LK Comstock & Co., Inc. v. Becon Const. Co., Inc.

Citation932 F. Supp. 906
Decision Date27 January 1993
Docket NumberCivil Action No. 89-61.
PartiesL.K. COMSTOCK & COMPANY, INC., Plaintiff, v. BECON CONSTRUCTION COMPANY, INC., Defendant.
CourtU.S. District Court — Eastern District of Kentucky

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William H. McCann, Wyatt, Tarrant & Combs, Lexington, Kentucky, Harry L. Griffin, Jr., Frank M. Crittenden, John D. Marshall, Jr., Griffin, Cochrane & Marshall, Atlanta, GA, for Plaintiff.

V. Thomas Fryman, Jr., Michael C. Slone, Greenebaum, Doll & McDonald P.L.L.C., Lexington, Kentucky, for Defendant.

ORDER

WILHOIT, District Judge.

This matter is before the Court on the Special Master's Proposed Findings of Fact and Conclusions of Law, objections thereto, a motion by defendant for action upon the proposed findings and conclusions, and a motion by plaintiff to stay action upon the proposed findings and conclusions. The Court has thoroughly reviewed the record and does not find any of the Special Master's findings to be clearly erroneous. Fed. R.Civ.P. 53(e)(2). Further, the Court is in agreement with the well-reasoned conclusions reached by the Special Master. Thus, the Proposed Findings of Fact and Conclusions of Law will be adopted as, and for the opinion of the Court; the objections will be overruled; the motion for action granted; and the motion to stay action denied. In accord with the conclusions reached by the Special Master, the claims contained in count 17 will be dismissed, and plaintiff shall take nothing thereby.1

In its opposition to the motion for action upon the proposed findings and conclusions, plaintiff argues that some of the findings made by the Special Master bear directly upon counts 1-16 of the complaint2, which are still pending before this Court3. Adoption of the proposed findings and conclusions, says plaintiff, would amount to a deprivation of its right to a trial by jury on counts 1-16.

This matter was referred to the Special Master for the sole purpose of preparing proposed findings and conclusions as to count 17. The Special Master has performed this task admirably, and his work, as adopted by this Court, is particularly related only to the claims raised in count 17. Thus, adoption of the findings and conclusions will not impair either party's right to a trial by jury on counts 1-16. The Court would note that in the Special Master's proposed findings and conclusions, as in any other Court order or opinion, findings not essential to the ultimate conclusion are obiter dicta.

Also pending in this case is a motion by plaintiff to refer the balance of the claims to the Special Master. Defendant has filed a response and has no objection to referring counts 7 and 8 to the Special Master4, but objects to the reference of all the remaining claims. Plaintiff generally opposes any further splitting of its complaint.

Reference of jury matters to a Special Master differs significantly from reference of nonjury matters. In nonjury matters, if the Court accepts the Special Master's proposed findings and conclusions, they become final. Eastern Fireproofing Co. v. United States Gypsum Co., 50 F.R.D. 140, 142 (D.Mass.1970). Not so for jury issues. Acceptance of a Special Master's proposed findings and conclusions in a jury matter has no finality; "the issues are referred merely for purposes of clarification before presentation to the jury which remains the ultimate arbiter of the facts." Id.; Fed.R.Civ.P. 53(e)(3). Upon submission of the report to the jury, either party must be given the opportunity to introduce evidence contrary to the findings of the Special Master. Crateo, Inc. v. Intermark, Inc., 536 F.2d 862, 868 (9th Cir.1976). The jury may accept or reject the findings of the Special Master as it sees fit, and this process preserves the right of a jury trial as guaranteed by the Seventh Amendment. 5A James Moore et al., Moore's Federal Practice, ¶ 53.143 (2d ed. 1992); citing Ex parte Peterson, 253 U.S. 300, 40 S.Ct. 543, 64 L.Ed. 919 (1920). The findings of a Special Master in regards to a jury issue can only become binding if the parties stipulate as to the finality of the findings, and thereby waive their right to trial by jury. Fed.R.Civ.P. 53(e)(4). In light of these rules relating to procedure before a Special Master, the Court is of the opinion that, while reference of the remaining jury issues to the Special Master would undoubtedly save time at the trial, the savings would not be nearly as great as it was for reference of the nonjury issues contained in count 17.

