Articles Posted in Construction Law

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In 2009, Jacquelyn Jacks bought a manufactured home from CMH Homes, Inc., on an installment plan. The purchase was financed through CMH Homes under a manufactured home retail installment contract. The contract contained an arbitration agreement, which provides that all disputes arising from, or relating to, the contract would be resolved by binding arbitration. By its terms, the agreement also covered all co-signors and guarantors, and any occupants of the manufactured Home (as intended beneficiaries of the arbitration agreement. Jacks moved into the home with her husband and their children. Five years later, the Jacks family sued CMH Homes, CMH Manufacturing, and Vanderbilt Mortgage and Finance (not a party to this appeal). They claimed: (1) CMH negligently installed and repaired the manufactured home’s water system, which caused toxic mold to grow; (2) the manufactured home was unreasonably dangerous at the time it left the control of CMH; (3) the manufactured home was not fit for habitation. Jacks also sought to rescind her purchase of the manufactured home, along with her agreement to pay Vanderbilt Mortgage and Finance the indebtedness incurred to purchase the home. The CMH defendants removed the case from state to federal court and moved to compel arbitration and stay the court proceedings. The district court granted the motion to compel as to the claims of Jacks, but denied the motion as to the remaining plaintiffs who were not parties to the installment contract. Defendants had argued that Jacks’ husband and their children were likewise bound by the arbitration agreement, even though they never signed the contract. The district court held that “the single sentence in the Arbitration Agreement generically referencing ‘any occupants of the Manufactured Home (as intended beneficiaries of this Arbitration Agreement)’ was not sufficient to make the nonsignatory plaintiffs third party beneficiaries of the Arbitration Agreement and subject to being compelled to arbitration. The district court also rejected Defendants’ contention that the nonsignatory plaintiffs were “bound to arbitrate their claims” under “the doctrine of equitable estoppel.” Defendants timely appealed the district court’s partial denial of their motion to stay and to compel arbitration. The Tenth Circuit found no reversible error in the district court’s judgment and affirmed it. View "Jacks v. CMH Homes" on Justia Law

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Plaintiff Savant Home, Inc., a custom home designer and builder, held a registered copyright to a floor plan of a three-bedroom ranch house (“Anders Plan”). Savant built a model house embodying that plan in Windsor, Colorado (“Savant house”). In June 2009, Ron and Tammie Wagner toured the Savant house and hired builder Douglas Collins and his firm, Douglas Consulting, LLC (jointly, “Collins”) to build a house. Collins, in turn, contracted with Stewart King to design the house. After Collins and Mr. King completed the Wagners’ house, Ms. Wagner hired them to build a second house. Savant sued Collins for copyright infringement, contributory copyright infringement, civil conspiracy, trade dress infringement, and other claims, alleging defendants copied the Anders Plan by building the two houses. The district court granted Defendants summary judgment on two grounds: (1) Savant failed to offer evidence of inherent distinctiveness or secondary meaning and (2) no reasonable jury could find a likelihood of confusion. Savant appealed. After review, the Tenth Circuit agreed with the district court as to the first ground and therefore did not address the second. View "Savant Homes v. Collins" on Justia Law

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Defendant-appellant Ryan Ridens received a fifteen-year mandatory-minimum sentence enhancement established by the Armed Career Criminal Act (ACCA) for certain felons with three or more prior convictions for “violent felon[ies]” or “serious drug offense[s].” He claimed the district court erred in imposing the enhancement because: (1) a burglary conviction used to trigger the sentence should not have counted as a “violent felony” because there was insufficient proof that it was a qualifying burglary within the meaning of the ACCA; and (2) triggering the mandatory minimum with the judicially found fact of his three prior qualifying convictions violated the Sixth Amendment. Finding no reversible error in the district court's decision, the Tenth Circuit affirmed his sentence. View "United States v. Ridens" on Justia Law

