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Court Crier: Construction and Surety

In American Interior v. Benjamin’s Desk, the Superior Court of Pennsylvania considered the question of whether Federal Express was a valid method for service of notice of a mechanics lien. A contractor sent notice of its intent to file a mechanics lien against the building owner via Federal Express. The building owner signed and received the notice from Federal Express. While the court agreed that service via Federal Express instead of the United States Postal Service was technically noncompliant with the law, it ultimately held that the procedures for original service may be excused absent an intent to “stall the judicial machinery.” (March 11, 2019)

In American Southern Insurance Company, Inc. v. Halbert, the Superior Court of Pennsylvania addressed a surety’s claim for contractual indemnification against a family-owned construction company for any claim arising out of the issuance of a performance bond for local land development. The court found that the construction company’s failure to perform the required land development breached the indemnity contract and the surety company was entitled to indemnification. The court further rejected the construction company’s defenses that the indemnity contract constituted a contract of adhesion and the federal Equal Credit Opportunity Act precluded any judgment against it. (January 17, 2019)

In Stapas v. Giant Eagle, the Supreme Court of Pennsylvania addressed a potential waiver of the right to appeal a jury’s verdict that included lost future wages when the plaintiff presented no evidence of future wages at trial. The defendant failed to object when the jury returned a verdict slip that explicitly included future wages and failed to conform to the trial court’s instruction to return a single, lump-sum verdict. The court held that an objection to a jury’s verdict that involves trial errors and is correctable before the jury is discharged must be raised before the jury is discharged(November 21, 2018)

In Desanctis v. Borough of Belmar, the Superior Court of New Jersey, Appellate Division, addressed the validity of an interpretative statement of a proposed ordinance relating to an appropriation of funds for a construction project. The court found that the interpretive statement was invalid because it was not publicly approved by the mayor and borough council and because it contained misleading and extraneous language. (July 9, 2018)

In Johnson v. Lend Lease Construction LMB, Inc., et al., the New York Supreme Court, Appellate Division, 2d Department, addressed what type of evidence a defendant can offer to rebut liability under Sections 200, 240(1), and 241(6) of the New York Labor Law. In the underlying case, the plaintiff was a construction worker that fell when he attempted to step up onto a rebar grid. According to the court, the defendants established prima facie their entitlement to judgment with respect to Section 240(1) because the defendants presented evidence demonstrating that only the plaintiff’s foot could fit through the rebar openings, not his entire body, therefore establishing that the grid did “not present an elevation-related hazard.” With the same evidence, defendants also established that the grid was not a “hazardous opening” at the site under Section 240(6). Moreover, the dismissal with respect to Section 200 was affirmed as well because “the plaintiff failed to raise a triable issue of fact.” (September 12, 2018)

In Dunbar Homes, Inc. v. Zoning Board of Adjustment of Franklin Township, the Supreme Court of New Jersey addressed whether an incomplete application for development under the Municipal Land Use Law triggers the Time of Application Rule. The Time of Application Rule provides that “development regulations which are in effect on the date of submission of an application for development shall govern the review of that application for development.” The Municipal Land Use Law defines an application for development as the application form and all accompanying documents required by ordinance. The court held that an incomplete application does not qualify as an “application” under the Municipal Land Use Law and does not benefit from the Time of Application Rule. (June 20, 2018)

In G4S Technology LLC v. Massachusetts Technology Park Corporation, the Supreme Judicial Court of Massachusetts addressed whether construction-contract breaches should continue to be covered by the common-law rule (that in relation to building contracts, a contractor cannot recover on the contract itself without showing complete and strict performance of all its terms) or whether the court should adopt a materiality rule to address construction-contract breaches. Here, the project was completed as specified, but the contractor had intentionally filed false certifications of timely payments to subcontractors. The court concluded that complete and strict performance is still required for all construction-contract terms relating to the design and construction itself but that ordinary contract principles, including the traditional Massachusetts materiality rule, would apply for breaches of other provisions, such as the certification requirement at issue here. The court further held that the breach-of-the-certification requirement was a material breach which precluded recovery for breach of contract. (June 13, 2018)

In Cintron v. RC Dolner, LLCthe Supreme Court of New York, Appellate Division, 1st Department, addressed whether a construction manager had sufficient control over a work site and notice of an unsafe condition as to warrant liability. In this action, a security guard at a building under construction was injured when he backed into a wood plank protruding from a saw table. The court found that an issue of fact existed as to whether the construction manager was liable. In making this determination the court noted that the project manager had general supervisory authority, the authority to stop unsafe work, and the ability to designate places for equipment. Moreover, the construction manager held weekly safety meetings and its laborers would clean up the site. As a result, the court held that the construction manager could not be deemed free from liability. (May 24, 2018)

In NRG Rema v. Creative Environmental Solutions Corporation, the Superior Court of New Jersey, Appellate Division, addressed whether the value of salvage materials recovered by a “contract price” demolition contractor increased the value of a lien fund available to unpaid contractors. The court held that the value of the salvaged materials constituted an element of the “contract price” under New Jersey’s Construction Lien Law (CLL) (N.J.S.A. 2A:44A-1 to 38). Accordingly, the court held that the monetary value of the salvage increased the amount of the lien fund pursuant to the CLL. (April 25, 2018)

In Colonial Surety Company v. Eastland Construction, Inc., the New York Supreme Court, Appellate Division, 1st Department, addressed when a surety company makes a prime facie showing of its entitlement to indemnification for payments made in connection with construction bonds it issued. The court held that the surety company made the necessary showing when it submitted: (1) an indemnification agreement, (2) construction bonds, (3) an affidavit by the surety’s president, and an (4) itemized statement of loss and expenses. In so holding, the court explained that the fact that the surety’s president did not state that the surety “honestly believed” it was liable for the claims did not render the surety’s showing insufficient. In addition, the court held that the contractor failed to raise a material issue of fact as to whether the surety made any payments of bond claims in bad faith when the contractor’s affidavits failed to allege fraud or collusion. (April 5, 2018)

