Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

Articles Posted in Construction Law
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In March 2015, Jere Hinman hired BrightView Landscape Development, Inc., to design and construct a pool at her residence. BrightView subcontracted with Georgia Gunite and Pool Company, Inc., to install plumbing and spray shotcrete for the pool shell. In November 2015, Hinman contacted BrightView after receiving an unusually high water bill and discovered that the pool was leaking water due to a missing part that was not included in Georgia Gunite’s scope of work. BrightView and Georgia Gunite worked together to address the issue in April 2016. In 2018, Hinman sued BrightView for defective construction of the pool, and BrightView filed a third-party complaint against Georgia Gunite, seeking indemnification based on the subcontractor agreement. Georgia Gunite moved for summary judgment, arguing that BrightView's claim was barred by Tennessee's four-year statute of repose for actions alleging defective improvements to real estate.The United States Court of Appeals affirmed the decision of the District Court for the Middle District of Tennessee, which granted summary judgment in favor of Georgia Gunite. The court held that, although BrightView's indemnification claim against Georgia Gunite was contractual in nature, it fell within the scope of Tennessee's statute of repose for deficient construction of an improvement to real property because, at its core, it sought to recover damages arising from such deficient construction. The court rejected BrightView's argument that the statute of repose only applies to tort actions. The court also rejected BrightView's argument that the application of the statute of repose in this case would extinguish its claim before it even accrued, noting that this argument is directed at the nature of a statute of repose. The court further held that the repose statute is not mutually exclusive with statutes of limitation. Thus, BrightView's claim against Georgia Gunite was barred because it was not brought within four years after substantial completion of the pool construction. View "Hinman v. ValleyCrest Landscaping Dev." on Justia Law

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In 2018, the Plaintiffs each purchased real estate in Cleveland, planning to rehabilitate and redevelop the properties. Before those purchases, Cleveland declared the buildings on the properties public nuisances, condemned them, and ordered that they be demolished. Following the purchases, and after the Plaintiffs invested time and resources into renovating the buildings, Cleveland authorized private contractors to demolish them. After the demolition of the buildings, the Plaintiffs sued, arguing that the demolitions violated state laws and federal constitutional provisions. The district court granted the defendants summary judgment on the constitutional claims and declined to exercise supplemental jurisdiction over the state law claims.The Sixth Circuit affirmed. Each Plaintiff received “notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” After their purchases, Cleveland sent “new owner letters” via certified mail both to the property address and to each Plaintiff's statutory agent, including both the notice of condemnation and demolition order. Neither Plaintiff applied for required rehabilitation permits. View "First Floor Living LLC v. City of Cleveland, Ohio" on Justia Law

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The Tennessee Department of Transportation (TDOT) contracted with Jones to repair State Route 141. The project involved 68,615 tons of “graded solid rock” for the new road's bottom layer. To obtain graded solid rock, Jones leased land near the roadway, paying the property owner $75,282. Jones prepared the Site and began pattern blasting the limestone to produce appropriately sized rock pieces, using a “shaker” bucket to allow debris to fall away. Appropriately-sized rocks were hauled to the road site. The Site also served as a waste pit for material from the road repair. After several months, a Federal Mine Safety & Health Administration Inspector inspected the Site, determined that Jones had violated several Administration standards, and issued citations and orders.An ALJ ruled that the Site was a mine subject to the Mine Act, not a “borrow pit,” which is not subject to the Administration’s jurisdiction. On remand, the case was assigned to another ALJ, who indicated that she had read the vacated decision. Jone moved for recusal, citing the Sixth Circuit’s command that Jones receive fresh proceedings. The ALJ denied the motion and held that the Site was a mine, not a borrow pit, based on findings that Jones did not only use the Site on a one-time basis or only intermittently; engaged in milling, sizing, and crushing; and did not use the rock more for bulk fill than for its intrinsic qualities. The Sixth Circuit affirmed the decision as supported by substantial evidence. View "Jones Brothers, Inc. v. Secretary of Labor, Mine Safety & Health Administration" on Justia Law

