Construction Law Insights

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.

On November 30, 2017, Wayne State University and Corvias completed a financial closing that secured $307.5 million in private financing for the development of new construction and the renovation of existing housing at Wayne State University’s campus in Detroit, Michigan. 

On January 13, 2017, Howard University and Corvias reached a financial closing that secured $114 million in private financing for the development and renovation of four residence halls and dormitory projects, including the East and West Towers, Drew Hall, and Cook Hall.

United States ex rel. Branscome Inc. v. Hanover Insurance Company, No. 2:15-cv-127, 2015 U.S. Dist. LEXIS 173841, 2015 WL 9665679 (E.D. Va. Dec. 8, 2015)

The U.S. Government contracted with Douglas P. Fleming, LLC (“Fleming”) for projects in two locations. Pursuant to the Miller Act, Hanover Insurance Company (“Hanover”) acted as surety, furnishing the U.S. Government with a bond. Fleming subcontracted with Branscome Eastern Shore’s (“Branscome”) for labor and materials. Branscome fully performed under the subcontract, but was not paid.

When owner-supplied plans and specifications turn out to be defective or insufficient in a traditional design/bid/build scenario, the contractor is not liable to the owner for any loss or damage resulting from the defects according to the “Spearin Doctrine.” Rather, the owner gives an implied warranty that the plans it has furnished are adequate. Courts in virtually all states have adopted the Spearin Doctrine.

United States ex rel. Engineered Servs., Inc. v. T.H.R. Enters., Inc., Civil No. 4:14cv21 (E.D. Va. Jan. 23, 2015)

The Navy contracted with THR Enterprises, Inc. (“THR”) to upgrade the HVAC system in one of its buildings. THR subcontracted with Applied Control Specialists (“Applied”) to install the Direct Digital Control System. Applied Assigned the subcontract to Engineered Services, Inc. (“Engineered Services”).

Recently, in ProBuild v. DPR, a Charlottesville, Virginia Circuit Court allowed a subcontractor to proceed straight to litigation despite the subcontract’s ADR provisions. The matter involved a dispute that arose after the completion of a construction project where ProBuild, the subcontractor, handled the framing and installation of exterior siding for DPR, the general contractor. ProBuild made a final payment claim of approximately $1.9 million on DPR, but DPR asserted a setoff of about $1.4 million for project delays and defective work that DPR said it had to cure.

On May 14, 2015, the University System of Georgia and Corvias, as part of a financial closing, secured $548.3 million in private financing for a public-private-partnership. Corvias was chosen by the Board of Regents for the University System of Georgia to develop, construct, manage, and maintain student housing on nine campuses in Georgia as part of a 65-year partnership. 

General District Court Increases Allowed Claims to $25,000

Effective July 1, 2011, the maximum amount for which a party may bring a claim in the General District Court (GDC) is increased from $15,000 to $25,000. (Va. Code §16.1‐77.) This will provide a faster and more inexpensive way for parties to litigate disputes within that threshold.

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