In Brandywine Village Associates v. East Brandywine Township Board of Supervisors, the Commonwealth Court of Pennsylvania quashed an appeal arising from the construction of a mixed-use development plan based on the appellants’ lack of standing. The court found that the appellants, adjacent property owners who objected to the plan, were not “aggrieved” as required to establish standing because the trial court found deficiencies in the developer’s 2014 plan. The court further held that the possibility of future litigation regarding the developer’s 2015 plan was insufficient to establish injury for the purpose of standing(January 5, 2018)

In Krishnan v. The Cutler Group, Inc., the Superior Court of Pennsylvania addressed what a plaintiff must show to prevail on a Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL) claim. The court held that a UTPCPL claim requires a plaintiff to prove only the justifiable reliance element of fraud. (October 2, 2017)

In Chatham Towers, Inc. v. Castle Restoration & Construction., Inc., the New York Supreme Court, Appellate Division, 1st Department, considered whether a construction materials supplier can be held liable for breach of contract and breach of warranty on a theory of res ipsa loquitur for the alleged defects in the materials. The court held that “[r]es ipsa loquitur ‘permits the inference of negligence to be drawn from the circumstance of the occurrence’” and that “ ‘[w]ithout a cause of action for negligence there is no viable cause of action to which to apply the doctrine.’” As such, the court ruled that, because there was no cause of action for negligence, res ipsa loquitur was not applicable. (September 28, 2017)

In The Palisades at Fort Lee Condominium Association, Inc. v. 100 Old Palisade, LLC, the Supreme Court of New Jersey addressed whether a plaintiff filed a lawsuit against a general contractor and three subcontractors for construction defects before the expiration of the statute of limitations. The court held that a construction defect cause of action accrues at the time that the building’s original or subsequent owners first knew, or through the exercise or reasonable diligence, should have known the basis for a claim. (September 14, 2017)

In Chatham Towers, Inc. v. Castle Restoration & Construction, Inc., the New York Supreme Court, Appellate Division, 1st Department, addressed whether a defendant construction company could assert a third-party claim for common law contribution against the third-party defendant, an architect, where plaintiff’s underlying claims against the construction company were based upon an alleged breach of contract. The court held that because plaintiff’s breach of contract claims against the construction company sought only to enforce the benefit of its bargain with the construction company, and because plaintiff’s alleged damages were thus for purely economic loss, such damages did not constitute an “injury to property” sufficient to state a claim for common law contribution pursuant to CPLR 1401. (June 1, 2017)

In Alpha Painting & Construction v. Delaware River Port Authority, the United States Court of Appeals for the Third Circuit addressed a government agency’s procurement decision to reject the lowest bidding contractor as “non responsible.” The court found that the agency had acted arbitrarily and capriciously in its rejection of the lowest bidding contractor. The court further found that the relief fashioned by the trial court was too broad. The court should have directed the agency to permit the lowest bidding contractor to compete for the bid instead of directing the agency to award it the contract since the record did not show that the lowest bidding contractor would have received the contract but for the agency’s illegal conduct. (April 6, 2017)

In Central Ceilings, Inc. v. Suffolk Construction Company, Inc., the Appeals Court of Massachusetts determined whether a “no-damages-for-delay” clause precluded a subcontractor from seeking damages for loss of productivity from the general contractor. The court held that because the subcontractor “was not seeking damages because it had been delayed, but, rather, because it had been forced to increase its workforce due to the compression of the schedule,” the “no-damages-for-delay” clause did not apply to the subcontractor’s claims. (March 29, 2017)

In Schell v. Murphy, the Superior Court of Pennsylvania held that the Mechanics’ Lien Law of 1963, 49 P.S. § 1101, et seq. does not require that the mechanics’ lien claimant name all parties to the contract to satisfy the requirements set forth in the mechanics’ lien statute. Instead, the court held that the statute requires only that the claimant name the owner or reputed owner of the property. The court reasoned that to hold otherwise would make it impossible for a claimant to file a mechanics’ lien claim on a property where he or she entered into a contract with anyone other than, or in addition to, the owner of the property. (December 23, 2016)

In Toussaint v. Ocean Avenue Apartment Associates, LLC, the New York Supreme Court, Appellate Division, 2d Department, addressed whether a building owner was liable to a tenant who had sustained injuries when a portion of her bathroom ceiling fell on her. The Court held that the building owner’s liability hinged upon whether it had actual or constructive notice of the specific condition that caused the tenant’s injuries, and the Court found that evidence of complaints of a developing hole in the ceiling made to the building superintendent several days before the incident were sufficient to provide the building owner with the required notice. (November 2, 2016)

In Doman v. Atlas America, Inc., the Superior Court of Pennsylvania addressed whether the general contractor at a gas well could be a statutory employee under Section 302(a) of the Workers’ Compensation Act,and thus immune from tort liability from a liability action brought by the estate of a decedent-employee of a subcontractor. Applying the plain language of Section 302(a) of the Worker’s Compensation Act, the court concluded that the general contractor was the decedent’s statutory employer under the Act. The Act provided that the statutory employer enjoyed the same protections as the decedent’s direct employer. As a consequence of this finding, the court asserted that the general contractor, having essentially stepped into the shoes of the direct employer, was able to invoke the protections of Section 303 of the Worker’s Compensation Act which provides “immunity from tort liability” for employers because the liability of an employer under the Act was exclusive. (October 27, 2016)

