Construction Law Insights

Balfour Beatty Infrastructure, Inc. v. Precision Constr. & Mgmt. Grp., LLC, 2019 U.S. Dist. LEXIS 86832, 2019 WL 2216470 (E.D. Va. May 22, 2019)

Balfour Beatty Infrastructure, Inc. v. Precision Constr. & Mgmt. Grp., LLC, 2019 U.S. Dist. LEXIS 87692, 2019 WL 2224966 (E.D. Va. May 6, 2019)

On July 14, 2016, Balfour Beatty Infrastructure, Inc. (“Balfour Beatty”) and Precision Construction and Management Group, LLC dba Precision Electrical & Instrumentation (“Precision”) entered into a firm lump sum subcontract (the “Subcontract”) in the amount of $1,266,171.00 for Precision to perform the electrical work for the Broad Run WRF Biosolids Project for Loudoun Water (the “Project”). The Subcontract provided that Precision was liable to Balfour Beatty for all damages and liability associated with Precision’s default, including attorney’s fees, enforcing the

Subcontract, paying vendors and suppliers, Project schedule delay damages, and liquidated damages. Under the Subcontract, time was of the essence, Precision’s failure to supply enough skilled workers was considered to be a default, and Balfour Beatty was permitted to withhold progress and final payments to Precision in order to protect Balfour Beatty from Precision’s acts and omissions. The Project began in July of 2016 and had a projected substantial completion date of July 4th or 5th of 2018.

Shortly after commencement, Precision failed to supply sufficient skilled workers and materials to maintain the Project schedule. On December 22, 2017, Balfour Beatty sent Precision a letter identifying Precision’s difficulties in supplying sufficient manpower to maintain the Project schedule, advising of adverse impacts to the schedule from Precision’s failure to do so, and indicating that Balfour Beatty would mitigate the impact caused by Precision’s failure to perform in accordance with the Subcontract. On January 30, 2018, the parties agreed that Balfour Beatty would contract with another electrical company to supplement Precision’s workforce and Balfour Beatty’s back charge to amounts owed to Precision. On January 31, 2018 and April 31, 2018, Balfour Beatty sent notices to Precision advising Precision that it would be liable for liquidated damages assessed against Balfour Beatty by the Owner. On March 7, 2018, the Owner began deducting liquidated damages from Balfour Beatty’s Application for Payment in the amount of $3,680 per day. On May 8, 2018, Balfour Beatty contracted MMR Constructors (“MMR”) to supplement Precision’s laborers.

On July 20, 2018, Balfour Beatty terminated the Subcontract and discovered that some of Precision’s work was defective and required correction. During the contract performance period, Balfour Beatty received notification from several of Precision’s vendors and suppliers that they were not being paid by Precision for labor and materials supplied to the Project. Some of the vendors and suppliers were paid via joint checks from available subcontract funds. On November 13, 2018, Balfour Beatty filed this action. After Precision failed to respond to Balfour Beatty’s Complaint or appear at any proceedings, Balfour Beatty moved for default judgment.

The District Court adopted the Magistrate’s Report and Recommendation, which recommended that judgment be entered against the and in favor of in the amount of $930,000.00 on its breach of contract claim, $60,000.00 on its conversion claim, and $21,180.96 for attorneys’ fees and costs, but deny Balfour Beatty’s motion for $8,322.23 in contract damages that were sought in Balfour Beatty’s motion but not plead in its complaint. Precision materially breached the Subcontract by failing to provide sufficient manpower to the Project, delaying the Project schedule, performing defective work, causing scheduling delays resulting in liquidated damages being deducted from Balfour Beatty’s payments from the Owner, and the non-payment to its suppliers and vendors. Balfour Beatty also properly asserted a cause of action for conversion because Balfour Beatty became the legal owner of the equipment and materials on the job site after Precision defaulted, Balfour Beatty demonstrated ownership by placing locks on the job trailers, and Precision wrongfully exercised control over the equipment and materials by trespassing on the Project site, breaking locks, and removing equipment and materials from the Project site. Finally, the attorney’s fees and costs were also awarded to Balfour Beatty because the Subcontract provided for such recovery.

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