Claims

KEYSTONE HEIGHTS – After being awarded over $2 million in damages, the Keystone Heights Airpark can start repairing problems that started after the 2008 construction of two new hangars. About 10 years ago, in October 2008, the small airport entered into a contract with Pipeline Contractors Inc., a Starke-based company that was awarded the bid for a hangar construction project. Once Pipeline had finished, the airport started noticing problems with the work. The pavement outside and concrete flooring inside the two new hangars had started to heave upward and form cracks throughout. The airport stopped payment while officials looked into why the materials used in the project had failed. Their research determined the flaws were a problem with the sub-base layer used in the building process. In 2010, Pipeline filed a suit against the Keystone Airpark Authority for non-payment. Airpark officials answered back with a counter-suit, claiming breach of contract against Pipeline had resulted in the brand new and now-cracked taxiways and concrete floors surrounding their clients’ stored planes, as well as seeking payment from The Hanover Insurance Company who had taken out a performance bond on Pipeline’s fulfillment of the contract with the airport. About seven years after the suits were filed, they went to court for a seven-day trial in October of last year in Clay County’s Fourth Judicial Court with Circuit Judge Don Lester hearing the case “As is usual in construction disputes, there can be no question that a failure occurred,” Lester wrote in his judgment. “The core matter to be resolved by the court is why the failure occurred.” In his report, Lester starts by outlining Pipeline’s responsibility under the contract, which boils down to two things: the company is to provide all of its own work and materials, and guarantee that work and those materials after the project’s completion. Pipeline is also required to get approval of materials from the project’s engineer. It was discovered that Pipeline had used a material known as EZBase underneath the asphalt and buildings in the airport project. EZBase, though allowed at the time, has since been banned in Clay County after a 2013 vote from the Board of County Commissioners. The material is a byproduct of burning coal that was marketed and delivered in the area by the Jacksonville Electric Authority. The BCC vote came following environmental concerns and overall unpredictability of the material as well as a push to ban it outright in the state of Georgia. Soil samples from the site showed that EZBase was not necessary for this project as the soil maintained the necessary properties for use as a sub-base natively with no additives. Judge Lester wrote that the use of a sub-base material when none was necessary was a breach of Pipeline’s duty to material selection under the contract, furthering his point in that they breached the contract again by failing to get the EZBase material inspected or approved by the engineer before placing it at the site. Read More … http://www.claytodayonline.com/stories/decade-old-trouble-comes-to-an-end-for-keystone-airpark,11449

