Contractors liable to other prime contractors on state construction projects in North Carolina (Law note)
As we discussed in the last blog post, the state legislature created the multi-prime system for many state construction projects.
One of the first cases to deal with the statute allowing contractors to sue each other is Bolton Corp. v. T.A. Loving Co., 94 N.C. App. 392, 380 S.E.2d 796, disc. rev. denied, 325 N.C. 545, 385 S.E.2d 496 (1989).
In that case, which involved the construction of an 8 story library on the UNC-CH campus, a HVAC prime contractor, Bolton, sued the project expeditor, TA Loving, for Loving’s breach of its contract with the State. Bolton brought the claim on both its own behalf and on behalf of its subcontractor.
The court allowed the suit, not based on tort, but based on the multi-prime statute (N.C. Gen. Stat. §143-128). The court held that a prime contract can be sued directly by another prime contractor working on a state construction project:
We interpret N.C.G.S. § 143-128 to mean that a prime contractor may be sued by another prime contractor working on a construction project for economic loss foreseeably resulting from the first prime contractor’s failure to fully perform “all duties and obligations due respectively under the terms of the separate contracts.”
In my next post, I will discuss the application of this concept to design professionals.