April 2008 – Construction Law

Partial Enforcement of Award Which Has Not Yet Become Final

Apr 24 2008

IPCO (Nigeria) Ltd. v Nigerian Nat’l Petroleum Corp., 2008 WL 1771454, [2008] EWHC 797 (Queen’s Bench Div., Commercial Ct.)

IPCO contracted with NNPC to design and build a petroleum export terminal in Nigeria. A dispute ensued and was arbitrated in Nigeria, subject to the supervision of the Nigerian courts. IPCO obtained an award in October 2004 (in the sum of approximately US$152 million) and sought an order for its enforcement in England. At the same time, NNPC brought an appeal against the award. The English High Court granted an order to IPCO, but adjourned enforcement of the award pending the Nigerian appeal. Subsequent developments in Nigeria had meant that any appeal against the award now lay some five or ten years in the future. IPCO applied for a variation of the order adjourning enforcement of the award. Read More

Appellate Court Finds Liquidated-damages Clause Was Not a Penalty and Thus Was Enforceable

Apr 24 2008

Mineo v. Lakeside Village of Davie, LLC, 983 So. 2d 20 (Fla. Dist. Ct. App. 2008)

Where a contract for the purchase of real property and construction of a residence gave the seller the option of retaining deposits and change order payments as liquidated damages in the event of the buyer’s default, or the seller could sue for specific performance at the purchase price plus interest as delay damages, the liquidated damages provision was not an unenforceable penalty because the contract did not provide the seller with the option to sue for actual damages (which would have change the character of the forfeiture as agreed damages).

Subcontractor’s Contractual Indemnity Obligation to Contractor for EIFS Damage Not Covered by Indemnity Provisions of Texas Product Liability Act

Apr 24 2008

K-2, Inc. v. Fresh Coat, Inc., 253 S.W.3d 386 (Tex. App. 2008)

In this case, the court held that the Texas Product Liability Act did not provide a product seller with the right of indemnity against a product manufacturer for that seller’s independent liability under a contract.

Several homeowners sued their builder, its subcontractor which installed synthetic stucco cladding (EIFS) on their houses and the EIFS manufacturer after experiencing water penetration leading to structural damage. After the claims made by the homeowners and the home builder against the subcontractor were settled, the subcontractor obtained a judgment against the manufacturer for indemnification of the amounts it paid in the settlement. The manufacturer appealed that portion of the judgment finding it liable to indemnify the subcontractor for the amount it paid to settle the home builder’s claims because it was paid under an indemnity clause in the subcontract. It did not dispute that part of the judgment obligating it to indemnify the subcontractor for settlement of the homeowners’ claims. Read More

Insurer’s Duty to Defend Construed Broadly in Favor of Insured

Apr 23 2008

WTC Captive Ins. Co. v. Liberty Mut. Fire Ins. Co., 549 F. Supp. 2d 555 (S.D.N.Y. 2008)

After the World Trade Center disaster in September 2001, the City of New York created a captive insurance company, funded by a grant from the Federal Emergency Management Agency, to insure the costs of lawsuits arising from the WTC clean-up efforts. Liberty Mutual was the primary insurer and had agreed to defend and indemnify the city against claims including, but not limited to, bodily and personal injury. A group of secondary insurers agreed to provide the same coverage if the Liberty Mutual policy became exhausted. All of the policies were retroactive to September 11, 2001. Read More

No Requirement to Dispense with Leave to Appeal Arbitral Award Under Section 69

Apr 22 2008

Royal & Sun Alliance Ins. PLC v. BAE Sys. (Operations) Ltd., 2008 WL 924979, [2008] EWHC 743 (Queen’s Bench Div., Commercial Ct.)

