Pierce Associates, Inc. v. The Nemours Foundation

865 F.2d 530 (3d Cir. 1988)

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Nature of the Case

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Facts

P entered into a general contract with Gilbane (Gilbane) for completion of the interior of a Hospital. The general conditions state: Nothing contained in the Contract Documents shall create any contractual relationship between the D or the Architect and any Subcontractor or Sub-subcontractor. The Aetna Casualty & Surety Company (Aetna) became surety on a performance bond which named Gilbane as principal and P as obligee. Gilbane entered into a $35.9 million fixed-price subcontract with D pursuant to which D agreed to perform the mechanical work on the project (the heating, ventilation, air-conditioning, plumbing, and fire-protection systems). The General Conditions contained the provision that nothing contained in the 'Contract Documents' shall create any contractual relationship between P and any subcontractor. Federal Insurance Company (Federal) became surety on a performance bond which named D as principal and Gilbane as obligee. P also approved the subcontract and stated, 'by this approval, The Nemours Foundation does not waive and expressly reserves all of its rights and remedies under said contract, and nothing herein shall be deemed or construed to create any contractual relationship between The Nemours Foundation and said, subcontractor.' Serious delays ensued from disputes. D withheld payments. P suspended performance under the subcontract. Other subcontractors who had claims stayed on the job. Gilbane hired Turner, and the work was finally finished 21 months late. Everybody made settlements leaving D the last party. Gilbane and P made an agreement (Mary Carter Agreement), where Gilbane would share 50-50 with P any possible recovery from D. P, Gilbane and Aetna sued seeking damages against D and Federal. A jury found in favor of P and Gilbane on all their claims against D and Federal awarding $26,017,411 in damages and pre-judgment interest to P and $3,018,372 in damages and pre-judgment interest to Gilbane. D filed a notice of appeal.