Construction Law Insights

Basham v. Jenks, 2018 U.S. Dist. LEXIS 79763 (W.D. Va. May 10, 2018)

Timothy Basham (“Basham”), a South Carolina resident, and Timothy L. Jenks (“Jenks”), a Virginia resident, formed Waterstone Development Company, LLC (“Waterstone”) in 2007 to develop homes in Roanoke County, Virginia. Basham and Jenks each owned 50 percent of Waterstone and both were required to make contributions to ensure liquidity and viability of the company. During its existence, Waterstone entered into multiple promissory note arrangements, at least one of which was with Franklin Community Bank (“Bank”). In December of 2013, Waterstone became insolvent, with outstanding obligations to Bank and other creditors in excess of $280,000.00. Basham alleged that he paid $274,000.00 to creditors, while Jenks only paid $6,000.00. Basham filed a breach of contract claim against Jenks, who removed the case to federal court.

Faneuil Inc. v. 3M Co., 2018 Va. Cir. LEXIS 74 (Cir. Ct. City of Richmond May 14, 2018)

In 2011, the Virginia Department of Transporation (“VDOT”) hired Elizabeth River Crossing Opco, LLC (“Elizabeth River”) to develop, design, construct, manage, operate, and maintain a tolling project in the Hampton Roads region of Virginia (the “Project”). Elizabeth River contracted 3M Company (“3M”) to design, implement, and operate the electronic tolling system (the “Tolling System”) for the Project. On October 9, 2013, 3M engaged Faneuil Inc. (“Faneuil”) to, among other tasks, run the customer service center and identify, invoice, and accept payment from the non-E-Z Pass drivers under a subcontract that contained a flat monthly rate (the “Tolling Subcontract”). Section 14.05(a) of the Tolling Subcontract required the parties to execute a “Scope Change” in the event of any “material addition to, deletion from, suspension of or other modification to” or a “material change to the requirements of the” Tolling Subcontract. Section 25.18 of the Tolling Subcontract further required the parties to memorialize in writing any alteration, amendment, or revocation to the matters covered in the Tolling Subcontract.

LAM Enters., LLC v. Roofing Sols., Inc., 2018 Va. Cir. LEXIS 80 (Cir. Ct. City of Roanoke May 30, 2018)

In September of 2012, LAM Enterprises, LLC (“LAM”) contracted with Roofing Solutions, Inc. (“Roofing Solutions”) for Roofing Solutions to replace a portion of a roof on a commercial property owned by LAM (the “Contract”). The Contract price was $44,900.00. In February of 2014, LAM filed a lawsuit against Roofing Solutions, alleging it breached the Contract’s indemnity and warranty provisions. In May of 2017, Roofing Solutions moved for partial summary judgment on whether the Contract’s limitation of liability provision capped Roofing Solutions’ liability at the Contract price of $44,900.00. Paragraph 6 of the Contract stated, “[i]t is agreed that in no event shall the liability of the Contractor exceed the contract price.” The Court granted Roofing Solutions’ motion for partial summary judgment on the limitation of damages issue. 

CGI Fed. Inc. v. FCi Fed., Inc., 2018 Va. LEXIS 74, 2018 WL 2728726 (Va. June 7, 2018)

In 2012, the State Department solicited bids for a visa processing contract. CGI Federal, Inc. (“CGI”), as a large contractor, was ineligible to bid because the State Department reserved the contract for small businesses. Although FCi Federal, Inc. (“FCI”), as a smaller contractor, was eligible to bid for the contract, it did not have the capabilities to perform the work alone. Therefore, CGI and FCI agreed to cooperate in submitting a proposal for the contract and entered into a teaming agreement on September 19, 2012 (the “Teaming Agreement”) to prepare a proposal. Under Section 2.0 of the Teaming Agreement, FCI “retain[ed] express and exclusive control over all prime proposal activities . . . as well as negotiation of any resulting prime contract.”  From the outset, CGI wanted at least 40% of the work available under the contract or its participation in the Teaming Agreement would not be worthwhile. The Teaming Agreement’s Statement of Work provided “Subject to the final solicitation requirements, [CGI] will receive forty-five percent (45%) work share of the total contract value . . . but the work share commitment may not be exactly 45% each year.”

Knox Energy, LLC v. Gasco Drilling, Inc., 2018 U.S. App. LEXIS 15646, 2018 WL 2944408 (4th Cir. June 11, 2018)

Knox Energy, LLC and Consol Energy, Inc. (collectively, “Consol”) filed a declaratory judgment action against Gasco Drilling, Inc. (“Gasco”), seeking a declaration that a drilling contract between Consol and Gasco was unenforceable because there was no meeting of the minds. Gasco filed a counterclaim, alleging that the contract was valid and enforceable. A jury returned a verdict in favor of Consol, finding there was no meeting of the minds. On appeal, Gasco argued: (1) the district court erred in instructing the jury on mutual assent; (2) Consol engaged in discovery misconduct, which warranted a new trial; and (3) the district court abused its discretion in excluding a document that Gasco sought to introduce during trial, which Gasco claimed also warranted a new trial. The Fourth Circuit Court of Appeals affirmed the district court’s decisions.

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