Justia Contracts Opinion Summaries

During a highway paving project a storm caused recently applied primer to emulsify in rainwater. The oil splashed onto passing vehicles, causing damage. The vehicle owners brought claims against the State, which the State paid. A.M. Welles, Inc. (Welles), the general contractor on the job, reimbursed the State for what it paid to the vehicle owners. The State then sued Liberty Mutual Fire Insurance Co. (Liberty), the insurer for the job, seeking indemnification for the costs that Welles did not cover. Welles, in turn, sued the subcontractors for the project, Montana Materials, Inc., RSJ, Inc., and GLJ, Inc. (collectively, “Jensen”), seeking indemnification under the subcontract. The district court granted summary judgment for Jensen on Welles’s indemnification claim and dismissed the State’s action against Liberty for failure to prosecute. The Supreme Court vacated and remanded, holding that the district court (1) erred in denying Welles’s motion for summary judgment, as Welles was entitled to indemnification under the subcontract; and (2) abused its discretion by dismissing the State’s action against Liberty for failure to prosecute. Remanded. View "A.M. Welles, Inc. v. Mont. Materials, Inc." on Justia Law

Christopher Walton and Tammara Duhn hired Jacob Hatch and his construction company (collectively, Hatch) as the general contractor to build a custom home in a subdivision. Hatch drew up two proposed written contracts, but Walton and Duhn would not sign either one. Nevertheless, construction began. A dispute over what Walton and Duhn owed Hatch led Hatch to terminate his involvement in the project before the house was finished. Walton and Duhn sued Hatch for breach of contract, among other claims. The district court entered judgment in favor of Walton and Duhn and awarded damages. The Supreme Court reversed in part and affirmed in part, holding that the district court (1) erred in calculating the damages that Walton and Duhn suffered as a result of Hatch’s improper billing practices; (2) erred in finding liability and awarding damages for breach of an implied warranty that the home would be built in a skillful and workmanlike manner; and (3) did not abuse its discretion in denying Walton’s and Duhn’s application for attorney fees. View "Walton v. Hatch" on Justia Law

FTR has constructed buildings for public entities for 15 years. In 1999, FTR submitted the winning bid of $7.345 million to construct a District school. During construction, FTR submitted approximately 150 proposed change orders (PCO). FTR claimed some were necessary because the District’s plans were inadequate or misleading. The District denied most of the PCOs on the grounds that the work was covered under the basic contract, the amounts claimed were excessive, or that a PCO was not timely under the contract. Construction was completed in 2001. Public Contract Code 7107 allows a public entity to withhold funds due a contractor when there are liens on the property or a good faith dispute concerning whether the work was properly performed. The court of appeal held that the trial court properly assessed penalties against District because it did not timely release retained funds; properly rejected the District's action under the False Claims Act, Government Code 12650; and properly assessed prejudgment interest. The court erred in its interpretation of a contract provision imposing time limitations to submit claims for extra work as requiring a showing of prejudice and erred in awarding fees for work not solely related to FTR's section 7107 cause of action. View "FTR Int'l, Inc. v. Rio Sch. Dist." on Justia Law

Bellingham Marine hired Major Engineering to construct a travel lift pier at the Channel Islands Harbor. Bellingham hired Moffatt, a civil engineering firm, to prepare the plans, which required that the concrete have a specific air entrainment and that the concrete, when cured, attain a specific compressive strength. Major's contract with Bellingham provided that if the concrete failed to meet the compression strength standard, that it would be removed and replaced at Major's expense. Major hired State, which submitted a concrete mix design. Moffatt, at the request of Major, reviewed and approved the design. It was not part of Moffatt's job duties. State delivered seven truck loads of wet pre-mixed concrete. After the concrete was cast, Major's testing lab took a sample that showed the concrete had inadequate compressive strength. Major demolished and rebuilt the affected portion of the pier. It sued; State filed a cross-complaint for implied equitable indemnity and contribution, alleging that Moffatt failed to use reasonable care in reviewing and approving the mix design. The court dismissed, finding that Moffatt was not in privity of contract with Major or State and that the cross-complaint was barred by the economic loss rule. The court of appeal affirmed. View "State Ready Mix Iv. Moffatt & Nichol" on Justia Law