In Borst & Associates v. 410 Shurs Lane Developers, LLC, the Supreme Court of Pennsylvania considered whether a contractor may maintain an action against a property owner’s agents under the Contractor and Subcontractor Payment Act (CASPA), a statute which provides that a contractor or subcontractor is entitled to timely payment for improving real property. The court held that a contractor may not do so, because CASPA does not suggest that liability attaches to non-contracting parties. (September 28, 2016)

In Aggregate Industries - Northeast Region, Inc. v. Hugo Key and Sons, Inc., the Appeals Court of Massachusetts addressed whether a subcontractor is entitled to attorney’s fees under Mass. Gen. Laws. c. 149, § 29 (the bond statute for public works) in a suit brought in quantum meruit where the only dispute is the amount owed to the subcontractor. Despite the fact that the contractor was ready, willing, and able to pay the amount it deemed reasonable, the court concluded that the subcontractor could recover attorney’s fees under the bond statute because the subcontractor met its requirements: (1) it filed its petition in equity in the Superior Court; (2) within one year of the completion of the work; (3) alleging nonpayment within sixty-five days of the invoice for labor and materials provided; and (4) prosecuted the claim "to final adjudication and execution for the sums justly due the claimant as provided in this section." (September 1, 2016)

In Adams v. Hellings Builders, Inc., the Superior Court of Pennsylvania addressed whether second purchasers of a home could raise a claim against the home builders under the Unfair Trade Practices and Consumer Protection Law since second purchasers had no direct business dealings with the builder. The buyers’ claim was based on the fact that, three years after buying the home, a test for moisture infiltration indicated possible presence of mold due to the improper application of stucco. The court considered whether the second purchasers’ reliance on alleged misrepresentations was especially foreseeable, and held that the builder’s preliminary objections should have been overruled because the second purchasers justifiably relied upon the builders’ misrepresentations in purchasing the home. (August 29, 2016)

In N-Tek Construction Services v. Hartford Fire Insurance Company, the Appeals Court of Massachusetts addressed whether an email notice by the claimants to the general contractor satisfied the statutory notice provisions for seeking recourse against a bond. The court determined that the email did not constitute sufficient written notice of a bond claim because it did not make clear, explicitly or implicitly, that the claimant was making a claim against the general contractor for services rendered on the project. (March 14, 2016)

In Dvorack v. AW Development, LLC, the Superior Court of New Jersey, Appellate Division, considered whether an arbitration clause was enforceable in a construction contract. The court found that the clause was unenforceable as written, citing ambiguity and unconscionability. Essential to the court’s decision that the clause was unconscionable was the reservation of the right to seek emergent and injunctive relief from the courts limited to one party. The court found that the limitation of seeking judicial relief on one party constituted “harsh and unfair one-sided terms that do not deserve judicial enforcement.” (February 16, 2016)

In Downey v. Chutehall Construction Company, the Appeals Court of Massachusetts addressed whether a contractor’s potential liability for violation of the building code, which, under G.L.C. 142A, § 17(10) constitutes a per se G.L.C. 93A violation, is waived when a homeowner requests for the work to be done in a way that results in the code violation. The court held that an oral waiver of the building code requirements by the homeowner does not preclude the contractor’s liability, especially when the violation contains a potential public safety consequence. (January 6, 2016)

In F. Zacherl, Inc. v. Flaherty Mechanical Contractors, LLC, the Commonwealth Court of Pennsylvania considered whether Section 508 of the Public School Code applied to an oral contract between the West Allegheny School District and a subcontractor. The court held that Section 508 of the Public School Code would not bar the contractor’s claim for payment of additional work because that work was part of an already-approved contract and the District had already approved the contractor’s performance. (January 6, 2016)

In Universal Health Services, Inc. v. Escobar, the United States Supreme Court granted a writ of certiorari to determine two questions: (1) whether the “implied certification” theory of legal falsity under the False Claims Act is viable; and (2) whether, if the “implied certification” theory is viable, a government contractor's reimbursement claim can be legally “false” under that theory if the provider failed to comply with a statute, regulation, or contractual provision that does not state that it is a condition of payment, or whether liability for a legally “false” reimbursement claim requires that the statute, regulation, or contractual provision expressly state that it is a condition of payment. (December 4, 2015)

In Ramos v. International Fidelity Insurance Company, the Appeals Court of Massachusetts addressed a surety’s vicarious liability for a bail bondsman. The court held that, because the bondsman was the surety’s agent, the surety was liable for the bondsman’s breach of contract with third parties (by failing to return cash collateral), and could be held liable under the Massachusetts Consumer Protection Act, Chapter 93A, based on the bondsman’s overcharging of premiums, despite the fact that the surety had no knowledge of the overcharging. (July 9, 2015)

In Clipper Pipe & Service, Inc. v. The Ohio Casualty Insurance Company, the Supreme Court of Pennsylvania held that the Contractor and Subcontractor Payment Act (CASPA) does not apply to public works projects because the federal government is not an “association,” “person” or “owner” as defined in CASPA. (June 15, 2015)

In State v. Perini Corporation, the Supreme Court of New Jersey addressed 1) when the statute of repose commences in the context of a continuing improvement to real property; and 2) whether the statute of repose is applicable to a products liability claim. On the first issue, the court held that, where a designer or person participating in the construction of an improvement to real property has a continuing responsibility throughout the construction of the project, the limitations period commences only when the entirety of the project relating to the improvement has been certified as substantially completed. On the second issue, the court held that manufacturers of products used in the construction of a continuing improvement to real property are not subject to the statute of repose, but are instead covered by the statute of limitations applicable to the New Jersey Products Liability Act. (April 30, 2015)

