Construction Law Insights

JPMCCM 2010-C1 Aquia Office LLC v. Mosaic Aquia Owner, LLC, 101 Va. Cir. 34, 2019 Va. Cir. LEXIS 70 (Stafford Cnty. March 18, 2019)

In 2007, RAMCO Virginia Properties, LLC (“RAMCO Virginia”) launched the Aquia Office Center project (the “Project”) and bought the land to re-develop into a mixed-use development for office, retail, and residential space. On May 13, 2010, to attract businesses, RAMCO Virginia developed a Reciprocal Easement Agreement (“REA”) to govern property rights. The REA required the Project’s Administrator to maintain common areas. Under the REA, each business owner is charged with paying its fair portion of the common area maintenance (“CAM”) charges and abiding by the REA’s requirements for building and developing the property.

Source America v. United States Dep’t of Educ., 368 F. Supp. 3d 974 (E.D. Va. March 15, 2019)

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. The Army contracts for two different types of services in its dining facilities, Full Food Services (“FFS”) and Dining Facility Attendant (“DFA”) services. The Army defines FFS as “a contract that covers those activities that comprise the full operation of an Army dining facility” and DFA services as “those activities required to perform janitorial and custodial duties within dining facilities.” In 2006, the Army awarded the Kansas Department for Children and Families (“Kansas”) a FFS contract pursuant to the Randolph-Sheppard Act (“RSA”). As required by the RSA, Kansas awarded the contract to a blind vendor. In 2011, the Army awarded Kansas a follow-up contract for the provision of FFS that was scheduled to expire in August 2015. Thereafter, the Army determined that it no longer needed a FFS contract because Army soldiers could perform the duties. However, because Army regulations prohibit soldiers from performing DFA services, the Army was required to contract out DFA services.

Marines Plumbing, LLC v. Durbin, 2019 Va. Cir. LEXIS 43 (Fairfax Cnty. Cir. Ct. Mar. 14, 2019)

Marines Plumbing, LLC (“MP”) performed plumbing repair work on the Defendants’ property and the Defendants did not pay for the repair work. The Defendants’ property is subject to a Deed of Trust securing a loan, which was recorded prior to the plumbing repair work performed by MP. On April 18, 2018, MP recorded a memorandum of lien against the Defendants’ property. On October 17, 2018, MP filed a complaint to enforce the lien. The Defendants moved to dismiss the complaint, arguing that it was fatally deficient due to its failure to name necessary parties, i.e. the two trustees and the lender.

Kerlavage v. America’s Home Place, Inc., 2019 Va. Cir. LEXIS 39 (Spotsylvania Cnty. Cir. Ct. Mar. 11, 2019)

Jeffrey Kerlavage (“Kerlavage”) contracted with America’s Home Place, Inc. (“AHP”) to build a home. Construction began in October of 2014. AHP hired Indoor Comfort Experts, LLC (“ICE”) to install an HVAC system, Builder Services Group, Inc. dba Cary Quality’s (“Cary Quality”) to install a vapor barrier in the crawl space, Vangorder Contracting, LLC (“Vangorder”) for the carpentry, Brandonbilt Engineering, P.C. (“Brandonbilt”) to waterproof the home and lay a foundation drain in the crawlspace, and PermaTreat Pest Control Company (“PermaTreat”) to remediate mold in the home. Kerlavage alleged that AHP and its subcontractors failed to properly perform their respective responsibilities and negligently created an unsafe condition in the home, which resulted in personal injuries, physical and emotional pain and suffering, medical expenses, and expenses related to repairing defects and mold remediation.

Gateway Residences at Exch., LLC v. Ill. Union Ins. Co., 2019 U.S. App. LEXIS 6044 (4th Cir. Feb. 28, 2019)

Gateway Residences at Exchange, LLC (“Gateway”) hired Mechanical Design Group (“MDG”) to provide various engineering and construction services, including installing two life safety power generators in the garage of an apartment complex. MDG did not install the generators properly and, when the generators were started, they caught on fire, wrecking the generators and delaying the opening of the apartment complex. Gateway demanded that MDG cure the negligent design and installation of the generators. In September of 2014, MDG went out of business. Before starting work on the Gateway project, MDG bought liability insurance from the Illinois Union Insurance Company (“IUIC”) that only covered claims made against the insured and reported to the insurer during the policy period, which was February 1, 2014 through February 1, 2015. MDG never informed IUIC about Gateway’s potential claim before its insurance policy expired. IUIC first

Brush Arbor Home Constr. v. Alexander, 823 S.E.2d 249 (Va. Feb. 21, 2019)

Andrea and Mark Alexander (the “Alexanders”) sued Brush Arbor Home Construction, LLC (“Brush Arbor”), alleging that the home constructed by Brush Arbor for the Alexanders’ suffered from a variety of defects that caused the home to sustain water damage. Article 12 of the parties’ contract contained the following arbitration clause: “Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the Better Business Bureau under its Construction Industry Arbitration Rules, and judgment on the award by the arbitrator(s) may be entered in any court having jurisdiction thereof.” Brush Arbor filed a motion to compel arbitration. The circuit court denied Brush Arbor’s motion because “the Better Business Bureau does not have any construction industry arbitration rules” and, therefore, it would be “impossible to execute the term of the agreement.”

