Construction Law Insights

Hensel Phelps Constr. Co. v. Perdomo Indus., LLC, 2019 U.S. Dist. LEXIS 82636, 2019 WL 2111530 (E.D. Va. March 14, 2019)

Hensel Phelps Constr. Co. v. Perdomo Indus., LLC, 2019 U.S. Dist. LEXIS 81623, 2019 WL 2112955 (E.D. Va. May 14, 2019)

On May 12, 2016, Hensel Phelps Construction Co. (“Hensel Phelps”) and Perdomo Industrial, LLC (“Perdomo”) entered into a subcontract for the Freedom Plaza Project (the “Subcontract”). As of December 19, 2016, Perdomo was in default under the Subcontract. If a party defaults, the Subcontract requires that such claims or disputes be arbitrated pursuant to the AAA’s Rules for Construction Industry (“AAA Rules”) and that the arbitrator’s decision is final, conclusive, and binding on the parties and enforceable in a court of competent jurisdiction. On February 27, 2017, Hensel Phelps filed a Demand for Arbitration against Perdomo and its surety, Allied World Insurance Company (“Allied”). On May 21-25 and June 4-7 of 2018, an evidentiary hearing was conducted before an arbitration panel, which Perdomo failed to appear at the hearings. On August 21, 2018, the arbitration panel issued an award in Hensel Phelps favor in the amount of

Fluor Enters. v. Mitsubishi Hitachi Power Sys. Ams., Inc., 2019 U.S. Dist. LEXIS 65470, 2019 WL 1620755 (E.D. Va. April 16, 2019)

In February of 2012, Mitsubishi Hitachi Power Systems Americas, Inc. (“Mitsubishi”) entered into a Turbine Supply Agreement (“TSA”) with Virginia Electric and Power Company (“VEPCO”) to sell turbine generators to VEPCO for a power generating facility (the “Brunswick Project”). In July of 2012, VEPCO contracted with Fluor Enterprises, Inc. (“Fluor”) for Fluor to construct the Brunswick Project (the “Fluor Contract”). Around the same time, VEPCO assigned the TSA to Fluor through a Partial Assignment, Assumption, and Coordination Agreement (“Assignment Agreement”), but VEPCO retained the obligation to pay Mitsubishi per the terms of the TSA. Both the TSA and the Assignment Agreement contained jury trial waiver provisions.

Henderson v. Senior Living Choices of Va., Inc., No. CL17-1634 (Chesterfield Cnty. Cir. Ct. Apr. 4, 2019)

Defendant owner Senior Living Choices of Virginia, Inc. (“SLC”) retained plaintiff contractor Henderson, Inc. (“Henderson”) to manage a major $42 million expansion and renovation of the Brandermill Woods assisted living facility in Chesterfield County, Virginia. In June 2017, Henderson sued SLC for breach of contract in the amount of $1.4 million, including “failing to obtain the required permits and respond to requests and proposed change orders.” SLC counterclaimed for Henderson’s alleged “failing to obtain required permits, failing to properly manage the project” and for unnecessary charges. SLC alleged its damages for delay in completion, loss of revenue, and other costs in the amount of $7.1 million.

W. World Ins. v. Air Tech, Inc., 2019 U.S. Dist. LEXIS 53683, 2019 WL 1434666 (W.D. Va. Mar. 29, 2019)

In February of 2015, Air Tech, Inc. (“Air Tech”) entered into a subcontract with Hall’s Construction Corp. (“Hall’s Construction”) to supply a Solvent Recovery Chiller (the “Chiller”) as part of a construction project Hall’s Construction had undertaken for BAE Ordinance Systems, Inc. The Chiller was delivered and installed. Thereafter, the Chiller failed, which resulted in Hall’s Construction having to replace the Chiller. In February of 2017, Hall’s Construction sued Air Tech in state court (the “State Court Action”). In August of 2017, Hall’s Construction amended its complaint to add Johnson Controls, Inc. (“Johnson Controls”) as a defendant. Western World Insurance Company (“Western World”) had issued a commercial insurance policy to Air Tech with

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.

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