Construction Case Law Summaries 

In this week’s cases:

• Waiving the right to arbitrate
• Time limits for claims under a payment bond
• Third party beneficiaries are held to terms in a payment bond despite absence of written agreement
• Without evidence, claims that a subcontractor first breached a contract failed
• Supplier entitled to payment under payment bond even though contract was terminated
• Contractor has three years to make claims under a builder’s risk policy in North Carolina
• A subcontractor may not sue an owner directly for payments due from a contractor
• An insured homeowner is entitled to repairs to damaged property rather than the cost of the repairs
• To recover under a “had and received claim,” a homeowner must prove that the contractor obtained money that it had no right to in law or equity
• Defective work within the scope of the construction contract is excluded from coverage by a CGL insurance policy’s contractual limitation exclusion
• Walking off a project and telling subcontractors to walk off the job was not willful or malicious injury to a homeowner under the bankruptcy statute
• Injunctive relief against an Alabama county does not require notice within 12 months of the claim’s accrual
• Unlicensed Arizona contractor permitted recovery in arbitration
• The expert offering a certificate of Merit in Texas must have knowledge, skill, experience, and training that relates to the specific professional negligence issue in its claim

Waiving the right to arbitrate.
In Mattie v. Rizzo Construction Pool Co., 128 Conn. App. 537, 2011 Conn. App. LEXIS 232 (2011), the court held that the right to arbitration may be waived if a subcontractor participates in attorney fact finding referred from legal proceedings without insisting on its right to arbitrate. The United States Navy had contracted for repairs and maintenance at the Groton submarine base. The general contractor subcontracted for the repair of a pool lining. The subcontract contained an arbitration provision. The Navy was displeased with the work of both the general contractor and subcontractor. Ultimately, the Navy entered into a settlement agreement with both the general contractor and subcontractor that contained an indemnification provision and also expressly preserved the subcontractor’s warranty for the work performed under the original contract. Subsequently, the Navy discovered a problem with the pool lining. The general contractor requested that the subcontractor honor its warranty. The subcontractor refused to honor the warranty until it was fully paid. In order to make the subcontractor honor the warranty and repair the pool, the general contractor paid the subcontractor. The subcontractor repaired the pool lining. In 2006, the general contractor filed suit and sought to recover the amount it paid to the subcontractor. The case was referred to an attorney fact finder.

The hearing was originally scheduled for September 2008 but the subcontractor successfully continued the proceeding until December 1, 2008. Thirty four days into the hearing, the subcontractor filed a motion to stay the proceeding arguing that the general contractor was obligated to participate in arbitration per the subcontract. The trial court found that the subcontractor had waived its right to arbitration. The motion to stay the proceedings was denied and the attorney fact finder recommended a judgment in favor of the general contractor. The subcontractor argued that it never waived its right to arbitration. The act of going to trial without insisting upon arbitration was considered a waiver of the right to arbitration. The subcontractor filed the motion to stay the proceeding two years after the suit was filed and thirty four days after the hearing commenced. That the subcontractor filed a motion to continue the hearing was evidence that it had actively participated in the proceedings. The trial court’s denial of the motion to stay was not erroneous.

Time limits for claims under a payment bond.
In Travelers Casualty & Surety Co. of America v. University Facilities, Inc., 2011 U.S. Dist. LEXIS 44411 (E.D. La. Apr. 25, 2011), the court held that surety in Louisiana could impose a contractual time limitation for claims against the bond so long as there are no other applicable statutory peremptive limitations. University Facilities, Inc., a private corporation, had entered into a ground and building lease agreement with a state university to develop and construct student housing facilities. The corporation contracted with a developer for the construction of the facilities. The developer contracted with a general contractor to construct eight dormitory buildings for a contract price of $33 million. A surety issued two payment bonds with multiple riders. The developer was the named principal and the corporation was named as the owner on the bonds. The riders named the general contractor and the university as additional obligees. The bond required that claims of the bond be filed within two years of the completion of the work. The general contractor completed construction of eight dormitory buildings in December 2005. In May 2009, the construction defects were discovered and the corporation sued the developer.

The corporation filed an arbitration demand against the surety. The surety argued that any claims under the two bonds were time-barred by the bond’s contractual two year limitation period. The corporation argued that claims on the bonds were not time barred because the contractual period was not applicable. The corporation further asserted the claims were governed by La. Civ. Code’s art. 3500 ten year prescriptive period. Under Louisiana law, a performance bond could contractually limit a suretyship in any lawful manner. A contractual time limitation controlled over a statutory prescriptive period but not over a statutory peremptive period. The statute provided a statutory prescriptive period. The statute’s limitation was not applicable. Because the corporation failed to provide evidence of any applicable peremptive period the bond’s two year time limitation was applicable. Because the claims on the bond were filed more than two years after work on the project was completed, the corporation’s claims were time barred.

