K&L Gates Construction Law Blog : Construction and Engineering Lawyers & Attorneys : K&L Gates Law Firm : Financing, Development, Dispute Resolution, Government Contracting

By K&L Gates attorneys Ian Meredith, Michael D. Napoli, Martin J. King, Andrew H. Davies, Douglas J. Simmons, Ben Morgan, Clare Tanner, Brian R. Davidson, Kari M. Horner, Sarah A. Munro and Rachel G. Stephens.

Arbitration World highlights the significant developments and issues in international arbitration that matter to in-house counsel and company executives with responsibility for dispute resolution.

Welcome to the third edition of "Arbitration World" and the first edition, we are proud to say, following the combination of Kirkpatrick & Lockhart Nicholson Graham LLP with Preston Gates Ellis LLP, effective 1 January 2007, to form Kirkpatrick & Lockhart Preston Gates Ellis LLP - "K&L Gates."

In light of this development, page 3 of this issue includes a short commentary on arbitration in Asia and a profile of the firm's Asian offices which enable the firm to advise clients in arbitration in this increasingly strategic part of the world.

For those reading for the first time, "Arbitration World" aims to highlight significant developments and issues in international arbitration that matter to in-house counsel and company executives with responsibility for dispute resolution. 

• Email This
• Print
• Comments
• Trackbacks

Craig Johnson Constr., L.L.C. v. Floyd Town Architects, P.A., 142 Idaho 797, 134 P.3d 648 (2006)

Town entered into a contract with Dean to prepare plans for condominiums in Ketchum.  Once Dean received the plans, Dean contracted with Johnson to build the condominiums according to Town’s plans.  The condominiums were built in two phases.  In Phase one Johnson deviated from the plans, but did not do so in building phase two.  The first winter the condominiums were completed, ice dams formed on the roofs of individual units in both phases of construction.  All three parties then brought actions against each other for breach of contract, negligence and indemnification. 

At trial, the jury found Johnson to be 90 percent at fault and Town only 10 percent at fault.  The court held that “a public or private contractor following plans and specifications prepared by another party is not liable in negligence where defects in the plans and specifications cause injuries, so long as the contractor should not have reasonably known about the defects.”  The court affirmed the jury’s verdict since there was sufficient evidence in the record to show that Johnson was negligent and failed to follow Town’s plans. 

• Email This
• Print
• Comments
• Trackbacks

O & M Indus. v. Smith Eng’g Co., 360 N.C. 263, 624 S.E.2d 345 (2006)

In this case, the subcontractor served a notice of claim of lien on funds owed to it by the contractor.  The owner paid the contractor after the subcontractor served notice, but also retained funds in excess of the subcontractor’s lien.  The subcontractor sued when neither the contractor nor the owner paid it.  The subcontractor moved for summary judgment, alleging that the owner was personally liable because it paid the contractor after the subcontractor served notice.  The owner also moved for summary judgment.  The trial court granted the subcontractor’s motion for summary judgment and denied the owner’s.  The Court of Appeals reversed, but the North Carolina Supreme Court reversed the Court of Appeals, holding, among other things, that the Court of Appeals failed to properly apply the applicable lien statutes, and that the owner’s retention of funds exceeding the lien did not relieve the owner of personal liability.

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

Kaleel Builders, Inc. v. Ashby, 161 N.C. App. 34, 587 S.E.2d 470 (2003)

In this case, homeowners hired an architect to design their residence, and also hired Kaleel Builders, Inc., as contractor to construct the residence.  Kaleel in turn hired several subcontractors. In the fall of 1996, the homeowners halted construction, and filed an arbitration demand against Kaleel alleging defective construction, including the work by the subcontractors and the design/supervision of the architect.  While the arbitration was pending, Kaleel filed a complaint seeking indemnification and/or contribution against the subcontractors and architect in July of 2001.  The trial court dismissed the claims against the subcontractors.  The claims for breach of warranty and breach of contract were dismissed on statute of limitations grounds, and the claims for negligence, indemnity, and contribution were dismissed for failure to state a claim.  The trial court also granted summary judgment for the architect.  The North Carolina Court of Appeals affirmed the trial court’s decision on all claims.

