Justia Contracts Opinion Summaries

In 2002, the Navy awarded Metcalf a contract to design and build 212 housing units in Hawaii by October, 2006, for $50 million. Problems arose involving soil conditions. The request for proposals stated that the “soil reconnaissance report” was “for preliminary information only” and required that the contractor conduct independent soil investigation, incorporating 48 C.F.R. 52.236-2, concerning site conditions that differ materially from those disclosed. Discussions delayed construction for a year. Metcalf implemented its preferred changes by over-excavating and using non-expansive fill, without a contract modification. The Navy denied that there was any material difference between pre-bid and post-award soil assessments, but approved some modifications. Metcalf was about 200 days behind schedule and began using “post-tension” concrete, which was more expensive but avoided the additional time and cost of over-excavation. The Navy amended the contract to approve use of post-tension concrete slabs. Metcalf claims additional delays resulting from the presence of more of a chemical contaminant than was expected. With respect to contamination, the Navy granted a 286-day extension and reimbursed $1,493,103. The Navy accepted the buildings in March, 2007. Metcalf alleged that its final cost was $76 million. The government paid less than $50 million. The Claims Court ruled in favor of the government, under the Contract Disputes Act, 41 U.S.C. 7104. The Federal Circuit vacated, holding that the court misconstrued what Metcalf needed to show to prove that the government breached its duty of good faith and fair dealing and misinterpreted certain contractual provisions.View "Metcalf Const. Co., LLC v. United States" on Justia Law

ICI Homes, Inc. (ICI) had a general liability insurance policy with General Fidelity Insurance Company. In 2007, Katherine Ferrin, the owner of a residence constructed by ICI, was injured while using stairs installed by Custom Cutting, Inc. Ferrin filed suit against ICI. ICI, in turn, sought indemnification from Custom Cutting. The parties agreed to a $1.6 million settlement of Ferrin’s claim. ICI accepted $1 million from Custom Cutting’s insurer to settle its indemnification claim, which it paid to Ferrin. ICI and General Fidelity then claimed the other was responsible for paying Ferrin the remaining $600,000. Both parties paid $300,000 to Ferrin to settle Ferrin’s claim. ICI then filed suit against General Fidelity seeking return of the $300,000 ICI paid above the $1 million indemnification payment. General Fidelity counterclaimed seeking return of the $300,000 it had paid to Ferrin. The district court entered judgment for General Fidelity. The court of appeals certified two questions to the Supreme Court for resolution. The Supreme Court answered (1) the General Fidelity policy allowed ICI to apply indemnification payments received from Custom Cutting’s insurer towards satisfaction of its $1 million self-insured retention; and (2) the transfer of rights provision in the policy did not abrogate the made whole doctrine. View "Intervest Constr. of Jax, Inc. v Gen. Fidelity Ins. Co." on Justia Law

In 2001 KBR agreed to provide the Army with logistics support services during Operation Iraqi Freedom. Individual task orders required KBR to install, operate and maintain dining services near Mosul, Iraq on a cost-plus-award-fee basis. KBR selected ABC, a subcontractor, to build a prefabricated metal dining facility and to provide dining services for a camp population of 2,573. In June 2004, the Army ordered KBR to stop construction of the metal facility and begin construction of a reinforced concrete facility for an estimated 2,573 to 6,200+ persons. Instead of requesting bids for the new work, KBR kept ABC as the subcontractor due to the urgency of the request. ABC submitted a new proposal with a total monthly cost about triple the monthly cost initially quoted. ABC attributed the increased costs to additional labor and equipment to serve a larger population and to a drastic increase in the cost of labor and a severe shortage of staff willing to work in Iraq. Due to a calculation error, it was determined that ABC’s proposal was reasonable. KBR’s management reviewed and approved a change order, embodying ABC’s proposal. In 2005 the subcontract ended and title to the dining facility passed to the Army. In 2007, the Defense Contract Auditing Agency suspended payment of certain costs paid by KBR to ABC pursuant to the change order. KBR prepared a new price justification for the concrete dining facility and ultimately filed suit, seeking recovery of the $12,529,504 in costs disapproved for reimbursement. The Claims Court awarded $6,779,762. The Federal Circuit affirmed.View "Kellogg Brown & Root Servs. v. United States" on Justia Law