The School District entered into a construction contract with Amoroso. Pursuant to Public Contract Code 22300, Amoroso elected to have the retention held in an escrow account in the form of securities. The escrow agreement stated that “District shall have the right to draw upon the securities and/or withdraw amounts from the Escrow Account in event of default by Contractor as determined solely by District.” The District gave written notice of material breach on March 30, 2011, based on Amoroso’s failure to complete, timely or at all, any of the three project phases and requested that Amoroso cure by April 4. Amoroso contested the assertions of material breach by letter dated April 1. The District sent notice of termination on April 18 and filed suit. On April 28, the parties entered into an “Exit and Demobilization Agreement,” “in lieu of any final termination or statement of default under the Contract.” The District sent a letter requesting withdrawal of $3.5 million from the escrow account, attaching its attorney’s memorandum as to why withdrawal was permissible. Amoroso unsuccessfully sought an injunction. The court of appeal affirmed, rejecting Amoroso’s claim that a public project owner must await judicial resolution of the underlying contract dispute before it can withdraw retention funds. View "Pittsburg Unified Sch. Dist. v. S.J. Amoroso Constr. Co., Inc." on Justia Law

In building their home, Plaintiffs purchased SuperFlex, a stucco-like material, to cover the house’s exterior. GrailCoat Worldwide, LLC and GrailCo, Inc. (collectively, GrailCoat), the manufacturers of SuperFlex, provided an express twenty-year warranty for the product. Several years after the construction of their home was completed, the product failed. Plaintiffs brought suit against GrailCoat and Hartley Construction, Inc., the company that had designed and built the home, for damages. Hartley moved for summary judgment under N.C. Gen. Stat. 1-50(a)(5), North Carolina’s six-year statute of repose for claims arising out of improvements to real property. The trial court granted summary judgment for Defendants. The Supreme Court reversed the trial court’s dismissal of Plaintiffs’ claim for breach of express warranty against GrailCoat, holding that GrailCoat knowingly and freely entered into a valid contract of sale with Plaintiffs that provided for a warranty term that exceeded the repose period, and therefore, GrailCoat waived the protections provided by the statute of repose. View "Christie v. Hartley Constr., Inc." on Justia Law

The respondents, Shared Towers VA, LLC and NH Note Investment, LLC, appealed, and petitioner Joseph Turner, individually and as trustee of the Routes 3 and 25 Nominee Trust, cross-appealed, Superior Court orders after a bench trial on petitioner’s petition for a preliminary injunction enjoining a foreclosure sale and for damages and reasonable attorney’s fees. The parties’ dispute stemmed from a commercial construction loan agreement and promissory note secured by a mortgage, pursuant to which petitioner was loaned $450,000 at 13% interest per annum to build a home. Respondents argued the trial court erred when it: (1) determined that they would be unjustly enriched if the court required the petitioner to pay the amounts he owed under the note from November 2009 until April 2011; (2) applied the petitioner’s $450,000 lump sum payment to principal; (3) excluded evidence of the petitioner’s experience with similar loans; (4) ruled that, because the promissory note failed to contain a "clear statement in writing" of the charges owed, as required by RSA 399-B:2 (2006), respondents could not collect a $22,500 delinquency charge on the petitioner’s lump sum payment of principal; and (5) denied the respondents’ request for attorney’s fees and costs. Petitioner argued that the trial court erroneously concluded that respondents’ actions did not violate the Consumer Protection Act (CPA). After review, the Supreme Court affirmed in part, reversed in part, vacated in part, and remanded: contrary to the trial court’s decision, petitioner’s obligation to make the payments was not tolled. Because the loan agreement and note remained viable, it was error for the trial court to have afforded the petitioner a remedy under an unjust enrichment theory. The trial court made its decision with regard to the payment of $450,000 in connection with its conclusion that the petitioner was entitled to a remedy under an unjust enrichment theory. Because the Supreme Court could not determine how the trial court would have ruled upon this issue had it not considered relief under that equitable theory, and because, given the nature of the parties’ arguments, resolving this issue requires fact finding that must be done by the trial court in the first instance, it vacated that part of its order and remanded for further proceedings. In light of the trial court’s errors with regard to the attorney’s fees and costs claimed by respondents, the Supreme Court vacated the order denying them, and remanded for consideration of respondents’ request for fees and costs. The Supreme Court found no error in the trial court’s rejection of petitioner’s CPA claim. View "Turner v. Shared Towers VA, LLC" on Justia Law

