ADB Cos. v. Socket Telecom, LLC

Decision Date09 February 2021
Docket NumberWD 83575
Citation618 S.W.3d 237
Parties ADB COMPANIES, INC., Respondent, v. SOCKET TELECOM, LLC, Appellant.
CourtMissouri Court of Appeals

Brian E. McGovern, Town and Country, for Respondent.

David G. Brown, for Appellant.

Division Two: W. Douglas Thomson, Presiding Judge, Lisa White Hardwick, Judge and Edward R. Ardini, Jr., Judge

EDWARD R. ARDINI, JR., JUDGE

Socket Telecom, LLC ("Socket") appeals the judgment entered by the Circuit Court of Boone County, after a bench trial, in favor of Respondent ADB Companies, Inc. ("ADB") on ADB's claim of breach of contract. The trial court found that Socket breached its contract with ADB by improperly withholding funds owed to ADB and that, as a result, ADB was entitled to attorney's fees and prejudgment interest under section 431.180, RSMo.1 For the reasons stated below, we reverse and remand with instructions to the trial court to enter judgment in favor of Socket.

Factual and Procedural Background

Socket is an internet service provider. Socket obtained a "loan/grant" from the Rural Utility Service ("RUS"), an agency within the United States Department of Agriculture,2 to lay a fiber optic network that would enable Socket to provide broadband internet service to homes and businesses in Callaway County, Missouri. Socket did not "have its own crews that go out and lay fiber," so, using a structured process controlled by the RUS, it invited bids from subcontractors to perform that work. ADB submitted a bid and was awarded the contract.

On July 13, 2012, ADB3 and Socket entered into a contract wherein ADB was to place "approximately 101 miles of fiber in the Fulton exchange in central Missouri" (the "Contract"). The Contract required ADB to complete its work within "150 calendar days excluding Saturdays, Sundays, and legal holidays from the contract commencement date," however ADB was entitled to an extension of this deadline for delays caused by Socket's failure to provide necessary materials, easements, or rights-of-way if ADB timely requested an extension in writing. The Contract contained two provisions governing this deadline-extension procedure. The first provision was located in the section of the Contract titled "Instructions to Bidders":

18. [Socket] represents:
a) If by other provisions of the contract documents [Socket] shall have undertaken to furnish any materials for the construction of the Project, such materials are on hand ... or if such materials are not on hand they will be made available by [Socket] to [ADB] before the time such materials are required for construction.
b) That all items to be accomplished by [Socket] to facilitate construction have been accomplished or will be completed prior to construction activity.
c) ...
d) Easements and rights-of-way for the Construction Corridor used for the placement of buried cable have been obtained from property owners or public authorities....
e) ...
f) ...
g) ...
If [Socket] shall fail to comply with any of the undertakings contained in the foregoing representations or if any of such representations shall be incorrect, [ADB] will be entitled to extension of time of completion for a period equal to the delay, if any, caused by the failure of [Socket] to comply with such undertaking or by any such incorrect representation; provided [ADB] shall have promptly notified [Socket], in writing within ten (10) days, of its desire to extend the time of completion in accordance with the foregoing, and provided further that such extension, if any, of the time of completion shall be the sole remedy of [ADB] for [Socket's] failure, because of conditions beyond the control and without the fault of [Socket], to furnish materials in accordance with subparagraph (a) hereof.

The second provision governing the deadline-extension procedure was located in Article II, Section 1 of the Contract, titled "Time and Manner of Construction":

The time for Completion of Construction set forth in [ADB's] Proposal shall be extended for the period of any reasonable delay which is due exclusively to causes beyond the control and without the fault of [ADB], including acts of God, fires, floods, inability to obtain materials, and acts or omissions of [Socket] with respect to matters for which [Socket] is solely responsible: Provided, however, that no such extension of time for completion shall be granted [ADB] unless within ten (10) days after the happening of any event relied upon by [ADB] for such an extension of time [ADB] shall have made a request therefore in writing to [Socket], and provided further, that no delay in such time of completion or in the progress of the work which results from any of the above causes except acts or omissions of [Socket] shall result in any liability on the part of [Socket].

(emphasis in original).

Article VI, Section 2 of the Contract, titled "Liquidated Damages," detailed the effect of ADB's failure to meet its deadline:

The time of the Completion of the Construction of the Project is of the essence of this Contract. Should [ADB] neglect, refuse or fail to complete the construction within the time herein agreed upon, after giving effect to extensions of time, if any, herein provided, then in that event and in view of the difficulty of estimating with exactness damages caused by such delay, [Socket] shall have the right to deduct from and retain out of such moneys which may be then due, or which become due and payable to [ADB] the sum of [$2,500.00] per day for each and every day that such construction is delayed in its completion beyond the specified time, as liquidated damages and not as a penalty; ... Provided, however, that [Socket] shall promptly notify [ADB] in writing of the manner in which the amount retained, deducted, or claimed as liquidated damages was computed.

