/>iA federal judge in Oklahoma last week ruled against an electrical subcontractor who quit work before finishing because it was allegedly unsafe to continue. The court found that the subcontractor was simply losing money, and that the safety excuse was a “post-hoc fabrication” to justify “jumping ship.”
The case involves construction of a renewable natural gas facility in Minnesota. The defendant, Stearns, was the prime contractor on the job. Morse, the plaintiff, was its electrical subcontractor. Morse commenced work but demobilized before completion after Stearns would not approve a change order increasing the subcontract value to account for alleged delays and design changes. During the four-day bench trial, Morse representatives testified that they were not intending to leave the job permanently but merely implementing a safety stand-down. The court rejected this excuse and found that by abandoning the site, Morse had breached its contractual obligation to continue performing in the event of a dispute:
Contrary to [Morse’s] assertion that leaving the site on February 4 was a safety standdown, the court finds that they intentionally left the site in order to renegotiate the subcontract and would not return to work unless [Stearns] agreed to their changing demands in the proposed change orders submitted in February 2022. The safety excuse was a post-hoc fabrication in order to justify [Morse’s] leaving the job site. The subcontract clearly required [Morse] to continue to work during any disputes and also explicitly stated that time was of the essence. The court finds that [Morse’s] actions in leaving the job site on February 4 and refusing to return constituted a material breach of the subcontract.
The court identified several reasons for finding Morse’s safety excuse not credible. For example, Morse had not raised any safety concerns in the weekly job meetings, had delayed in transmitting any concerns to Stearns, and allowed its workers to continue working before implementing recommendations from its safety inspector. After Morse finally implemented those recommendations, no further incidents or complaints regarding safety were raised with Stearns before leaving the job site.
The court went on to reject Morse’s claim that Stearns breached first by refusing to pay its invoices, rejecting change orders, or otherwise hindering its performance. The court found that Morse would have been justified in seeking a change order for increases in the work, but that is not what it did:
Rather, [Morse] chose to walk off of the job and refuse to perform until the dispute was resolved. This was a material breach of the agreement. And, after the breach, [Morse] submitted varying invoices and change orders with varying figures and explanations. It essentially appeared that [Morse] wanted to renegotiate the entire subcontract and not simply be paid for the change in the scope of work. This leaves the court to surmise that [Morse] simply underbid the project and, upon realizing that it could not financially remain at site and pay its employees decided to jump ship.
The court awarded Stearns approximately $700,000 in excess completion costs on its breach of contract counterclaim and declared Stearns the prevailing party under the fee-shifting provision subcontract. Morse’s claims were all rejected. A copy of the court’s opinion is located here.