Plaintiff, a construction company, filed a five-count complaint in superior court against Defendants, alleging breach of contract, quantum meruit, unjust enrichment, and violation of the Prompt Payment Act. In the fifth count of the complaint, Plaintiff sought enforcement of a mechanic’s lien it recorded against Defendants’ property. Plaintiff then moved for summary judgment on its claims for breach of contract, violation of the Prompt Payment Act, and enforcement of the mechanic’s lien. The superior court granted summary judgment for Plaintiff on those three counts but made no mention of Plaintiff’s quantum meruit or unjust enrichment claims. Defendants appealed. The Supreme Court dismissed the appeal as interlocutory, as there was no final judgment on any of Plaintiff’s causes of action where two of Plaintiff’s claims were still pending. View "Warren Constr. Group, LLC v. Reis" on Justia Law

The issue at the heart of this appeal to the Tenth Circuit centered on indemnity stemming from a promise by Martin K. Eby Construction Company’s predecessor to build a water pipeline. Eby engaged another company (the predecessor to Kellogg Brown & Root, LLC), promising to indemnify claims resulting from Eby’s work. While building the water pipeline, Eby accidentally hit a methanol pipeline, causing a leak. At the time, no one knew about the leak. It was discovered over two decades later, and the owner of the methanol pipeline had to pay for the cleanup. The owner of the methanol pipeline sued to recover the expenses from Kellogg and Eby. Kellogg and Eby prevailed, but Kellogg incurred over $2 million in attorneys’ fees and costs. Kellogg invoked Eby’s indemnity promise, suing Eby and its liability insurer, Travelers Casualty and Surety Co. The district court granted summary judgment to Eby and Travelers, leading Kellogg to appeal. To resolve the Kellogg-Eby portion of the appeal, the Tenth Circuit focused on the enforceability of Eby’s promise of indemnity: the promise was broad enough to cover the pipeline owner’s claims against Kellogg for its inaction after Eby caused the leak, but the indemnity clause was not conspicuous; thus, it was unenforceable. The Kellogg-Travelers appeal turned on Kellogg’s argument that Travelers’ insurance policy covered liabilities assumed by its insured (Eby). The Tenth Circuit concluded that because the indemnity clause was unenforceable, it is as if Eby never agreed to assume Kellogg’s liabilities. In the absence of Eby’s assumption of Kellogg’s liabilities, Travelers did not insure Kellogg. Accordingly, Kellogg was not entitled to indemnity from Eby or insurance coverage from Travelers, and Eby and Travelers were entitled to summary judgment. View "Martin K. Eby Construction v. OneBeacon Insurance" on Justia Law

AIDG Properties, LLC, a real-estate holding company managed by Anjan Dutta-Gupta, purchased property. AIDG obtained loans from BankNewport (Defendant) to finance the purchase and to perform improvements. Dutta-Gupta personally guaranteed the loans. Emond Plumbing & Heating, Inc. and Tecta America New England, LLC (collectively, Plaintiffs) served as subcontractors on the project. Plaintiffs substantially completed the renovations, and BankNewport deposited the loan proceeds into AIDG’s account. After Dutta-Gupta was arrested, Defendant declared Dutta-Gupta to be in default and accelerated the loans. Defendant then set off the deposit it made previously by reversing it. As a result, AIDG was unable to pay Plaintiffs for the work they had performed. Defendant, who was granted possession of the property, later foreclosed. Plaintiffs filed a complaint seeking to recover compensation for their work under the theory of unjust enrichment. The superior court granted summary judgment for Defendant. The Supreme Court affirmed, holding that due to the absence of a relationship between Plaintiffs and Defendant and the lack of any allegation that Defendant engaged in any type of misconduct or fraud, Defendant’s retention of the property, including the improvements, was not inequitable under the Court’s jurisprudence on unjust enrichment. View "Emond Plumbing & Heating, Inc. v. BankNewport" on Justia Law