RLI Ins. Co. v. MLK AVE. REDEVELOP. CORP.
RLI Ins. Co. v. MLK AVE. REDEVELOP. CORP.
Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 916
RLI Insurance Company appeals from a judgment in favor of MLK Avenue Redevelopment Corporation ("MLK"). We affirm.
MLK purchased a tract of land in the City of Mobile to develop into a residential subdivision to be called F.D. Richardson Heights. MLK hired Polysurveying of Mobile, Inc., a professional engineering firm, to prepare plans and specifications for the development, to handle bids and to award the contract for construction of the water, sewer, and street improvements, and to provide instructions and directions relative to the execution of the work. R.P. Colquett, Inc. ("Colquett"), was awarded the construction contract, which required Colquett to complete the project in 60 days. RLI issued a performance bond on the contract naming Colquett as principal and MLK as owner or obligee of the bond.
After Colquett began construction, MLK's soils engineer, Geotechnical Engineering-Testing, Inc. ("GET"), discovered unsuitable soils on the site that needed to be excavated, removed, and replaced. The project engineer, Craig Bryant of Polysurveying, recommended that the additional work be performed. MLK approved a written change order, which the contract required, for payment of an additional $18,768 to remedy the unsuitable soil condition. The additional work apparently was performed, and MLK paid Colquett for this work. GET later recommended excavation and backfilling in other areas on the site. The project engineer testified that he orally advised MLK of the need for this extra work and that MLK orally approved it. Based on MLK's alleged oral approval, the project engineer instructed Colquett to perform the work, and Colquett performed it without insisting on a written change order. However, MLK has *Page 917 refused to pay for the work; MLK denies that it orally approved the second change order for excavation and backfilling, and it contends that Colquett did not perform a significant amount of this extra work.
The contract provides that the project was to be completed in November 1999. Around that time, GET tested the concrete used in the improvements at the project, the subsoils or base used under the roads, and the asphalt road. GET found that Colquett's work was in compliance with the project requirements. In January 2000, the project engineer wrote to the City of Mobile Engineering Department and requested a final inspection of the project, which was necessary for the plat of the streets and improvements to be accepted by the City and recorded. After inspecting the project, the city engineer requested that additional work be performed. On February 23, 2000, the project engineer wrote to the City of Mobile Engineering Department once again, stating, "It is my opinion that this job was constructed in accordance with the approved drawings and the City of Mobile Standards." In response, the city engineer wrote to the project engineer: "I respectfully disagree with your assessment that the F.D. Richardson subdivision was constructed in accordance with the approved drawings and to City of Mobile standards." The city engineer listed a number of corrective measures that "must be taken prior to the City of Mobile accepting the subdivision for maintenance." Colquett protested the list of items but apparently performed some further work. On April 6, 2000, the work apparently having been found acceptable to the city engineer, the subdivision plat was recorded.1 RLI contends that this recording constituted acceptance of the subdivision by the City of Mobile for purposes of maintaining the subdivision.
Some time after the subdivision plat was recorded, problems developed with the improvements Colquett had constructed. The record is unclear as to when the problems began to appear, but on February 14, 2002, the city engineer sent MLK a letter stating that the City of Mobile "requires that [certain] reconstruction work be performed in order to bring the subdivision up to standards," and listing specific items that needed to be corrected to bring the subdivision up to standards. Colquett refused to perform any further work. MLK turned to RLI under the performance bond, but RLI refused to have the work completed or to pay MLK the cost of having the work completed.
MLK sued RLI, seeking specific performance under the performance bond. MLK alleged that "the city of Mobile refused to take over maintenance of the subject streets, gutters and drains because of numerous deficiencies they discovered upon inspection . . . [which] were caused by Colquett's failure to follow the plans and specifications and were due to poor workmanship." MLK alleged that it had informed Colquett of the "deficiencies discovered by the city" but that Colquett had refused to make the "improvements necessary to insure compliance" with the contract requirements. MLK alleged that RLI was required under the performance bond to hire a new contractor to complete the work and that it had demanded performance *Page 918 but that RLI had refused to perform under the bond. MLK alleged that it had suffered lost revenues and sales as a result of RLI's failure to perform, that the City has refused to accept maintenance of the streets, drains, and gutters in the subdivision, and that RLI has a duty to complete the necessary changes to the streets, drains, and gutters. MLK asked the trial court to order RLI to hire a new contractor to complete the work, and it also sought incidental damages, attorney fees, and costs.