The Court is of the opinion, however, that a trial of counts 7 and 8, under which the greatest amount of damages are claimed, could facilitate a more expeditious resolution to this case. Thus, the parties shall submit letters for the Court's in camera consideration informing the Court of each side's estimate as to the length of a trial on counts 7 and 8. Also, the parties should state whether they have considered submission of all remaining claims to binding arbitration before the Special Master pursuant to Rule 53(e)(4), and their reasons for rejecting this option.5 These letters shall be sent within ten (10) days from the date of this order. The pending motion by plaintiff to refer the remaining claims to the Special Master shall be held in abeyance pending receipt of the letters.

Accordingly,

IT IS THEREFORE ORDERED AND ADJUDGED:

(1) That the Special Master's Proposed Findings of Fact and Conclusions of Law are adopted as and for the opinion of the Court;

(2) That the objections to the Proposed Findings of Fact and Conclusions of Law are OVERRULED;

(3) That the motion of plaintiff to stay action upon the Proposed Findings of Fact and Conclusions of Law is DENIED;

(4) That the motion of defendant for action on the Proposed Findings of Fact and Conclusion of Law is GRANTED;

(5) That in accord with the Special Master's conclusions, count 17 of the plaintiff's complaint is DISMISSED, and plaintiff shall take nothing thereby;

(6) That within ten (10) days from the date of this order, the parties shall submit letters for the Court's in camera consideration in accord with the directions set out in this order;

(7) That the motion of plaintiff to refer the balance of the claims to the Special Master is HELD IN ABEYANCE pending receipt of the letters.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

THOMAS J. STIPANOWICH, Special Master.

On February 16, 1989, Plaintiff L.K. Comstock & Company, Inc. ("Comstock") commenced this action against Defendant Becon Construction Company ("Becon"). Comstock filed a seventeen-count complaint against Becon for certain claims for additional compensation arising from labor, material, and services provided by Comstock to Becon in connection with the Toyota Automotive Manufacturing Facility in Georgetown, Kentucky (the "Project"). The District Court severed Count 17 of Comstock's Complaint concerning Comstock's claims that the changes in the work to be performed by Comstock were so extensive as to constitute an abandonment of the contract or a "cardinal change." The hearing on Count 17 was referred to Thomas J. Stipanowich, Professor of Law at the University of Kentucky College of Law, as Special Master pursuant to Rule 53 of the Federal Rules of Civil Procedure. The hearing began on December 9, 1991, and continued for a total of fourteen trial days. Both parties subsequently submitted extensive trial "briefs."

For the reasons stated below, the Special Master concludes that Comstock did not sustain the burden of demonstrating an abandonment of the contract or a cardinal change.

                                    INDEX TO FINDINGS AND CONCLUSIONS
                  I. Findings of Fact .................................................... 911
                     A. Project Background ............................................... 911
                     B. Pre-Bid Events ................................................... 912
                     C. Bidding, Negotiations, and Letter of Intent ...................... 912
                     D. Incomplete Drawings .............................................. 913
                     E. Incomplete Vendor Data ........................................... 914
                     F. Requests for Information; Coordination Problems .................. 915
                     G. Denial of Time Extensions ........................................ 919
                     H. Volume of Changes ................................................ 921
                     I. Early Performance, Administration and Scheduling Problems ........ 922
                     J. Withholding of Payment and Comstock's "Impact" Claim ............. 926
                     K. Continuing Contract Negotiations and Signing of Subcontract ...... 930
                     L. Proof of Costs ................................................... 930
                 II. Conclusions of Law .................................................. 931
                     A. Introduction ..................................................... 931
                     B. Contract Abandonment ............................................. 931
                          Basic Principles Under Kentucky Law ............................ 931
                          Abandonment of a Construction Contract ......................... 932
                          Persuasive Authority ........................................... 933
                          Conclusion ..................................................... 935
                     C. Cardinal Change .................................................. 936
                          Basic Principles ............................................... 936
                          Nature of Inquiry .............................................. 939
                          Effect of Modifications; Continued Performance ................. 941
                          Other Limits on Cardinal Change ................................ 943
                          "Engrafting" Cardinal Change onto Kentucky Law? ................ 944
                          Conclusion ..................................................... 946
                III. Final Conclusion .................................................... 947
                
I. FINDINGS OF FACT
A. Project Background

1. This dispute arose out of the construction of an automotive assembly plant in...

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