An arbitral award pursuant to the arbitration under LCIA rules of an insurance dispute formed the subject matter of this claim. Royal & Sun sought to appeal the award to the English court on a point of law. The defendants argued that s.69 of the Arbitration Act 1996 (the “Act”) and the terms of the relevant arbitration agreement obliged Royal & Sun to seek the leave of the court. The question was settled in Royal & Sun’s favour as a pure question of construction involving consideration of the Act, the LCIA rules and the arbitration agreement. Read More

Constructive Notice Not Established by Discussion in Meetings

Apr 22 2008

Geonie v. O.D. & P. N.Y., Ltd., 855 N.Y.S.2d 495 (N.Y. App. Div. 2008)

An injured worker, Geonie, filed a negligence suit against multiple defendants, including the general contractor, after stepping into an opening left by the removal of a tile from a raised floor in a computer room. Geonie argued that defendants failed to provide adequate safety devices to protect against an elevation-related hazard and failed to adequately supervise the work area. He further claimed that because the removed tile was discussed at weekly safety meetings, the defendants had, at least, constructive notice of the problem. The trial court dismissed Geonie’s claims under New York Labor Law and his negligence claim against the general contractor. Read More

Landscaper Must Have Proper License to Recover Damages for Breach of Contract

Apr 22 2008

Hakimi v. Cantwell Landscaping & Design, Inc., 855 N.Y.S.2d 273 (N.Y. App. Div. 2008)

Hakimi filed a breach of contract claim against Cantwell stemming from landscaping work performed on the property where Hakimi was having a new home built. Cantwell admitted that it was not licensed as a home improvement contractor at the time it did the work. In response to the lawsuit suit, Cantwell filed a mechanic’s lien and a notice of pendency against Hakimi’s property. Cantwell claimed that it did not need a home improvement contractor’s license because Hakimi was building a new house and the administrative code exempted new home construction from the home improvement licensing requirements. Hakimi moved to dismiss Cantwell’s counterclaims and the Supreme Court denied the motion. Read More

Federal Arbitration Act Does Not Preempt California Code of Civil Procedure § 1281.2; California Court May Refuse to Enforce Arbitration Agreement To Prevent Possibility of Conflicting Rulings

Apr 18 2008

Best Interiors, Inc. v. Millie and Severson, Inc., 2008 WL 1122182 (Cal. Ct. App. Apr. 11, 2008)

A dispute arose between general contractor Millie and Severson, Inc. and subcontractor Best Interiors, Inc. related to the construction of a hospital in Whittier, California. Best sued M&S, the hospital and two building inspectors, alleging various delay and disruption damages caused by improper management and inspection of the project. M&S petitioned to compel arbitration of the dispute and to stay Best’s lawsuit, based on arbitration clauses in the subcontract and the prime contract. Best opposed on the grounds that (1) the building inspectors could not be compelled to arbitrate; (2) the arbitration might result in inconsistent results; and (3) the court had authority under California Code of Civil Procedure § 1281.2 to refuse to enforce the arbitration clause. The trial court granted Best’s petition. On appeal, M&S raised two arguments. First, M&S argued that the Federal Arbitration Act, 9 U.S.C. § 1 et seq., applied to the arbitration agreement and did not give the trial court discretion to deny arbitration. Second, M&S argued that, even if California law applied to the arbitration agreement, there was no possibility of conflicting rulings. Read More

Whether Liquidated Damages Clause is Properly Invoked Depends on Whether Actual Damages Can be Determined

Apr 15 2008

Zeer v. Azulay, 2008 WL 1134239 (N.Y. App. Div. Apr. 8, 2008)

In this case, defendant contractors agreed to construct a home on property owned by plaintiffs pursuant to a written contract executed by the parties in September 2003. The parties agreed that if the contractor did not complete the project by February 29, 2004 and obtain a certificate of occupancy, it would be liable for liquidated damages of $250 per day until the work was completed. Read More

No Summary Judgment Where Counterclaim is Equal To or Greater Than Amount Demanded in Complaint

Apr 04 2008

Pronti v. Grigoriou, 853 N.Y.S.2d 718 (N.Y. App. Div. 2008)

In this case, a construction company filed a mechanic’s lien foreclosure action against a homeowner. The parties had executed a written contract providing that Pronti would find an independent contractor to install vinyl siding on Grigoriou’s residence. After Grigoriou paid the full contract price of $11,000, she refused to pay a $500 cleanup fee provided for in the contract. Grigoriou alleged that Pronti performed the work in an “unworkmanlike manner” and counterclaimed for $10,520 in damages. Read More

Archive:April 2008