a homeowner with an independent cause of action for damages arising from the statute's violation; (3) whether a contract for the services of an unlicensed builder was void ab initio or whether it may have some form of continuing legal existence; and (4) whether the trial court abused its discretion in refusing to set aside the default of defendant Denaglen Corp., the check-cashing service. In lieu of granting leave to appeal, the Supreme Court affirmed in part and reversed in part the judgment of the Court of Appeals and remanded the case for further proceedings. The Court found that the appellate court erred in granting summary judgment to the plaintiffs. While the Court of Appeals correctly held that MCL 339.2412(1) did not prevent an unlicensed builder from defending against a lawsuit on its merits and did not afford a homeowner an independent cause of action to seek damages for its violation. However, contracts between an innocent homeowner and an unlicensed residential builder were voidable by the homeowner and thereby effective in conveying rights and authorities to both parties and third parties. The Court of Appeals therefore erred when it declared the contract at issue void ab initio, "although that court's error was wholly understandable given the confusing state of applicable law." Finally, the trial court did not abuse its discretion by refusing to grant defendant Denaglen relief from its default. However, because the proper amount of damages remained in dispute, Denaglen was free to attempt to challenge the extent of its liability. View "Epps v. 4 Quarters Restoration, LLC" on Justia Law

HKS a Texas architecture firm, provided services for a luxury hotel in Mammoth Lakes under an Agreement that contained a Texas forum selection clause, requiring mediation, and a Texas choice of law provision.The Agreement authorized HKS to hire “[c]onsultants.” Vita, a California landscape design firm, submitted to HKS a Contract incorporating the terms of the Agreement. Neither Vita or HKS signed the Contract, but Vita performed work in 2008, during the “design phase” and sent invoices to HKS. Owner began having financial problems before construction commenced, leaving HKS with unpaid bills for its own services and those provided by “consultants.” HKS obtained a judgment against Owner in 2010 in Texas for $1,617,073.70 but was unable to recover anything. In 2013, Vita sued HKS, alleging breach of contract; unjust enrichment; quantum meruit; and breach of the implied covenant of good faith and fair dealing, seeking $370,650.53. After answering the complaint, HKS moved to enforce the forum selection clause and dismiss. The court of appeal reversed dismissal. HKS established the existence of a contract between HKS and Vita containing a forum selection clause, but Code of Civil Procedure 410.42 prohibits enforcement of construction contract provisions requiring disputes between contractors and California subcontractors to be litigated outside California. View "Vita Planning & Landscape Architecture, Inc. v. HKS Architects, Inc." on Justia Law

The Division of Capital Asset Management and Maintenance (DCAM), the owner of a construction project, entered into a contract with a designer to prepare the project’s designs. DCAM contracted with Gilbane Building Company to be the construction manager at risk (CMAR). Gilbane subcontracted with Coghlin Electrical Contractors, Inc. to perform electrical work. Coghlin later filed a complaint against Gilbane alleging that Gilbane breached the subcontract by causing Coghlin to incur additional costs resulting from design errors. Gilbane filed a third-party complaint against DCAM, asserting that DCAM breached its contract with Gilbane by refusing to pay Gilbane the amounts claimed by Coghlin. The trial court allowed DCAM’s motion to dismiss the third-party complaint. The Supreme Judicial Court vacated the superior court’s judgment, holding (1) a public owner of a construction management at risk project gives an implied warranty regarding the designer’s plans and specifications, but the scope of liability arising from that implied warranty is limited; (2) the construction management at risk contract in this case did not disclaim the implied warranty; and (3) the contract's indemnification provision did not prohibit Gilbane from filing a third-party complaint against DCAM seeking reimbursement of additional costs under the implied warranty for damages claimed by Coghlin caused by an insufficient or defective design. Remanded View "Coghlin Elec. Contractors, Inc. v. Gilbane Bldg. Co." on Justia Law

West Bay Builders, Inc. and Safeco Insurance Company of America (Safeco) appealed the trial court’s denial of their motion for attorney fees under Business and Professions Code section 7108.5 and Public Contract Code sections 7107 and 10262.5 (prompt payment statutes). West Bay and Safeco were sued by James L. Harris Painting & Decorating, Inc. for breach of contract and violation of the prompt payment statutes. In turn, West Bay filed a cross-complaint against Harris for breach of contract arising out of the same construction project. After years of litigation, the jury found both West Bay and Harris had failed to perform and thus did not award damages to either side. Safeco also did not recover because it was sued only in its capacity as issuer of a bond to West Bay for the construction project. Although West Bay and Safeco did not recover any damages, they moved for attorney fees under the fee shifting provisions of the prompt payment statutes. The trial court denied their motion, finding there was no prevailing party in this case. On appeal, West Bay and Safeco argued the trial court lacked discretion to refuse an award of mandatory attorney fees under the prompt payment statutes because they prevailed at trial. After review, the Court of Appeal disagreed, finding that under the prompt payment statutes, the trial court has discretion to determine there is no prevailing party in an action. And in this case, the trial court did not abuse its discretion in concluding there was no prevailing party. View "James L Harris Painting v. West Bay" on Justia Law

General Contractor hired several subcontractors to assist in contracting an IMAX theater. After the theater was completed and three of the subcontractors (“Subcontractors”) had not been paid in full for their services, the Subcontractors filed mechanic’s liens against the IMAX property and sued the General Contractor to foreclose on their respective liens in the amount due on their contracts. The trial court awarded the Subcontractors judgments against the General Contractor and awarded attorney’s fees. At issue in this case was whether, under Indiana’s mechanic’s lien statute, the Subcontractors were entitled to collect attorney’s fees incurred in foreclosing on their liens from the General Contractor, which posted a surety bond and filed an undertaking obligating it to pay attorney’s fees upon recovery of a judgment against it. The Supreme Court affirmed the trial court’s fee award, holding that the trial court did not abuse its discretion in awarding the Subcontractors attorney’s fees incurred in their foreclosure suits under the circumstances of this case. View "Goodrich Quality Theaters, Inc. v. Fostcorp Heating & Cooling, Inc." on Justia Law