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Where Breach of Contract and Tortious Interference Collide

July 18, 2022 — Christopher G. Hill - Construction Law Musings
Claims for breach of contract are numerous in the construction law world. Without these claims we construction attorneys would have a hard time keeping the doors open. A 2021 case examined a different sort of claim that could arise (though, “spoiler alert” did not in this case) during the course of a construction project. That type of claim is one for tortious interference with business expectancy. In Clark Nexsen, Inc. et. al v. Rebkee, the U. S. District Court for the Eastern District of Virginia gave a great explanation of the law of this type of claim in analyzing the following basic facts: In 2018, Clark Nexsen, Inc. (“Clark”) and MEB General Contractors, Inc. (“MEB”) responded to Henrico County’s (“Henrico”) Request for Proposals (“RFP”) for the design and construction of a sport and convocation center (the “Project”). Henrico initially shortlisted Clark and MEB as a “design-build” team for the Project, but later restarted the search, issuing a second RFP. Clark and MEB submitted a second “design-build” proposal, but Henrico selected Rebkee Co. (“Rebkee”) for certain development aspects of the Project. MEB also submitted proposals to Rebkee, and Rebkee selected MEB as the design-builder for the Project. MEB, at Rebkee’s request, solicited proposals from three design firms and ultimately selected Clark as its design partner. From December 2019 to May 2020, Clark and MEB served as the design-build team to assist Rebkee in developing the Project. In connection therewith, Clark developed proprietary designs, technical drawings, and, with MEB, several cost estimates. In February 2020, MEB submitted a $294,334.50 Pay Application to Rebkee for engineering, design, and Project development work. Rebkee never paid MEB. Henrico paid MEB $50,000.00 as partial payment for MEB’s and Clark’s work. MEB then learned that Rebkee was using Clark’s drawings to solicit design and construction proposals from other companies. On July 23, 2020, Rebkee told MEB that Henrico directed it to cancel the design-build arrangement with MEB and Clark and pursue a different planning method. MEB and Clark sued and Rebkee for, among other claims, tortious interference with a business expectancy. Rebkee moved to dismiss the tortious interference claim. Read the court decision
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Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

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Homebuilders Call for Housing Tax Incentives

May 10, 2013 — CDJ STAFF
The National Association of Home Builders has asked Congress to support tax incentives for home buyers and renters, including the Low Income Housing Tax Credit and the mortgage interest deduction. Robert Dietz, an economist at the NAHB, noted that in 2009, 35 million home owners were able to claim the mortgage deduction. Dietz responded to arguments that the deduction simply lead to people buying bigger homes by saying that “the need for a larger home created the higher loan deduction, not the other way around.” The NAHB notes that one hundred new single-family homes creates more than 300 jobs and generates substantial tax revenues. “Housing provides the momentum behind an economic recovery because home building and associated businesses employ such a wide range of workers” said Dietz. Read the court decision
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Affordable Global Housing Will Cost $11 Trillion

October 08, 2014 — Flavia Krause-Jackson – Bloomberg
Replacing the world’s substandard housing and building affordable alternatives to meet future global demand would cost as much as $11 trillion, according to initial findings in a McKinsey & Co. report. The shortage of decent accommodation means as many as 1.6 billion people from London to Shanghai may be forced to choose between shelter or necessities such as health care, food and education, data disclosed at the 2014 CityLab Conference in Los Angeles show. McKinsey will release the full report in October. The global consulting company says governments should release parcels of land at below-market prices, put housing developments near transportation and unlock idle property hoarded by speculators and investors. The report noted that China fines owners 20 percent of the land price if property is undeveloped after a year and has the right to subsequently confiscate it. Read the court decision
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Reprinted courtesy of Flavia Krause-Jackson, Bloomberg
Ms. Krause-Jackson may be contacted at fjackson@bloomberg.net

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Federal Court Reiterates Broad Duty to Defend in Additional Insured Cases

April 22, 2024 — Craig Rokuson - Traub Lieberman
In the recent case of Travelers Indem. Co. of Am. v. Accredited Sur. & Cas. Co., No. 21-CV-7189 (FB) (JRC), 2024 U.S. Dist. LEXIS 44634 (E.D.N.Y. Mar. 13, 2024), the Federal District Court for the Eastern District of New York had occasion to consider an additional insured tender on behalf of a prime contractor, Archstone, to a subcontractor, Topline, who was named as a direct defendant in a New York labor law case. Even though Topline’s carrier put forth evidence that Topline was not negligent, the court held, under New York’s broad duty to defend, that Topline’s carrier owed a duty to defend the prime contractor. Initially, the court was satisfied that a purchase order, signed only by Topline and not Archstone, was binding on Topline. That purchase order specified that Topline agreed to name Archstone as an additional insured. With respect to the duty to defend, the court found that it was enough that the underlying plaintiff alleged that all defendants, including Topline, were negligent in permitting a ladder that plaintiff was on to remain in a defective condition and in failing to foresee the existence of a hazard from the condition of the subject ladder. Read the court decision
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Reprinted courtesy of Craig Rokuson, Traub Lieberman
Mr. Rokuson may be contacted at crokuson@tlsslaw.com

