APAC-Carolina, Inc. v. Greensboro-High Point Airport Authority, APAC-CAROLIN

• Decision Date: 06 July 1993
• Docket Number: No. 9218SC29,APAC-CAROLIN,INC,GREENSBORO-HIGH,9218SC29
• Citation: 110 N.C.App. 664,431 S.E.2d 508
• Court: North Carolina Court of Appeals
• Parties: and United Sprinkler, Inc., Plaintiffs-Appellants, v.POINT AIRPORT AUTHORITY and Southern Mapping & Engineering Company, Defendants-Appellees.

Page 508

431 S.E.2d 508

110 N.C.App. 664

APAC-CAROLINA, INC. and United Sprinkler, Inc., Plaintiffs-Appellants, v. GREENSBORO-HIGH POINT AIRPORT AUTHORITY and Southern Mapping & Engineering Company, Defendants-Appellees.

No. 9218SC29.

Court of Appeals of North Carolina.

July 6, 1993.

Patton, Boggs & Blow, by Robert G. McIver and C. Allen Foster, Greensboro, for plaintiffs-appellants.

Smith Helms Mulliss & Moore, by Stephen P. Millikin and James W. Barkley, and Cooke & Cooke, by Barden W. Cooke, Greensboro, for defendant-appellee Greensboro-High Point Airport Authority.

Frazier, Frazier & Mahler, by Harold C. Mahler and James D. McKinney, Greensboro, for defendant-appellee Southern Mapping & Engineering Co.

LEWIS, Judge.

APAC-Carolina, Inc. ("APAC"), a business engaged in paving highways and airports, served as general contractor for the extension of a runway and construction of a taxiway (the "Project") at the Greensboro-High Point Airport. United Sprinkler, Inc. ("Sprinkler") was a subcontractor on the Project. On 1 September 1989 APAC and Sprinkler filed a complaint against defendants Greensboro-High Point Airport Authority ("Authority") and Southern Mapping and Engineering Company ("Southern"), an engineering and surveying business which prepared plans, specifications and estimates for the project. Plaintiffs alleged, among other things, nonpayment of claims for undercut excavation work which was neither contemplated by the contract nor mentioned by defendants. Both defendants filed answers on 14 November 1989. On 3 August 1991 defendants filed motions for summary judgment, and on 14 August 1991 plaintiffs filed a cross-motion for partial summary judgment. On 16 August 1991 Judge Walker denied plaintiffs' motion and granted defendants' motions for summary judgment. Plaintiffs now appeal from this order.

In June 1986 APAC submitted a bid proposal for the Project to Authority. APAC's proposal included a contract price of $1.99 per cubic yard of unclassified excavation for an estimated 167,200 cubic yards. It did not include a price for undercut, replacement, or compaction work as such.

APAC, as the low bidder, was awarded the contract on 26 August 1986. The contract provided for completion in 120 calendar days. It also stated that all soil removal or undercutting would be included in the broader category of "unclassified excavation" for contract purposes, to be paid at the rate per cubic yard for that item. APAC had bid a price of $1.99 per cubic yard for all unclassified excavation.

APAC subcontracted with Sprinkler, a grading and excavation business, to do the grading work. Shortly after Sprinkler began work in September 1986, Southern directed APAC and Sprinkler to undercut the taxiway subgrade to "substantial depths." When it became apparent that a "substantial volume" of undercutting would be required for the Project, Sprinkler protested that such work was not contemplated in the plans and specifications, was not a contract-pay item, and was more complicated, time-consuming and expensive than the work estimated to be $1.99 per cubic yard. In response to Sprinkler's indication that it would seek additional compensation for the work, Southern threatened to shut-down the job and impose liquidated damages of $1,000.00 a day. Plaintiffs performed the work under protest.

Sprinkler measured its excavation work using load counts, although the contract specified another method. Relying on the load counts, Sprinkler claims it performed more excavation than the amount recorded and paid for by Authority. Plaintiffs allege performance of this "extra" work caused delays resulting in suspension of their work until May 1987. Extra erosion control work, performed by Sprinkler, was also a factor in the delays, and Sprinkler advised APAC and Southern it would seek additional compensation for this work as well. Plaintiffs also claim they incurred duration-related costs because of the delays.