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The issue this case presented for the Tenth Circuit's review centered on whether the developer of a master-planned subdivision (master developer) was liable under the Interstate Land Sales Full Disclosure Act when a different developer sells units in a condominium project in the subdivision without providing a property report or making a statement of record available, as required by 15 U.S.C. 1703(a)(1)(A)-(B). RP Steamboat Springs, LLC was formed for the purpose of developing a mixed-housing, master-planned subdivision in Steamboat Springs, Colorado, called Wildhorse Meadows. RP entered into an agreement with the City of Steamboat Springs to develop Wildhorse Meadows. As master developer and initial owner of the Trailhead parcel, RP engaged in a variety of marketing activities through its listing agent, S&P Properties, for the development as a whole and for Trailhead Lodge specifically. A group of investors formed Trailhead Lodge at Wildhorse Meadows, LLC for the purpose of developing the Trailhead Lodge condominiums. Trailhead LLC hired Resort Ventures as its management company and S&P Properties as its listing and marketing agent. S&P Properties and Trailhead LLC's unsuccessfully tried to negotiate a separate project agreement for the Trailhead Lodge. RP entered into a project agreement with S&P Properties concerning Trailhead Lodge and then assigned all of its rights, title, and interest in the Trailhead Project Agreement to Trailhead LLC. RP transferred the Trailhead parcel to Trailhead LLC by special warranty deed. Two days before Trailhead LLC officially obtained ownership of the Trailhead parcel, several Buyers entered into (substantially identical) preconstruction purchase and sale agreements with Trailhead LLC. RP was not a signatory to the Contracts, but it was mentioned as the master developer. Buyers each paid a deposit toward the purchase of their respective Trailhead Lodge units. At the time Trailhead LLC entered into the Contracts with Buyers, no one had filed a statement of record with the Department of Housing and Urban Development for Trailhead Lodge, nor were Buyers provided a property report, as required by the Interstate Land Sales Full Disclosure Act. As a result of this failure, Buyers had the right to rescind the Contracts within two years after signing, which they did. The now-insolvent Trailhead LLC did not return the deposits Buyers paid under the Contracts. Buyers filed this action Trailhead LLC, RP, and S&P Properties. Among other claims, Buyers alleged Trailhead LLC, RP, and S&P Properties all qualified as developers under the Land Sales Act and that they violated the Land Sales Act by failing to file a statement of record and failing to provide a property report when Buyers purchased the condominium units. The district court subsequently granted Buyers' motion for summary judgment against Trailhead LLC on the Land Sales Act claims. Buyers later settled all claims against S&P Properties, and S&P Properties was dismissed from the case. Buyers and RP agreed to submit those Land Sales Act claims to the district court on written briefs, supporting affidavits, and stipulated facts. In its ultimate findings of fact and conclusions of law, the district court ruled that RP was not liable under the relevant provisions of the Land Sales Act. Buyers timely appealed. The Tenth Circuit concluded that because the master developer in this case, RP Steamboat Springs, LLC (RP), neither directly nor indirectly sold the condominium units at issue, it was not liable under the Land Sales Act. The Court therefore affirmed the district court's ruling in favor of RP. View "Dalzell v. Trailhead Lodge at Wildhorse" on Justia Law

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The issue at the heart of this appeal to the Tenth Circuit centered on indemnity stemming from a promise by Martin K. Eby Construction Company’s predecessor to build a water pipeline. Eby engaged another company (the predecessor to Kellogg Brown & Root, LLC), promising to indemnify claims resulting from Eby’s work. While building the water pipeline, Eby accidentally hit a methanol pipeline, causing a leak. At the time, no one knew about the leak. It was discovered over two decades later, and the owner of the methanol pipeline had to pay for the cleanup. The owner of the methanol pipeline sued to recover the expenses from Kellogg and Eby. Kellogg and Eby prevailed, but Kellogg incurred over $2 million in attorneys’ fees and costs. Kellogg invoked Eby’s indemnity promise, suing Eby and its liability insurer, Travelers Casualty and Surety Co. The district court granted summary judgment to Eby and Travelers, leading Kellogg to appeal. To resolve the Kellogg-Eby portion of the appeal, the Tenth Circuit focused on the enforceability of Eby’s promise of indemnity: the promise was broad enough to cover the pipeline owner’s claims against Kellogg for its inaction after Eby caused the leak, but the indemnity clause was not conspicuous; thus, it was unenforceable. The Kellogg-Travelers appeal turned on Kellogg’s argument that Travelers’ insurance policy covered liabilities assumed by its insured (Eby). The Tenth Circuit concluded that because the indemnity clause was unenforceable, it is as if Eby never agreed to assume Kellogg’s liabilities. In the absence of Eby’s assumption of Kellogg’s liabilities, Travelers did not insure Kellogg. Accordingly, Kellogg was not entitled to indemnity from Eby or insurance coverage from Travelers, and Eby and Travelers were entitled to summary judgment. View "Martin K. Eby Construction v. OneBeacon Insurance" on Justia Law