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The Problem with One Year Warranties

June 10, 2015 — Craig Martin – Construction Contractor Advisor
Contractors often ask if they should include a one year warranty in their subcontracts. I tell them that they can, but it may be more effective to include a one-year correction period. If a contractor does include a warranty in the contract, it may actually extend the time in which a contractor may be sued. I recommend instead a Correction Period. Typical Construction Warranties Form construction contracts, like the AIA forms, often times contain warranty language. The AIA A201, General Conditions, contains a warranty section that covers materials, but it does not address how long the work is warranted: “3.5 WARRANTY The Contractor warrants to the Owner and Architect that materials and equipment furnished under the Contract will be of good quality and new unless the Contract Documents require or permit otherwise. The Contractor further warrants that the Work will conform to the requirements of the Contract Documents and will be free from defects, except for those inherent in the quality of the Work the Contract Documents require or permit.” Instead, the AIA A201, section 13.7, limits the time by which claims must be brought to 10 years or the applicable statute of limitations. Read the court decision
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Reprinted courtesy of Craig Martin, Lamson, Dugan and Murray, LLP
Mr. Martin may be contacted at cmartin@ldmlaw.com

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Colorado Chamber of Commerce CEO Calls for Change to Condo Defect Law

March 05, 2015 — Beverley BevenFlorez - CDJ STAFF
According to the Denver Business Journal, Dennis Houston, president and CEO of the Parker Chamber of Commerce in Colorado, spoke at the state’s capitol recently, calling legislators “to make it harder for attorneys to file class-action lawsuits against condominium builders so that areas like his can attract a workforce of millennials.” Houston and other Chamber of Commerce leaders gathered at the capitol “to lobby for sensible energy policies and construction defects reform, among other things.” Read the court decision
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Reprinted courtesy of

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Difference Between a Novation And A Modification to a Contract

May 10, 2022 — David Adelstein - Florida Construction Legal Updates
In contract law, there are two doctrines that have similarities but are indeed different. These doctrines are known as novation and modification. There are times you may want to make arguments relative to these doctrines because they are important for your theory of the dispute. Thus, you want to make sure you understand them so you can properly plead and prove the required elements to substantiate the basis of the theories. Understanding the elements will help you understand the evidence you will need to best prove your factual theories. A novation is essentially substituting a new contract for an old contract.

“‘A novation is a mutual agreement between the parties for the discharge of a valid existing obligation by the substitution of a new valid obligation.’” Thompson v. Jared Kane Co., Inc., 872 So.2d 356, 361 (Fla. 2d DCA 2004) (citation omitted). To prove a novation, a party must prove four elements: “(1) the existence of a previously valid contract; (2) the agreement of the parties to cancel the first contract; (3) the agreement of the parties that the second contract replace the first; and (4) the validity of the second contract.” Id. at 61. Whether the parties consented to the substitute contract can be implied from the factual circumstances. Id.

Parties are more familiar with a modification because it is not uncommon that parties may agree to modify contractual terms. The contract remains in effect but certain terms or obligations are modified. For example, a change order to a contract is a modification. Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

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Construction Litigation Roundup: “Sudden Death”

October 17, 2023 — Daniel Lund III - Lexology
It’s not football, though. Rather, just when you thought it was safe in Louisiana to wait to file a garden-variety construction contract payment claim, an appellate court slams the door on it – applying a statute of “repose” to your claim. “Personal actions” – such as an action on contract – are generally subject in Louisiana to a 10-year “liberative prescription,” the applicable statute of limitations pursuant to Louisiana Civil Code article 3499. Like some other states, Louisiana has a statute of “repose” – imposing “peremption” rather than prescription for claims having to do with construction projects – limiting those claims (generally speaking) to five years post-completion. Like other statutes of “repose,” Louisiana Revised Statute 9:2772 provides that claims on construction projects may not be filed after five years, a duration which is not subject to interruption or extension. Read the court decision
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Reprinted courtesy of Daniel Lund III, Phelps
Mr. Lund may be contacted at daniel.lund@phelps.com

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