Environmental Protection v City of Kansas City, Mo, WD56182

• Citation: 37 S.W.3d 360
• Decision Date: 26 December 2000
• Docket Number: WD56182
• Parties: This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court. Environmental Protection, Inspection and Consulting, Inc., Appellant/Cross-Respondent, v. City of Kansas City, Missouri, Respondent/Cross-Appellant. WD56182 (Consolidated with WD56183) Missouri Court of Appeals Western District Handdown Date:
• Court: Court of Appeal of Missouri (US)

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court

Environmental Protection, Inspection and Consulting, Inc., Appellant/Cross-Respondent v City of Kansas City, Missouri, Respondent/Cross-Appellant

WD56182 (Consolidated with WD56183)

Missouri Court of Appeals Western District

Handdown Date: 12/26/2000

Appeal From: Circuit Court of Jackson County, Hon. Gene R. Martin

Counsel for Appellant: Daniel J. Ross

Counsel for Respondent: M. Margaret S. Moran

Opinion Summary: Under a construction contract between EPIC and KCMo, EPIC agreed to build a spillway for the Zoo on Lake of the Woods in Swope Park, Kansas City, MO. EPIC sued KCMo for negligent maintenance of property that caused flooding on the work site. EPIC also claimed breach of contract for failure to pay amounts due under the contract. Additionally, EPIC sought damages and attorney fees under the Prompt Payment Law. The jury returned verdicts with money damages for EPIC. The trial court granted Judgment Notwithstanding the Verdict (JNOV) for KCMo on the Prompt Payment Act claim. REVERSED IN PART; AFFIRMED IN PART.

Court holds:

Because of instructional error, the breach of contract verdict in favor of EPIC is reversed. The remaining judgments of the trial court are affirmed.

Opinion Author: Thomas H. Newton, Judge

Opinion Vote: Because of instructional error, the breach of contract verdict in favor of EPIC is reversed. The remaining judgments of the trial court are affirmed. Lowenstein, P.J., and Denvir Stith, J., concur.

Opinion:

The litigation and the eventual appeals between Environmental Protection, Inspection, and Consulting, Inc. (EPIC) and the City of Kansas City, Missouri (KCMo) arose from a construction contract for building a replacement spillway at the Kansas City zoo. Although the contract provided for an initial completion date of four months, construction of the zoo spillway took fourteen months. The contract specified payment of $400,000.00 for the spillway project. Yet, in the ensuing litigation, EPIC sought the additional sum of $625,000.00 for breach of contract, late payment interest under the Prompt Payment Statute, and $100,000.00 for negligent maintenance of property.

Procedural Background

The litigation over the zoo spillway began in 1994 in the United States District Court. Included in that lawsuit was EPIC's civil rights action in which KCMo prevailed on summary judgment. The remaining actions were dismissed without prejudice in 1996 and were refiled in the Jackson County Circuit Court the same year.

In the circuit court petition, EPIC reinstituted the actions against KCMo that are the subject of this appeal: Count I, negligent maintenance of property that caused flooding on the work site; Count X, breach of contract for failure to pay amounts due and for late payment interest. Counts II through IX in the petition sought damages for negligence, interference with contract, negligent misrepresentation, fraudulent misrepresentation, and civil conspiracy. The corporate defendants involved were the management, consultant, and engineering firms hired by KCMo for work on the new zoo project. The individual defendants included construction managers, engineers, the KCMo deputy director of Parks and Recreation, the KCMo contract administrator, and a KCMo assistant attorney.

The jury trial began in February 1998 and lasted six weeks. At the end of evidence, the trial court granted directed verdicts for the defendants on Counts II through IX. After argument and submission of Counts I and X, the jury returned unanimous verdicts with money damages for EPIC and against KCMo. On the negligence action, the jury awarded EPIC $40,000.00 after reduction for 20% fault. For breach of contract, the jury set damages at $561,200.00. In addition, the jury imposed interest of $454,572.00 under the Prompt Payment Statute. The total damages awarded to EPIC equaled $1,015,772.00.

In post trial rulings, the trial court granted judgment notwithstanding the verdict (JNOV) for KCMo and set aside EPIC's $454,572.00 award of late payment interest. The court conditionally granted a new trial for KCMo if the JNOV on Prompt Payment interest were reversed on appeal. In further post-trial rulings, the trial court denied (1) KCMo's motion for JNOV/new trial on the negligence and breach of contract claims, and (2) EPIC's motion for attorney fees under the Prompt Payment Statute. In its amended judgment, the trial court upheld EPIC's damage awards of $40,000.00 for negligent maintenance of property and $561,200.00 for breach of contract for a total judgment of $601,200.00.