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

Capital Safety, Inc. v. State, 848 A.2d 863, 369 N.J. Super. 295 (N.J. Super. App. Div. 2004)

In this case, an asbestos removal contractor brought suit against the state for delay damages due to delays cause by the state’s inability to relocate workers to permit asbestos removal.  The court, in this matter, enforced the contract’s no-damages-for-delay clause, finding that such clauses are enforceable even if the delay is the result of the public entity’s “error of judgment, lack of effort, or lack of complete diligence.”
 

• Email This
• Print
• Comments
• Trackbacks

Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979 (2004)

In this case, helicopter manufacturer Robinson Helicopter Co., Inc. sued parts supplier Dana Corporation after Dana delivered nonconforming parts to Robinson.  Dana had contracted to supply Robinson with clutches for Robinson’s helicopters.  Dana provided the parts according to Robinson’s specifications for roughly twelve years, but then changed its manufacturing process without notifying Robinson.  For the next sixteen months, Dana delivered nonconforming parts which failed at a much higher rate than the conforming parts.  Robinson notified Dana of the higher failure rate and Dana subsequently switched to a conforming manufacturing process.  Although there were no accidents that lead to physical injury or property damage, Robinson was required to recall and replace the defective parts. 

Robinson sued Dana and the trial awarded Robinson $1.5 million in compensatory damages and $6 million in punitive damages, based on Dana’s knowing misrepresentation or concealment of material facts with the intent to defraud.  Dana appealed.  The court of appeals affirmed the award of compensatory damages but reversed the award of punitive damages, finding that Robinson could not recover in tort when it had only suffered economic loss.

• Email This
• Print
• Comments
• Trackbacks

Quality Asphalt Paving, Inc. v. Dept. of Transp. & Public Facilities, 71 P.3d 865 (Alaska 2003)

In this case, a state agency accepted bids on a contract to widen a state highway.  Shortly after the state awarded the contract to a contractor, the state terminated it under a termination-for-convenience clause in the contract.  The contractor sued for costs and damages.  A hearing officer awarded damages to the contractor, but did not award prejudgment interest.  The trial court affirmed, and the parties appealed.

• Email This
• Print
• Comments
• Trackbacks

Craft v. Stevenson Lumber Yard, Inc., 843 A.2d 1076, 179 N.J. 56 (2004)

In this matter, a project owner filed a complaint demanding the dismissal of a construction lien claim filed by a supplier (Stevenson) after the contractor, who was responsible for paying Stevenson, walked off the job.  The contractor owed Stevenson for multiple past unrelated projects. Therefore, when the contractor provided payments to Stevenson from the plaintiff’s payments, without specifying the project, Stevenson automatically credited the payments to the oldest outstanding invoices, not to those associated with the plaintiff's project.  The supplier subsequently filed a construction lien claim against the real property.  

The court found that the supplier could not arbitrarily assign the payments to different accounts, but rather must apply the contractor’s payments to the individual project account from which payments were derived.  Therefore, the supplier was precluded from filing the lien claim due to its failure to allocate the contractor’s payments to the proper accounts.

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

Cyktor v. Aspen Manor Condo. Ass’n, 820 A.2d 129, 359 N.J. Super. 459 (N.J. Super. Ct. App. Div. 2003)

In this case, a condominium developer negotiated an agreement releasing it and its principals from all liability connected with the construction of the development at issue.  The agreement was reached in 1986, several years after construction was completed, and transferred control of the development to the condominium association.  Eleven years later, in 1997, the Department of Community Affairs (DCA) cited the development for certain violations regarding the structure of the facility.  In defense of the citation and the condominium association’s attempts to place liability with the developer, the defendants argued that the action was barred by the statute of repose.  The DCA argued that the statute of repose applied only to claims for damages and did not bar enforcement actions.  The court disagreed with the DCA and held that the statute of repose applies broadly to governmental action.

