Construction Law Insights

Radiance Capital Receivables v. Foster, 2019 Va. LEXIS 135 (Va. Oct. 24, 2019)

On February 21, 2006, Robert D. Foster (“Foster”) and Wilson Building, LLC (“Wilson Building”) executed a promissory note in favor of New South Federal Savings Bank (“New South”) based on a construction loan. On March 2, 2006, Foster and James M. Wilson (“Wilson”) executed a Continuing Guaranty agreement (“Guaranty”) with New South in which they personally guaranteed and promised to pay all of Wilson Building’s debt. In the Guaranty, Foster and Wilson agreed to “waive[] the benefit of any statute of limitations or other defenses affecting the … Guarantor’s liability” under the agreement. Wilson Building eventually defaulted on the promissory note and notice of default and demand for payment was sent to Foster and Wilson on August 27, 2010. On November 23, 2015, Radiance Capital Receivables Fourteen, LLC (“Radiance Capital”), the assignee of New South and holder of the promissory note and Guaranty, filed a complaint against

Faneuil, Inc. v. 3M Co., No. 181202, 2019 WL 4891274 (Va. Oct. 3, 2019)

Plaintiff Faneuil, Inc. (“Faneuil”) entered into a subcontract with 3M Company (“3M”) to provide customer services in support of 3M’s contract with Elizabeth River Crossings Opco, LLC (“ERC”) to assess and collect tolls at facilities between Norfolk and Portsmouth, Virginia. Under the contract between Faneuil and 3M, 3M agreed to pay Faneuil $2.52 million in annual base compensation in equal monthly payments; 3M could reduce those base payments for a fiscal quarter if the previous quarter included fewer than expected toll transactions; 3M must reimburse Faneuil for

James River Stucco, Inc. v. Monticello Overlook Owners’ Ass’n, No. CL16-408, 2019 Va. Cir. LEXIS 468 (Cir. Ct. Sep. 30, 2019)

In the case-in-chief, plaintiff, James River Stucco, Inc. (“James River”), alleged that defendant, Monticello Overlook Owners’ Association (“Monticello”), breached their Agreement (“Agreement” or “Contract”) by failing to pay its outstanding balance. Monticello counterclaimed that James River had itself breached first by hiring subcontractors, thereby failing to staff the job with a sufficient number of appropriately skilled “employees” as the Contract provided. Id. The Court held that the Contract did not require James River to use only workers who were on its own payroll.

W. C. English, Inc. v. Rummel, Klepper & Kahl, LLP, 934 F.3d 398 (4th Cir. 2019)

W.C. English, Inc. (“English”) contracted with Virginia Department of Transportation (“VDOT”) to construct a bridge over Interstate 81 near Lexington, Virginia. English subcontracted with Rummel, Klepper, & Kahl, LLP (“RK&K”) to provide project quality assurance services and with CDM Smith, Inc. (“CDM”) to provide project quality control services.

Cacheris v. City Council of Alexandria, 2019 Va. Cir. LEXIS 443 (Cir. Ct. City of Alexandria Aug. 13, 2019)

The Alexandria School Board (“School Board”) decided that the City of Alexandria’s (“City”) T.C. Williams High School’s (“School”) athletic stadium needed improvement, including the addition of stadium lighting and a new speaker system. The City Council of the City of Alexandria (“City Council”) approved a Development Special use Permit (“DSUP”) that allowed the School Board to install and use the lighting and speaker systems. The Zoning Ordinance approval process mandated that the City Council, acting upon the DSUP, consider the effects of the improvements on neighboring properties and act to minimize any adverse effects the use provided for in the DSUP may have on those properties. Homeowners with properties adjacent to the stadium sought declaratory and injunctive relief to challenge the granting of the DSUP, arguing that the Council failed to consider the factors set forth in the Zoning Ordinance that provide for the protection of neighboring properties. The defendants demurred.

White Oak Power Constructors v. Mitsubishi Hitachi Power Sys. Americas, Inc., No. 3:17-CV-00355- JAG, (E.D. Va. Aug. 8, 2019)

Old Dominion Electric Cooperative (“Old Dominion”) entered into an engineer, procure, and construct (“EPC”) contract with White Oak Power Constructors (“White Oak”) to design and build a natural gas power plant in Maryland. The EPC contract’s choice of law provision identified Virginia law as the governing law. White Oak encountered several delays during its performance of the EPC contract related to property damage caused by fire, freezing water, and windstorms. The EPC contract required White Oak to achieve substantial completion of the project by May 1, 2017. Due at least in part to delays, White Oak did not achieve substantial completion until April 11, 2018. In response, Old Dominion assessed over $50 million in liquidated damages against White Oak.