Both EPIC and KCMo appeal. Epic's appeal centers on the Prompt Payment Statute and concerns the JNOV setting aside its $454,572.00 late payment interest award, the ordering of a conditional new trial, and the denial of attorney fees. In its cross appeal, KCMo challenges the denials of its motions for directed verdict and JNOV/new trial on the breach of contract claim.

Factual Background

In May 1992, KCMo awarded EPIC the construction contract on the replacement spillway for the new zoo project. EPIC had submitted the lowest bid. The contract amount for the spillway was $400,000.00, while the projected costs for the entire zoo renovation was $50,000,000.00. EPIC was to receive its compensation in progress payments. The contract set the time for completing the spillway at 120 days or four months. The contract provided procedures for requesting additional time for weather delays and additional compensation for unforeseen conditions requiring extra work.

The work site for the new spillway was on the seven-acre Lake of the Woods in Swope Park in Kansas City, Missouri. Gregory Boulevard ran across the top of the existing dam. While the then-existing spillway had channeled water to the Swope Park Lagoon, the new spillway was to divert water to the Blue River. The new spillway was designed with three components: a concrete box culvert or conduit connecting an inlet structure west of Gregory and an outlet structure east of Gregory. The specifications called for building the spillway without draining the lake. To accomplish this, EPIC was required to build a cofferdam, a temporary structure, to dam up the water to allow excavations for the spillway.

EPIC began its work on the spillway June 20, 1992, but did not complete the project until fourteen months later. The summer months of 1992 brought heavy rainfalls of over fifteen inches. In spite of the adverse weather, EPIC began constructing the cofferdam from the clay under the existing dam. Toward late summer, the cofferdam was complete. By July 1992, EPIC began excavations for the spillway. As work progressed during the fall months, EPIC installed the sheet pilling; placed and poured the concrete forms for the box culvert as well as the inlet and outlet structures.

Although the walls of the cofferdam held the water back, water seeped from beneath the cofferdam. The seepage required pumping. In October 1992, the water backup from the seepage caused unsafe conditions and required the inlet structure excavation to be shut down. EPIC consulted with KCMo's engineers about the seepage problem, which remained unresolved. To combat the seepage, EPIC received permission from KCMo to inject urethane grout at the base of the cofferdam and to lower the water level of the entire lake. Through its own investigation, EPIC determined that the water flowed from a discrete layer of porous shot rock under the cofferdam. KCMo's representatives directed EPIC to proceed with removal of the rock.

During the discovery phase of the litigation, EPIC found out about a rock haul road submerged in the lake near the cofferdam. Although KCMo and its engineers knew of the submerged road's existence, the bidding materials and the contract for the spillway project contained no reference to it. The road had been constructed in 1990 as a part of KCMo's chlordane remediation project. The materials composing the road were contaminated and consisted of packed rock that was porous and allowed water seepage.

In November 1992, the spillway project suffered another setback. A KCMo work crew entered EPIC's work site and filled a ditch near the existing spillway with dirt. On November 19, the Kansas City area again experienced heavy rainfall. Because of the blockage by the work crew, the waters rose over the top of the cofferdam and flooded the new spillway work site. The resulting flood created an emergency situation: the police were called; ambulances were placed on standby; Gregory Boulevard had to be closed. Although the cofferdam sustained damage, its walls remained intact. EPIC lost equipment and materials at the work site. The flooding necessitated extensive repairs, replacement, pumping, and cleanup.

In meetings and correspondence, KCMo urged EPIC to timely complete the spillway project. To do so, EPIC provided extra work. In spite of EPIC's requests for change orders, KCMo approved change orders amounting to $12,466.00 only.

In its last payment application, Contract Payment Request #9 Revised dated July 19, 1993, EPIC sought payment of $11,080.07. The KCMo project consultant denied the application but recognized that the zoo spillway project was 98% complete.

EPIC and KCMo never reconciled their differences. The final contract payment and the change order requests remained unpaid. EPIC was sued by a materials supplier. Because of the losses sustained on the spillway project, EPIC was forced to close its business in 1994.

As a result, EPIC sued KCMo. EPIC's judgment for negligent maintenance of property, which has not been appealed, was based on evidence of the dangerous condition on land created by the flooding of EPIC's work site. The $40,000.00 award on the negligence claim represented EPIC's damages for the loss of its business concern. On its breach of contract claim, EPIC relied principally on evidence that...