Justia Contracts Opinion Summaries

Neumann Homes was the developer of two Antioch subdivisions. The Village entered into infrastructure agreements with Neumann to make public improvements in the subdivisions; Neumann provided four substantially identical surety bonds issued by Fidelity, totaling $18,128,827. The bonds did not contain specific “payment bond” language. A payment bond generally provides that if the contractor does not pay its subcontractors and material suppliers, the surety will pay them. In contrast, a “completion bond” or “performance bond” provides that if the contractor does not complete a project, the surety will pay for its completion. Lake County Grading (plaintiff) and Neumann entered into agreements for plaintiff to provide labor and materials for the improvements. Plaintiff completed the work, but was not paid in full. Neumann defaulted on its contract with the Village and declared bankruptcy. Plaintiff served Neumann and the Village with notices of a lien claim and ultimately filed suit, alleging breach of contract because the surety bonds did not contain language guaranteeing payment to subcontractors compliant with the first paragraph of section 1 of the Bond Act, 30 ILCS 550/1, and that it became a third-party beneficiary of the contracts between the Village and Neumann because the Act’s requirements are read into every public works contract for the benefit of subcontractors. The circuit court entered summary judgment on those counts. The appellate court affirmed. The Illinois Supreme Court reversed, holding that the bonds were sufficient and did not violate the Act, so that the Village did not breach any contractual obligation.View "Lake Cnty. Grading Co. v. Vill. of Antioch" on Justia Law

This case was one of a number of cases which have, in the aftermath of the "Great Recession" that hit Riverside and San Bernadino counties particarly hard. This appeal stemmed from the construction of a Kohl’s department store in Beaumont. The developer of the store was Inland-LCG Beaumont, LLC, and the general contractor was 361 Group Construction Services, Inc. Somewhere in the process of construction, the money dried up and 361 refused to pay its subcontractors for work they had done. Those subcontractors included Cass Construction, TNT Grading Inc., Palomar Grading & Paving and R3 Contractors. These four subcontractors recorded mechanic’s liens and sued to foreclose those liens. With one exception they obtained judgments of foreclosure. The one exception was TNT, who, by the time of the trial to foreclose its mechanic’s lien, was a suspended corporation and thus unable to prosecute an action. The two owners of the property, Kohl’s and Wells Fargo, appealed the judgments obtained by the three successful subcontractors, Cass, R3 and Palomar Grading. The Court of Appeal took a "soup-to-nuts" approach in reviewing the multiple issues presented on appeal, and affirmed in all respects except to the degree that liens of Palomar Grading and Cass should include prejudgment interest. To that degree the Court reversed the judgment and remanded it with instructions to the trial court to recalculate the prejudgment interest at 7 percent. On balance, Cass and R3 were still the prevailing parties in this appeal: Of 10 issues raised, they prevailed, either singly or together, in 9. They recovered their costs on appeal from Kohl’s and Wells Fargo. For Palomar Grading, the only issue on which it has appeared in this appeal was the issue of the proper rate of prejudgment interest, and on that issue it lost. "However, it would be unfair to allow Kohl’s and Wells Fargo to recover all their appellate costs from Palomar Grading because they won on the lone prejudgment interest rate issue. Most of this appeal has concerned their unsuccessful challenges to the foreclosure judgments obtained by Cass and R3."View "Palomar Grading v. Wells Fargo" on Justia Law

Debtors contracted with Builder to finish construction on a house. After Debtors defaulted on progress payments, Builder sued Debtors and Bank, claiming that Defendants falsely represented or concealed material information about whether Debtors could pay for the work. The district court sustained Defendants’ motions for summary judgment on Builder’s fraud and conspiracy claims. Debtors then confessed judgment on Builder’s breach of contract claim. After a bench trial, the district court ruled for Defendants on Builder’s equitable and promissory estoppel claims. The Supreme Court affirmed in part and reversed in part, holding (1) the court erred in granting summary judgment to Debtors on Builder’s fraud claim and to Debtors and Bank on Builder’s civil conspiracy claim; and (2) during trial, the court did not err in finding that Builder had failed to prove by clear and convincing evidence that Bank promised to fund Builder’s work that was definite enough to induce Builder’s foreseeable reliance on the statement, but these factual findings did not preclude Builder’s proof of the same facts for its fraud claims. Remanded.View "deNourie & Youst Homes, LLC v. Frost" on Justia Law