Third party beneficiaries are held to terms in a payment bond.
In Travelers Casualty & Surety Co. of America v. University Facilities, Inc., 2011 U.S. Dist. LEXIS 44411 (E.D. La. Apr. 25, 2011), the court held that a payment bond’s contractual time limitation is enforceable against a third party beneficiary even if the beneficiary fails to sign the bond agreement. A surety had argued that a corporation’s claims on the two bonds were barred by the two year contractual limitation period included in the bond. The corporation argued that, as a third party beneficiary, the two year contractual limitation was only enforceable if it agreed to the limitation. The corporation further asserted that the two year contractual time limitation was not applicable because it had not signed the bond form and therefore had not agreed to the limitations. Instead, the corporation claimed that the La. Civ. Code art. 3500’s ten year prescriptive period was applicable and its claims on the bonds were valid. A contractual time limitation was controlling over a conflicting prescriptive period. Therefore, the statute’s ten year prescriptive period was only applicable if the two year contractual limitation was found invalid. It was undisputed that the corporation was third party beneficiary of the bond agreements. Under Louisiana law, a contractual time limitation was enforceable even if the third party beneficiary had not expressly assented to the contractual provision. The corporation’s failure to sign the bonds had no effect on the enforceability of the two year contractual limitation. The bonds’ two year contractual limitation provisions were valid and the statute’s ten year prescriptive period was not applicable. Because the corporation failed to file suit until more than two years after the work on the project had been completed, its claims on the bonds were time barred.

Without evidence, claims that a subcontractor first breached a contract failed.
In United States ex rel. Thyssenkrupp Safway, Inc. v. Tessa Structures, LLC, 2011 U.S. Dist. LEXIS 46044 (E.D. Va. Apr. 27, 2011), the court held that only evidence of a material breach will excuse a non-breaching party from performing under a contract. A general contractor for the restoration and repair of the FBI Academy in Quantico, Virginia furnished a Miller Act payment bond. The general contractor subcontracted with for the masonry repair work on the project. The subcontractor hired a sub-subcontractor for the supply of scaffolding on the project. The subcontractor and the sub-subcontractor entered into a rental agreement for the scaffolding effective from January 2009 through October 22, 2009. The general contractor terminated the subcontractor from the project on October 7, 2009. The sub-subcontractor was not notified that the subcontractor had been terminated from the project. The sub-subcontractor tendered invoices to the subcontractor which were never paid. The subcontractor claimed that the sub-subcontractor’s work had been deficient. The sub-subcontractor filed suit against the subcontractor for breach of contract. The subcontractor denied that it had breached the contract because the sub-subcontractor had breached the contract first with its deficient work. The sub-subcontractor also filed suit against the general contractor and surety and sought payment pursuant to the Miller Act. The subcontractor argued that the summary judgment on the sub-subcontractor’s breach of contract claim was not appropriate because the sub-subcontractor’s work was deficient. The subcontractor claimed that summary judgment was not appropriate because a dispute existed as to whether the subcontractor could recover for a breach of contract when it had provided deficient work. A non-breaching party was excluded from subsequent performance under a contract if the breaching party materially breached the contract. A breach was considered material if it was so fundamental that the failure to perform defeated an essential purpose of the contract. The subcontractor failed to provide any evidence, other than its own allegations, that the sub-subcontractor actually breached the contract. No reasonable jury could have found that any alleged breach by the sub-subcontractor was material without such evidence. Because the sub-subcontractor had not materially breached the contract, the subcontractor was not excused from performing under the contract. The subcontractor’s failure to pay the sub-subcontractor was an unexcused breach of the contract. The sub-subcontractor’s motion for summary judgment on its breach of contract claim was granted.

