Construction Law News Blog

Showing 20 posts in Claims / Dispute Resolution.

Kentucky Adopts Economic Loss Doctrine – Contractors’ Contract Remedies For Disputes In Construction Projects of Renewed Importance

On June 16, 2011, Kentucky’s highest court adopted the economic loss doctrine.  This doctrine holds that when a product causes only property damage, with no personal injury or physical harm, the owner of the product cannot bring tort claims and is limited to the recovery allowed under the contract between the parties.  Negligence claims and strict liability claims are prohibited.  See Giddings & Lewis, Inc. v. Industrial Risk Insurers, __ S.W. 3d ___, 2011 WL 2436154 (Ky. 2011).  In the Giddings’ case, an insurer of a diffuser cell system attempted to recover amounts paid to the owner of the product from the manufacturer of the system based on breach of contract, negligent strict liability, negligent misrepresentation and fraud by omission.  The court rejected the tort based claims and damages, including economic loss for lost profits, costs for repair and replacement of the defective commercial product. Recovery was allowed only under the terms of the parties’ contract, which could include express or implied warranties negating certain damages. Read More ›

False Claims Act Introduced in Ohio Senate

At a press conference on April 7, 2011, the Ohio Attorney General and two Ohio state senators introduced SB 143, Ohio’s False Claims Act. Ohio currently does not have a false claims act and, as a result, this bill presents the possibility of a large change in Ohio public. A brief examination of the key provisions, therefore, is useful to see what may be on the horizon for entities that receive state funds either through contracts or grants. Read More ›

Out-of-State Contractor Can Enforce Georgia Arbitration Award in Kentucky: Costly Lessons on Contents of Arbitration Provision

The interplay between the Kentucky Arbitration Act, the Federal Arbitration Act and the enforcement of an award and judgment in either state or federal court creates certain procedural challenges.  Kentucky’s latest court ruling resolved one open issue:  can an arbitration award obtained and confirmed in a different state be enforced in a Kentucky state court when the contract’s arbitration clause is silent on both the location of an arbitration and the court that may confirm an award, the parties are from different states, and the contract involves interstate commerce,?  Under the facts in Paducah Federal Credit Union v. Consultants & Builders, Inc., the answer is yes. Read More ›

Appeals Court Affirms Trade Group’s Standing to Sue for Violation of Wage and Hour Regulations

In its opinion released in October 2010, the Sixth District Court of Appeals in Ohio held that the Ohio Valley Associated Builders and Contractors (“ABC”) had statutory standing to present a claim alleging violation of Ohio’s prevailing wage laws. The court then returned the case to the trial court for further proceedings. Read More ›

Overpaid DBE Subcontractor Could Not Defend Overpayment Based On DBE Compliance Issues

Central Bridge Company, LLC subcontracted with Javier Steel Corporation for steel materials and labor for seven different road projects in Kentucky. Central Bridge was to pay Javier for the labor and materials. Alternatively Central Bridge could pay third party vendors directly. Central Bridge identified Javier as a disadvantaged business enterprise (“DBE”) and used the steel subcontract to meet the “not less than 10% expenditure on economically disadvantaged individuals” to meet the DBE requirements. Read More ›

Contractors' Reliance on Erroneous Information From County Auditor Does Not Save Defective Mechanic's Lien

The Indiana Court of Appeals recently rendered a decision that should give all Indiana contractors pause before recording a mechanic’s lien. In Capital Drywall Supply, Inc. et al. v. Jai Jagdish, Inc. and Ranjan Amin, 934 N.E.2d 1193 (Ind. Ct. App. 2010), the court affirmed summary judgment in the owner’s favor where the mechanic’s lien claimants identified the improper owner on their Mechanic’s Liens even though the improper identification was based upon erroneous information received from the County Auditor. Read More ›

Economic Loss Doctrine Alive and Well in Indiana

The construction industry extensively relies upon the use of written contracts to establish duties and to allocate risk. When defects occur on a project, a party's ability to recover is governed by the existence of its contractual relationships, as well as the type of damages it seeks to collect. In Indiana, where the aggrieved party’s losses are solely economic in nature, it may look to recover only from those with whom it has contracted. Indianapolis-Marion County Public Library v. Charlier Clark & Linard, P.C., 929 N.E.2d 722 (Ind. 2010). Read More ›

Kentucky Appellate Court Requires Arbitration Even If Contract Already Terminated

The Kroger Company expanded a grocery store in Lexington, Kentucky and hired E.H. Construction, LLC as the general contractor for the expansion project. E.H. Construction subcontracted with Alpha Concrete Construction for the cement floor and Alpha subcontracted with W.T. Congleton Co. and others for material and labor. Congleton later sued Alpha and Kroger and others for breach of contract and unjust enrichment. Alpha brought in E.H. Construction as a third party defendant. E.H. Construction filed a motion to stay the litigation and compel arbitration. E.H. Construction relied on Article 15, entitled Dispute Resolution, which provided that all claims or disputes arising out of or related to the subcontract between E.H. and Alpha be decided by arbitration in accordance with the Construction Industry Arbitration rules of the American Arbitration Association, except for claims waived by the making or acceptance of final payment. Read More ›

"Parties may be bound to contract terms even in absence of signed agreement"

Occasionally, in a rush to commence performance (or in some cases by intentional design), the parties to a contract may proceed despite the fact that one of them has not signed the written agreement. If a dispute later arises related to performance, the issue may arise whether the unsigned contract nevertheless controls the parties' rights and liabilities. The answer to this questions likely depends upon the specific facts of the case. Read More ›

“'Successful Party' fee-shifting provision does not authorize recovery of fees in absence of a judgment"

In Indiana, in the absence of a statute or contractual provision authorizing an award of attorney's fees, the parties are expected to bear their own legal costs. As a result, many construction contracts include a fee-shifting provision which may provide, for example, that: "If either party sues the other to collect damages arising out of a breach of this agreement, the successful party shall be entitled to the recovery of its reasonable costs and attorney fees." Because so many cases are ultimately resolved through informal settlement negotiations or at mediation however, one issue that may arise as the parties discuss and finalize settlement is whether the party recovering compensation from the other is a "successful party", such that it would also be entitled to the recovery of its attorney's fees. The Indiana Court of Appeals recently resolved this issue in Delgado v. Broyles, where the purchasers of a parcel of property reached a settlement with the seller prior to trial and then sought an order from the court for the recovery of their attorney's fees on the basis that they were "successful." In such a case, the court determined that recovery of attorney's fees is improper. Read More ›

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C. Michael Shull, III focuses his practice on construction law and litigation. Michael's client representations range from casinos and ENR Top 400 contractors to design firms and subcontractors.