Delaware Business Litigation Report

District Court Grants One Motion for Summary Judgment, Denies Other Motion

Creedon Controls, Inc. v. Banc One Bldg. Corp., 2007 WL 149002 (D.Del. Jan. 22, 2007)

In this opinion, the District Court granted one co-defendant’s motion for summary judgment while denying the other’s. Defendant Banc One was involved in construction of two data centers, and contracted with Defendant Forest to coordinate all electrical power and data connections work on the project. Forest then contracted with Plaintiff as an electrical subcontractor on the project. Plaintiff later filed suit against both defendants, alleging that their inefficiency and improper behavior resulted in significant delays and cost increases.  Banc One moved for summary judgment as to Banc One because it had no contractual relationship with Plaintiff and no agency relationship with Forest could be established, and therefore it was not liable for damages to Plaintiff. Forest moved for partial summary judgment, arguing that its contract with Plaintiff expressly precluded damages for delay, and that it was merely an agent of Banc One and therefore could not be held liable for damages. The court granted Banc One’s motion, finding that there was no contractual relationship with Plaintiff and no jury could reasonably find that Forest served as Banc One’s agent. The court denied Forest’s motion, however, finding that there were genuine issues of material fact as to how the alleged delays arose and whether the contract provision precluding delay damages was enforceable.

With regard to Banc One’s motion, the court found that it was undisputed that Banc One did not contract with Plaintiff. The court rejected Plaintiff’s and Forest’s argument that Forest had actual authority to act on Banc One’s behalf.  The court determined that contracts between the parties, Forest’s representations to Plaintiff, and Plaintiff’s failure to execute the only document that contained Forest’s unilateral description of itself as agent of Banc One supported a finding that Forest did not have actual authority to act on Banc One’s behalf. The court rejected Plaintiff’s and Forest’s argument that Banc One’s initial answer to the complaint was an admission of Forest’s actual authority. The court also rejected Plaintiff’s and Forest’s argument that Forest had apparent authority to act on Banc One’s behalf. The court concluded that the beliefs of Plaintiff’s executives that Forest was Banc One’s agent, the silence of Banc One’s construction manager when presented with Forest’s assertion of agency, and the relationship of Banc One and Forest on prior projects did not give Forest apparent authority to act for Banc One. 

With regard to Forest’s motion, the court noted that both Plaintiff and Forest agreed that the contractual provision prohibiting Forest’s liability for delay damages was unenforceable where delay was a result of bad faith. The court concluded that because Plaintiff was alleging bad faith, genuine issues of fact as to how the delays occurred and whether the provision was enforceable precluded summary judgment for Forest.

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