After a trial at which evidence was presented ore tenus, the trial court found that, under the contract between Colquett and MLK, Colquett was to "construct the subdivision in a good and workmanlike manner, in accordance with the plans and specifications, and in compliance with the State Highway Department of Alabama Standard Specifications for Highway Construction, 1992 edition and the Mobile City Area Water Sewer Service System/Standard Specifications." The trial court concluded that there are several defects in the project and that "these defects are the result of R.P. Colquett's failure to construct the project in a workmanlike manner, and in accordance with the contract." The trial court described the scope of the work to be performed in a list of 18 items that is essentially the same list as the February 14, 2002, list prepared by the City of Mobile. RLI appeals.
RLI argues that MLK lacks standing to sue because, according to RLI, MLK has suffered no damage as a result of Colquett's alleged breach of the contract. However, it is well settled that an action based on a breach of contract will lie even where the plaintiff has suffered no actual damage. Avis Rent A Car Sys.,Inc. v. Heilman,
In Avis, the plaintiff, Heilman, rented a car from Avis and was reimbursed by her employer for the rental fee she had paid Avis. Avis argued that because Heilman had been reimbursed by her employer for the rental fee, and because that was the measure of her damages, she lacked standing to sue Avis. This Court held that Heilman had standing to sue; the fact that she had been reimbursed for the cost of the rental — her actual damage — did not deprive her of standing to assert a breach-of-contract claim against Avis.
MLK is the promisee of Colquett's performance under the contract. Thus, Colquett's alleged breach of the contract constitutes an invasion of a legally protected interest of MLK. Therefore, even assuming that MLK has suffered no actual damage as a result of Colquett's alleged breach, Colquett's alleged unexcused failure to perform the contract is a legal wrong. SeeAvis,
"`[W]e apply a de novo review to a trial court's determination of whether a contract is ambiguous and to a trial court's determination of the legal effect of an unambiguous contract term.'" Mobile Eye Ctr., P.C. v. Van Buren P'ship,
RLI points to several provisions of the contract, quoting, however, only the language emphasized below. Section 6.11 of the contract, entitled "Permits and Regulations" provides:
"[Colquett] shall and will, in good workmanlike manner, do and perform all work and furnish all supplies and materials, machinery, equipment, facilities and means, except as herein otherwise expressly specified, necessary to properly perform and complete all the work required by this contract, within the time herein specified in accordance with the directions of the [project] Engineer *Page 920 as given from time to time during the progress of the work. . . . [Colquett] shall observe, comply with, and be subject to, all terms of the specifications and shall do, carry on, and complete the entire work to the satisfaction of the [project] Engineer and the Owner [MLK]."
(Emphasis added.)
Section 6.12 of the contract, entitled "Contractor's Obligations," provides:
"[Colquett] shall and will, in good workmanlike manner, do and perform all work and furnish all supplies and materials, machinery, equipment, facilities and means, except as herein otherwise expressly specified, necessary to properly perform and complete all the work required by this Contract, within the time herein specified in accordance with the directions of the [project] Engineer as given from time to time during the progress of the work. . . . [Colquett] shall observe, comply with, and be carry on [sic], and complete the entire work to the satisfaction of the [project] Engineer and the Owner [MLK]."
(Emphasis added.)
Section 6.25 of the contract, entitled "Correction of Work," provides:
"All work, all materials, whether incorporated in the work or not, all processes of manufacture, and all methods of construction shall be at all times and places subject to the inspection of the [project] Engineer who shall be the final judge of the quality and suitability of the work, materials, processes of the manufacturer, and methods of construction for the purposes for which they are used. Should they fail to meet his approval, they shall be forthwith reconstructed, made good, replaced and/or corrected, as the case may be by [Colquett] at his own expense. Rejected material shall immediately be removed from the site. If, in the opinion of the [project] Engineer, it is undesirable to replace any defective or damaged materials or [to] reconstruct or correct any portion of the work injured or not performed in accordance with the Contract Documents, the compensation to be paid to [Colquett] hereunder shall be reduced by such amounts considered by the judgment of the [project] Engineer as equitable."