In Guaman v. 1963 Ryer Realty Corp., the New York Supreme Court, Appellate Division, 1st Department, addressed whether a construction worker, who fell from a six-story high scaffold when two workers on the ground loosened the scaffolding ropes, causing the scaffold to shift to a vertical position, was required to show that a specific defect in safety devices caused him to fall off the scaffolding. The court held that plaintiff established that the safety devices did not provide adequate protection from the risk of falling, and, therefore, a showing of a specific defect was not necessary. (April 9, 2015)

In East Coast Paving v. North Allegheny School District, the Commonwealth Court of Pennsylvania held that the Prompt Pay Act, not the Contractor and Subcontractor Payment Act, governed a dispute between a school district and a contractor. As a result, the court held that the contractor would only be entitled to a penalty and attorneys’ fees if the school district acted in bad faith in connection with the dispute over the contractor’s paving work. (March 6, 2015)

In Porteous v. J-Tek Group, Inc., the New York Supreme Court, Appellate Division, 1st Department, addressed whether a building owner and independent contractors hired to perform work on the exterior of a building could be held liable for injuries sustained by a pedestrian who was walking on a nearby sidewalk. The court held that it was for a jury to determine whether the owner and contractors should have anticipated the inherent dangers in the work that was being performed. (February 3, 2015)

In Perrotto Builders, Ltd. v. Reading School District, the Commonwealth Court of Pennsylvania, addressed whether a plaintiff’s request for a preliminary injunction was properly denied when a school district revoked its award of a construction contract to the plaintiff based on the school district’s financial difficulties which caused it to revise the scope of the work. The court held that the plaintiff could not prevail on the merits of its claim against the school district because the bidding documents permitted the school district to modify the scope of the project and accept an alternative bid. (January 8, 2015)

In Mayer v. Conrad., the New York Supreme Court, Appellate Division, Fourth Department, addressed whether Labor Law § 200 applied in a situation where an unsecured embankment collapsed and killed a construction worker. At issue was whether the collapsed embankment qualified as a defective premises condition or whether the accident stemmed from the manner in which the work was being performed. The court held that Labor Law § 200 did apply, because the unsecured embankment transformed into a premises condition since it remained in that condition several weeks prior to the accident and neither the decedent nor any other employee was working on the embankment at the time of the accident. (December 3, 2014)

In Pennsylvania Public Utility Commission v. Seder, the Commonwealth Court of Pennsylvania denied public access to documents related to an investigation conducted by the Public Utility Commission (“PUC”). The investigation, done in response to an anonymous tip from an employee of a electric utilities company, led to a settlement between PUC and that company. The court held that documents relating to the investigation were not discoverable under either the Public Utility Code or Right to Know Law because PUC did not use them in effectuating its settlement with the utilities company. Furthermore, the records contained the name of the confidential source, were created as a part of an informal investigation, and their disclosure may cause employees of public utility companies to be less likely to cooperate with PUC and, therefore, hinder future investigations. (December 3, 2014)

In Scungio Borst & Associates v. 410 Shurs Lane Developers, LLC., the Superior Court of Pennsylvania held that a shareholder in a company could not be held personally liable after his company failed to pay construction bills under Pennsylvania’s Contractor and Subcontractor Payment Act (CSPA). The court held that the CSPA entitles a contractor or subcontractor to payment from the party with whom it contracted, but that it did not permit recovery from each and every owner or shareholder from an entity who has failed to provide payment under a construction contract. The court concluded that its ruling left intact a party’s ability to pierce the corporate veil and hold shareholders and members of corporate entities personally liable where the facts warrant. (November 20, 2014)

In A. Scott Enterprises, Inc. v. City of Allentown, the Commonwealth Court of Pennsylvania addressed the evidence required for a bad faith claim under the Procurement Code where the City withheld payment on a contractor’s invoice for suspension costs. The contract required the City to pay the contractor for costs if it suspended the work. The court held that there was sufficient evidence for the contractor to establish a bad faith claim under the Procurement Code where the City did not direct the contractor to demobilize or resume work; did not dispute or make payment on the suspension invoice; and did not notify the contractor that it was withholding payment on the invoice. The court also held that the Procurement Code requires the imposition of attorney’s fees and an interest penalty upon a finding of bad faith by the jury. (October 22, 2014)

In Assos Construction Corp. v 1141 Realty LLC, the New York Supreme Court, Appellate Division, First Department, addressed whether a project owner is entitled to void a contract it entered into with a steel construction company on the basis of misidentification of the project owner in the contract. First and Second Department precedent stands for the proposition that “misidentification of [a] corporate plaintiff in [a] contract does not preclude [the] plaintiff from enforcing the contract.” Thus, the court held that the project owner could not free itself of liability on the basis of a misnomer in the contract. (September 30, 2014)

In Allied Building Products Corp. v. J. Strober & Sons, LLC, the Superior Court of New Jersey, Appellate Division, addressed whether a surety which issues a bond to an unintended obligee is still bound to the intended obligee due to the bond’s incorporation of the contract between the intended obligee and the obligor. The court found that, because a surety bond and a contract that is incorporated by reference are considered as one integrated document, a surety remains bound to the intended obligee by virtue of the contract. Consequently, the doctrine of reformation based on mutual mistake serves to provide the intended obligee with the agreed upon performance. (September 5, 2014)

In Prieto Corporation v. Gambone Construction Co. the Superior Court of Pennsylvania addressed the Contractor and Subcontractor Payment Act (CASPA) and whether construction of a curb falls within the CASPA provisions to constitute an improvement. The court held that a “curb” is both a structure and an alteration of real property, each of which falls within the scope of CASPA.(September 10, 2014)