(emphasis in original). The "Completion of Construction" referred to in the liquidated damages provision was contractually defined as "full performance by [ADB] of [its] obligations under the Contract and all amendments and revisions thereof[.]" Pursuant to the Contract, "[t]he Certificate of Completion, signed by the Engineer[4 ] and approved in writing by [Socket] and the Administrator,[5 ] shall be the sole and conclusive evidence as to the date of Completion of Construction[.]"

Finally, as relevant to this appeal, the Contract contained a provision governing what the parties refer to as "retainage," located in Article III, Section 1 of the Contract, titled "Payments to Contractor":

Within the first fifteen (15) days of each calendar month, [Socket] shall make partial payment to [ADB] for construction accomplished.... Only ninety-five percent (95%) of each such invoice approved during the construction of the project shall be paid by [Socket] to [ADB] prior to completion of the Contract. Upon completion by [ADB] of the construction of the Project, the Engineer will prepare a Final Inventory [and] ... will certify it to [Socket], together with a certificate of the total cost of the construction performed. Upon the approval of such certificates by [Socket] and the Administrator, [Socket] shall make payment to [ADB] of all amounts to which [ADB] shall be entitled thereunder which shall not have been paid[.] ...

The contract commencement date—the date triggering the 150-day completion deadline—was September 13, 2012. On September 15, 2012, Fail Engineering (the firm hired by Socket to perform engineering services for the project) provided ADB with a weekly progress report on a pre-printed form created by the RUS ("RUS Report"). An RUS Report "documents weekly production rates, build rates," "the amount of cable placed, conduit placed," and "contract extensions ... around weather, material delays, or any such delays." The September 15th RUS Report stated that "the date construction was scheduled to be completed per the [C]ontract" was April 8, 2013. Representatives of ADB, Socket, and Fail Engineering signed the September 15th RUS Report. As discussed more fully herein, Fail Engineering did not provide ADB with any other RUS Reports until "the end of the project" as "part of the project closeout."

On July 24, 2013, Fail Engineering sent correspondence to ADB advising that the "time for completion of construction pursuant to the [Contract] including weather days and granted time extensions was June 27th, 2013,"6 and that because ADB had still not completed its work, Socket would be seeking liquidated damages beginning July 24, 2013 in the amount of $2,500 per day.

ADB completed its work on August 23, 2013. The Certificate of Completion signed by Socket, Fail Engineering, and the RUS provided that the date of Completion of Construction was September 30, 2013. In October 2013, Socket sent correspondence to ADB advising that it had assessed 30 days of liquidated damages—from July 24, 2013 to the date ADB had actually completed construction, as opposed to the later date documented in the Certificate of Completion—which amounted to $75,000. Socket withheld these funds from the retainage owed to ADB, which by the conclusion of the project was $109,384. Socket released the remaining retainage—$34,384—to ADB.

ADB initiated this action for breach of contract in 2015. In its petition, ADB alleged that it furnished the labor and material required of it under the Contract, Socket failed to pay ADB the amount owed to it, and, because of such failure, Socket failed to perform its contractual obligations. ADB requested attorney's fees and interest pursuant to section 431.180, RSMo, Missouri's Private Prompt Pay Act.

A one-day bench trial was conducted on September 24, 2019. ADB presented the testimony of one witness, Jason Lynd, ADB's vice president and the manager for this project. Lynd testified that pursuant to the Contract, Socket was responsible for obtaining all easements and rights-of-way, as well as certain materials necessary for laying the fiber, and that ADB could not perform its work without these items. Lynd stated that Socket had not...

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3 cases
  • Craig v. Craig
    • United States
    • Missouri Court of Appeals
    • May 3, 2022
    ...declares or applies the law." Aldrich v. Aldrich , 637 S.W.3d 485, 489 (Mo. App. W.D. 2021) (quoting ADB Cos. v. Socket Telecom, LLC , 618 S.W.3d 237, 244 (Mo. App. W.D. 2021) ). "[T]he trial court's judgment is presumed valid and the burden is on the appellant to demonstrate its incorrectn......
  • Aldrich v. Aldrich
    • United States
    • Missouri Court of Appeals
    • November 2, 2021
    ...to support it, it is against the weight of the evidence, or it erroneously declares or applies the law.’ " ADB Cos. v. Socket Telecom, LLC , 618 S.W.3d 237, 244 (Mo. App. W.D. 2021) (quoting Ivie v. Smith , 439 S.W.3d 189, 198-99 (Mo. banc 2014) ). " ‘A claim that the judgment erroneously d......
  • Coleman v. Hartman
    • United States
    • Missouri Court of Appeals
    • May 25, 2021
    ...believed, has some probative force on each fact that is necessary to sustain the [trial] court's judgment." ADB Cos. v. Socket Telecom, LLC , 618 S.W.3d 237, 244 (Mo. App. W.D. 2021) (quoting Ivie v. Smith , 439 S.W.3d 189, 199 (Mo. banc 2014) ).Actual Possession Coleman asserts that the Ha......

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