Ferguson Enters., Inc. v. F.H. Plumbing, Heating & Air Conditioning, Inc., 830 S.E.2d 917 (Va. Aug. 1, 2019)

Ferguson Enterprises, Inc. (“Ferguson”) distributes Trane-manufactured HVAC equipment. Ferguson negotiated with Trane to provide rebates, known as “claim-backs,” if Ferguson sold Trane’s equipment at a specific discounted price, known as a “contract price.” Ferguson negotiated with Trane to provide contract pricing for one of its customers, F.H. Furr Plumbing, Heating, and Air Condition, Inc. (“Furr”). In 2013, Furr sued Ferguson. In its first amended complaint, Furr alleged that Ferguson sold equipment to Furr above “contract prices” and then submitted false claims to Trane for claim-backs, misrepresented to Furr that the prices charged to Furr were the lowest prices Ferguson could charge, that Ferguson’s misrepresentations were intended to induce Furr to buy Trane-manufactured equipment from Ferguson, and that Furr relied on these misrepresentations in entering into purchase agreements. Ferguson filed a demurrer and plea in bar, contending

1004 Palace Plaza, LLC v. Ebadom Food, LLC, 2019 U.S. Dist. LEXIS 118320 (E.D. Va. July 15, 2019)

1004 Palace Plaza, LLC (“Palace Plaza”) and Edabom Food, LLC (“Edam Food”) were parties to a 10-year lease for a commercial space that was to be used as a restaurant. The lease contained a 7-month rent grace period for the build-out of the space and required Edam Food to provide Palace Plaza with building plans within 14 days of executing the lease. Palace Plaza alleged that Edam Food did not provide building plans within the 14-day period, was not able to complete the build-out of the property on schedule in order to open the restaurant on time, did not get the required permits from the county, and ordered work to continue despite not having the required permits. Edam Food counterclaimed and asserted that Palace Plaza was responsible for certain aspects of the buildout and permitting which it failed to complete, hid issues from Edam Food regarding the buildout in order to have Edam Food begin paying rent and to foist additional costs on Edam Food.

Afresh Church v. City of Winchester, 2019 U.S. Dist. LEXIS 109975, 2019 WL 2746757 (W.D. Va. July 1, 2019)

Afresh Church (“Afresh”) has a leasehold interest in a building (the “Building”) owned by Farmont Avenue Holdings, LLC (the “Owner”) and located in an area designated as a “limited industrial district.” The City of Winchester (the “City”) has cited the Owner several times for allowing church services to be held in the Building because the area is not zoned for churches. While church uses are not expressly prohibited by the ordinances, they are not included in the list of allowed businesses and activities. Afresh sought a declaratory judgment that the City’s zoning ordinance and its enforcement action against the Owner violates Afresh’s rights under the Religious Land Use and Institutionalized Persons Act (“RLUIPA”) and to enjoin the City from pursuing any enforcement or other action against the Owner that would affect Afresh’s ability to continue to use the Building.

L-3 Communs. Corp. v. Serco, Inc., 926 F.3d 85 (4th Cir. 2019)

In 2004, the United States Air Force Space Command (“Air Force”) awarded Serco, Inc. (“Serco”) an indefinite delivery indefinite quantity contract (the “Prime Contract”). The Prime Contract required Serco to provide testing and upgrading services to certain Air Force facilities to protect those sites from high altitude electromagnetic pulse (“HEMP”) events. Under the Prime Contract, the Air Force would periodically provide Serco with a statement of work that outlined the requirements for a specific HEMP-related project. If Serco could not complete the work itself, Serco would issue a request for proposal (“RFP”). Serco entered into a subcontract for HEMP-related work (the “Subcontract”) with Titan Corporation, a predecessor to L-3 Applied Technologies, Inc. (“L-3 ATI”). The Subcontract stated that Serco was not required to issue any work to L-3 ATI and that L-3 ATI was still required to bid on HEMP-related work. Between 2004 and 2009, Serco awarded

Morris v. DSA Roanoke, LLC, 2019 Va. Cir. LEXIS 204 (City of Roanoke Cir. Ct. May 31, 2019)

The Court granted Thomas Builders, Inc.’s (“Thomas Builders”) demurrer as to Count I of the Amended Complaint of Third-Party Plaintiff DSA Roanoke, LLC (“DSA”) because “a grant of demurrer is appropriate in an instance where an indemnification provision in a construction contract can only function to indemnify a party from damages caused by its own negligence.” Although the court held that the indemnification provision did not on its face violate Virginia Code § 11-4.1 (i.e. Virginia’s anti-indemnity statute) dismissal of the claim “accords with the public policy goals behind Virginia’s restriction against provisions that provide such indemnification.”

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