In Conway v. Cutler Group, Inc., the Supreme Court of Pennsylvania considered the transferability of a builder’s implied warranty of habitability. The court held that a subsequent purchaser of a previously inhabited home may not recover in contract from a builder’s implied warranty of habitability. (August 18, 2014)

In Shafer Electric & Construction v. Mantia, the Supreme Court of Pennsylvania held that the Home Improvement Consumer Protection Act (Act) does not bar a contractor from recovery under a theory of quantum meruit in the absence of a valid and enforceable home improvement contract as defined by the Act. While traditional contract remedies are not available to the contractor for failure to comply with the Act, the applicable provisions do not preclude common law equitable remedies. (July 21, 2014)

In J.M. Hollister, LLC v. Architectural Access Board, the Massachusetts Supreme Judicial Court addressed whether it was reasonable for the Architectural Access Board to conclude that three separate but adjacent doorways on the same façade of a public building constituted separate “entrances” under G. L. c. 22, § 13A and 521 Code Mass. Regs. §§ 5.1, 25.1, given that the three doorways led to different areas of the same store. The court held that the distinct use, treatment, and presentation of the central doorway, which was not handicap accessible, allowed for a reasonable conclusion that the doorway was a separate entrance from the neighboring doorways. (July 10, 2014)

In Waller Corp. v. Warren Plaza, Inc., the Superior Court of Pennsylvania addressed the awarding of attorneys’ fees under the Pennsylvania Contractor and Subcontractor Payment Act (CSPA). The court held that whether a party withheld funds in good faith is relevant to a determination of whether a party is entitled to statutory interest and penalties under the CSPA, but is not relevant to an award of attorneys’ fees. Because the general contractor was awarded the full amount of compensatory damages requested, it was entitled to attorneys’ fees as a “substantially prevailing party” under the CSPA. (June 30, 2014)

In Battiste v. Borough of East McKeesport and Ronald Bachner, the Commonwealth Court of Pennsylvania addressed whether a municipality may issue a stop work order when the owner plans to rent apartments only to women in violation of the Pennsylvania Human Relations Act and the Fair Housing Act. The Court held that a municipality cannot deny a building permit or issue a stop work order because the owner might rent only to women in the future. (June 3, 2014)

In Dept. of Labor and Industry, Bureau of Workforce Development v. Dean Institute of Technology, the Commonwealth Court of Pennsylvania held that, under the Procurement Code, a letter which does not set forth “all grounds upon which the contractor asserts a controversy exists” was not an administrative claim under the Code. Therefore, the Code’s 120 day window to file a statement of claim against the Department, which begins to run following the making of an administrative claim, did not accrue following a letter to the Department which contained only general areas of disagreement. (March 27, 2014)

In Patton v. Worthington Associates, Inc., the Supreme Court of Pennsylvania addressed whether the defendant was a statutory employer under the Workers’ Compensation Act (WCA), and therefore immune to civil liability for plaintiff’s injuries. The Court held that plaintiff’s construction company was a subcontractor of the defendant general contractor and, as such, the statutory employer provisions of the WCA applied despite plaintiff’s assertion that he was an “independent contractor” at common law. (March 26, 2014)

In Cove at St. Charles v. JWest Corp., the Superior Court of Pennsylvania addressed the ability of a homeowners association to assert breach of warranty claims against a builder. The court held that, while the implied warranty of habitability extended to a subsequent purchaser, it did not extend to a homeowners association. (February 13, 2014)

In Port Liberte II Condominium Assoc., Inc. v. New Liberty Residential Urban Renewal Co., LLC, the Superior Court of New Jersey, Appellate Division, addressed whether a condominium association’s complaint should be dismissed on the grounds that the association did not obtain the unit owners' approval to institute the litigation, in violation of the association's by-laws. The court found that the owners could retroactively authorize the lawsuit and refused to permit dismissal. (January 21, 2014, approved for publication January 31, 2014)

In Shamis v. James Moon c/o Geppert Brothers, Inc., the Superior Court of Pennsylvania addressed whether a demolition contractor was immune from civil liability pursuant to the Borrowed Servant Doctrine of the Pennsylvania Workers’ Compensation Act for injuries sustained by an employee of a demolition subcontractor. The court held that genuine issues of material fact existed as to whether the right of controlling the manner of the subcontractor’s employee’s performance of the work ever passed to the contractor. (December 4, 2013)

In Vintimilla v. National Lumber Company, the Appeals Court of Massachusetts addressed whether a duty of care was owed by the lessor of machinery in an action for negligent entrustment where the lessor did not entrust the machinery directly to the operator, but to the operator’s employer, and where the lessee had agreed to use and maintain the equipment in compliance with all federal and state laws. The court held that, under a theory of bailment, the lessor did not have an obligation to ensure the safety of third parties. The lease agreement also shifted the duty of care from lessor to lessee. (November 6, 2013)

In Hogg Construction, Inc. v. Yorktowne Medical Centre, L.P., the Superior Court of Pennsylvania addressed the application of an amendment effective January 1, 2007 to the Mechanics' Lien Law, which extended the time to file a mechanics' lien claim from four months to six months. The relevant work was performed prior to the effective date of the amendment but the claim was filed after the effective date, more than four months after completion of work but less than six months. The court held that the Legislature intended the six-month deadline to apply to all liens filed in 2007. (October 2, 2013)