Morrison-Maierle, Inc. (MMI) was hired by two counties to provide engineering services and supervision on a road improvement contract. The counties retained JEM Contracting, Inc. (JEM) to provide the construction services on the project. JEM filed suit against MMI alleging detrimental reliance and fraudulent inducement for promises MMI allegedly made during the job that JEM would be paid for unanticipated costs incurred during pulverization of the old road. The district court granted summary judgment for MMI, concluding that JEM could not prove it had been harmed by MMI’s alleged representations. The Supreme Court affirmed, holding that the district court did not err by (1) concluding that JEM was required to continue performance pending approval of a change order under a certain contract provision, as the provision was not void as against public policy; and (2) granting summary judgment to MMI on the ground that JEM failed to show it was harmed by the representations made by MMI. View "JEM Contracting, Inc. v. Morrison-Maierle, Inc." on Justia Law

In 1998 the Gillespie School District hired Wight under for services preliminary to the actual designing and construction of a new elementary school building. Wight agreed to perform a “site mine investigation.” Wight hired Hanson Engineers to assess the potential for coal mine subsidence. A physical engineer at Hanson sent a letter to Wight, noting recorded subsidence events, including five to six events since 1979, affecting more than 40 structures in the area. The letter stated: “No one can predict when or if the land above the roof-and-pillar mine will subside… The owner should consider the fact that there is no economically feasible corrective action… to guarantee against future subsidence… it can be intuitively concluded that there is a relatively high risk of subsidence in the Benld/Gillespie area. The letter was not attached to the report, which noted some of its highlights. The school was built and occupied, but in 2009 was severely damaged as the result of subsidence and was condemned. The District sued Wight, alleging professional negligence, breach of implied warranty, and fraudulent misrepresentation by concealment of material fact. The court entered summary judgment in favor of Wight, based on statutes of limitations applicable to the claims. The appellate court affirmed. The Illinois Supreme Court affirmed, noting that it was expressing no opinion concerning the merits of various claims. View "Gillespie Cmty. Unit Sch. Dist. No. 7 v. Wight & Co." on Justia Law

Ewing Construction Company entered into a contract with a school district to serve as general contractor on a project. The school district later filed suit against Ewing for faulty construction. Ewing tendered defense of the underlying suit to Amerisure Insurance Company, Ewing's insurer under a commercial package policy that included commercial general liability coverage. Amerisure denied coverage, and Ewing filed suit in federal district court seeking a declaration that Amerisure breached its duty to defend and indemnify Ewing for damages awarded in the underlying suit. The district court granted summary judgment for Amerisure, concluding that the policy’s contractual liability exclusion applied to exclude coverage because Ewing assumed liability for its own construction work pursuant to the contract such that it would be liable for damages arising out of its defective work. On appeal, the court of appeals certified questions to the Texas Supreme Court, which answered that “a general contractor that enters into a contract in which it agrees to perform its construction work in a good and workmanlike manner, without more specific provisions enlarging this obligation, does not ‘assume liability’ for damages arising out of the contractor’s defective work so as to trigger the contractual liability exclusion.” View "Ewing Constr. Co., Inc. v. Amerisure Ins. Co." on Justia Law

