Construction Law – Page 42 – Legal issues, news, and regulations concerning the construction industry

Existence of Dispute for Purposes of Obtaining Stay of Judicial Proceedings

Aug 07 2007

Loon Energy, Inc. v. Integra Mining, 2007 WL 2139992, [2007] EWHC 1876 (Queen’s Bench Div., Commercial Ct.)

In this case, the court considered the application of s.9 of the Arbitration Act 1996 which requires it to stay its proceedings if the dispute before it is one falling within the scope of an arbitration clause. Loon sought and obtained specific declarations in relation to oil exploration rights under English law contracts. In the meantime, Integra launched arbitration in accordance with the terms of a Texas law confidentiality agreement into which the parties had entered prior to concluding the English law contracts. Loon amended its own claim for relief to include a declaration that the confidentiality agreement had been superseded. Integra sought to stay Loon’s application under s.9. Loon countered that at the time it issued its own claims there was no dispute in existence in relation to the confidentiality agreement and that therefore there was no obligation on the court under s.9. Read More

Insurer Has Duty to Defend General Contractor for Injuries Arising Out of Subcontractor’s Work Where General Contractor is Named as Additional Insured on Subcontractor’s Policy

Aug 06 2007

Parker v. John Moriarty & Assocs., Inc., 2007 WL 2429719 (Mass. Super. Ct. July 29, 2007)

This case arose from personal injuries suffered by the plaintiff while working at a construction site in Brighton, Massachusetts. The general contractor of the construction project subcontracted some aspects of the project; plaintiff was an employee of the subcontractor. The plaintiff filed a complaint, asserting a negligence claim against the general contractor for negligently failing to provide a safe workplace and the general contractor settled. By third-party complaint, the general contractor brought claims against the subcontractor and the subcontractor’s insurer for indemnification, contribution, and breach of contract for failure to provide insurance. The insurer moved for summary judgment on all claims against it, arguing that the insurance policy did not provide coverage on the claims. The insurer argued that it did not owe a duty to defend the claims and did not have a duty to indemnify because the general contractor was not covered for the claims under the additional insured endorsement and such claims were excluded from coverage under the cross-suits provision. The general contractor opposed and filed a cross-motion for summary judgment, asserting that, as a matter of law, the policy provided coverage in that the insurer had a duty to defend and to indemnify for the settlement of the claims. The subcontractor also moved for summary judgment in its favor on the breach of contract claim for failure to provide insurance, arguing that it had named the general contractor as an additional insured on the policy. Read More

Insurer Not Entitled to Summary Judgment on Breach of Performance Bond Claim

Aug 05 2007

Klewin Bldg. Co. v. Heritage Plumbing & Heating, Inc., 840 N.Y.S.2d 144 (N.Y. App. Div. 2007)

In this case, plaintiff was the construction manager for a building project and had entered into a subcontract with defendant Heritage Plumbing & Heating pursuant to which Heritage was required to supply plumbing materials and services for the project. Defendant Hartford Fire Insurance Company provided a performance bond to Heritage for the benefit of Klewin. Hartford’s obligations to Klewin under the bond would only arise upon certain conditions, including, among other things, Klewin’s declaration that Heritage had defaulted and a termination of Heritage’s right to complete the subcontract.

Award Overturned for Serious Irregularity Where Decision Based on Issues Not Argued

Aug 03 2007

OAO N. Shipping Co. v. Remolcadores De Marin SL, 2007 WL 2139977, [2007] EWHC 1821 (Queen’s Bench Div., Commercial Ct.)

In this case, buyers of a tug boat had brought a claim for damages for a misrepresentation by the sellers as to the total rated power of the vessel’s engine which had induced the contract. The sellers argued, inter alia, that the representation, made in the form of a certificate of total rated power, was true, that the buyers had not relied on the representation, and had not shown that the representation was false. The tribunal held that there had not been a representation by the sellers as to the “truth” of the certificate, but only as to its “authenticity.” The buyers appealed the award under s.68 of the Arbitration Act 1996 (the “Act”) on the basis that no argument had been heard on the point. Read More

Court of Claims Ruling Upheld – Contractor Entitled to Reimbursement from Government Under Unit Contract

Jul 23 2007

Harrison & Burrowes Bridge Constructors, Inc. v. New York, 839 N.Y.S.2d 854 (N.Y. App. Div. 2007)

The claimant filed suit in the Court of Claims seeking additional compensation for its rehabilitation and resurfacing of eight bridges under a unit-price contract with the State of New York. The state offered several reasons for its refusal to pay the claimant for labor and materials supplied under the contract.