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Nashville passed a “sidewalk ordinance.” To obtain a building permit, an owner must grant an easement across their land and agree to build a sidewalk on the easement or pay an “in-lieu” fee that Nashville will use to build sidewalks elsewhere.In a challenge to the ordinance under the Fifth Amendment’s Takings Clause, the landowner plaintiffs asked the court to apply the “unconstitutional-conditions” test that the Supreme Court adopted in 1987 to assess conditions on building permits (Nollan v. California Coastal Commission). Nashville argued that the Court has applied Nollan’s test only to ad hoc administrative conditions that zoning officials impose on specific permit applicants—not generally applicable legislative conditions that city councils impose on all permit applicants. For legislative conditions, Nashville argued in favor of the application of the deferential “balancing” test that the Court adopted to assess zoning restrictions in “Penn Central” (1978). The district court granted Nashville summary judgment.The Sixth Circuit reversed, agreeing with the landowners. Nothing in the relevant constitutional text, history, or precedent supports Nashville’s distinction between administrative and legislative conditions. Nollan’s test should apply to both types, including those imposed by the sidewalk ordinance. View "Knight v. e Metropolitan Government of Nashville and Davidson County" on Justia Law

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The Sixth Circuit affirmed the order of the district court granting summary judgment in favor of the City of Powell, Ohio and dismissing Golf Village North LLC's claims brought under 28 U.S.C. 1983 for violating its procedural and substantive due process rights, holding that there was no error.Golf Village, a developer, sought to build a "residential hotel" on its property in Powell, Ohio but never filed the required zoning application. Instead, Golf Village requested that the City confirm the residential hotel was a permitted use of the property. The City directed Golf Village to file an appropriate application for "zoning Certificate approval" to receive an answer. Rather than reply, Golf Village sued the City. The district court granted summary judgment for the City. The Sixth Circuit affirmed, holding that Golf Village's procedural due process and substantive due process rights were not violated in this case. View "Golf Village North, LLC v. City of Powell, Ohio" on Justia Law

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Leone’s employer used a degasser, a large vat lined with brick, to extract gas impurities from molten steel. The degasser’s components include an alloy chute near the top of the vat. The employer hired BMI to “tearout” the degasser’s deteriorated face brick. Although the contract did not include any work on the alloy chute, a BMI employee testified that his team would dislodge loose material from the chute to ensure that nothing could fall. He did not notice any loose slag on the chute. After BMI finished, his employer assigned Leone to reline the degasser. Leone and his crew frequently climbed ladders near the alloy chute. They never spotted any loose slag on the chute but, 21 days after BMI completed its one-day job, a 40-pound piece of slag fell and struck Leone. Leone sued, claiming that the slag detached from the alloy chute. Because no molten metal could have created new slag, the court concluded that the slag must have existed when BMI finished but that BMI owed Leone no duty of care under Michigan law. The Sixth Circuit reversed. The district court interpreted Michigan law too narrowly. Although a contractor’s creation of a new hazard can trigger a duty to third parties, that is not the only way that such a duty might arise. A contractor can be liable to a third party if “any legal duty independent of the contract existed,” including by voluntary assumption of a duty. View "Leone v. BMI Refractory Services., Inc." on Justia Law

