The United States Court of Appeals for the Eighth Circuit recently upheld an Eastern District of Arkansas decision (applying Missouri Law) ruling that a general contractor’s threats to a subcontractor constituted a material breach of their contract. 1See Randy Kinder Excavating, Inc. v. JA Manning Construction, et al., 2018WL3722034 (8th Cir. 2018).
General Contractor Randy Kinder Excavating ("Kinder") entered into a 2010 contract with the Army Corps of Engineers for a pump station project with a late summer 2011 deadline. Kinder subcontracted with JA Manning Construction ("Manning") to construct an earth wall. Kinder's work was delayed, which delayed Manning's start date. As a result of the delays, Kinder advised the Army Corps that the extended November 2011 completion date was untenable and instead the project would be completed by September 2012. However, rather than advising Manning of the new projected completion date, Kinder wrote a threatening email and letter to Manning requiring Manning to complete its work imminently, or else Manning would be liable for delay-related damages. Kinder subsequently terminated and sued Manning, and Manning counterclaimed for payment of work performed.
The District Court of Arkansas ruled, and the Eighth Circuit agreed, that Kinder's threats to Manning were the first material breach of their contract. The District Court ruled that Kinder wrongfully terminated Manning's contract by threatening to asses delay-related damages without any justification, interring with Manning’s relationship with Manning's sub-subcontractor, and failing to provide assurances that Manning would be paid for its work. Kinder argued that Manning first breached the contract due to Manning's failure to pay its suppliers. However, the District Court and Eighth Circuit ruled that Manning's failure to pay its suppliers was not a material breach.
Please contact this author, Greg Boucher, or any member of the firm’s Construction Practice Group to learn more about this case or any other construction-related issues.
1Randy Kinder Excavating, Inc. v. JA Manning Construction, et al., 2018WL3722034 (8th Cir. 2018).