The Georgia Department of Corrections (GDOC) entered into a construction contract with Lewis Walker Roofing (Walker Roofing) to re-roof several buildings at Valdosta State Prison. The Contract contained two “no assignment” clauses, and as a prerequisite to contracting with GDOC, Walker Roofing was required to obtain payment and performance bonds. It obtained such payment and performance bonds from Developers Surety and Indemnity Company. Walker Roofing did not complete its work within the time frame required by the Contract, and GDOC declared Walker Roofing in default. Developers Surety did not notify GDOC within 25 days of receipt of GDOC's notice of default regarding whether it would remedy the default or perform the contract. However, approximately three months after the declaration of default, Developers Surety gave GDOC the option of entering into a contract with another company for the completion of the work. GDOC then contracted with that company to finish the project. Under the payment and performance bonds and prior to Walker Roofing's default, Developers Surety had provided financial assistance to Walker Roofing. Developers Surety filed suit against GDOC for breach of contract and for a declaratory judgment that it had no obligation under the payment and performance bond it issued to Walker Roofing on behalf of GDOC. GDOC filed a counterclaim for breach of contract. The parties filed cross-motions for summary judgment, and the trial court determined that Developers Surety's claims were not barred by sovereign immunity and that GDOC had breached the construction contract as a matter of law. It concluded that GDOC waived its sovereign immunity by entering into the contract with Walker Roofing, and that the doctrine of equitable subrogation gave Developers Surety the ability to file suit against GDOC once it incurred liability and paid the obligations of its principal under the bond. Consequently, the trial court granted summary judgment to Developers Surety and denied it to GDOC; in the same order, the trial court entered judgment in favor of Developers Surety in the amount equal to the "financial assistance" Developers Surety provided to Walker Roofing. The Supreme Court granted certiorari to the Court of Appeals to consider whether the State’s sovereign immunity was waived for the claim Developers Surety made on its contract with the State. The Supreme Court found that immunity was indeed waived in this instance, and accordingly, it affirmed the judgment of the Court of Appeals. View "Georgia Dept. of Corrections v. Developers Surety & Indemnity Co." on Justia Law

Petitioner, a construction corporation, contracted to construct a wharf for Respondent, the Port of Houston Authority of Harris County, Texas. After the construction was to be completed, Petitioner sued, claiming damages from delays caused by the Port. The Port, in turn, claimed that a no-damages-for-delay provision in the construction contract between the parties precluded delay damages. Petitioner also sought recovery of $2.36 million in delay damages withheld by the Port for Petitioner’s failure to meet deadlines. After a trial, the jury found that the Port had breached the contract for deliberately and wrongfully interfering with Petitioner’s work, causing Petitioner to incur $18,602,697 in delay damages. The jury also found Petitioner had not released its claim to the $2.36 million liquidated damages the Port withheld. The court of appeals reversed. The Supreme Court reversed the court of appeals, holding (1) the Local Government Contract Claims Act waives governmental immunity from suit on a contract claim for delay damages the contract does not call for; (2) the no-damages-for-delay provision in the parties’ contract did not shield the Port from liability for deliberately and wrongfully interfering with the contractor’s work; and (3) Petitioner was entitled to recover the liquidated damages withheld by the Port.View "Zachry Constr. Corp. v. Port of Houston Auth. of Harris County" on Justia Law

A Homeowner contracted with a Builder to build a home on property owned by the Homeowner. The Builder contracted with a Plumber to put in the plumbing at the house. After the home was completed, the Builder and the Homeowner sued the Plumber for damages allegedly caused by plumbing leaks, alleging breach of contract, breach of express warranty, and negligence. The trial court granted summary judgment for the Plumber, reasoning (1) the Homeowner could not recover contract damages because it was not a party to the plumbing subcontract, nor could the Builder recover contract damages because it had not suffered any compensable damage; and (2) the plaintiffs did not have a negligence claim because they did not allege violation of any tort duty independent of the contract. The Supreme Court reversed, holding that the court of appeals erred in concluding that the pleadings and summary judgment evidence negated the existence of a negligence claim. View "Chapman Custom Homes, Inc. v. Dallas Plumbing Co." on Justia Law

