Construction Law Insights

Manganaro MidAtlantic, LLC v. KBE Bldg. Corp, 2020 U.S. Dist. LEXIS 160144 (W.D. Va. Sep. 1, 2020)

In November 2017, the Commonwealth of Virginia and the Rector and Visitors of the University of Virginia (collectively “Owner”) contracted with KBE Building Corporation (“KBE”) for KBE to construct upper-class student housing (the “Project”). Federal Insurance Company (“Federal”) issued a payment bond on behalf of KBE for the Project. In February 2018, KBE and Atlantic Constructors, Inc. (“Atlantic”) entered into a subcontract for Atlantic to provide fire protection work at the Project. Atlantic completed its work on the Project in November 2019. Atlantic alleged that KBE breached the subcontract, KBE and Federal breached the payment bond, and that Atlantic was owed $168,175.00 for its completed work.

In May 2018, KBE and Manganaro MidAtlantic Corporation (“Manganaro”) entered into a subcontract for Manganaro to install drywall, carpentry, and ceiling tiles at the Project. Manganaro completed its work on the Project between October 2018 and August 2019. Manganaro alleged that KBE made numerous changes and that Manganaro was delayed in completing its work by KBE and other subcontractors, which resulted in increased costs to Manganaro. Manganaro alleged that KBE breached the subcontract, KBE and Federal breached the payment bond, and that Manganaro was owed $1,526,833.00 for its completed work.

In both cases, KBE and Federal filed Joint Answers and Counterclaims. KBE alleged the same affirmative defenses and counterclaims for breach of contract in both cases. KBE alleged that other subcontractors, including Atlantic and Manganaro, were responsible for the delays and additional costs in the Project. KBE and Federal moved to consolidate the cases in May 2020. Atlantic and Manganaro opposed the consolidation and filed a joint reply.

The Court granted the motion to consolidate filed by KBE and Federal. Rule 42 of the Federal Rules of Civil procedure provides that “[i]f actions before the court involve a common question of law or fact, the court may … consolidate the actions.” A court must weigh the risk of prejudice and possible confusion from consolidation against the burden on the parties, witnesses, and judicial resources to conduct multiple suits involving common questions of law or fact, the length of time to conclude multiple lawsuits as opposed to a single lawsuit, and the relative expense to all the parties presented by single consolidated trial or multiple trials. Generally judicial economy favors consolidation because it saves time and expenses and avoids the risk of inconsistent judgments. The Court found that the two cases involved substantial common questions of law and fact, including the same prime construction contract, the same Project, the same defendants, the same causes of action, and the same defenses and counterclaims. There was little risk of inconsistent judgments because a bench trial was requested in both cases and both cases were before the same judge. Additionally, the witnesses in both cases were likely to be similar and the evidence presented by KBE and Federal was likely to overlap in both cases. Consolidation would also eliminate separate trial dates.

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