Justia U.S. 8th Circuit Court of Appeals Opinion Summaries

Articles Posted in Construction Law
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Dunbar, a Service Disabled Veteran Owned Small Business (SDVOSB), was awarded an Army Corps of Engineers ditch and tributary project in Arkansas. Dunbar then hired a subcontractor, Harding Enterprises, to work on the project. After Harding Enterprises defaulted, Dunbar made a demand on the bond guaranteed by Hanover, which Hanover denied. Hanover then filed suit seeking a declaration that it had no obligations under the bond and seeking to have the bond rescinded based on illegality of the subcontract.The Eighth Circuit reversed the district court's grant of summary judgment in favor of Hanover, holding that the district court erroneously concluded that the subcontract was undisputedly in violation of 13 C.F.R. 125.6(b)(2) because the percentage that Dunbar spent on contract performance relative to the prime contract price could not be conclusively ascertained until conclusion of performance of the prime contract. The court also held that the potential that Hanover may have liability under the False Claims Act if it were to perform under the bond does not justify discharging Hanover from its obligations and rescinding the contract. View "Hanover Insurance Co. v. Dunbar Mechanical Contractors, LLC" on Justia Law

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The Eighth Circuit affirmed the district court's judgment against a subcontractor's surety (Fidelity), and in favor of the general contractor's surety (Liberty) for the full amount of Fidelity's performance bond. The appeal stemmed from a dispute over costs that resulted from contractor defaults in completing a federal government construction project.The court held that when Fidelity issued a performance bond for a subcontractor on a federal project, and its principal defaulted, the word "successor" in the performance bond included as obligee a surety operating under the Takeover Agreement with the federal government. The court agreed with the district court that the many subcontract changes in the Ratification Agreement cited by Fidelity did not as a matter of law, singly or in combination, so materially alter Electric's obligations under the Subcontract that Fidelity's performance bond was discharged. Finally, the court rejected Fidelity's argument that Liberty failed to meet conditions precedent. View "Liberty Mutual Insurance Co. v. International Fidelity Insurance Co." on Justia Law

Posted in: Construction Law
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Kinder filed suit against Manning, alleging that Manning breached a contract to build a pumping station. The Eighth Circuit affirmed the district court's judgment in favor of Manning, holding that Kinder committed the first material breach of contract by threatening to assess delay-related damages without any justification, interfering with the relationship between Manning and EarthTec, and failing to provide adequate assurances that Manning would be paid for its work. The court also held that the district court correctly found that Kinder wrongfully terminated the contract and that evidence at trial supported the damage award. View "Randy Kinder Excavating, Inc. v. JA Manning Construction Co." on Justia Law

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The utility and its insurers filed suit against BendTec for negligence, alleging that its pipes were the source of grit and had been improperly cleaned. The district court granted summary judgment to BendTec. The court affirmed the judgment, agreeing with the district court's conclusion that the negligence claim was barred under the two year limitations period in Minn. Stat. 541.051 since the installation of the turbine was an improvement to real property. Because the two year statute of limitations in Minn. Stat. 541.051 applies and the subdivision 1(e) exception does not, and plaintiffs did not file this lawsuit within the limitations period, the district court correctly granted summary judgment to BendTec. View "Associated Electric & Gas Ins. v. BendTec, Inc." on Justia Law

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Demien, the unsuccessful bidder for the construction of a new firehouse, filed suit against the District under 42 U.S.C. 1983, alleging that the District violated federal and state constitutional rights, as well as state law, in the bidding process. The district court dismissed the complaint. The court concluded that it need only determine whether Damien has Article III standing under Federal law and not whether Damien has standing under Missouri law. Determining that Demien has Article III standing, the court concluded that Demien has abandoned its claims under the First Amendment by failing to argue them before the district court, and that Demien failed to allege that the District deprived Demien of any entitlement, and so it failed to state a claim under the Fourteenth Amendment Due Process Clause. The court concluded that, under Missouri law, there is no property right to the lowest bidder, and standing to bring a state court claim of deprivation of property rights does not establish a protected property interest. In this case, the District stated that it may accept the lowest bid, but does not need to. Accordingly, the court affirmed the judgment. View "Demien Construction Co. v. O'Fallon Fire Protection Dist." on Justia Law

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Duit, an Oklahoma highway contractor, contracted with the Arkansas State Highway and Transportation Department (ASHTD) to reconstruct I-30 between Little Rock and Benton. Duit encountered soil conditions that, it alleges, differed materially from information provided by the ASHTD during bidding. Duit’s claims for compensation were denied by the ASHTD, the Arkansas State Claims Commission, and the General Assembly. Duit sued under 42 U.S.C. 1983, citing the “in re Young” exception to Eleventh Amendment immunity. Duit alleged violations of the Federal Aid Highway Act, 23 U.S.C. 101, and the Due Process and Equal Protection clauses and sought to “enjoin Defendants from accepting federal aid … until . . . they fully comply with the federally mandated differing site clause.” The court dismissed the FAHA claim because that statute is enforced exclusively by an executive agency, dismissed the due process claim because Duit’s interest in future highway contracts is not a protected property interest and because the state appeals process for claim denials satisfies procedural due process requirements. The court declined to dismiss the equal protection claim, concluding Duit sufficiently alleged that the Commission treated out-of-state-contractor Duit differently from similarly situated in-state contractors without a rational reason. The Eighth Circuit held that Duit lacks standing to bring its equal protection claim and that the court erred in not dismissing that claim. View "Duit Constr. Co. Inc. v. Bennett" on Justia Law

