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Contractor Acted In Bad Faith By Passing Unexplained Costs On To Its Sub

Wednesday, February 02, 2011 01:36 am


Delay, Contract Default

Younger-Holmes Electrical Contractors, Inc. v. BE&K Building Group, LLC, 2010 U.S. Dist. Lexis 128559 (D. Okla. Dec. 3, 2010)

When a contractor calls in reinforcements to speed up the work of a delinquent sub, it has the right to charge those costs back to the sub -- but it's only entitled to reasonable costs to complete the work.

General contractor BE&K Building Group, LLC (BE&K) hired Younger-Holmes Electrical Contractors, Inc. (Y-H) to provide $450,000 worth of electrical and fire alarm work on a construction project at the Ponca City Medical Center in Oklahoma. During its performance, Y-H fell behind schedule. BE&K eventually notified Y-H that it was in default of the subcontract and then hired another sub to work alongside Y-H to finish the job on time -- at Y-H's expense. Y-H cried contract breach, claiming BE&K failed to act reasonably and in good faith in declaring default and back-charging Y-H. The cour [...]

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