Construction Law Insights

Ware v. Commonwealth, 2019 Va. App. LEXIS 212, 2019 WL 4777251 (Va. Ct. App. Oct. 1, 2019)

In 2004, Walker W. Ware, IV (“Ware”) subdivided a parcel of land and recorded subdivision documents, including a “Road Dedication and Maintenance Agreement” and Addendum 1 (the “Agreement”). The Agreement provided that each lot owner would be assessed $200 per year for maintenance and upkeep of the right-of-way. In 2009, Ware unilaterally modified the Agreement by executing and recording Addendum 2, which increased the annual assessment from $200 to $5,000, but discounted $4,800 if Ware received the owner’s payment on time. From 2006 to 2014, Ware performed minimal repairs and kept the payments in a segregated account. In 2014, Ware transferred $3,000 from the segregated account to his business account for road repairs. In 2014, Stephen and Susan Cabiroy as trustees of a family trust (the “Cabiroy”) sent a check for $356.10 to Ware for two parcels, deducting the cost of gravel Cabiroy put on the road. Ware returned the

Bass v. Romano (In re Romano), 2019 Bankr., LEXIS 3264, 2019 WL 5204455 (Bankr. E.D. Va. Oct. 15, 2019)

On October 8, 2016, Melissa Bass (“Bass”) executed a contract (the “Purchase Agreement”) to acquire a residence (the “Property”) from CNJ Ventures, LLC (“CNJ”), a Virginia limited liability company owned by Joshua Romano (“Romano”). The Purchase Agreement contemplated that CNJ would perform renovations and repairs on the Property prior to the closing, which was scheduled for January 2017. Closing was delayed as work on the Property ensued. In the interim, Bass had sold her old home and moved into temporary lodgings while awaiting her new home’s completion.

Fid. & Deposit Co. of Maryland v. Ramsgate Corp., Inc., 2020 U.S. Dist. LEXIS 171701, 2020 WL 5604823 (E.D. Va. Sep. 18, 2020)

Following years of unsuccessful efforts to finalize approval of a subdivision’s infrastructure permits, a local building authority made a claim against the developer’s construction bond. The authority’s original claim was for $426,179. Following productive negotiations with the bonding company, however, the authority offered to settle for $80,000. On the advice of an outside consultant, the bonding company accepted the offer.

The bonding company then sought reimbursement from the developer pursuant to the bond indemnity agreement, under which the developer agreed to:

  • exonerate, indemnify, and keep indemnified the Surety from and against any and all liability for losses and/or expenses of whatsoever kind or nature (including, but not limited to, interests, court costs and counsel fees) and from and against any and all such losses and/or expenses which the Surety may sustain and incur: (1) By reason of having executed or procured the execution of the Bonds.

The indemnity clause further provided that:

  • [i]n the event of any payment by the Surety ... the Surety shall be entitled to charge for any and all disbursements made in good faith and about the matters herein contemplated by this Agreement under the belief that it is or was liable for the sums and amounts so disbursed, or that it was necessary or expedient to made such disbursements, whether or not such liability, necessity of expediency existed; and that the vouchers or other evidence of any such payments made by the Surety shall be prima facie evidence of the fact and amount of the liability to the Surety.

The developer argued that the bonding company had breached the parties’ agreement by paying the authority’s claim in bad faith, where it had an “absolute defense” to the authority’s bond claim under the statute of limitations. The developer took the position that, because the project for which the bond was issued had been “completed” more than five years earlier, the authority’s claim on the bond was time barred by any applicable statute of limitations. Consequently, the developer argued, the bonding company’s reimbursement claim was a nullity. The Court disagreed.

The Court first found that as a matter of law, paying a claim despite the availability of a possible defense does not establish a surety’s bad faith. The developer argued that a “statute of limitations defense” is different, because it is an “absolute bar” to action, unlike other affirmative defenses. Again, the Court disagreed.

A statute of limitations defense calls for two inquiries: (1) the length of the applicable limitations period and (2) the date the claim accrued—both of which were sharply disputed here. Accordingly, while a statute of limitations may have provided a strong defense, it was not guaranteed, or “absolute.” It follows that the bonding company’s choice to settle the authority’s claim—for significantly less than originally demanded—rather than pursue a possible statute of limitation’s defense, did not indicate “bad faith.” For that reason, the Court awarded judgment to the bonding company.

PLDR Law Scott Kowalski 1 PLDR Law Mark Burgin 1

Thomas Wolf 002 Kenneth Stout 002 Jason Goldsmith 002

Kansas v. SourceAmerica, 2020 U.S. App. LEXIS 30263, 2020 WL 5640409 (4th Cir. Sep. 22, 2020)

The dispute revolves around the procurement of a contract for services to be performed in The Department of the Army’s (“Army”) dining facilities at Fort Riley, Kansas. For the factual background, please see last year’s case digest for Source America v. United States Dept’ of Educ., 368 F. Supp. 3d 974 (E.D. Va. Mar. 15, 2019). The cross-appeals are from the district court’s decision to overturn, in part, the Department of Education (“DOE”) arbitration panel’s award in favor of the State of Kansas (“Kansas”), by and through the Kansas Department for Children and Families (“KDCF”). In the instant appeal, Kansas appealed the district court’s summary judgment decision as to the statutory standing of Lakeview Center, Inc. ("Lakeview") and SourceAmerica, formerly

Biscayne Constr., Inc. v. Bd. of Supervs. of Fairfax Cty., 103 Va. Cir. 306 (Fairfax Cnty. Cir. Ct. Oct. 28, 2019)

The issue before the Court was whether the decision of a county’s purchasing agent was a “final decision” of a “public body” under the Virginia Public Procurement Act (“VPPA”). The Board of Supervisors for Fairfax County, Virginia (the “Board”) argued it was, but the Court disagreed.

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