 

• Email This
• Print
• Comments
• Trackbacks

Power Constructors, Inc. v. Taylor & Hintze, 960 P.2d 20 (Alaska 1998)

In this case, a contractor brought a legal malpractice action against its former law firm and several attorneys.  The contractor’s case was a “trial-within-a-trial” approach, which required the contractor to demonstrate the merits of its underlying case (concerning a deficient powerline construction project) as part of its malpractice case.  At trial, the jury returned a verdict for the contractor, and both parties appealed the damages award in the jury’s verdict.

• Email This
• Print
• Comments
• Trackbacks

Geolar, Inc. v. Gilbert/Commw. Inc. of Mich., 874 P.2d 937 (Alaska 1994)

In this case, a contractor sued an electric company for breach of contract against the company’s agent for tortious interference with contract.  The contractor also sued the electric company for breach of contract, and calculated its damages based on direct costs, lost of efficiency costs, and delay costs.  The trial court dismissed the contractor’s claim for intentional interference with contract, but the breach of contract claim went to trial, where a jury based an award of damages to the contractor on the contractor’s calculation.

• Email This
• Print
• Comments
• Trackbacks

M.J. Paquet, Inc. v. N.J. Dep’t of Transportation, 794 A.2d 141, 171 N.J. 378 (2002)

In this case, a contractor submitted an unbalanced bid to the New Jersey Department of Transportation (“DOT”) for the rehabilitation of a bridge with the expense of painting over-estimated and other expenses underestimated.  Following the award of the project, OSHA released new paint safety requirements that the contractor claimed significantly raised the price of the project.  DOT decided that the increased price was too much and decided to excise the bridge painting from the contract.  The contractor then filed suit claiming that DOT was not authorized to delete the painting from the contract and alternatively, that DOT could not subtract the entire amount attributed to painting in the initial unbalanced bid from the contract price.  The Supreme Court concluded that while it was appropriate for the DOT to excise the painting component from the contract it was not proper to simply subtract the value of that item from the initial bid.  Rather, the contractor must have an equitable adjustment to the contract price.
 

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

Conom Alaska v. Bell Lavalin, Inc., 842 P.2d 148 (Alaska 1992)

In this case, when a dispute arose regarding the schedule for completing construction, the subcontractor sued the general contractor for professional negligence and breach of contract.  The trial court granted the contractor’s motion to dismiss the professional negligence claim because the subcontractor failed to adequately establish a basis for the jury to determine the amount of damages.  The subcontractor appealed.

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

DiMaria Constr., Inc. v. Interarch, 799 A.2d 555, 351 N.J. Super 558 (N.J. Super. Ct. App. Div. 2001)

In this case, the general architect and interior designer on a construction project recommended that the owner terminate the general contractor.  The owner, on this advice, terminated the contractor who subsequently filed suit against the architect and interior designer for tortious interference with contract.  In analyzing the claims, the court looked at the four elements of the tort of interference with a business relation or contract:  (1) a protected interest; (2) malice in the sense that the defendant interfered without justification; (3) a reasonable likelihood that the interference caused the loss of the prospective gain; and (4) resulting damages.  The court found that the architect and interior designer were liable for tortious interference.  The court also addressed whether they were acting as agents of the owner and therefore escaped liability.  The court found that question to be a factual issue that was implicitly answered in the affirmative in the jury’s finding of liability.
 

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

Credit Alliance Corp. v. Arthur Andersen & Co., 65 N.Y.2d 536 (1985)

In Credit Alliance, the Court of Appeals held that accountants could be liable to noncontractual parties if the relationship of the parties approached that of privity.  Specifically, the court held that an accountant could be liable, absent privity of contract, to a party who relies to his detriment on a negligently prepared financial report if (i) the accountant was aware that the financial reports were to be used for a particular purpose, (ii) in the furtherance of which a known party was intended to rely, and (iii) there must have been some conduct on the part of the accountant linking him to that party which evinces his understanding of that parties’ reliance.