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The State of Michigan contracted with E.L. Bailey to construct a prison kitchen. After delays, the parties sued each other for breach of contract. Bailey had obtained surety bonds from Great American Insurance Company (GAIC) and had agreed to assign GAIC the right to settle claims related to the project if Bailey allegedly breached the contract. Exercising that right, GAIC negotiated with the state without Bailey’s knowledge, then obtained a declaratory judgment recognizing its right to settle. The Sixth Circuit affirmed, rejecting, for insufficient evidence, a claim that GAIC settled Bailey’s claims against the state in bad faith. Although “there can be bad faith without actual dishonesty or fraud,” when “the insurer is motivated by selfish purpose or by a desire to protect its own interests at the expense of its insured’s interest,” “offers of compromise” or “honest errors of judgment are not sufficient to establish bad faith.” There was no evidence that GAIC’s settlement of Bailey’s claims was undertaken with selfish purpose at Bailey’s expense. GAIC and Bailey shared an interest in securing the highest settlement possible from the state. Even if GAIC misunderstood Michigan law, leading it to miscalculate its liability and accept a lower settlement, “honest errors of judgment are not sufficient to establish bad faith.” View "Great American Insurance Co. v. E.L. Bailey & Co." on Justia Law

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The Tennessee Department of Transportation engaged Mountain States to build two bridges over the Cumberland River at its intersection with Highway 109 in Gallatin. On May 21, 2013, the boom cable of a Terex HC 165 crane snapped while the crane operator was excavating material from under water, causing the boom—the extendable overhead arm of the crane controlled by the load-bearing wire boom cable—to collapse onto the adjacent highway. As the cable broke under tension, it whipped back to shatter the windows of the crane operator’s cab and the boom hit a passing vehicle. Though no person was injured, the subsequent OSHA investigation determined that at least four people were exposed to risk as a result of the accident. An Administrative Law Judge determined that Mountain States had committed a willful violation of the wire rope inspection standard of the Occupational Safety and Health Administration Act because, before the accident, Mountain States had knowledge that the boom cable had “visible broken wires” within the meaning of the provision requiring repair or replacement before further use. The Sixth Circuit affirmed the citation and penalty, finding substantial evidence to support findings of constructive and actual knowledge. View "Mountain States Contractors, LLC v. Perez" on Justia Law

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Baker, an Ohio concrete construction business, subcontracts its work to smaller firms. In 2000, Baker signed a multi-employer collective bargaining agreement (CBA) between the Reinforced Concrete Contractors Association and the Union, covering current employees and employees not yet hired. A prehire CBA is allowed only in the construction industry, 29 U.S.C. 158(f). The CBA renewed automatically. On January 25, 2013, Baker sent the Union a letter, asserting: “Baker’s notice of its intent to terminate the Agreement, including any subsequent successor agreements.” The Union responded: "notice of withdrawal should be made not more than 60 days prior to the termination of the Agreement. The Agreement is in effect … until May 31, 2015, therefore your request was untimely." Baker reiterated that none of its employees perform work covered by the Agreement and that none had performed bargaining unit work covered by the Agreement for at least seven years. The Union filed a grievance. Baker stated that it did not recognize the arbitrator’s authority, but would appear to preserve its position. The arbitrator found Baker in violation of the CBA. The district court vacated the award. The Sixth Circuit affirmed, adopting the single-employee-unit rule; an employer may repudiate statutory and contractual obligations when the employer does not employ anyone within the relevant bargaining unit. View "Baker Concrete Constr., Inc. v. Reinforced Concrete Contractors Ass'n" on Justia Law

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Over the course of seven years, Circle C, a contractor that built 42 warehouses at Fort Campbell Army base, paid some electricians about $9,900 less than the Davis-Bacon (40 U.S.C. 3142) wages specified in its contract with the Army. The government obtained a damages award of $763,000 under the False Claims Act, 31 U.S.C. 3729, arguing that all of the electrical work was “tainted” by the $9,900 underpayment and, therefore, worthless. The Sixth Circuit, reversed the damage award and remanded for entry of an award of $14,748. Actual damages are the difference in value between what the government bargained for and what the government received. The government bargained for the buildings and payment of Davis-Bacon wages. It got the buildings but not quite all of the wages. The shortfall was $9,916--the government’s actual damages. That amount tripled is $29,748 (31 U.S.C. 3729(a)(1)(G)). Minus a $15,000 settlement payment, Circle C is liable for a total of $14,748. View "Wall v. Circle C Constr., LLC" on Justia Law