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No Default Notice, No Excuse For Walking Away

Tuesday, September 26, 2017 06:18 am

 

Contract Abandonment

Vast Construction, LLC v. CTC Contractors, LLC, 2017 Tex. App. Lexis 6146 (14th Dist. July 6, 2017)

What may have started out as a contractor's and subcontractor's amiable plan to "part ways" on an ongoing project ended up as textbook contract abandonment---leaving the sub to pay damages.

In February 2014, CTC Contractors, LLC (CTC) and Vast Construction, LLC (Vast) entered into a $355,000 subcontract under which Vast would perform street expansion work on a Houston construction project. The work involved performing flood control, water and sewage work, installation of a fire sprinkler line, and sidewalk construction. After securing all but one of the necessary City of Houston permits, and mobilizing to perform, Vast ultimately walked off the job in March 2014, a month before scheduled project completion. CTC sued Vast for breach of contract, and sought recovery of the difference between Vast's subcontract price and what the contractor ended up paying replacement subs to complete the project.

A jury found that Vast breached its subcontract and awarded CTC $91,900 in actual damages (CTC had sought $162,416). Vast appealed, contending that it had not breached but that CTC had. The sub also charged CTC with violating Texas prompt payment law for failing to pay the sub's $38,400 mobilization invoice even though CTC had received that amount from the project owner.

Sub's duty may not have included permits

The parties spent much of this dispute arguing about who was responsible for obtaining the project's requisite city permits. The subcontract was entirely silent on that issue. Nevertheless, during its performance, Vast obtained an excavation permit, a sidewalk impairment permit, and a storm water line system permit. It also applied for a critical lane closure permit, which the City denied.

Apparently, communication between the City and CTC regarding traffic control continued after this denial, and it was while discussions about lane closure were underway that Vast contacted the city to cancel its maintenance bond and all the permits it had successfully acquired. Vast stopped work and "walked of[...]

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