Supplier entitled to payment under payment bond even though contract was terminated.
In United States ex rel. Thyssenkrupp Safway, Inc. v. Tessa Structures, LLC, 2011 U.S. Dist. LEXIS 46044 (E.D. Va. Apr. 27, 2011), the court held that a supplier that reasonably believes in good faith that its materials are used on a federally bonded project is entitled to protection under the Miller Act bond even though the subcontract had been earlier terminated. A general contractor and its surety had argued that a sub-subcontractor’s Miller Act claim was not appropriate because the general contractor had paid the subcontractor in full for the sub-subcontractor’s work. The general contractor and surety also asserted that the sub-subcontractor sought recovery for work performed after the subcontractor had been terminated from the project. A supplier that reasonably believed, in good faith, that the materials it was supplying were being used on a bonded project was protected by the bond. The subcontractor had been terminated on October 7, 2009. The sub-subcontractor was not notified of the subcontractor’s termination and continued to deliver supplies until October 22, 2009. The sub-subcontractor reasonably believed, in good faith, that the supplies it provided up to October 22, 2009, were being used on the bonded project. The sub-subcontractor was entitled to the protection of the bond for all the supplies it provided, including those delivered after the subcontractor was terminated from the project. The general contractor and surety were not relieved from liability under the Miller Act payment bond merely because they had paid the subcontractor in full. Because the general contractor and surety were liable under the bond and the sub-subcontractor reasonably believed that it was supplying equipment for use on a bonded project, summary judgment on the Miller Act claim was granted.

Contractor has three years to make claims under a builder’s risk policy in North Carolina.
In Cleveland Construction, Inc. v. Fireman’s Fund Insurance Co., 2011 U.S. Dist. LEXIS 46368 (W.D.N.C. Apr. 29, 2011), the court held that the applicable statute of limitations period for a breach of contract claim in North Carolina was three years. Mecklenburg County had contracted for the construction of a new courthouse. An insurer issued the county a builder’s risk insurance policy. The insurance policy excluded coverage for defective workmanship. On March 2, 2006, the general contractor was informed that it was being held responsible for repairing damaged drywall. On March 22, 2006, the general contractor received notice that it was being held responsible for the damage to the roof. The general contractor submitted claims to the insurer for the costs it incurred in repairing the courthouse’s roof and drywall. The insurer refused to pay arguing that the claims were excluded under the policy because the damage had been caused by the general contractor’s defective work. On April 15, 2009, the general contractor filed suit against the insurer for breach of the insurance contract. The insurer argued that the general contractor’s breach of contract claim was barred by the applicable statute of limitations. Under N.C. Gen. Stat. § 1-52(1), the applicable statute of limitations for a breach of a contract claim was three years. The statute required the filing of all breach of contract claims within three years after the insured gained knowledge of the loss or damage. The general contractor was notified of the loss no later than March 22, 2006 but failed to file the breach of contract claim until over three years later on April 15, 2009. The general contactor’s breach of insurance contract claim was barred by the applicable statute of limitation. The court granted the insurer’s motion for summary judgment.

A subcontractor may not sue an owner directly for payments due from a contractor.
In Truland Services Corp. v. McBride Electric, Inc., 2011 U.S. Dist. LEXIS 45668 (D. Md. Apr. 27, 2011), the court held that a subcontractor could not recover from a property owner under the theories of unjust enrichment and quantum meruit when the subcontractor had a contract with the general contractor but no contract with the property owner. Home Depot had contracted for the installation of electrical systems and new power generators at multiple retail stores. The contractor subcontracted for the electrical labor and materials on the project. The subcontractor furnished the labor and materials as directed by the contractor. The subcontractor claimed that the owner was aware of and fully accepted its work. The subcontractor claimed that neither the contractor nor the owner paid it for the work and materials it furnished on the projects. The subcontractor filed suit against the owner for quantum meruit and unjust enrichment. The owner argued that the contractor had been paid in full for the subcontractor’s work. The owner argued that the subcontractor’s quantum meruit and unjust enrichment claims were not appropriate because the contractor had been paid in full for the subcontractor’s work. The owner also asserted that, upon nonpayment by a general contractor, a subcontractor’s only course of action was to either sue the general contractor or file a mechanic’s lien. The owner claimed that the subcontractor’s claims were merely attempts to rectify its failure to avail itself of the proper course of action. The subcontractor failed to present any applicable law which would permit a subcontractor to recover from a property owner for unjust enrichment or quantum meruit when the subcontractor had a contractual relationship with the general contractor but not with the property owner. The subcontractor never contracted with the owner. The subcontractor was not permitted to recover from the owner on the theories of quantum meruit or unjust enrichment. The subcontractor lacked a plausible claim for relief and granted owner’s motion to dismiss the subcontractor’s quantum meruit and unjust enrichment claims.