Southwestern Community College is seeking compensation for damage to the Balsam Center building that it believes resulted from the R-5000 road project, a 0.7-mile connector road between N.C. 107 and N.C. 116 that wound up costing $30 million. A three-way finger-pointing contest over the damage has been ongoing since 2015, with SCC blaming DeVere Construction Company Inc. and the N.C. Department of Transportation, and DeVere and the DOT each claiming that the other is responsible for the mess. In the suits, SCC claims that DOT’s construction easement for the culvert project associated with the R-5000 project was limited to the Balsam Center parking lot, but that the easement stopped at the concrete sidewalk in front of the building. However, the suits say, when DeVere installed helical anchors to secure metal sheeting for the project, those anchors extended under the Balsam Center’s foundation. In January 2015, the suits say, DeVere began removing the metal sheeting and the helical anchors, but no fill or grout was placed in the holes created when those anchors came out. This caused holes in the ground under the building’s foundation. As a result, the suit said, vertical and horizontal cracks appeared in the Balsam Center’s interior and exterior walls and floors. “Due to NCDOT’s and DeVere’s actions and/or omissions stated above, the subsurface soil underneath the Balsam Center Building’s foundation was disturbed and compromised, leading to soil settlement and shifting underneath the Balsam Center Building and is the direct and proximate cause of the Balsam Center Building’s settlement-related damages,” both suits read. SCC claims that DeVere failed to adhere to its own plans and specifications, charging the company with negligence and trespass to real property. In its complaint against the DOT, SCC further states that a copy of a subsurface report commissioned for the project, which DOT received in September 2012, was not shared with SCC. It also claims that the alleged trespass of the helical anchors outside the project right-of-way amounts to taking of a “compensable interest” of SCC’s property and that SCC is due compensation for this taking, as well as recovery of court, attorney, appraisal and engineering fees. In its response to the lawsuit filed March 8, DeVere denied many of the central claims in SCC’s complaint. DeVere denied the assertion that the right-of way was limited to the parking lot area, as well as the claims that no fill or grout was placed in the holes when the anchors were removed, that DeVere did not use proper desaturation protocol, that DeVere failed to adhere to its own plans and specifications and that damage to the Balsam Center Building was the result of DeVere’s negligence. The DOT approved all of the construction plans, DeVere said, and any damages that occurred “were caused by defects in the plans and specifications provided by NCDOT and were not caused by DeVere.” In addition, the company said, because it did its work in accordance with the specifications from DOT, it can’t be held liable for any damages resulting from performance of that work. If damage did result from the work, the response said, SCC should seek compensation by suing DOT for compensation for property taken — which, as it happens, SCC is doing. DeVere further expounded on its complaints against DOT in a third-party lawsuit attached to its response, bringing in the DOT, CALYX Engineers and Consultants Inc. and engineer Dave Wissell as third-party plaintiffs in the case. According to this complaint, the DOT and the engineering firm CALYX knew or should have known about saturated soils and subsurface water under the Balsam Center. These entities “were negligent and breached their duties of care owed to the College by preparing drawings, plans and specifications that were defective, and those defects were the proximate cause of any property damage alleged by the College,” DeVere said. The plans were defective, DeVere said, because they required stone to be placed around the subgrade culvert, which would have allowed water to migrate from the Balsam Center’s foundation, creating voids underneath and causing the building to settle. DeVere also pointed the finger at engineer Dave Wissell, who it says designed the temporary shoring that SCC alleges ultimately created the problems, saying that the “alleged but denied property damage arises from and relates to the acts and/or omissions of Wissell.” DeVere states that its agreement with Wissell included a provision that Wissell would reimburse DeVere for any costs it should be required to pay for settling claims related to the work. DeVere closed by asking that SCC’s claims against it be dismissed and that any costs or liability associated with the case by covered by DOT, CALYX and Wissell. DOT has not yet filed a response to either SCC’s lawsuit or DeVere’s third-party complaint. When asked about the case, a DOT spokesman said that the department has a policy against commenting on ongoing lawsuits. “CALYX was only recently added to the lawsuit by DeVere, and as such, it is too soon to offer any detailed response,” said Candace Austin, communications manager for CALYX. “Based on what we know at this time, CALYX strongly denies any and all liability in this matter.” A request for comment sent to Wissell was not immediately returned. This is not the first time that DOT and DeVere have been at loggerheads. In January 2016, the company walked away from DOT projects across the state, including its $15.9 million contract for the R-5000 project. Despite warnings from the DOT, DeVere defaulted on the project, initiating a bonding procedure that resulted in DeVere’s bonding agency, Liberty Mutual, suing the company in federal court. Liberty sued the company for $12.5 million, saying that it had “willfully breached” its duty to Liberty in the way it spent funds from the bonding company, and that DeVere “intentionally submitted false, misleading and/or inaccurate information contained in the financial statements submitted to Liberty.” For example, said Liberty, financial statements submitted in 2013 to assure Liberty that there was enough collateral to protect Liberty from

Trade credit insurers are expected to pay some £31 million to help firms in the supply chain recover from the collapse of UK construction company Carillion, according to the Association of British Insurers (ABI). And the collapse could also trigger legal action with potential claims for negligence and wrongful trading faced by Carillion’s directors from the liquidators, according to some legal experts. Trade credit insurance covers firms against the risk of not being paid for goods or services that they provide, following an insolvency, protracted default or political upheaval. Claims in this sector have spiralled in recent months thanks to a number of high profile company collapses including Monarch, Palmer & Harvey, Multiyork and Misco. In 2016, trade credit insurers paid out £210 million to businesses due to non-payment. Mark Shepherd, assistant director, head of property, commercial and specialist lines, at the Association of British Insurers, said the demise of Carillion acts as a powerful reminder of how trade credit insurance can be a lifeline for businesses in uncertain trading times. “For all businesses, large or small, bad debt could easily put their day-to-day operations at risk, threatening the jobs of their employees. One insolvency can risk a domino effect to hundreds of firms in the supply chain. Trade credit insurance is an essential resource that provides businesses with the confidence to trade, secure in the knowledge they are financially protected when insolvencies occur,” Shepherd said. n terms of potential claims for negligence and wrongful trading, George Hilton, Insolvency and Insurance barrister at chambers 2 Temple Gardens, said that the spotlight will turn to the actions of Carillion’s directors in the run up to the liquidation. “There have been rumours that Carillion’s liquidators may explore potential claims against its former directors. If Carillion’s directors knew, or ought to have concluded that there was no reasonable prospect that Carillion would avoid going into liquidation before it became insolvent, the directors may be held liable,” Hilton said. “Any compensation ordered would go towards potential payments the liquidators would ultimately make to Carillion’s numerous creditors. “Liquidators may also contemplate causes of action against Carillion’s directors on the basis that they failed to exercise reasonable skill, care and diligence in their actions. It is, however, too early to tell whether the evidence will support either type of claim against Carillion’s former directors. “The evidence gathering process will undoubtedly take a long time given the scale of Carillion’s affairs. The current political climate and public uproar at excessive executive pay may add to pressure on the liquidators to commence their investigations as quickly as possible. “The liquidators will want to scrutinise Carillion’s former directors’ actions forensically. There may be more sleepless nights ahead for some of Carillion’s directors – or their insurers.” https://www.intelligentinsurer.com/news/trade-credit-insurers-will-be-hit-by-carillion-claims-abi-14460

