Construction Law Insights

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.

Travelers Indem. Co. v. Lessard Design, Inc., 2018 U.S. Dist. LEXIS 98937, 2018 WL 2939014 (E.D. Va. June 12, 2018)

In a previous lawsuit, Humphreys & Parnters Architects, LP (“Humphreys) sued Lessard Design, Inc. (“Lessard Design”), PDT Builders, LLC (“PDT”), and other Penrose Group entities (the “Penrose Group”) for copyright infringement. PDT tendered its defense to Lessard Design. After Lessard Design declined to defend PDT, the Penrose Group and PDT tendered their own defense to Travelers Indemnity Company of Connecticut (“Travelers”) pursuant to the Penrose Group’s Commercial General Liability policy (“CGL Policy”). Travelers accepted the tender of defense and paid the attorneys’ fees and costs associated with the defense in the Humphreys litigation. As such, Travelers was subrogated to the rights of its insureds, PDT and the Penrose Group. After granting summary judgment, the district court awarded $792,765.00 in attorneys’ fees to the defendants in the Humphreys litigation, which the parties later settled for $745,000.00. Travelers, as subrogee, then requested that Lessard Design indemnify Travelers for the outstanding attorneys’ fees and costs, which Lessard Design declined. Travelers then filed suit against Lessard.

M&C Hauling & Constr., Inc. v. Hale, 2018 Va. Cir. LEXIS 114 (Cir. Ct. Fairfax Cnty. June 28, 2018)

In June of 2014, William Hale d/b/a Mulch, Topsoil and Stone (“MTS”) and Hauling Unlimited (“HU”) entered into a subcontract for HU to provide truck hauling services for a construction project at the Joint Base Andrews in Prince George County, Maryland (the “Project”). HU then subcontracted those same services to M&C Hauling and Construction, Inc. (“M&C”). From June to July of 2014, M&C provided 2,020.25 hours of debris hauling services for the Project. Written sales tickets on HU letterhead were generated daily, reflected the day’s date, listed the hours worked on that date, and were signed by MTS’ project manager (the “Daily Tickets”). The price term of $75.00 per hour was not shown on the Daily Tickets, but was later included in an invoice dated August 9, 2014. On February 1, 2018, M&C filed a complaint against HU alleging that MTS and/or HU failed to pay M&C $86,456.23 for 1,152.75 hours of labor from June and July of 2014. HU argued that M&C’s claim was barred by Virginia’s three-year statute of limitations for unwritten contracts (Va. Code § 246(4)). 

Owens v. City of Va. Beach, 2018 Va. App. 212, 2018 WL 3732420 (Va. Ct. App. Aug. 7, 2018)

In December of 2015, Cynthia and Richard Owens (the “Owens”) hired a contractor (“First Contractor”) to renovate their condominium’s roof and an engineering firm to create a plan for the proposed work. The First Contractor applied for and the City of Virginia Beach (the “City”) issued a building permit for the work, which included the plan prepared by the engineering firm. In January of 2016, the First Contractor began work, took pictures of the work, presented the pictures to the engineering firm, and requested an inspection by the City. The engineering firm reviewed the photos and submitted them to the City along with a report. Neither the City nor the engineering firm visited the site. Relying on the engineering firm’s report and the photos, the City gave the project a “final” passing inspection status.

Precision Pipeline, LLC v. Dominion Transmission, 2018 U.S. Dist. LEXIS 133202, 2018 WL 3744018 (E.D. Va. Aug. 7, 2018)

In 2011, Dominion Transmission, Inc. (“Dominion”), retained Precision Pipeline, LLC (“Precision”), to build a stretch of natural gas pipeline through Pennsylvania and West Virginia. During construction, Precision encountered various issues, especially undisclosed subsurface utility crossings. Precision claimed that Dominion failed to pay Precision for its additional work in light of the drastically changed the scope of the project. 

Columbia Gas Transmission, LLC v. Grove Ave. Developers, Inc., 2018 US Dist. LEXIS 140942 (E.D. Va. Aug. 10, 2018)

Grove Avenue Developers, Inc. (“Grove”) sought to develop a property into a small condominium complex. The property was subject to Columbia Gas Transmission, LLC’s (“Columbia”) easement to lay, maintain, operate, and remove pipelines. Columbia’s easement required Columbia to maintain its pipeline “below cultivation, so that the Grantors may fully use and enjoy the premises. . .” Although Columbia did not prohibit Grove from constructing an asphalt roadway crossing over its two gas lines installed below cultivation, Columbia sought to require Grove to pay for costly pipeline “improvements” before the road was constructed, including excavation, inspection, application of new protective coatings, and installation of a special ground fill material to protect the pipelines from future damage based on the weight of crossing vehicular traffic.

