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Sub That Was Forced To Work Twice As Fast Cries Fraud

Tuesday, June 05, 2012 03:00 am


Work Scope -- Fraud -- Misrepresentation

Morales Electrical Contracting, Inc. v. Siemens Building Technologies, Inc., 2012 U.S. Dist. Lexis 43258 (E.D. N.Y. March 28, 2012)

A sub claimed that a contractor fraudulently concealed the reality of the project's scope and timeline to induce a lower bid on subcontracted work--and that the sub's being forced to work faster and incur extra costs ultimately led to the loss of its business

Siemens Building Technologies, Inc. (Siemens) agreed to perform the facility management systems work on a project at the JetBlue Airways terminal at John F. Kennedy airport in New York. Siemens then subcontracted with Morales Electrical Contracting, Inc. (Morales) for the electrical work. Siemens contended that it adequately compensated Morales for additional work it performed, but Morales disagreed. The dispute centered on the project's scope and duration.

Morales claimed Siemens orally represented that the project was a two-year job even though the contractor knew completion was required within one year. Siemens argued that Morales' reliance on these alleged misrepresentations was unreasonable because: (1) the subcontract contained a merger clause disallowing reliance on prior oral or written statements, (2) the sub was responsible for reviewing documents relevant to project scope and duration, and (3) the subcontract incorporated by reference documents that contradicted the alleged misrepresentations.

Merger clause doesn't bar parol evidence

The merger clause stated that the subcontract documents constituted the entire agreement betwe [...]

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