PITTSBURGH – A California company that issues performance bonds alleges that two entities and an individual have failed to perform their obligations under a bond. Developers Surety and Indemnity Co. filed a complaint on Dec. 19, 2017, in the U.S. District Court for the Western of Pennsylvania against Parkwood Pointe Associates LLC, Blackwood Pointe Associates LLC and David Cherup citing indemnification and reimbursement. According to the complaint, in 2002 the plaintiff furnished bonds to M Squared Development with Crescent Township as obligee for a project. The suit states that the defendants executed an indemnity agreement. The plaintiff holds Parkwood Pointe Associates LLC, Blackwood Pointe Associates LLC and Cherup responsible because the defendants allegedly have failed and refused to perform their obligations to indemnify and hold the plaintiff harmless in connection with the demands of the bond. The plaintiff seeks judgment against the defendants for damages, expenses, court costs, and any further relief this court grants. It is represented by Paul T. DeVlieger of Devlieger Hilser PC in Philadelphia. U.S. District Court for the Western District of Pennsylvania case number 2:17-cv-01647-MPK https://pennrecord.com/stories/511306155-developers-surety-and-indemnity-co-seeks-reimbursement-from-parkwood-pointe-associates-others

A federal appeals court has reversed its earlier ruling and held a Travelers Cos. Inc. unit is not obligated to pay a subcontractor in a public project under its payment and performance bonds. The complex case involves Pearl, Mississippi-based McMillan-Pitts Construction Co. L.L.C., which was selected as the prime contractor on a public project to construct an office building at the Mississippi State University Delta Research and Extension Center in Stoneville, Mississippi, according to court papers in JSI Communications v. Travelers Casualty & Surety Co. of America. McMillan-Pitts was required to obtain payment and performance bonds as surety for the project, and did so from Travelers Casualty & Surety, according to the ruling. Separately, a Tackett creditor unrelated to the project served a writ of garnishment on McMillan-Pitts seeking access to any funds McMillan-Pitts owed Tackett. McMillan-Pitts tendered to the court the $19,445.16 it still owed Tackett for its work on the project, and obtained a judgment from a chancery court releasing it from any further liability on its subcontract with Tackett. Shortly afterwards, JSI notified both McMillan-Pitts and Travelers it was seeking payment under the project’s payment bond for Tackett’s nonpayment of JSI’s invoice. In November 2012, Travelers denied JSI’s claim on the bond on the grounds the McMillan-Pitt’s chancery court judgment released it of any obligations under its subcontract with Tackett. JSI filed suit against Travelers, and the U.S. District Court in Jackson, Mississippi, ruled in Travelers’ favor. A three-judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans unanimously overturned the ruling in 2015. “We do not interpret the (chancery court) judgment as having any effect on obligations under the payment bond,” said the ruling. “Accordingly, we conclude that JSI is entitled to recovery under the bond and summary judgment on liability for the invoiced amount (it) should have been granted in the amount of $36,346.09,” said the panel, in remanding the case for further proceedings. On remand, the U.S. District Court ruled in Travelers favor, denying JSI’s bad faith and punitive damages claim. A unanimous-three judge appeals court panel affirmed this ruling on Friday. “The district court determined that Travelers demonstrated an arguable reason for denying JSIs’ claim and that JSI failed to meet its burden to show otherwise” said the panel’s ruling. Travelers “met its low burden for showing a reasonable justification for its action. JSI, now with the burden to demonstrate that Travelers’s reasons are not legitimate, fails to persuade,” said the panel, in affirming the lower court ruling. http://www.businessinsurance.com/article/20171212/NEWS06/912317883/Travelers-need-not-pay-public-project-subcontractor-JSI-Communications