Leesburg Building Partners, LLC v. Mike Berger Incorporated d/b/a MBI Concrete, Inc., Civil No. CL 115479 (Cir. Ct. Loudoun Cnty. Aug. 22, 2018)

On April 13, 2017, Leesburg Building Partners, LLC (“LBP”) contracted with Lansdowne Construction (the “Contract”) for Lansdowne Construction to construct an 18-unit condominium project known as the Ironsides Square Condominium (the “Project”). Lansdowne Construction subcontracted the concrete portion of the Contract to Mike Berger Incorporated d/b/a MBI Concrete, Inc. (“MBI”). In February of 2018, Lansdowne Construction completed the Project. On February 28, 2018, LBP paid Lansdowne Construction the full Contract price, including amounts for change orders. By April 27, 2018, LBP had conveyed all of the 18 units to third parties. On May 18, 2018, MBI recorded a Mechanic’s Lien against all of the condominium units in the amount of $48,180.00. On June 5, 2018, LBP filed a Petition for Release of Mechanic’s Lien, asserting that MBI’s Mechanic’s Lien was unenforceable under Va. Code § 43-7. On June 12, 2018, MBI filed a Petition to dismiss LBP’s Petition, asserting (i) that LBP lacked standing to bring the proceeding because it no longer had any interest in the property at issue and (ii) LBP’s Petition was not ripe for adjudication.

Allied Prop. & Cas., Ins. Co.v. Zenith Aviation, Inc., 2018 U.S. Dist. LEXIS 147627, 2018 WL 4112588 (E.D. Va. Aug. 29, 2018)

In 2017, Zenith Aviation, Inc. (“Zenith”) hired Abby Construction Company (“Abby”) to install an elevator at its warehouse. Abby used a wet saw to cut away eight inches of concrete. Abby, however, did not use any water with the wet saw, which generated concrete dust that settled on everything inside the building. As a result, Zenith’s inventory stored in the warehouse as well as its automated electronic retrieval system was damaged. Zenith had a commercial insurance policy (the “Policy”), which was issued by Allied Property and Casualty Company, Inc. (“Allied”). 

Innotec, LLC v. Visiontech Sales, Inc., 2018 U.S. Dist. 43833 (W.D. Va. March 16, 2018)

Innotec, LLC v. Visiontech Sales, Inc., 2018 U.S. Dist. LEXIS 84287, 2018 WL 2293969 (W.D. Va. May 18, 2018)

Innotec, LLC v. Visiontech Sales, Inc., 2018 U.S. Dist. LEXIS 121702 (W.D. Va. July 20, 2018)

Innotec, LLC v. Visiontech Sales, Inc., 2018 U.S. Dist. LEXIS 156793, 2018 WL 4387639 (W.D. Va. Sep. 14, 2018)

On February 14, 2013, Innotec, LLC (“Innotec”) and Visiontech Sales Group Hong Kong, Ltd. (“VSG HK”) entered into a Mutual Non-Disclosure Agreement (“NDA”), which primarily concerned each parties’ ability to protect its information shared with the other party to facilitate discussions regarding a business relationship, but also covered broader aspects of the parties’ potential business relationship. Innotec maintained relationships with factories and suppliers in China and agreed to supply Visiontech with goods and products obtained from these contacts. On March 28, 2013, Innotec Advance Energy Systems, LLC (“Innotec AES”) and Visiontech Sales, Inc. (“Visiontech”) entered into an Exclusivity Agreement (“EA”), which concerns the exclusive purchase and sale of one product, Vivoplay Charger Adapters. The EA contained an arbitration provision that provided, in pertinent part, that “[a]ny controversies or disputes arising out of or relating to [the EA] shall be resolved by binding arbitration in accordance with the then-current Commercial Arbitration Rules of the American Arbitration Association.” To obtain the product or goods from Innotec’s Chinese contacts, Visiontech had to go through Innotec or receive Innotec’s written permission to contract with the original manufacturer or supplier. Visiontech placed two orders under the EA in February 2016. The goods were shipped to and received by Visiontech, but were not paid for by Visiontech.

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