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

Boise Jr. Coll. Dist. v. Mattefs Constr. Co., 92 Idaho 757, 450 P.2d 604 (1969)

Mattefs Construction submitted a bid for the construction of a building for Boise Junior College.  The bid contained a clerical error that omitted one item that constituted 14 percent of the bid.  The court held a contractor is entitled to the equitable relief of rescission if he can establish the following conditions:  “(1) the mistake is material; (2) enforcement of a contract pursuant to the terms on an erroneous bid would be unconscionable; (3) the mistake did not result from violation of a positive legal duty or culpable negligence; (4) the party to whom the bid is submitted will not be prejudiced except by loss of his bargain; and (5) prompt notice of the error is given.”  The court concluded that the clerical error in submitting a bid, which was 14 percent of the total bid, was substantial and material and did not result from culpable negligence.  The court further found that Boise Junior College would not suffer a substantial hardship since Mattefs informed them of the error before they had attempted to accept the offer.  The court did note that not all mistakes entitle a bidder to withdraw his bid, but distinguished this case on the basis that this was a clerical error and not an error in judgment, such as underestimating cost or labor.  Since the court found Mattefs satisfied all five factors, equity required the bid to be withdrawn without forfeiting the bid bond. 

• Email This
• Print
• Comments
• Trackbacks

F. Bender, Inc. v. Jos. L. Muscarelle, Inc., 700 A.2d 374, 304 N.J. Super. 282 (N.J. Super. Ct. App. Div. 1997)

In this case, the plaintiff sub-subcontractor sued the general contractor and property owner seeking to recover in quantum meruit for construction work on a parking facility.  The general contractor hired a sub-contractor to perform all of the concrete work who in turn hired the plaintiff.  The sub-contractor was eventually terminated for failure to adequately perform its subcontract agreement with the general contractor.  Plaintiff had no contract with the general contractor or the property owner but sued them for his losses nonetheless.  The court held that where the plaintiff sub-subcontractor had no contractual agreement with the defendants, recovery based upon quantum meruit was precluded.

In so holding, the court pointed out that the plaintiff was not without protection but that he had “failed to protect his rights by filing an appropriate mechanic’s lien” as provided by the Mechanic’s Lien Law.  The court also noted that the result of this opinion did not render the plaintiff helpless to recover but that recovery would properly come from action against the subcontractor.
 

• Email This
• Print
• Comments
• Trackbacks

Southeast Alaska Constr. Co., Inc. v. Dept. of Transp. & Public Facilities, 791 P.2d 339 (Alaska 1990)

This case concerned a public construction project that suffered from design and material deficiencies.  When the contractor failed to complete the project, the agency sued and won on a claim for liquidated damages.  The contractor appealed, arguing that because the agency was responsible for the delay, it should not be entitled to damages.

• Email This
• Print
• Comments
• Trackbacks

Saxon Constr. & Mgmt. Co. v. Masterclean of N.C., Inc., 641 A.2d 1056, 273 N.J. Super. 231 (N.J. Super. Ct. App. Div. 2004)

In this case, the court found a termination clause void as against public policy.  The plaintiff, Saxon, a general contractor was awarded a contract to renovate a building owned by the Veterans Administration.  Saxon entered a subcontract with defendant, Masterclean, for asbestos abatement and removal.  Masterclean defaulted and Saxon terminated the contract. The termination clause of the contract provided that if the subcontractor defaulted and the unpaid contract value was less than the expense of finishing the project, then the subcontractor was entitled to the difference.  Saxon was able to procure a substitute contractor at a price lower than Masterclean’s initial contract price.  Masterclean, therefore, invoked the clause to claim the difference between its contract price and the amount paid to the new contractor.  The court found that that type of termination clause violated public policy because it permitted a defaulting party to profit by its breach and discouraged the non-breaching party to minimize its losses.
 