(Emphasis added.)
Section 6.39 of the contract, entitled "Engineer's Authority" provides:
"The [project] Engineer shall give all appropriate instructions and directions contemplated under the contract and specifications relative to the execution of the work. The [project] Engineer shall determine the amount, quality, acceptability, and fitness of the several kinds of work and materials which are to be paid for under this contract and shall decide all questions which may arise in relation to said work and the construction thereof. The [project] Engineer's estimates and decisions shall be final and conclusive, except as herein otherwise expressly provided. In case any question shall arise between the parties hereto relative to said contract or specifications, the determination or decision of the [project] Engineer shall be a condition precedent to the right of [Colquett] to receive any money or payment for work under this contract affected in any manner or any extent by such questions.
"The [project] Engineer shall decide the meaning and intent of any portion of the specifications and of any plans or drawings where the same may be found obscure or be in dispute. Any differences or conflicts in regard to their work which may arise between [Colquett] under this Contract and other Contractors performing work for [MLK] shall be *Page 921 adjusted and determined by the [project] Engineer."
(Emphasis added.)
RLI's argument that the approval of the project engineer is final and conclusive misses other express contract language.3 As MLK points out in its responsive brief, Section 6.39 of the contract, quoted above, states that the project engineer's decisions shall be final and conclusive, "except as herein otherwise expressly provided." Sections 6.11 and 6.12 both state that the "Contractor shall . . . complete the entire work . . . to the satisfaction of the [project] Engineer and the Owner [MLK]." RLI fails to address the meaning of these provisions. RLI does not explain how the requirement that the work be completed to the satisfaction of "the Owner" leaves the final and conclusive approval in the hands of the project engineer; it also fails to explain how the language apparently limiting the project engineer's decisions — "except as herein otherwise expressly provided" — does not in fact limit the finality of his or her decisions. Therefore, we reject RLI's argument that the project engineer's certification and his testimony are final and conclusive evidence that the project was completed according to specifications. See Bruce v. Cole,
Moreover, the trial court's decision does not rest on whether the contract was to be performed to the satisfaction of the project engineer, the city engineer, or the owner. The trial court simply concludes that Colquett was required under the contract to "construct the subdivision in a good and workmanlike manner, in accordance with the plans and specifications, and in compliance with the State Highway Department of Alabama Standard Specifications for Highway Construction, 1992 edition and the Mobile City Area Water Sewer Service System/Standard Specifications," and that, as a result of Colquett's failure to construct the project "in a workmanlike manner, and in accordance with the contract," there are several defects in the project. The "General Guaranty" section of the contract provides that the project engineer's final certification shall not constitute acceptance of work not done in accordance with the contract or relieve Colquett of liability for faulty workmanship.4 In addition, Colquett was required by the contract to remedy any defects in work and to pay for any damage resulting from faulty workmanship that appeared within one year of the date of final acceptance. Thus, even if the trial court found, as RLI presumes it did, that *Page 922 the project engineer's final certification5 was conclusive under the contract as to the completion of the project, Colquett remained liable for any problems covered by the General Guaranty provision of the contract. RLI concedes6 that Colquett's obligations under the General Guaranty provision of the contract are covered by the performance bond.7 *Page 923
This Court does not consider an argument for purposes of reversing the judgment of a trial court when that argument was never presented to the trial court. State Farm Mut. Auto. Ins.Co. v. Motley,
RLI's argument is premised on an assumption that Colquett substantially performed the contract. Whether a promise has been substantially performed is a question of fact to be determined from the circumstances of the case. Cobbs v. Fred BurgosConstruction Co.,
Assuming RLI's legal argument is correct — that substantial performance would entitle it to the retained amounts13 — the trial court's judgment is nonetheless correct if it found that there was not substantial performance. We cannot say, based on the record before us, that such a finding would be plainly and palpably wrong; there was credible evidence to support such a finding. The February 14, 2002, letter from the city engineer to MLK indicated that a significant amount of work — so significant that RLI asserts it amounts to reconstruction of the project — had to be performed to bring the project into compliance with the contract requirements and the standards of the City of Mobile.14
RLI also argues that the trial court erred in refusing to allow it an offset for the extra work performed by Colquett for which MLK did not pay. The trial court gave three reasons for determining that RLI was not entitled to an offset for the extra work allegedly performed by *Page 925
Colquett: (1) "there is sufficient evidence to suggest that a significant amount of work called for in this change order was never performed"; (2) the extra work "was never approved, either orally or in writing by MLK"; and (3) "the amount of the change order is almost totally offset by the amount of liquidated damages owed to MLK from Colquett for its failure to complete the project in a timely manner." We note again that "`this Court will assume that the trial judge made those findings necessary to support the judgment,'" New Properties,
The evidence offered by MLK indicates that MLK was entitled to liquidated damages of $27,600 because Colquett failed to complete the project within the time provided in the contract. Such a finding, combined with a finding that a "substantial amount of the extra work had never been performed" would indicate that RLI's claim for extra work in the amount of $33,248 was entirely offset by liquidated damages and the amount of extra work not performed. We cannot say that the trial court's findings are plainly and palpably wrong; therefore, we will not reverse the judgment of the trial court on this asserted error.
