Construction Law Insights

Atkins v. A.H. Elec. Contrs., LLC, 2017 Va. Unpub. LEXIS 27, 2017 WL 4681945 (Va. Oct. 19, 2017)

A.H. Electric Contractors, LLC (the “LLC”) filed a complaint against Tamika Atkins (“Atkins”) for enforcement of a mechanic’s lien against her home. The complaint alleged that the LLC entered into a written contract with Atkins in 2014 under which the LLC would perform certain home repairs and that Atkins pay for the work performed. Atkins filed a counterclaim in which she asserted a claim for breach of contract alleging that the LLC failed to complete its work under the contract.

Taja Invs., LLC v. Peerless Ins. Co., 2017 U.S. App. LEXIS 19855, 2017 WL 4534788 (4th Cir. 2017)

Taja Construction LLC was renovating a row house owned by affiliate Taja Investments LLC (together, “Taja”) when the east wall of the house collapsed. Taja sought to recover the cost of repairs under its insurance policy, issued by Peerless Insurance Company (“Pearless”). Peerless determined that the collapse was caused by Taja’s failure to support the building’s foundation properly while excavating the basement, and it denied Taja’s claim under a policy exclusion for defects in construction or workmanship. Peerless also denied the claim under a separate exclusion for damages resulting from movement of the earth’s surface. Taja filed suit against Peerless for breach of its insurance policy.

HB 823 General contractors; waiver or diminishment of lien rights; subordination of lien rights.

Provides that a general contractor may not waive or diminish his lien rights in a contract in advance of furnishing any labor, services, or materials. The bill further provides that, notwithstanding the prohibition against waiving or diminishing such a lien right, a general contractor may, prior to or after providing any labor, services, or materials, contract to subordinate his lien rights to prior and later recorded deeds of trust, provided that such contract is (i) in writing and (ii) signed by any general contractor whose lien rights are being subordinated pursuant to such contract. This bill is identical to SB 319.

M&C Hauling & Constr., Inc. v. Hale, 2018 Va. Cir. LEXIS 114 (Cir. Ct. Fairfax Cnty. June 28, 2018)

In Virginia, a party has five years to bring a claim based on a written contract, but only three years to sue for breach of a verbal or non-written contract. In this case, the sub-subcontractor’s claim was out of time unless certain unsigned documents were considered to be a written contract.

Construction suretyship is a tripartite relationship where a surety issues bonds to guarantee a contractor’s obligation for performance and payment to an “obligee.” Sureties expect that their bond obligations will mirror the contractor’s obligations as defined by the operative contracts. However, in certain circumstances, the surety’s liability may be greater than the contractor’s obligations and exceed the operative contract terms.

Bd. of Supervisors v. Bd. of Zoning Appeals, 2018 Va. Cir. LEXIS 23 (Fairfax Cnty. Feb. 13, 2018)

Board of Supervisors and the Zoning Administrator of Fairfax County (“Plaintiffs”) brought suit seeking a declaratory judgment overturning a decision made by the Board of Zoning Appeals of Fairfax County (“BZA”) on September 27, 2017, in favor of particular landowners regarding the need for a special permit to construct a ropes course on the landowner’s property. Plaintiffs contended that BZA’s initial determination from June of that year was never appealed and thus was invalidly reconsidered.

Va. Natural Gas, Inc. v. Sumner, 2018 Va. Cir. LEXIS 21 (Cir. Ct. City of Chesapeake Feb. 23, 2018)

Virginia Natural Gas, Inc. (“VNG”) filed a Petition for Condemnation and Application for Entry pursuant to Va. Code §§ 25.1-223 and 224. VNG sought to acquire a permanent and temporary construction easements over a portion of respondents’ property, for the construction and installation of a natural gas pipeline as part of VNG’s Southside Connector Distribution Project (the “Project”). The proposed pipeline would be, at a minimum, three feet below grade and within an existing Dominion Virginia Power easement where electrical transmission lines currently run.