ACA Fin. Guar. Corp. v. City of Buena Vista, 917 F.3d 206 (4th Cir. 2019)

In 2002, the Commonwealth of Virginia created the Public Recreational Facilities Authority (the “Authority”) to construct, operate, and maintain public recreational facilities for the City of Buena Vista (the “City”). In 2003 the Authority, at the City’s request, took out a loan to finance the construction of a municipal golf course called the Vista Links Golf Club (the “Golf Course”). In 2005, the City and Authority sought to refinance the Golf Course loan and issued over $9 million in bonds. The Authority and SunTrust Bank (the “Bank”) entered into a Trust Agreement, which described how the bonds would be issued and repaid. To repay the bonds, the Authority leased the Golf Course to the City and the rent payments were used to repay the bonds, but the City’s obligation to make rent payments was subject to its decision to appropriate funds each year. The City issued a Deed of Trust to the Bank pledging the existing City Hall building and police station as security and another Deed of Trust pledging the Golf Course as security (collectively, the “Deeds of Trust”). The Bank retained ACA Financial Guaranty Corporation (“ACA”) to provide insurance on the bonds.

Sherman v. South Grading, Inc., 2019 Va. Cir. LEXIS 10 (City of Chesapeake Cir. Ct. Jan. 28, 2019)

Heather Sherman (“Sherman”), judgment creditor/garnishor, obtained a judgment against Southern Grading, Inc. (“SGI”), judgment debtor. Sherman caused the court to issue a summons in garnishment on November 21, 2017. Sherman then served the garnishment summons on Virtexco Corporation (“Virtexco”) on November 30, 2017. Virtexco filed a garnishment answer that stated that it held no funds owed to SGI. Sherman disagreed and asked the court to determine Virtexco’s potential liability. A garnishment proceeding is a separate proceeding in which the judgment creditor enforces the lien of his execution against property or contractual rights of the judgment debtor which are in the hands of a third person, the garnishee. The judgment creditor stands on no higher ground than the judgment debtor and can have no rights greater than the judgment debtor possess. Raley v. Haider, 286 Va. 164, 170 (2013). Upon service the summons on the garnishee, the debts already due to the judgment debtor when the summons in garnishment is served upon the garnishee and any indebtedness of the garnishee to the garnishee to the judgment debtor which arises between the date of service of such summons on the garnishee and the return date of the summons is subject to garnishment.

JES Constr., LLC v. Bd. of Contrs., Dep't of Prof'l & Occupational Regulation, 2018 Va. App. LEXIS 361, 2018 WL 6738972 (Va. App. Dec. 26, 2018)

On February 19, 2015, JES Construction, LLC (“JES”) contracted with a homeowner to make certain foundation repairs to the home (the “Contract”). The Contract provided that JES would obtain a permit for its work. On April 23, 2015, six days into the project, the homeowner contacted JES and inquired about whether a permit was obtained. JES said that it had requested a permit, but it had not been delivered. On April 24, 2015, the homeowner learned from Henrico County that JES had not yet applied for a permit. The next day, JES applied for a permit, but the request was rejected. JES corrected the deficiency and Henrico County issued the permit on May 15, 2015.

Loch Levan Land L.P. v. Bd. of Supervisors, No. 181043, 2018 Va. LEXIS 204 (Va., Dec. 18, 2018)

In the early 1990s, the plaintiffs (collectively “HHHunt”) built an upscale housing development known as “Wyndham” in northern Henrico County (the “County”), abutting the Hanover County line. The Chickahominy River marks the border between the counties. To access the development, HHHunt also constructed Dominion Club Drive, a “spine” road connecting Wyndham with surrounding arteries. HHHunt’s original plans showed Dominion Club Drive extending into Hanover County, where it also owned several non-contiguous parcels of land. The physical road however, terminated in a cul-de-sac on the Henrico County side of the river. Since 1991, Henrico County’s Major Thoroughfare Plan has included Dominion Club Drive as built, but not the planned extension into Hanover County. In 1992, HHHunt posted a separate bond to extend Dominion Club Drive to the Chickahominy. Over the next 25 years, HHHunt updated the bond several times, but never constructed the road. In the interim, as a cost-saving measure, HHHunt split the plat for the unbuilt extension of Dominion Club Drive into two pieces.

Mobilization Funding, LLC v. W.M. Jordan Co., 2018 U.S. Dist. LEXIS 202748, 2018 WL 6257109 (E.D. Va. Nov. 28, 2018)

Riverside Retirement Services (“Riverside”) contracted with W.M. Jordan (“Jordan”) to build the Apartments at Patriots Colony in Williamsburg, Virginia. Jordan’s project manager, Jerry Barthelemy (“Barthelemy”), approved payments to subcontractors. On December 12, 2016, Jordan and Mexarg Contractors, LLC (“Mexarg”) entered into a subcontract (the “Subcontract”). On January 10, 2018, Mexarg’s subcontractors complained that Mexarg had not paid them. On January 20, 2018, Mexarg submitted a payment application to Jordan. Barthelemy approved Mexarg’s payment application, but did not notify Mexarg that he had approved the payment application. On January 30, 2018, Mexarg entered into a loan agreement with Mobilization Funding, LLC (“Mobilization”) for up to $361,155.00 and was secured by contract assignments, among other collateral (the “Loan Agreement”). On January 31, 2018, Jordan entered into a Joint Check Agreement (“JCA”) with Mexarg and Mobilization. During the JCA and Loan Agreement, Mobilization did not know about Mexarg’s failure to pay subcontractors.

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