Hard Hat Case Notes

• Author: By Christopher M. Burke and Lauren P. McLaughlin
• Pages: 42-45

THE CONSTRUCTION LAWYER42 Winter 2021

Published in The Construction Lawyer, Volume 41, Number 1, Winter 2021. © 2021 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

HARD HAT CASE NOTES

North Carolina Court

Interprets Impact of

Partial Lien Waivers

on Ongoing Work

Contractors are often required

to submit partial waivers and

lien releases with payment

applications in order to receive

periodic payments during

the course of a project. In

Gamewell Mechanical, LLC v.

Lend Lease (US) Construction,

Inc., the North Carolina Court

of Appeals addressed the reach

of such partial waivers where

change order work was ongo-

ing at the time partial waivers

were signed.

In December 2013, Gamewell

Mechanical, LLC (Gamewell) entered into a xed-price

contract with Lend Lease Construction, Inc. (Lend Lease)

for the mechanical and plumbing scope on new construc-

tion at Research Triangle Park in North Carolina. The

subcontract required that in order to receive periodic

payments, Gamewell needed to execute a partial waiver/

lien release that agreed to:

. . . waive, release, and relinquish any and all rights,

claims, demands, liens, claims for relief, causes of

action and the like, whether arising at law, under a

contract, in tort, in equity or otherwise, which the

undersigned has now or may have had arising out

of the performance of work or the furnishing of

labor or materials by the undersigned.

The release contained an exception for unresolved

claims for which written notice was provided. It also per-

mitted Gamewell to identify any other unresolved claims

for work for which Gamewell believed it was entitled to

payment.

Over the course of the project, Gamewell and Lend

Lease executed multiple change orders, and Gamewell

consistently signed the partial waivers in connection with

its payment applications. On March 31, 2016, at the end

of the project, Gamewell submitted a payment applica-

tion that included an executed partial waiver/lien release.

In early April 2016, Gamewell sent a claim to Lend Lease

seeking recovery of approximately $2.7 million in dam-

ages resulting from delays and other impacts allegedly

encountered on the project. The trial court entered an

award in favor of Gamewell for some of the damages,

including $100,000 for labor and materials that the trial

court determined had not been waived by Gamewell as

part of the partial waivers/lien releases. The trial court

also awarded Gamewell monies in connection with spe-

cic discrete change order work. Lend Lease appealed

the trial court’s ruling, arguing that Gamewell waived

and released its claims through the lien waiver process.

Lend Lease argued that because Gamewell did not

provide written notice of allegedly unresolved claims as

permitted in the partial waiver/lien release, Gamewell had

waived its right to recover for any “acts, events, circum-

stances, changes, constructive or actual delays, accelerations,

extra work, disruptions, interferences and the like which

have occurred, or may be claimed to have occurred, prior

to [March 2016].” The trial court disagreed, nding that

the “waiver and release documents submitted with each

pay application could not cover claims not readily appar-

ent due to daily changes on the job.” The trial court had

held that, while the majority of Gamewell’s claims were

precluded by the execution of the partial releases/lien waiv-

ers, it was “undisputed that there were delays, numerous

Change Orders issued, re-sequencing, and coordination

issues occurring throughout the project. Given the daily

problems that arose as a result of these issues, [Gamewell’s]

failure to reserve claims regarding the day-to-day miscella-

neous items done at the direction of [Lend Lease] is not a

material breach-of-contract.” The trial court further iden-

tied several specic change order requests where it found

sufcient evidence to award sums to Gamewell. The court

of appeals did not overturn the rationale from the trial

court’s ruling in this regard, and found that the damages

award was based on competent evidence.

The court of appeals did, however, turn a closer eye

to the additional $100,000 that the trial court awarded

for “miscellaneous” delays and impacts. Specically, the

court of appeals held that “there is no clear evidence in

the record to support the $100,000.00 award that was

based on Item 1 of the spreadsheet. The trial court’s nd-

ing of fact as to this award . . . does not support the trial

court’s conclusion of law. Therefore, we reverse the trial

court’s award of $100,000.00 for additional labor and

material caused by the redesign of the drawings, pay-

ment of which was not waived in any pay application, and

vacate that portion of the award.” The court of appeals

remanded this portion of the award for further ndings

of fact and law.

Authors’ Comments: The court of appeals’ decision

afrmed the trial court’s determination that the partial

waivers/lien releases did not waive plaintiff’s right to

recover monies associated with changed work. However,

with its remand of one portion of the award back to the

trial court, the court of appeals effectively required a

closer nexus between the impacts alleged by plaintiff and

Christoph er M. Burke

Lauren P. McLaughlin

By Christopher M. Burke and Lauren P. McLaughlin