In American Architectural, Inc. v. Charles Marino, the Supreme Court, Appellate Division, Second Department held that a dispute resolution procedure in a subcontract was void for illegality insofar as it prevented a subcontractor from asserting a claim pursuant to the Lien Law and the State Finance Law. A construction subcontract between the parties contained a detailed dispute resolution procedure and set forth various conditions precedent to the making of any “claim, dispute or question arising out of or in relation to [the] subcontract.” Those conditions included a seven-day notice of claim procedure, and granted the contractor the right to act as sole arbiter. The court noted that the provision granting the contractor the right to act as sole arbiter “violates the principles of trusteeship as reflected in the Lien Law by creating an inherent conflict between the plaintiff’s duty to the trust beneficiaries and its own self-interest…”(September 11, 2013)

In Edward J. Minskoff Equities, Inc. v. Crystal Window & Door Systems, Ltd., the New York Supreme Court, Appellate Division, First Department addressed whether plaintiffs should be permitted to introduce at trial any evidence of their delay damages. Crystal Window signed a guaranty letter in which it guaranteed that its subsidiary would complete work pursuant to a subcontract; however, Crystal Window did not complete the work and the job was ultimately performed by a different subcontractor. The court held that the plaintiffs should be allowed to present evidence of consequential damages to the jury because the issue was not resolved on a prior appeal, the terms of the guaranty were unambiguous, and the subcontract specifically required the subsidiary to indemnify the plaintiffs for any damages caused by “delay.” (July 30, 2013)

In Shafer Electric & Construction v. Mantia, the Superior Court of Pennsylvania interpreted the applicable provisions of the Home Improvement Consumer Protection Act (HICPA) in regards to the section addressing quantum meruit recovery. In interpreting HICPA section 517.7(g), the court found that the legislative purpose was to provide an equitable remedy to situations where there was no valid enforceable written contract. As such, the court found that a written contract is unnecessary for a contractor’s recovery pursuant to HICPA section 517.7(g). (May 13, 2013)

In Motley v. Seaside Park Zoning Board, the Superior Court of New Jersey, Appellate Division, reinstated a stop work order precluding a resident from continuing construction that exceeded the scope of zoning permits. The court held that the homeowner could not rebuild a non-conforming structure without obtaining proper permits, and the homeowner’s expenditure of significant funds to rebuild was not a defense to the stop work order. (March 4, 2013)

In Gerbracht v. Twp. of Millcreek, the Commonwealth Court of Pennsylvania held that the Uniform Construction Code (UCC) Board has the authority to hear appeals from determinations of a building code official. Further, it held that the UCC Board cannot hear issues related to vested rights in building permits. Finally, because there is no administrative process to appeal the rescission of a road occupancy permit, the proper forum to hear an appeal is the trial court. (January 30, 2013)

In Eastern Savings Bank, FSB v. CACH, LLC, the Supreme Court of Delaware held that a judgment lien for a car loan was entitled to be satisfied first after foreclosure on a home. Factually, the judgment lien was recorded a few weeks before the mortgage. After the home was purchased at a foreclosure sale, no payments were made to the lienholder. The court held that, per Delaware’s pure race recording statute, the judgment lien was discharged and the proceeds from the foreclosure were to be distributed according to a first in time, first in line priority. (August 24, 2012)

In Durst v. Milroy General Contracting, Inc., the Superior Court of Pennsylvania addressed whether the Home Improvement Consumer Protection Act (HICPA) precludes lawsuits where home improvement work was conducted but no written contract exists and the contractor is seeking to recover under a quantum meruit theory. The court found a written contract is needed in order to maintain a cause of action for home improvement contracts under HICPA. It further held that the inability of a plaintiff to assert a claim under the HICPA does not preclude recovery under a quasi-contractual theory such as unjust enrichment and quantum meruit. (August 28, 2012)

In Costa v. Brait Builders Corporation, the Supreme Judicial Court of Massachusetts addressed whether a subcontractor may waive his right to payment from a payment bond required by statute for public works projects where a mechanic's lien is unavailable. The court concluded that although the statutory language was silent, the right could not be privately waived because of the dual public-private purpose of the statute. (August 1, 2012)

In Feldman v. Board of Supervisors of East Caln Township, the Commonwealth Court of Pennsylvania addressed whether a conditional use application granted to a developer for the construction of multi-family dwelling units on borough land met the open space and storm water management requirements of the governing township ordinance, where the borough conveyed an easement in order to meet those requirements. The court held that, because the record did not show that the General Assembly had granted the borough authority to convey an encumbrance, use of the land for construction was ultra vires and the conditional use permit invalid. (July 12, 2012)

In Commerce Bank v. Kessler et al, the Superior Court of Pennsylvania held that a contractor’s mechanic’s lien had priority over a bank’s open-end mortgage under 49 Pa.C.S.A. § 1508. After construction began on a residential property, the homeowner obtained a construction loan and used a portion of the loan proceeds for expenses unrelated to the construction on the mortgaged premises. The court concluded that § 1508 only extends priority to open-end mortgage loans where all of the proceeds are used to pay for the “completing erection, construction, alteration or repair of the mortgaged premises.”