In 2006, the Federal Bureau of Prisons issued a Request for Proposals for the “design-build” construction of a federal correctional institution. The project involved a “cut-to-fill” site, meaning that the ground had to be leveled by excavating materials from one area of the site and using those materials to fill lower areas. Based on information in the solicitation documents and prior experience, BH believed the New Hampshire Department of Environmental Sciences would approve a permit for a one-step-cut-to-fill construction plan and calculated its bid price, $238,175,000, accordingly. The contract provided liquidated damages of $8,000 for each day completion was overdue. The NHDES rejected the application. BH advised the government of the implications of NHDES restrictions, but did not refuse to proceed or request that the government intervene with the NHDES. According to BH, the restrictions were contrary to generally accepted industry practice. Upon completion of cut-to-fill operations, BH submitted a Request for Equitable Adjustment, seeking $7,724,885 for excess costs. The Contracting Officer and the Claims Court rejected the request, finding that the Permits and Responsibilities clause placed the burden of obtaining and complying with state and local permits on BH “without additional expense to the Government;” that BH had not alleged violation of the implied duty of good faith; and that, because the government did not control the NHDES, there was no basis for imposing liability for constructive change. The Federal Circuit affirmed. View "Bell/Heery v. United States" on Justia Law

Defendant, Suzynne D. Cumminngs and S.D. Cummings & Co., PC, appealed a Superior Court order awarding $44,403 to plaintiffs, Robert Audette and his company, H&S Construction Services, LLC (H&S), for breach of contract. Defendants provided various accounting and business services to Audette and his then-partner, Paul Fogarty, including helping them to start their construction business partnership, as well as preparing tax returns for both the business and Audette and Fogarty personally. In 2007, defendants helped Audette and Fogarty dissolve their partnership. One of the final acts defendants worked on for H&S was the placement of a mechanic's lien on a property on which H&S worked: the municipality halted construction on the project when H&S was approximately ninety-five percent complete. The lien placed on the property was for $44,403. Ultimately, plaintiffs’ 120-day statutory lien had not been timely secured or recorded, therefore it had lapsed. Plaintiffs brought suit against defendants in November 2009 for failing to secure the lien. The trial court found for plaintiffs and awarded damages in the amount of $44,403. Finding no error in the Superior Court's judgment, the Supreme Court affirmed. View "Audette & v. Cummings" on Justia Law

Gambro Renal Products, Inc. hired The Facility Group, Inc. ("TFG"), as the general contractor for the construction of a facility designed to produce kidney dialysis filters in Opelika. TFG contracted with the Hardy Corporation for specialized piping work on the project. Absolute Welding Services, Inc. ("AWS"), is a subsidiary of Rayco Industrial, Inc., a subsubcontractor hired by Hardy. Although the negotiations on the subcontract at issue in these appeals were between AWS and Hardy, the subcontract was executed by Rayco and Hardy. A dispute arose over whether the exclusion of "passivation" and the installation of piping in Rayco's offer was incorporated into its subcontract. Rayco filed a complaint against Hardy, Gambro and 15 fictitiously named parties, seeking an accounting, a declaratory judgment, a reformation of the contract, and perfection of a lien. Rayco asserted claims for damages for breach of contract, unjust enrichment/quantum meruit, and "work and labor done." Both parties unhappy with the eventual trial court order resolving the dispute, appealed the order. After careful consideration of the contracts and the trial court record, the Supreme Court reversed in part, and affirmed in part. The case was remanded with instructions for further proceedings. View "Hardy Corporation v. Rayco Industrial, Inc. " on Justia Law

The issue before the Supreme Court in this matter centered on whether defects in load-bearing walls were a result of "any defect" due to noncompliance with the buildings standards subject to a one year peremptive period, or whether they constituted a "major structural defect" subject to a peremptive period of five years. This case stemmed from damages caused by a home flooding. The District Court found the defects in the four exterior load-bearing walls constituted a major structural defect under the Act to which the five-year warranty period applied and awarded plaintiff Barbara Shaw damages. The Court of Appeal reversed, finding the plaintiff's claim was for a defect in workmanship subject to a one year peremptive period. After review, the Supreme Court reversed, finding the record supported the failure of the load-bearing walls affected the "load-bearing functions to the extent the home becomes unsafe, unsanitary, or is otherwise unlivable," as provided by La. Rev. Stat. 9:3143. Thus, it constituted a major structural defect and the five-year warranty applied. View "Shaw v. Acadian Builders & Contractors, LLC" on Justia Law