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In 2003, the governors of Cedar Rapids Lodge obtained the rights to build an AmericInn franchise. The company used Lightowler as the project architect. Lightowler used a standard form agreement that specified that its terms would be governed by the law of North Dakota. After changes requested by the Fire Marshal and for compliance with franchise standards, Lightowler submitted revised plans in February, 2004. Construction began in January 2004. In July, 2004, Lidberg of AmericInn led a construction site visit attended by the governors, and Olson, a Lightowler engineer. Lidberg and Olson prepared reports detailing deficiencies. The last act performed by Lightowler on the project was a response to the contractor in September, 2004. Lidberg led a second site visit in October, 2004, produced a report identifying additional deficiencies, and sent it to Siebert and Lightowler. The hotel opened for business in December, 2004, but problems continued. In December, 2009 Cedar Rapids Lodge brought claims against its former governors and others involved in the hotel project and alleging professional negligence by Lightowler. The Eighth Circuit affirmed summary judgment in favor of Lightowler, concluding that the claim was barred by the statute of limitations under either North Dakota or Iowa law. View "Cedar Rapids Lodge & Suites, LLC v. Lightowler Johnson Assocs., Inc." on Justia Law

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Weitz contracted with Hyatt to build an Aventura, Florida assisted-living facility, which was completed in 2003. Hyatt obtained post-construction insurance from defendants. Weitz was neither a party nor a third-party-beneficiary. The policies exclude faulty workmanship and mold, except to the extent that covered loss results from the faulty workmanship, such as business interruption losses. The construction was defective. Hyatt notified defendants of a $11 million loss involving moisture and mold at the care center, settled that claim for $750,000, and released defendants from claims relating to the care center. Hyatt next discovered moisture, mold, and cracked stucco at the residential towers. Hyatt gave defendants notice, but bypassed inevitable defenses based upon policy exclusions, and sued Weitz. Weitz sued its subcontractors and its own construction contract liability insurers. Weitz settled with Hyatt for $53 million and was indemnified by its insurers for $55,799,684.69. Weitz sued, claiming coverage under defendants’ policies, based on equitable subrogation or unjust enrichment. The Eighth Circuit affirmed dismissal, recognizing that Weitz, as subrogee, was subject to any defense Hyatt would have faced, and that Hyatt had discharged defendants from liability; that suit was barred by the contractual period of limitations; that Weitz was barred from suing for damage to the plaza because Hyatt did not give defendants notice of that damage; and that Weitz had already collected several million more than it paid. View "Weitz Co. v. Lexington Ins. Co." on Justia Law

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Contractor contracted to build a restaurant in Minnesota, promising to pay each subcontractor, upon receipt of payment from the owner, the amount to which the subcontractor was entitled. Appellant became the subcontractor for carpentry and drywall work. Upon completing its work, Appellant was not paid the full amount owed. After Contractor settled a dispute with the restaurant, it offered Appellant a smaller sum, claiming it was Appellant's pro rata share of the settlement proceeds. Appellant rejected the offer and sued Contractor and its Owner in state court. Owner and his wife subsequently filed a petition for Chapter 7 bankruptcy relief, with the debt to Appellant unsatisfied. Appellant commenced this adversary proceeding to have the debt declared nondischargeable. The bankruptcy appellate panel (BAP) determined that neither 11 U.S.C. 523(a)(4) nor 11 U.S.C. 523(a)(6) barred discharge of the debt. The Eighth Circuit Court of Appeals affirmed, holding (1) Owner was not a section 523(a)(4) fiduciary by reason of a Minnesota statute or Owner's Minnesota common law duties, nor did Contractor's use of its own property amount to embezzlement; and (2) the BAP did not err in finding no malicious injury, which resolved the section 523(a)(6) issue. View "Reshetar Sys., Inc. v. Thompson" on Justia Law

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Torrance Bunch and Fernando Sanchez-Garcia were each convicted by a jury of conspiracy to possess with intent to distribute 500 grams or more of methamphetamine. The jury also found Bunch guilty of three counts of distribution of five grams or more of methamphetamine. On appeal, Bunch alleged that he was denied his Sixth Amendment right to counsel, and Sanchez-Garcia contended that the district court erred in denying his motion for a mistrial and committed other trial-related errors. The Eighth Circuit Court of Appeals affirmed, holding (1) by repeatedly rejecting all options except self-representation, after having been warned of the consequences, Bunch necessarily chose self-representation, and thus, the district court's ruling did not violate Bunch's rights under the Sixth Amendment; (2) the prosecutor's comments during closing argument were not improper, and thus Sanchez-Garcia was not entitled to a mistrial; (3) the district court did not commit plain error by proceeding with a joint trial; and (4) the district court did not abuse its discretion by admitting a recording of a telephone call into evidence. View "United States v. Sanchez-Garcia" on Justia Law