• Email This
• Print
• Comments
• Trackbacks

Perini Corp. v. Greate Bay Hotel & Casino, Inc., 610 A.2d 364, 129 N.J. 479 (1992)

In this case, a casino owner sought judicial enforcement of an arbitration award of lost profits against the general contractor hired to manage the casino renovation project.  The project took longer to complete than anticipated and the casino was not fully operational for its peak summer season.  The court held that lost profits may fall under the category of consequential damages and are therefore recoverable as long as they are foreseeable at the time of contract.
 

• Email This
• Print
• Comments
• Trackbacks

Vinen Corp. v. Alan W. Nau Contracting, Inc., 557 A.2d 1056, 232 N.J. Super. 589 (N.J. Super. Ct. App. Div. 1989)

In this case, the court looked at an action by a contractor against the construction manager for breach of contract for withholding monies from payment that were owed on an unrelated project.  The defendant entered into a contract with the property owner to act as construction manager on a shopping center construction job.  Subsequently, the defendant entered into a subcontract with the plaintiff to act as the site contractor for the project.  During the course of construction, the plaintiff discontinued performance because the defendant withheld $11,000.00 from payment to the plaintiff for monies owed by the plaintiff to the defendant on a different project.  The defendant also insisted that the plaintiff sign a release of lien and threatened that failure to do so would result in defendant’s refusal to pay plaintiff any of the money it was owed for work up to that time.  The plaintiff filed suit for breach and defendant filed a counterclaim.  The court found that the withholding of money constituted a material breach and that the plaintiff was entitled to discontinue performance and was not liable for breach.
 

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

P.T. & L. Constr. Co. v. N.J. Dep’t of Transportation, 531 A.2d 1330, 108 N.J. 539 (1987)

In this case, P.T. & L. Construction Co. was awarded a contract to perform work on a portion of Route 78.  Due to extremely poor working conditions, the project, which was contracted to end on November 15, 1974, was not completed until June of 1976.  P.T. & L. filed suit to recover damages, attributing the delay to the State’s failure to inform them of the actual conditions of the land.  Specifically, where P.T. & L. expected to work in normal or dry conditions, they instead faced wet conditions, including flooding of the work area.  The court, looking at the issue of whether an owner can be liable for damages where it fails to disclose certain critical information regarding the project to bidders, found that a sufficient factual basis existed to warrant recovery for nondisclosure of material facts.
 

• Email This
• Print
• Comments
• Trackbacks

Puget Sound Nat’l Bank v. C. B. Lauch Constr. Co., 73 Idaho 68, 245 P.2d 800 (1952)

Saxon Painting entered into a contract with Lauch Construction to do all of the painting for a government housing project.  The contract required Saxon to apply two coats of a certain type of paint, which was provided by Lauch.  Saxon followed the specifications in the contract and completed the painting in a timely manner without any objections to the work from Lauch.  Saxon alleged that he was still owed $19,958 from the contract and three months after completing the work, a lawsuit was commenced.

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

Earthmovers of Fairbanks, Inc. v. Dept. of Transp. & Public Facilities, 765 P.2d 1360 (Alaska 1989)

In this case, the Supreme Court of Alaska considered as a case of first impression what remedy is appropriate for a contractor who is awarded a public contract that turns out to violate a statute or regulation.  The facts concerned Earthmovers of Fairbanks (EM), the apparent low bidder for a public project.  When a discrepancy was discovered in the second lowest bid and corrected as permitted by the applicable Standard Specification, the state agency awarded the project to the second lowest bidder.  EM sued and won a permanent injunction.  EM also prevailed on appeal, and the contract was awarded to EM on April 27.  However, on April 30, the Supreme Court of Alaska reversed itself and on May 1, it entered a stay.  Subsequently, EM sued the state agency for damages. 