An insured homeowner is entitled to repairs to damaged property rather than the cost of the repairs.
In Smith v. Alacrity Services, LLC, 2011 U.S. Dist. LEXIS 42829 (D. Md. Apr. 20, 2011), the court held that a homeowner could recover for unjust enrichment from a general contractor that repaired damage for an insurance company, but only if the contractor benefitted by infringing on the homeowner’s interests. Amy Smith’s house caught fire and incurred roughly $36,000 in damage. The homeowner submitted a claim to its insurer. Alacrity Services, LLC was a corporation that maintained a network of contractors across the country to repair insured damage. The member contractors agreed to pay the corporation 2.8% of any monies received as a result of referrals made by the corporation. The insurer frequently used the corporation when it needed a local contractor to perform repair work under its insurance policies. The first step of the network process was for the corporation to select a contractor. The selected contractor was then presented for approval by both the insured and the insurer. If the contractor was approved, the insurer would deposit the agreed-upon amount into an account that was managed by the corporation. The corporation supervised the contactor’s draws and confirmed the completion of the work to the insurer. The corporation provided an approved contractor and the insurer deposited funds into an account managed by the corporation. Upon completion of the repair work, the corporation withheld for itself 2.8% from the funds in the account. The homeowner claimed the corporation wrongfully withheld for itself 2.8% of the total insurance claim that she was entitled to without her knowledge or consent. The homeowner claimed that the corporation had no right at law or equity to the 2.8% it withheld for itself. The homeowner filed a claim for unjust enrichment and another claim for money had and received against the corporation. The homeowner argued that the corporation had received a benefit by infringing on her interests in the money. The homeowner was entitled to have the insurer pay for the repairs to her property. However, the homeowner could only recover the 2.8% if she was able to prove that she was entitled to a certain amount of money for the repairs. The homeowner failed to establish that she was entitled to anything more than the repair of her property. The homeowner’s property had been completely repaired. The homeowner was unable to prove that she had an interest in the withheld money. Because the homeowner failed to prove that the corporation had received a benefit by infringing on her interests, the corporation’s motion for summary judgment on the unjust enrichment claim was granted.

To recover under a “had and received claim,” a homeowner must prove that the contractor obtained money that it had no right to in law or equity.
In Smith v. Alacrity Servs., LLC, 2011 U.S. Dist. LEXIS 42829 (D. Md. Apr. 20, 2011), the court held that a homeowner was wrong with she had argued that a contractor had no right in law or equity to the money it withheld for its fees for repairing insured damage to her home. The homeowner claimed that she had been entitled to the money withheld by the contractor because it was part of her insurance claim. To recover under the money had and received claim, the homeowner was required to show that the contractor received money, as a mistake of law or fact, that it had not had a right to obtain. The homeowner failed to provide any evidence that she was actually entitled to the disputed money. The court held that without other evidence, the homeowner’s claim that she had a right to the money was insufficient to prove that the contractor had mistakenly received money in which it had no right to obtain. The money “had and received claim” failed and the court granted summary judgment in favor of the corporation.

Defective work within the scope of the construction contract is excluded from coverage by a CGL insurance policy’s contractual limitation exclusion.
In Ewing Construction Co. v. Amerisure Insurance Co., 2011 U.S. Dist. LEXIS 45827 (S.D. Tex. Apr. 28, 2011), the court held that a contractor’s defective work within the scope of the construction contract is excluded from coverage by the CGL insurance policy’s contractual limitation exclusion. A school district had contracted with a general contractor for the construction of a tennis facility in Texas. The general contractor was issued a CGL policy that covered property damage that was caused by an occurrence. The insurance policy contained a contractual liability exclusion provision which excluded coverage for liability that the general contractor assumed pursuant to a contract. The general contractor completed construction on the project. Subsequently, cracks formed which made the tennis court unusable. The school district claimed that the general contractor deficiently constructed the tennis facility and filed suit against the general contractor for breach of contract and negligent construction. The general contractor tendered the district’s breach of contract claim to the insurer for a defense. The insurer denied that it owed a duty to defend arguing that the coverage was excluded by the policy’s contractual liability exclusion. The general contractor argued that the insurer was obligated to provide it with a defense because the district’s claim was covered by the insurance policy. Generally, the insurer was obligated to defend any lawsuit that was brought against the general contractor that alleged an event potentially covered by the policy. The policy covered property damage that was caused by an occurrence. The district’s claim potentially fell within the policy’s coverage unless there was a policy exclusion that applied. The policy’s contractual limitation exclusion excluded coverage for liability assumed by the general contractor pursuant to a contract. The contractor assumed liability for its own construction work pursuant to its contract with the district. The contractual limitation exclusion was applicable unless there was a valid exception to the exclusion. Liability that the general contractor would have incurred in the absence of the contract was an exception to the policy’s contractual liability exclusion. Despite the fact that the allegations against the general contractor included a claim for negligence, the court refused to find that liability would have existed in the absence of the contract because recovery was only sought for property covered under the contract. The exception to the contractual liability was not applicable. The district’s claims were not covered by the insurance policy and the insurer had no duty to provide a defense. The insurer’s motion for summary judgment was granted.