Suits v. Stephen Alexander Homes, LLC, 2018 Va. Cir. LEXIS 29 (Cir. Ct. City of Chesapeake Feb. 27, 2018)

Plaintiffs alleged defects in a home constructed for them by Defendant. Plaintiffs noticed defects a few days after closing and the contract included a warranty of completion and an express one-year warranty. The complaint contained counts alleging breach of contract, breach of warranty, fraud, constructive fraud, negligence in supervision of the project, and violation of the Virginia Consumer Protection Act (“VCPA”). Defendant demurred to all counts of the complaint, except for breach of contract and breach of warranty.

Nichols v. Vico Constr. Corp., 2018 Va. Cir. LEXIS 28 (Va. Cir. City of Chesapeake Mar. 1, 2018)

Either Hanbury Manor, LLC or Hanbury Manor Construction, LLC (collectively “Hanbury”) hired Vico Construction Corporation (“Vico”) to construct a drainage ditch between the Berskshire Estate subdivision and the Hanbury Manor subdivision. The drainage ditch crossed land owned by Thomas and Connie Nichols (the “Nichols”), upon which the City of Chesapeake has a drainage easement. During the construction of the drainage ditch, Vico allegedly cut down trees situated on the Nichols’ land and belonging the Nichols. On September 19, 2016, the Nichols sent Vico a notice of trespass and a demand for replacement of the trees. The court denied the Nichols motion for default judgment against Hanbury Manor, LLC because the Nichols’ service on a non-designated, non-member employee was not sufficient to give the limited liability company notice of the pendency of the action.

Slay’s Restoration, LLC v. Wright Nat’l Flood Ins. Co., 884 F.3d 489 (4th Cir. Mar. 9, 2018)

Wright National Flood Insurance Company (“Wright Insurance”) provided flood insurance to City Line Associates, LP (“City Line”). In September of 2014, City Line’s apartment complex was damaged by flooding. City Line hired First Atlantic Restoration, Inc. (“First Atlantic”) to repair the apartment complex and First Atlantic hired Slay’s Restoration, LLC (“Slay’s Restoration”) to perform “drying services.” Slay’s Restoration submitted documentation of its work to First Atlantic and City Line, which City Line used in presenting its 18 claims to Wright Insurance, totaling over $1,200,000.00 in the aggregate. To adjust the claims, Wright Insurance hired Colonial Claims Corporation (“Colonial Claims”), who then hired two consulting firms to evaluate the work done in repairing the apartment complex. These two consulting firms submitted reports that concluded that First Atlantic and Slay’s Restoration had not adhered to the applicable industry standards in repairing the apartment complex. After receiving these reports, Wright Insurance offered to pay City Line $530,000.00 as satisfaction of City Line’s 18 claims. Slay’s Restoration alleged that Wright Insurance, Colonial Claims, and the two consulting firms (the “Defendants”) participated in a “fraudulent scheme” to create “false reports [about the repair work done] to deny policy benefits to insureds and payment to contractors” in violation of the Racketeering Influenced and Corrupt Organizations Act (“RICO”).

Joe Rainero Tile Co. v. Young & McQueen Grading Co., 2018 U.S. Dist. LEXIS 48968 (W.D. Va. Mar. 26, 2018)

In 2017, the North Carolina Department of Transportation (“NCDOT”) awarded Young and McQueen Grading Company, Inc. (“Y&M”) a contract for a bridge contract based on its bid, which included a quote by Joe Rainero Tile Co., Incorporated d/b/a Permatile Concrete Products Company (“Permatile”) for the design and manufacturing of precast concrete culvert sections. Y&M selected Permatile as its subcontractor and sent it a purchase order for $85,031.34, the amount of Permatile’s quote. NCDOT rejected the initial draft design prepared by Permatile but eventually accepted Permatile’s design and Permatile manufactured the materials in Virginia and delivered them to the project site in North Carolina. Permatile then invoiced Y&M for the purchase price, which Y&M revised to pay on the grounds that Permatile was late in furnishing an acceptable design to NCDOT, which resulted in Y&M incurring liquidated damages on the project. Permatile then filed a breach of contract cause of action.

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