In State of New Jersey v. Perini Corp., the Superior Court of New Jersey, Appellate Division addressed the calculation of the ten-year statute of repose for construction litigation under N.J.S.A. 2A:14-1.1. Addressing multi-phase construction for the first time, the court held that the statute of repose begins to run on the date of substantial completion of a project, that each contractor has its own such date, and that such date runs from the completion of the contractor’s entire work, not specific tasks. The court rejected a separate statute of limitations for individual components of a project. (March 30, 2012)

In Mabey Bride & Shore v. Schoch, the United States Court of Appeals for the Third Circuit decided whether the Pennsylvania Steel Products Procurement Act (PSPPA) is unconstitutional because it prohibits the use of temporary bridges made out of foreign steel on public works projects. The court rejected the argument that an exception for structures which do not permanently incorporate foreign steel (i.e. temporary bridges) set forth in the Buy America Act preempts the PSPPA. The court reasoned that the Buy America Act provides leave for states to enact more restrictive regulations and was not meant to preempt the PSPPA. (January 24, 2012)

In Laborers Combined Funds of Western Pennsylvania, v. Scott’s Development Company, the Superior Court of Pennsylvania addressed whether the trustees of employee benefit funds have standing to file mechanics’ lien claims for unpaid contributions owed to union members as a result of collective bargaining agreements between a contractor and the unions. The court held that a traditional subcontractor agreement is not a mandatory prerequisite to confer “subcontractor” status. Under the specific facts presented in this case—the unions were subcontractors and given the unique legal relationship that exists between the trustee and the union—the trustee has standing to assert a mechanics’ lien claim on behalf of the union. (January 6, 2012)

In O’Donnell v. Carella, et al., the Superior Court of Pennsylvania addressed whether a condominium builder waived its right to arbitration. The court held that the right to compel binding arbitration pursuant to a Builders Limited Warranty had been waived because the builder did not promptly raise the arbitration provision, and instead waited over two years to raise the issue while contemporaneously participating in the judicial process. (October 4, 2011)

In Selinsgrove Area School District v. Lobar, Inc., the Commonwealth Court of Pennsylvania addressed the doctrine of nullum tempus – a doctrine holding that a statute of limitations is not applicable to actions brought by the state or its agencies. The court held that the plaintiff school district could not invoke the doctrine to avoid a statute of limitations bar because contractual language that specifically identified when the statutory limitation period would begin to run constituted a waiver of the doctrine. (September 27, 2011)

In Sloan & Co. v. Liberty Mut. Ins. Co., the United States Court of Appeals for the Third Circuit addressed competing interpretations of a construction subcontract where a general contractor failed to make payment to a subcontractor following the default and non-payment by the prime contractor. The court evaluated whether the subcontract contained “pay-if-paid” or “pay-when-paid” terms, as the distinction materially impacted whether the general contractor bore the entire risk of the prime contractor’s default. The court held that the contract was unambiguous and the parties intended to share the risk of default equally.  (August 1, 2011) 

In Murnane v. Finch Landscaping, LLC, the Superior Court of New Jersey, Appellate Division, addressed whether a homeowner who contracts directly with a building contractor to perform a home improvement without engaging the services of a general contractor may assert a claim against the contractor under the Consumer Fraud Act (N.J.S.A. 56:8-1 to -20) and the Contractor's Registration Act (N.J.S.A. 56:8-136 to -152). The court held that these statutes were not meant to exclude homeowners who contract with multiple contractors rather than one general contractor from their protection. (July 1, 2011)

In Brockwell v. Carrington Contractors, Inc. v. Kearny Bd. of Educ., the Superior Court of New Jersey, Appellate Division addressed the issue of the construction and application of N.J.S.A. 17:19-2.13(c) which prohibits contracts from being awarded to firms with a backlog of uncompleted construction work. The court held that subcontractors as well as general contractors are "firms" within the meaning of the statute. (June 20, 2011)

In Port Imperial Condominium Assoc. v. K. Hovnanian, the Superior Court of New Jersey, Appellate Division, addressed the statute of repose bar of construction defect claims where work was completed ten years before litigation began. The court held that the statute of repose barred claims where, at the time of completion, the "work created a situation hazardous to the well-being and safety of persons or property coming into contact with the improvement or structure." (May 2, 2011)

In Clearwater Concreter & Masonry Inc., the Superior Court of Pennsylvania addressed whether a mechanics' lien claimant who performed work on several improvements which form part of a single business plant was required to apportion its lien claim. The court held that the claimant was not in strict compliance with the statue because it filed a second claim for the same debt on the same project rather than a separate construction/improvement project. The claimant was not entitled to file two liens for improvements to a single business plant. (March 29, 2011)

In Young's Sales and Service v. Underground Storage Tank, the Supreme Court of Pennsylvania granted a Petition for Allowance of Appeal to address the following question of first impression: "does the Commonwealth Court's holding that eligibility for recovery from the Underground Storage Tank Indemnification Fund is on a per tank basis misinterpret the purpose of and misapply both federal and state laws requiring mandatory financial responsibility for underground storage tanks and threaten the overall financial sustainability of the Fund itself?" (January 19, 2011)

In Dean v. Barrett Homes, Inc., the Supreme Court of New Jersey addressed the applicability of the economic loss rule and the integrated product doctrine in a case arising from the purchase of a residence found to have certain exterior defects related to its original construction. The court held that the integrated product doctrine did not apply and that the economic loss rule limited any recovery to damages for harm other than to the allegedly defective product itself. (November 15, 2010) 

In Schuylkill Township v. Pennsylvania Builders Assoc., et al., the Supreme Court of Pennsylvania addressed whether the Department of Labor and Industry properly invalidated a township's sprinkler ordinance. The Department found that the ordinance, which required sprinklers in all new structures, was invalid because it exceeded the minimum requirements of Pennsylvania's Uniform Construction Code. The court-giving substantial deference to the agency's interpretation of the statute-agreed that the township failed to prove that local circumstances and conditions justified an exception to the uniform standards and, therefore, upheld the Department's ruling invalidating the ordinance. (October 19, 2010)