Walking off a project and telling subcontractors to walk off the job was not willful or malicious injury to a homeowner under the bankruptcy statute.
In Stanley v. McLain (In re McLain), 2011 Bankr. LEXIS 1602 (Bankr. W.D. Tex. Apr. 29, 2011), the court held that a contractor that intentionally ceased work on a project before its completion had not willfully or maliciously injured a Texas homeowner for purposes of the Bankruptcy Code’s dischargeability exception. Homeowner had contracted for the renovation of an existing home. Under the contract, the homeowner agreed to pay the contractor $117,511 for his work. The homeowner obtained a one year construction loan to finance the project. The homeowner claimed that the contractor represented that the project would take six to eight weeks and that the home would be habitable during construction. The contractor denied making the representations. The homeowner became displeased with the quality and pace of the contractor’s work. The homeowner claimed that after eight months of construction, the project had been at best forty percent complete. The homeowner also asserted that his house was inhabitable during the project. After receiving complaints from the homeowner, the contractor ceased work on and instructed all subcontractors to walk off the job. The homeowner filed suit against the contractor for breach of contract and violations of the Texas Deceptive Trade Practices Act. A jury returned a verdict in favor of the homeowner. Subsequently, the contractor filed for Chapter 7 bankruptcy. The homeowner filed suit against the contractor arguing that the judgment it obtained in the earlier trial was not dischargeable under 11 U.S.C.S § 523(a)(2) or 11 U.S.C.S. §523(a)(6). The homeowner argued that judgment debt owed was not dischargeable under § 523(a)(2) because the contractor made knowingly false representations regarding the completion date of the project and the habitability of the home during construction. The homeowner also argued that the judgment debt was not dischargeable under §523(a)(6) because it was willfully and maliciously injured by the contractor when it intentionally ceased work on the project and told the subcontractors to walk off the job. Debt obtained by false representations or fraud was not dischargeable under § 523(a)(2). Under § 523(a)(2), the homeowner had to prove that the contractor knowingly made a false representation. The homeowner failed to present sufficient evidence that the contractor actually made the alleged representations. § 523(a)(2) was not applicable. Debt for willful or malicious injury was excepted from discharge under §523(a)(6). The fact that the contractor ceased work on the project and told the subcontractors to walk off the job was insufficient to show that the contractor willfully or maliciously injured the homeowner. Additionally, the fact that the contractor was found liable for intentional violations of the Act was insufficient to activate §523(a)(6)’s dischargeability exception. Because neither sections were applicable, the judgment debt was dischargeable.

Injunctive relief against an Alabama county does not require notice within 12 months of the claim’s accrual.
In Hobbs v. Mobile County, 2011 Ala. LEXIS 55 (Ala. Apr. 22, 2011), the court held that a claim for injunctive relief was not subject to requirements that an Alabama county be notified within 12 months of the accrual of a claim against the county. Homeowners purchased real property in Alabama. The homeowners spent substantial time and money improving the property, including the construction of a five acre pond. A few years after the homeowners purchased the property, the county designed and modified its storm water capture and drainage system. As a result of faulty design and construction of the drainage system, large amounts of storm water began flowing onto the homeowners’ property. The homeowners’ home, land, and pond were all damaged by the storm water. The homeowners filed suit against the county alleging nuisance, negligent design, and negligent construction. The homeowners also asserted a claim for injunctive relief. The county argued that it was entitled to a dismissal because the homeowner failed provide notice of their claims before filing suit as was required under Ala. Code §§ 6-5-20 and 11-12-8. The statute required all claimants to provide notice of their claims against the county to the county commission within 12 months of accrual. The homeowners argued that the statute’s notice requirement was not applicable. The homeowner claimed that relief that was historically equitable, including injunctive relief, was not subject to the statute’s notice requirements. The homeowners failed to provide the county with notice of its claims before it filed suit. However, claims in which a plaintiff sought a historically equitable remedy were an exception to the statute’s notice requirement. The homeowner’s suit included a claim for injunctive relief. Injunctive relief was a historically equitable relief. The homeowners had no obligation to provide the county with notice prior to filing its suit for injunctive relief. On the other hand, the homeowners’ claims for negligence and nuisance were not considered historically equitable relief and therefore were subject to the statute’s notice requirement. The appellate court affirmed the circuit court’s decision to grant the motion to dismiss on the negligence and nuisance claims and reversed as to the injunctive relief claim.

