VB CGC Practice Group

VB CGC Practice Group
Vandeventer Black's Construction and Government Contracts Practice Group focuses on serving our business clients in the construction industry. We currently have offices in Norfolk and Richmond, VA, the OBX and Raleigh, NC, and Hamburg, Germany. For more information about Vandeventer Black, clink on the VB logo.

Friday, January 10, 2014

Party Relationships: Contract Form Can Dictate

When parties go into relationships they often think the relationship is one thing; but legally the relationship may be another.  Judge Hughes' recent decision in the case of PEAC Consulting, LLC v. The Ridley Group & Associates, et al., decided September 20, 2013 (CL12-4821, Richmond Circuit Court) emphasizes the importance to the relationship question of the documents and titles actually used by the parties themselves when they create the relationship. In that case, the plaintiff claimed there was a joint venture relationship with another company in seeking award of a public procurement; however, the trial court disagreed because the proposal that was submitted to the public body identified the parties as "two primary subcontractors." While the court allowed plaintiff's claims to proceeds on other basis, the distinction between joint venturers and subcontractors can be significant; particularly with respect to rights, obligations, and damages. Bottom line, what you call yourself matters, so carefully chose your words, and seek appropriate legal counsel regarding the legal consequences, advantages, and disadvantages of what you could or do choose.

Monday, January 6, 2014

Oh Oh . . . Did I Really Just Waive My Coverage?

Incidents are common place on construction sites. Unfortunately, sometimes things happen that damage the work or cause injury. Typically there is insurance coverage that covers these incidents, but a recent Federal Court decision highlights the pitfalls to the insured taking unilateral action to resolve associated claims, if the insured intends to pursue a related claim against the insurance carrier.

That case is the Fourth Circuit Court of Appeals decision decided on December 16, 2013, Case No. 12-2415 in Perini/Thompkins Joint Venture v. ACE American Insurance Company.  The JV was the construction manager for that project.  The owner had purchased Owner Controlled Insurance through ACE. The JV was an additional insured under that policy.

During construction a 2,400 ton glass atrium was damage.  The JV incurred significant related monetary losses for the damages, and also the related time impacts. Related project litigation ensued between the JV and the owner, that eventually resulted in a settlement of the JV's claims. The JV did not notify ACE of that lawsuit or the settlement until after the settlement.

Six months after the settlement, and nearly two years after the collapse, the JV send a demand letter to ACE advising that to the extent the JV's builder's risk carrier did not pay the JV's collapse related claim then the JV expected ACE to pay. That letter was the first formal written demand to ACE by the JV. Eventually the JV sued ACE and ACE moved to dismiss on the grounds the JV settled the underlying claim without prior notice to ACE.

Applying MD law, but at its basic level merely interpreting the insurance contract as written, the Fourth Circuit held the JV waived any coverage claims against ACE by settling its underlying claim with the owner without first notifying ACE, and that ACE had not intentionally relinquished its rights under that contract by any of its related acts or omissions.

While facts and policy language will differ, the basic premise of this case stands as a warning to those who are contemplating a contractual settlement of claims when those same claims might also have associated insurance claims. Bottom line, ignore insurance policies and insurers at one's peril.

Friday, January 3, 2014

Vandeventer Black's Lowenstein Teaching Upcoming Public Contracts and Procurement Regulations Seminar

Vandeventer Black's Neil Lowenstein is one of the teachers for an upcoming seminar on January 15, 2014 in Norfolk, VA addressing Public Contracts and Procurement Regulations in Virginia. Part of Neil's presentation is a section on procurement ethical issues as well as common dispute issues.  The seminar is at the Marriott Courtyard in Downtown Norfolk.  More information about this program is in the brochure below, or you can contact Neil:

Fourth Circuit Affirms Dismissal of Suit for Discovery Failings

In its recent decision in Projects Management Co. v. DynaCorp International LLC, __ F.3d ___ 122241 (4th Cir., No. 12-2241, Decided November 5, 2013), the Fourth Circuit Court of Appeals re-iterated the importance of meeting pre-trial discovery requirements in affirming the lower court's dismissal of a multi-million dollar damage claims because of the plaintiff's discovery failings, including non- and late production of documents.

While the plaintiff argued dismissal was too extreme and lesser sanctions were available, the Fourth Circuit concluded the district judge's dismissal decision was not clearly erroneous or an abuse of the judge's discretion, and therefore sustained the dismissal.  This case re-iterates the importance of complying with pre-trial discovery obligations, and offers additional insights to the Fourth Circuit's review on appeal of related decisions.

First, the Fourth Circuit re-iterated the review standard as abuse of discretion.  Since district courts have so much discretion in addressing their dockets and matters before them, this is a very tough standard to overcome on appeal. Second, the Fourth Circuit addressed the factors for consideration before a dismissal; which are: 1) degree of wrongdoer's culpability; 2) extent of the client's blameworthiness if wrongful conduct committed by its attorney; 3) prejudice to the judicial process and the administration of justice; 4) prejudice to the victim; 5) availability of other sanctions; and 6) the public interest. 

The court noted that the district judge's evaluation of these factors stands unless clearly erroneous. The court further noted that in exercising the related discretion the district court can act of its of volition (sua sponte) and must consider the whole of the case in choosing the appropriate sanction. That latter was part of the decision because the district judge had based his decision on matters beyond those addressed in the related briefs, which the court confirmed was not just appropriate, but required.

While the abuses in this case were severe, it demonstrates the importance for clients to understand the role of pre-trial discovery and breadth of the district court's discretion, and role, in insuring discovery compliance and the fairness of the judicial process.