• Email This
• Print
• Comments
• Trackbacks

Edwin J. Dobson, Inc. v. State, 526 A.2d 1150, 218 N.J. Super. 123 (N.J. Super. App. Div. 1987)

In this case, a contractor brought suit against the state for delay damages arising out of the construction of a public project.  The delays were caused by a variety of reasons primarily stemming from the state’s requirement that the contractor use a specific manufacturer for supplies.  The contract included a “no damage for delay” clause which provided an extension of time for completion, but no additional payment, for damages, in the event of any hindrance or delay in the progress of the work, even if caused by the state.  The court found that the clause was legal and that it precludeed recovery by the plaintiff.

• Email This
• Print
• Comments
• Trackbacks

A.J. Tenwood v. Orange Senior Citizens Hous. Co., 491 A.2d 1280, 200 N.J. Super. 515 (N.J. Super. Ct. App. Div. 1985)

In this case, a construction contractor brought a claim for breach of contract against the owner of a housing project.  The contract between the parties included a one-year claims limitation clause.  The court upheld that one-year limitation relying on precedent that the statutory limitation on contract actions could be waived by the express agreement of both parties.  Therefore, as long as the period is reasonable and does not violate public policy, shortened statutes of limitation clauses are valid.
 

• Email This
• Print
• Comments
• Trackbacks

Seal Tite Corp. v. Ehret, Inc., 589 F. Supp. 701 (D.N.J. 1984)

In this case, a subcontractor sued the general contractor for failure to pay in a timely fashion, and moved for summary judgment.  Relying on the “pay when paid” provision of the subcontract, the general contractor claimed that it had not yet been paid in entirety by the owner and therefore the lack of payment to the subcontract was not in breach of the contract.  The court ruled that the “pay when paid” clause was designed to postpone payment by general contractor to subcontractor for a reasonable period after work has been completed to afford the general contractor the opportunity to procure from the owner the funds necessary to pay the subcontractor.  The purpose is not to require the subcontractor to wait to be paid for an indefinite period of time.  Accordingly, the court granted the subcontractor's motion for summary judgment and awarded the amount due under the subcontract.

• Email This
• Print
• Comments
• Trackbacks

Broadway Maint. Corp. v. Rutgers Univ., 447 A.2d 906, 90 N.J. 253 (1982)

In this case, two prime contractors brought suit against the university for damages caused by delays in construction.  In the appeal, the Supreme Court of New Jersey looked at three issues:  (1) whether in an instance of multi-prime contractors each prime contract is liable to the other; (2) whether the owner has a duty to coordinate multi-prime contractors; and (3) whether the exculpatory clause in the prime contracts shielded Rutgers from liability.

The court found that each of the prime contractors, absent privity, had a right of action against the other as long as the contract between the owner and each prime contractor made the remaining contractors third-party beneficiaries.  Second, the court found that an owner entering into multiple prime contracts has the obligation to act in good faith to coordinate the various contractors to avoid unreasonable delay, if the owner has not delegated that responsibility to one of the prime contractors.  Finally, the court found that the exculpatory clause shielded Rutgers from all delays, not just reasonable delays.

• Email This
• Print
• Comments
• Trackbacks

Zulla Steel v. A & M Gregos, Inc., 415 A.2d 1183, 174 N.J. Super. 124 (N.J. Super. Ct. App. Div. 1980)

In this case, a subcontractor brought an action against the prime contractor for breach after contractor failed to make progress payments when due.  The plaintiff did not complete the project. The court found that the contractor’s failure to make timely payments constituted a material breach and that the plaintiff was therefore justified in terminating its performance.  The court held that the measure of damages in a matter where the plaintiff was stopped from completing the contract is “such a proportion of the entire price as the fair cost of that work bears to the fair cost of the whole work and, in respect to the work not performed, such profits as he would have realized as a result of the complete performance.”  Accordingly, the judgment of the trial court was affirmed, with slight modification.
 