Kimbrell,"`The rule is that every plea in estoppel must be certain in every particular and must allege the facts upon which the plea is predicated, and must allege every material fact which the pleader expects to prove in support of the plea. Conclusions of the pleader, not supported by a statement of facts from which the conclusions are drawn, will not suffice.'"
RLI's argument, limited in that respect, is that MLK is estopped from claiming that additional work needs to be done on the project because the project engineer, allegedly aware that certain pipe was not installed as the city engineer wanted, certified that the improvements were in compliance with the contract and with the City's requirements. In support of its estoppel argument, RLI cites only Mazer v. Jackson InsuranceAgency,
RLI does not argue, or cite any authority for, the proposition that the project engineer's alleged knowledge should operate to estop MLK from making a claim under the contract. See Mazer,
AFFIRMED.
NABERS, C.J., and HARWOOD, STUART, and BOLIN, JJ., concur.
"Neither the final certificate of payment, nor any provision in the Contract Documents, nor partial or entire occupancy of the premises by the Owner [MLK] shall constitute acceptance of work not done in accordance with the Contract Documents or relieve [Colquett] of Liability in respect to any expressed warranties or responsibility for faulty materials or workmanship. [Colquett] shall remedy any defects in work and pay for any damage to the work resulting therefrom, which shall appear within a period of one year from date of final acceptance of the work unless a longer period is specified. The Owner [MLK] will give notice of observed defects with reasonable promptness."
"Final payment shall be due thirty (30) days after issuance of final certificate, provided the work be then fully completed and the contract fully performed.
"Within ten (10) days after receipt of written notice that the work is ready for final inspection and acceptance, [Colquett], [project] Engineer, and the Owner [MLK] shall make such inspection, and when the work is found acceptable under the terms of this contract, the [project] Engineer shall issue the final certificate in writing stating that the work provided for in the contract has been completed and is accepted and the terms and conditions thereof.
"Before issuance of the final certificate, [Colquett] shall submit evidence satisfactory to the Owner [MLK] that all payroll, materials, bills, and other indebtedness connected with the work have been paid and that he has advertised and met all State, County, and City Codes, and other requirements. . . ."
We are not convinced that the February 23, 2000, letter from the project engineer to the City of Mobile constitutes a "final certificate." Section 6.55 contemplates that the project engineer will issue a final certificate to the contractor. The project engineer sent the February 23, 2000, letter to the City of Mobile. The City of Mobile responded to the letter by taking exception to the project engineer's statement that the project was in compliance with the City's requirement and indicating certain items that needed to be remedied. After it appeared to the City that those remedial measures had been taken, the City accepted the project. However, there is no indication that thereafter the procedures leading up to the issuance of a final certificate were completed, or that the project engineer thereafter issued a written "final certificate."
Reference
- Full Case Name
- Rli Insurance Company v. Mlk Avenue Redevelopment Corporation.
- Cited By
- 10 cases
- Status
- Published