In Berlin Steel Construction Company and Western Surety Company v. Salah & Pecci Leasing Co., Inc., the Supreme Court of Delaware recently addressed the question of whether a leasing company that provided equipment on a construction project could recover from the principal or surety under the terms of a performance and payment bond issued for the project. The court determined that since the bond defined a claimant as one having a direct contract with the principal or a subcontractor of the principal, and the leasing company was only under contract with a subcontractor of the subcontractor, the leasing company was not a "claimant" who could seek payment from the bond. (October 4, 2010)

In Ira G. Steffy & Son, Inc. v. Citizens Bank of Pa., the Superior Court of Pennsylvania addressed whether a subcontractor who was not paid for work it performed stated an unjust enrichment claim against a bank who failed to release funds to a developer who was to pay the subcontractor pursuant to a construction loan agreement. A claim for unjust enrichment requires that the defendant not only be enriched, but also that injustice result from that enrichment. The court found that the subcontractor did not state a claim for unjust enrichment because the bank did not do anything it did not have the right to do under the construction loan agreement. (September 17, 2010)

In Van Dunk v. Reckson Associates, the Superior Court of New Jersey, Appellate Division, addressed whether the facts of the case could support a claim that the intentional wrong exception to the workers' compensation bar applied. The Appellate Division held that evidence that the contractor-employer had knowledge that a trench was unstable, coupled with evidence that the employer failed to provide any safety devices, was sufficient evidence to create a question of fact regarding the application of the intentional wrong exception to the workers' compensation bar. (August 30, 2010)

In 500 James Hance Court, et. al. v. Pennsylvania Prevailing Wage Appeals Board, et. al., the Supreme Court of Pennsylvania granted a Petition for Allowance of Appeal to consider the following issue: "Whether the Commonwealth Court erred in concluding that the Prevailing Wage Act applies only to the segment of a bifurcated construction contract receiving public funds." (August 4, 2010)

In Gresik v. PA Partners, L.P., the Supreme Court of Pennsylvania granted a Petition for Allowance of Appeal to consider a premises liability question associated with the Restatement (Second) of Torts § 385. Section 385 refers to persons creating artificial conditions on land on behalf of the possessor of the land, and harm caused after the work has been accepted. The court agreed to consider the following question: "Did the Superior Court err in its interpretation and application of Section 385 of the Restatement (Second) of Torts?" (June 24, 2010)

In Trevdan Building Supply v. Toll Brothers, Inc., the Superior Court of Pennsylvana considered whether an unpaid materialman's equitable claim was superior to a security interest possessed by an assignee of the contractor. In Trevdan, Houston Drywall, Inc. (HD) contracted with Toll Brothers, Inc. (Toll Brothers) to perform drywall work on several of Toll Brothers' residential construction projects. HD then entered into an agreement with Trevdan, the materialman, to supply the building materials for the project. Thereafter, HD sold its rights to unpaid present and future invoices to Gulf Coast Bank & Trust Company (Gulf Coast). Gulf Coast sent notice of its assignment to Toll Brothers, and directed that all future payments to HD be made directly to Gulf Coast. After HD ceased operations on the project, Trevdan (the materialman) demanded payment from Toll Brothers for materials it had supplied to date. After Toll Brothers refused, Trevdan filed suit. Meanwhile, HD filed for Chapter 7 bankruptcy. The trial court ultimately granted Gulf Coast's request for payment of all outstanding invoices and denied Trevdan's request for payment for the materials it had supplied. The Superior Court reversed, and held that "as an unpaid materialman, Trevdan holds an equitable lien against the funds Toll Brothers withheld during the construction project." The court reasoned that the contract between HD and Toll Brothers required HD to pay all outstanding liens and sums due for materials and to certify that all such payments had been made as a condition of payment under the contract. Because the contractor, HD, had breached its obligation under the agreement by not satisfying all liens and ensuring payment to its materialmen, the owner (Toll Brothers) was permitted to retain sufficient funds to satisfy HD's payment obligations. The court further held that the materialman's lien was not inferior to Gulf Coast's security interest because, among other things, "Gulf Coast's right to payment of [HD's] receivables never matured because [HD] failed to satisfy its contractual obligations." (May 28, 2010) 

In Kuhn Construction, Inc. v. Diamond State Port Corporation, et al., the Supreme Court of Delaware addressed whether a "referee" clause in a construction contract drafted by the defendant, Diamond State Port Corporation (DSPC), permitted DSPC to compel the parties to arbitrate. The "referee" clause provided, among other things, that "[t]he Director, or his designee, shall act as referee in all questions arising under the terms of the Contract between the parties hereto, and the Decision of the Director shall be final and binding." When disputes arose during the project, DSPC's executive director attempted to institute a multi-party hearing and asserted the authority to do so under the "referee" clause in the contract. Kuhn refused to participate in any arbitration proceeding, and sued to enjoin the arbitration. DSPC filed motions to compel arbitration and to dismiss, which the Delaware Court of Chancery granted. The Supreme Court reversed, holding that the "referee" clause did not compel arbitration because it did not "clearly and unambiguously indicate the intention to arbitrate" and did not provide Kuhn with "adequate notice" that DSPC, the drafting party, intended to arbitrate all disputes pursuant to the "referee" clause. (March 8, 2008) 

In Excavation Technologies v. Columbia Gas Company of Pennsylvania, the Supreme Court of Pennsylvania addressed the question of whether § 552 of the Restatement (Second) of Torts imposes liability for economic losses, suffered by a contractor, that were caused by a gas utility company’s failure to mark or improperly marking the location of gas lines under the One Call Act. 73 P.S. § 177(5)(i). The court held that because the Act did not provide a private cause of action for economic losses, the legislature did not intend for utility companies to be liable for economic harm caused by an inaccurate response under the Act. The court also declined to impose liability under § 552(3). (December 29, 2009). 

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