• Email This
• Print
• Comments
• Trackbacks

Conforti & Eisele, Inc. v. John C. Morris Assocs., 418 A.2d 1290, 175 N.J. Super. 341 (N.J Super. Ct. Law Div. 1980)

In this case, a general contractor sued the State and its design professionals for economic damage due to the faulty plans prepared by the design professionals and provided by the State.  There was no privity between the general contractor and the design professional defendants.  However, the court found that a design professional can be held responsible for the losses suffered by a contractor regardless of privity.  The decision was based on a line of New Jersey cases that look with disfavor on the privity doctrine especially with regard to design negligence and physical injuries sustained by third-parties.  The court created a test to determine whether liability should be imposed on design professionals when third-parties are injured.  The elements are:  (1) the extent to which the transaction was intended to affect the plaintiff; (2) the foreseeability of harm to him or her; (3) the degree of certainty that the plaintiff suffered injury; (4) the closeness of the connection between the defendant’s conduct and the injuries suffered; (5) the moral blame attached to the defendant’s conduct; and (6) the policy of preventing future harm.
 

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

Rolnick v. Gilson & Sons, Inc., 617 A.2d 288, 260 N.J. Super. 564 (N.J. Super. Ct. App. Div. 1992)

This case concerned a property that was severely damaged by a fire allegedly caused by a defective fan component in the air conditioning system.  The trial court applied the statute of limitations that bars claims over ten years after improvement, finding that the installation of an air conditioning system was an "improvement" within the meaning of the statute.  The appellate court reversed, finding that a mass produced and marketed attic ventilation fan was not an “improvement” within the meaning of the statute and thus the action was not barred.
 

• Email This
• Print
• Comments
• Trackbacks

Indus. Indem. Co. v. Wick Constr. Co., 680 P.2d 1100 (Alaska 1984)

In this case, the Alaska State Housing Authority (ASHA) awarded a contract for the construction of a courthouse and office building to a general contractor.  The prime contract featured a liquidated damages clause limiting the contractor’s liability to $400 per day of delay.  The subcontract between the general contractor and subcontractor included a so-called “flow down” or “conduit clause” incorporating the liquidated damages clause from the prime contract.  When the general contractor sued the subcontractor for delays, the trial court awarded the general contractor $765,654.00 in total damages.  The subcontractor appealed, arguing that the liquidated damages clause applied.

• Email This
• Print
• Comments
• Trackbacks

Golomore Assoc. v. N.J. State Highway Auth., 413 A.2d 361, 173 N.J. Super. 55 (N.J. Super. Ct. App. Div. 1980)

In this case, the court evaluated a claim by a contractor and subcontractor against the State for additional costs of construction. Plaintiffs claimed that the increased costs were due to faulty evaluations of ground elevation provided by the State prior to bidding. The bid submitted to the State was calculated using those faulty measurements and therefore did not adequately predict actual expenses. The court ruled in favor of the plaintiffs, finding that the elevations provided by the State constituted positive averments. Therefore, when the elevation data was shown to be incorrect, contractors were entitled to recover for additional costs.
 

• Email This
• Print
• Comments
• Trackbacks

Steltz v. Armory, 15 Idaho 551, 99 P. 98 (1908)

Steltz contracted with Armory for the construction of a building in the city of Genesee.  The building was erected and Armory moved in and continued to use it for six weeks, until a windstorm blew down the front of the building.  Armory then refused to pay Steltz arguing that the building was not constructed in a workmanlike manner and Steltz filed this action to recover payment due under the contract.  During trial, evidence was presented that showed the front wall blew down because it had not been properly tied into the rest of the building.  The court held that the defect of not tying the front wall into the building was not an obvious or patent defect, but was a latent defect.  The Court reasoned that if the defect were obvious or patent, then Armory would have accepted the defect by taking possession without conditionally doing so.  The court affirmed the lower court’s decision to offset the cost to repair the defect from the amount still owed under the contract.

