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No Litigation Stay For Two Defendants Pending Arbitration With A Third

Thursday, January 04, 2007 11:21 am

No Litigation Stay For Two Defendants Pending Arbitration With A Third

A federal district court in Michigan determined that a subcontractor's pleadings against a design firm were sufficient to state a tort action for breach of duty, even though the two parties were not in privity.

Gleeson Constructors (Gleeson) was the general contractor for a project that involved the construction, remodeling and rebuilding of plants 7 and 9 at ConAgra Foods Refrigerated Food Co., Inc.'s (ConAgra) sausage processing facility in Quincy, Michigan. West Plains Engineering (West Plains) was the project engineer and prepared plans and drawings for contractors that bid on the project.

Gleeson subcontracted with RMF Nooter, Inc. (RMF) for certain electrical work and materials. Gleeson agreed to pay RMF $2.4 million for the work. The subcontract included provisions for adjustments for changes or additional work.

RMF sued Gleeson, West Plains and ConAgra contending that inaccuracies and omissions from the drawings caused Gleeson to issue numerous extra work orders and ConAgra to issue extra purchase orders. Other changes allegedly changed the scope of RMF's work dramatically and extended the time necessary to perform. Many of the extra work orders did not result in a change order to the s [...]

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