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MMS Construction & Paving, L.L.C. entered into a subcontract with Head, Inc. to pave asphalt runway shoulders at Altus Air Force Base in Oklahoma. The project was delayed and MMS, expressing concern that Head had not been making agreed payments, quit the job. MMS also complained that completing the job would be more expensive than it originally believed because certain requirements were being imposed that Head said would be waived. After MMS quit, Head finished the job, relying on other subcontractors. MMS sued Head on state-law claims of breach of contract, tortious breach of contract, quantum meruit, and misrepresentation, and brought a claim under the federal Miller Act on Head’s surety bond for the project. Head filed a counterclaim, alleging that MMS breached the contract. After a jury trial, MMS was awarded damages and attorney fees. Head filed a motion for judgment as a matter of law or for a new trial, both of which the district court denied. Head appealed, arguing: (1) the evidence at trial was insufficient to show that Head breached the contract; (2) if there was a breach, it was not material; (3) an Oklahoma statute limited MMS’s breach-of-contract damages to the amount unpaid plus interest; (4) the evidence was not sufficient to establish MMS’s alleged lost-profits damages for breach of contract; (5) MMS did not present sufficient evidence to prove misrepresentation or any damages from misrepresentation, MMS waived the misrepresentation claim, and the award of misrepresentation damages duplicated the award of damages for breach of contract; and (6) MMS was not entitled to attorney fees from Head because the Miller Act does not allow recovery of those fees. Upon careful consideration of the district court record, the Tenth Circuit reversed damages award based on the misrepresentation claim because the jury’s award was not supported by any evidence at trial. On all other issues, the Court affirmed. View "MMS Construction & Paving v. Head, Inc., et al" on Justia Law

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Jeremy Myers challenged the district court's dismissal of his malicious prosecution claim, alleging violations of his Fourth and Fourteenth Amendment rights. Specifically, he argued that Detective Brian Koopman obtained an arrest warrant by fabricating facts to create the illusion of probable cause. As a result, Myers spent three days in custody. Upon careful consideration of the facts of this case, the Tenth Circuit concluded that the district court did not err in dismissing Myers’ Fourteenth Amendment claim because an adequate state remedy existed, but the district court improperly dismissed Myers’ Fourth Amendment malicious prosecution claim as untimely after recasting it as a claim for false imprisonment. View "Myers v. Koopman" on Justia Law

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John Doe pled guilty to two drug trafficking charges in a plea bargain. Prior to the plea deal, he filed a motion to dismiss the indictment for breach of an immunity agreement and outrageous governmental conduct. The district court denied the motion. In the plea agreement, Doe did not negotiate a conditional plea in which he retained the right to appeal the court’s ruling, so he could not appeal unless he could establish a basis for the Tenth Circuit to ignore the appeal waiver. He attempted to do so in this appeal by contending: (1) the government cannot force the waiver of an immunity agreement on due process grounds; and (2) even if he could waive immunity, outrageous government conduct was an implied exception to any appeal waiver. Upon review, the Tenth Circuit found that Doe lacked a basis to bring the appeal and the facts of the case did not implicate the outrageous governmental conduct exception. Accordingly, the Court affirmed Doe's conviction, dismissed his appeal, and granted his motion to seal the briefs. View "United States v. Doe" on Justia Law

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Plaintiff-Appellant Mid-Continent Casualty Company ("Mid-Continent") brought a declaratory judgment action seeking determination of its coverage obligations related to construction defect litigation. Defendant-Appellee, The Village at Deer Creek Homeowners Association, Inc. (the "Association"), moved to dismiss, requesting that the district court not exercise jurisdiction over Mid-Continent's action. Weighing the five factors set forth in "State Farm Fire & Casualty Co. v. Mhoon," (31 F.3d 979, 982–83 (10th Cir. 1994)), the district court declined jurisdiction in favor of resolution in Missouri state court and dismissed the action. Mid-Continent appealed, arguing the district court's application of the "Mhoon" factors amounted to an abuse of discretion. Upon review of the district court record, the Tenth Circuit affirmed its order granting the Association's motion to dismiss. View "Mid-Continent Casualty Co. v. Greater Midwest Builders, LTD" on Justia Law

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Pro se prisoner Plaintiff Stephen Burnett appealed a district court’s order dismissing his civil-rights complaint and denying his motion to add a defendant. Plaitiff's case arose from a six-week lockdown at the Cimmaron facility in which Plaitiff was incarcerated. "The linchpin of [Plaintiff's] suit was not whether prison officials had the authority to impose a lockdown, but instead whether the restrictions imposed during the lockdown so altered the conditions of his confinement as to violate his constitutional rights." The magistrate judge issued a report and recommendation which concluded that Plaintiff's claims against Warden Joseph Taylor were moot and should have been dismissed without prejudice. As to the director of the Oklahoma Department of Corrections Justin Jones, the magistrate found that even if the claims against him were not moot, those claims should have been dismissed with prejudice because the complaint failed to state any claims upon which relief could be granted and would have been futile to amend. The magistrate also denied Plaintiff's motion to add Warden Robert Ezell as a defendant. The district court adopted the report and recommendation, effectively ending Plaintiff's case. Upon review, the Tenth Circuit partly affirmed, partly reversed the district court (and magistrate judge's) decision. Because the Court's conclusion that the claims against Mr. Jones were moot but for different reasons than the district court, it reversed the decision for dismissal without prejudice. The Court affirmed the district court in all other respects.