• Email This
• Print
• Comments
• Trackbacks

Buckley & Co. v. State, 356 A.2d 56, 140 N.J. Super. 289 (N.J. Super. Ct. Law Div. 1975)

In this case, the court adjudicated a claim by two construction companies against the State regarding the construction of Route 78.  The project, namely the creation of a section of the road that involved various bridge constructions as well as electrical, drainage and related work, was finished 87 days later than was provided in the contract and various change orders and 564 days later than the original completion date.  Consequently, the contractors filed suit for delay damages which included various overhead expenses and wages for employees.  The contractors also sought the return of monies withheld by the Department of Transportation as “liquidated damages” for the delay.  The State contended that the delays were the contractors’ fault, that the reasons for the delays given by the contractors did not occur, and that claims for costs were barred by no-damages clauses included in the contract.  The court, concluding that some of plaintiff’s losses were the result of breach by the State, allowed recovery for those losses accordingly.  The court declined to allow the State to withhold liquidated damages where the delay could be attributed actions and inaction by both parties as well as circumstances beyond either party’s control.  The court also held that the construction company had standing to assert claims on behalf of subcontractors.
 

• Email This
• Print
• Comments
• Trackbacks

Hartley v. Ballou, 286 N.C. 51, 209 S.E.2d 776 (1974)

The plaintiff purchased a house from the defendants which one of the defendants had built.  Shortly after the purchase, the plaintiff experienced flooding in the basement of the house.  The plaintiff sued the defendants for breach of express and implied warranties.  Following trial, the trial court entered a judgment in favor of the plaintiff against the builder defendant.  On appeal, the North Carolina Supreme Court recognized an implied warranty of habitability and workmanlike construction by the builder-vendor of a residence to the initial vendee.  The Supreme Court ultimately reduced the damages awarded since it found that they exceeded the builder’s liability under the implied warranty.

• Email This
• Print
• Comments
• Trackbacks

Totten v. Gruzen, 245 A.2d 1, 52 N.J. 202 (1968)

In this case, the Supreme Court of New Jersey held that the “completed and accepted” rule does not render defendants immune from liability for injuries sustained from a faulty heating system.  A child resident of a multi-family housing project sustained serious burns from contact with exposed, hot piping that was part of the radiator heating system in the child’s bedroom.  The court found that the lack of privity between the plaintiffs and the defendants was insufficient to excuse the defendants from liability.
 

• Email This
• Print
• Comments
• Trackbacks

Home Owners Const. Co. v. Borough of Glen Rock, 169 A.2d 129, 34 N.J. 305 (1961)

In this case, the court looked at whether a contractor could recover in quantum meruit for services and materials actually provided, even though the work was not authorized in writing.  During the course of construction, the Borough requested the contractor to perform certain extra services and provide additional materials.  Upon the Borough’s refusal to pay these additional expenses, the contractor sought to recover in quantum meruit.  The court found that the lack of writing authorizing these changes did not preclude the contractor from recovery.
 

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

525 Main St. Corp. v. Eagle Roofing Co., 168 A.2d 33, 34 N.J. 251 (1961)

In this case, the plaintiff property owner, contracted with the defendant for repairs to his roof and a five-year guarantee against leaks with a promise to repair.  During the five years, the defendant disputed the scope of his responsibility and stopped performing repairs.  The trial court found in favor of the plaintiff, concluding that the defendant had breached, but awarded nominal damages.  The plaintiff appealed on the issue of damages.

The defendant argued that the damages should properly be calculated as the difference in value of the entire structure with the defective roof and the value of the building as if the contract had been fully performed.  The court disagreed and found that in the construction context, the cost of repairs or the cost of replacement is the appropriate measure of damages and not a measurement made with reference to the value of the building as whole.
 

• Email This
• Print
• Comments
• Trackbacks