At issue in this case was whether Washington State courts have jurisdiction over a civil case arising out of a contract in which the tribal corporation waived its sovereign immunity and consented to jurisdiction in Washington State courts. The Washington Supreme Court held that it did not infringe on the sovereignty of the tribe to honor its own corporation's decision to enter into a contract providing for jurisdiction in Washington State courts. View "Outsource Servs. Mgmt. v. Nooksack Bus. Corp." on Justia Law

The Developer converted a vacant building into a residential condominium by gutting and refitting it. The Developer purchased Commercial Lines Policies covering bodily injury and property damage from Nautilus, covering periods from June 1998 through June 2000. The policies define occurrence as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions,” but do not define accident. The policies exclude damage to “that particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the ‘property damage’ arises out of those operations;” eliminate coverage for damage to “that particular part of any property that must be restored, repaired or replaced because ‘your work’ was incorrectly performed on it;” and contain an endorsement entitled “Exclusion—Products-Completed Operations Hazard.’ Construction was completed in 2000; the Developer transferred control to a board of owners. By May 2000, one homeowner was aware of water damage. In 2005, the Board hired a consulting firm, which found that the exterior brick walls were not fully waterproofed and concluded that the deterioration had likely developed over many years, even prior to the condominium conversion, but that the present water penetration was the result of inadequate restoration of the walls. The Board sued the Developer. Nautilus denied coverage and obtained a declaratory judgment. The Seventh Circuit affirmed, reviewing the policy and finding that the shoddy workmanship, of which the board complained, was not covered by the policies; that Nautilus did not unduly delay pursuing its declaratory suit; and that the alleged damage to residents’ personal property occurred after the portions of the building were excluded from coverage.View "Nautilus Ins. Co. v. Bd. of Dirs. of Regal Lofts Condo Ass'n" on Justia Law

In 2008, Plaintiff purchased a home in Bar Harbor, Maine from Defendants for $2.9 million. After his purchase, Plaintiff spent in excess of $1.5 million in repairs to the property. Plaintiff brought suit against Defendant to recover damages for the repairs, alleging, among other claims, breach of contract, fraud, and negligent misrepresentation. A federal district court entered summary judgment in favor of Defendants, concluding (1) Maine’s implied warranty of habitability did not apply under the circumstances of this case, and Defendants had no duty of disclosure; and (2) Defendants were not entitled to attorney’s fees. The First Circuit affirmed, holding that the district court (1) properly granted summary judgment for Defendants on Plaintiff’s breach of contract, fraud, and negligent misrepresentation claims; and (2) properly entered judgment on the record for Plaintiff on Defendants’ counterclaim for attorney’s fees. View "Thompson v. Miles" on Justia Law

The respondents, two developers and an architectural firm, Stevens & Wilkinson of South Carolina, Inc. (S&W), entered into a Memorandum of Understanding (MOU) with the City of Columbia as part of a larger project team to develop a publicly-funded hotel for the Columbia Metropolitan Convention Center. The City eventually abandoned its plan under the MOU, and the respondents brought suit on several causes of action including breach of contract and equitable relief. The City moved for summary judgment arguing the MOU was not a contract and therefore the contract claims failed. The circuit court agreed and, rejecting the equitable claims as well, granted summary judgment in favor of the City. The respondents appealed and the court of appeals affirmed in part and reversed in part. The Supreme Court reversed. Because the MOU was comprised of agreements to execute further agreements, there was no meeting of the minds on numerous material terms which had not yet been defined. Accordingly, the court of appeals was reversed with respect to that portion of the court's judgment; the Supreme Court held the MOU was unenforceable as a matter of law. The Supreme Court agreed with the circuit court and reinstated its judgment in favor of the City. View "Stevens & Wilkinson of South Carolina, Inc. v. City of Columbia" on Justia Law