First, the contract required the state to pay the claimant for the total number of markers installed, including any markers damaged by traffic. The state refused to pay for an additional 1,478 replacement markers installed by the claimant, arguing that the bid proposal, upon which the contract was based, only covered the installation of 868 markers. Affirming the Court of Claims, the appellate court found that the state should pay for the additional 1,478 replacement markers. Although the contract (which required the claimant to replace damaged markers) did not specify who would be obligated to pay for those markers, the court reasoned that the contract did not require the claimant to include the cost of replacing markers in its bid.

Economic Loss Rule Remains Alive and Well in Texas

Jul 19 2007

Pugh v. Gen. Terrazzo Supplies, Inc., 243 S.W.3d 84 (Tex. Ct. App. 2007), petition for review filed (Mar. 24, 2008)

In this case, the court affirmed a take-nothing summary judgment in favor of a materials supplier based on the economic loss rule. Pugh arose out of a residential construction project involving an exterior insulated finishing system (“EIFS”). After discovering alleged water damage to their home’s wood frame and interior wood flooring, the homeowners sued the masonry subcontractor and veneer supplier for negligence, “product liability (marketing defect),” and breach of the “implied warranties of good and workmanlike service and habitability.”

In a motion for summary judgment, the material supplier argued that the economic loss rule barred the homeowners’ claims for negligence and strict liability.

Massachusetts Building Code Does Not Render Either Engineer or Architect Liable for Unsafe Working Conditions on Owner’s Site

Jul 14 2007

Garcia v. Federics, 2007 WL 2367672 (Mass. Super. Ct. July 9, 2007)

In this case, the Superior Court granted a motion for summary judgment brought by the architect and engineer of a project on claims asserted by a construction worker injured on the job. As grounds for its ruling, the court found that neither the contract between the owner and the construction company nor the contract for architect’s services assigned responsibility to the architect or engineer for safety issues on the project. Thus, the court found that the architect and engineer did not have a contractual duty to protect the worker against unsafe working conditions.

In reaching its decision, the court rejected plaintiff’s argument that the Massachusetts Building Code created a duty for the architect and engineer to control safety conditions. Specifically, the court noted that the Massachusetts Building Code places the responsibility for the conditions of the building on the owner of the building rather than the architect or engineer. Plaintiff’s additional claims also failed because he could not demonstrate a reasonable expectation of proving that the architect and the engineer had a duty of care to the worker. The cross-claims by the owner failed because the architect and the engineer were not directly liable to the worker.

K&L Gates’ Arbitration World, Summer 2007

Jul 01 2007

By K&L Gates attorneys Wing L. Cheung, Martha J. Dawson, Ira S. Kaufman, Ian Meredith, Sarah A. Munro, Glenn R. Reichardt, Thomas M. Reiter, Stephen A. Smith, Sarah Turpin and Tiffany Yeung.

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 Fourth Edition of “Arbitration World,” a publication from K&L Gates’ Arbitration Group which aims to highlight significant developments and issues in international arbitration that matter to executives and in-house counsel with responsibility for dispute resolution.

In this edition we look back at the firm’s third annual London International Arbitration Seminar at the Mandarin Oriental Hotel in Knightsbridge in April and look forward to hosting a similar event in San Francisco on 4-5 October 2007 (details in the Forthcoming Events section on the back page).

We are pleased to include a guest contribution from Petter Tornquist of Setterwalls, the leading Swedish law firm, on the new rules of the Arbitration Institute of the Stockholm Chamber of Commerce.

General Contractor Has No Indemnification Claim Against Subcontractor Where Claims Arise Out of Contractor’s Own Failure to Supervise

Jun 24 2007

Fireman’s Fund Ins. Co. v. Falco Constr. Corp., 493 F. Supp. 2d 143 (D. Mass. 2007)

A property insurer, Fireman’s Fund Insurance Company, asserted claims against a general contractor and subcontractor after an insured home sustained fire damage. The general contractor had performed extensive renovations on the home, and the subcontractor had constructed a masonry fireplace at the home. In Counts I and II, the insurer sought recovery from the subcontractor for improperly installing the fireplace on theories of negligence and breach of contract. In Counts III and IV, the insurer brought the same claims against the general contractor for failing to supervise. The general contractor subsequently filed a cross-claim for indemnification against the subcontractor. Read More

Cancelled LLC Can Be Sued, But Cannot Sue

Jun 23 2007

Chadwick Farms Owners Assoc. v. FHC, LLC, 139 Wash. App. 300, 160 P.3d 1061 (2007)

This case presents a similar set of facts to Maple Court. Condominium developer FHC, LLC was administratively dissolved on March 24, 2003. On August 18, 2004, Chadwick Farms Homeowner’s Association filed suit against FHC, alleging construction defects. Seven months later, on March 24, 2005, FHC was administratively cancelled because it failed to reinstate during the two-year dissolution period. Two months after cancellation, FHC filed third party claims against its subcontractors, and in August 2005 moved for summary judgment against Chadwick on the ground that it was no longer a legal entity.
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