Unlicensed Arizona contractor permitted recovery in arbitration.
In Smith v. Pinnamaneni, 2011 Ariz. App. LEXIS 59, 607 Ariz. Adv. Rep. 35 (Ariz. Ct. App. Apr. 28, 2011), the court held that an Arizona construction contract is not always unenforceable because the contractor was not licensed when it signed the contract. A homeowner had contracted for the construction a new home. The contract contained an arbitration clause which provided that all claims that arose out of the contract were subject to arbitration. During construction, a dispute arose regarding the contractor’s work. The homeowner terminated the contractor from the project. The contractor demanded arbitration and sought relief against the homeowner for wrongfully termination and for payments owed. At the same time, the homeowner was engaged in litigation with a different company that was headed by the contractor’s president. The homeowner refused to arbitrate claiming that a stay of the arbitration proceedings was appropriate until its lawsuit with the related company was resolved. The arbitrator informed the homeowner that the arbitration was not stayed and encouraged participation. The homeowner still refused to participate in the arbitration. During this time, the homeowner discovered that the contractor had not been licensed at the time it signed the contract or during the first year of construction. The arbitration hearing was held without the homeowner and the contractor was awarded roughly $38,000. The contractor applied to the superior court for confirmation of the arbitration award. The homeowner opposed the award confirmation arguing that the contractor had fraudulently entered into a contract without a contractor’s license as required by Ariz. Rev. Stat. § 32-1153. The contractor asserted that the homeowner waived the licensing argument by failing to raise it in arbitration. The Arizona statute prohibited a contractor from maintaining any action in state court for the collection of compensation relating to contracted work when the contractor was not licensed at the time the contract was signed. However, a contract was not per se unenforceable merely because an unlicensed contractor violated the statute. An unlicensed contractor could still recover under a contact if it was able to show that it substantially complied with the licensing requirements. The burden was on the homeowner to affirmatively raise the lack of licensure defense. The contract expressly required arbitration for all claims brought under the contract. The arbitration hearing was valid and the homeowner should have raised all of its claims and affirmative defenses during the arbitration proceedings. A failure to plead an affirmative defense resulted in the waiver of the defense. The homeowner was deemed to have waived the lack of licensure defense because it failed to raise it in the arbitration proceedings. The superior court had not erred when it confirmed the arbitration award.

The expert offering a certificate of Merit in Texas must have knowledge, skill, experience, and training that relates to the specific professional negligence issue in its claim.
In Howe-Baker Engineers, Ltd. v. Enterprise Products Operating, LLC, 2011 Tex. App. LEXIS 3237 (Tex. App. Houston 1st Dist. Apr. 29, 2011), the court held that the Texas certificate of merit only required that one negligent act must be presented and supported by an expert affidavit. An owner had entered into a contract with an engineer to provide engineering design, procurement, and construction management services to build two gas processing plants in Wyoming and Colorado. Two years after the completion of the project, the owner filed suit against the engineer seeking to recover fees it overpaid as well as other damages for construction costs. The owner provided a certificate of merit from an expert engineer with the original petition and in accordance with the Texas Civil Practice and Remedies Code section 150.002. The expert was a registered engineer with experience in the gas-processing industry. The certificate focused on only one of the two construction projects and specifically identified three alleged acts, errors, or omissions committed by the engineer. Ten months after the initial suit was filed, the owner joined the engineer’s parent company as a vicariously liable additional defendant. The owner alleged that the engineer and parent company were alter egos of each other. The engineer argued that the owner’s certificate of merit did not satisfy the requirements of the Texas statute because the expert practiced an area of engineering which was different than the engineer. The engineer argued if the expert failed to meet the qualifications, then the certificate of merit was invalid. However, the statute only required that the expert was “competent to testify” and practiced in the same area of practice as the defendant. Furthermore, the statute required the owner to establish that the expert has knowledge, skill, experience, and training in gas-processing plants. The trial court found that the expert shared the same area of practice with the engineer and the expert had investigation and work experience in the gas-processing industry. The trial court correctly denied the motion for dismissal of the owner’s petition.