Construction Law Insights

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.

W.C. English v. Rummel, Klepper, and Kahl, LLP, 2018 U.S. Dist. LEXIS 36158 (W.D. Va. Mar. 6, 2018)

The Virginia Department of Transportation (“VDOT”) and W.C. English, Inc. (“English”) entered into a contract for the construction of a bridge over Interstate 81. English was responsible to VDOT for designing and constructing the bridge to certain specifications. Per its contracts with other parties, English was required to build the bridge in accordance with its subcontractor AECOM’s approved plans and any change to the bridge design was to be approved through written requests submitted to AECOM, who then ensured the revision met VDOT standards.

Miller v. Foremost Indus., 2018 U.S. Dist. LEXIS 55547 (W.D. Va. Apr. 2, 2018)

On March 17, 2016, Foremost Industries, Inc. of PA (“Foremost”) and Jason Miller entered into an agreement for Foremost to deliver a prefabricated home to Miller’s address. In December of 2016, Miller filed a complaint against GLD Foremost Holdings, Inc. (“GLD”) in Clark County’s Circuit Court. On January 3, 2017, GLD removed the case to the federal district court. On April 20, 2017, Miller filed an amended complaint against GLD and Foremost. In the original and amended complaint, Miller alleged fraud in the inducement.

Gateway Residences at Exch., LLC v. Ill. Union Ins. Co., 2018 U.S. Dist. LEXIS 58256, 2018 WL 1629107 (E.D. Va. Apr. 3, 2018)

On September 16, 2016, Gateway Residences at Exchange, LLC (“Gateway”) sued Mechanical Design Group, Ltd (“MDG”) alleging negligent design by MDG during the design and construction of a building in 2014. MDG did not appear in the lawsuit and Gateway obtained a default judgment for over $900,000.00 plus approximately $22,000.00 in attorney’s fees and costs. Thereafter, Gateway sought to recover on the judgment from Illinois Union Insurance Company (“IUIC”), MDG’s insurer, claiming that IUIC is required to indemnify MDG. From February 1, 2014 through February 1, 2015, IUIC covered MDG under an insurance policy (the “Policy”). The Policy is a “claims made and reported” policy, which required, as a condition of coverage, that a claim be made and reported to the insurer within the policy period. IUIC alleged that there is no coverage under the Policy because IUIC did not receive a claim during the existence of the Policy, which, at the request of First Insurance Funding (“FIF”), was cancelled on September 5, 2014. FIF was the premium finance company for the Policy and FIF had power of attorney over the Policy. On September 2, 2016, IUIC was first notified of Gateway’s claim.

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