The Project was completed in July 1987. In June 1988 APAC, acting on behalf of itself and on behalf of Sprinkler, submitted claims to Southern for additional payment for undercut work, extra erosion control work, and increased costs caused by the delays. In July 1988 Authority made its last payment to APAC, but withheld a retainage of $29,800 as liquidated damages. Authority did not include payment for APAC's additional claims.

Plaintiffs filed suit on 1 September 1989, alleging breach of contract for failure to pay the claims based on extra work. APAC requested $74,000 on its own behalf, and $226,000 on behalf of Sprinkler, summarily explaining that "APAC-Carolina is entitled to recovery [sic] for the benefit of United Sprinkler." APAC also claimed damages for losses and expenses incurred in performing corrective erosion control work arising from defective specifications provided by Authority. Finally, APAC alleged Southern's plans and specifications failed to disclose any quantities of undercut, replacement or compaction work, and that Southern concealed this information in its failure to exercise reasonable care or competence. APAC asserted that it and Sprinkler reasonably and foreseeably relied on the misrepresentations and concealments in preparing and submitting their bids. APAC claimed they were each damaged in excess of $10,000 on this count.

In its motion for summary judgment, Authority asserted: (1) APAC could not present claims on behalf of Sprinkler; (2) plaintiffs' claims were barred by contractual provisions; (3) the undercut work was properly paid for as unclassified excavation; (4) & (5) the quantities of undercut and other excavation were accurately measured; (6) plaintiffs' delay and suspension claim was barred by the contract; (7) there was no warranty regarding erosion control; and (8) & (9) the amount of an environmental fine was properly withheld as well as the amount of liquidated damages. Southern moved for summary judgment on the negligent misrepresentation claim. Finding no genuine issues of material fact, the trial court granted summary judgment for defendants on all issues.

On appeal from the order of summary judgment in favor of defendants, plaintiffs assert: (1) APAC may present claims on behalf of Sprinkler; (2) questions of material fact exist concerning their claims against Authority; and (3) they have a cause of action against Southern for negligent misrepresentation.

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At the outset, we note that summary judgment is only appropriate where there are no genuine issues of material fact. N.C.G.S. § 1A-1, Rule 56(c) (1990). After reviewing plaintiffs' arguments, we conclude that summary judgment was appropriately granted on several of the issues before us. However, we hold that summary judgment was improperly entered on the issue of the accuracy of the measurements of unclassified excavation. As discussed below, this issue affects the total amount owed to plaintiffs for their work, and may also affect the calculation of liquidated damages.

I. Standing of APAC to Assert Claims of Sprinkler

In its first argument, APAC contends it has standing to assert claims on behalf of its subcontractor Sprinkler. It is undisputed that the subcontractor, Sprinkler, has no direct claim against Authority. There is no privity of contract, Sprinkler is not a third-party beneficiary of the contract between Authority and APAC, the contract was not assigned to Sprinkler, and no liens have been asserted by Sprinkler. Plaintiffs acknowledge the traditional rule that subcontractors have no action in their own right against owners due to the lack of privity between them. See Warren Bros. Co. v. N.C. Dep't of Trans., 64 N.C.App. 598, 599, 307 S.E.2d 836, 838 (1983) (Court did not allow general contractor to bring claim on behalf of subcontractor when subcontractor itself could not bring a claim against owner). However, plaintiffs assert that it is common practice for a contractor to present the claims of its subcontractor when suing another party to the contract. Plaintiffs cite the case of Bolton Corp. v. T.A. Loving Co., 94 N.C.App. 392, 380 S.E.2d 796, disc. rev. denied, 325 N.C. 545, 385 S.E.2d 496 (1989) (hereafter Bolton I ), as support for this proposition, stating that it allowed a contractor to recover from an owner its subcontractor's claim for services and costs. This is a misstatement of the holding of Bolton I.

Bolton I involved a multiple-prime contract to build a library at UNC-Chapel Hill. This type of contract is required by N.C.G.S. § 143-128 for public building projects with expected costs exceeding $50,000. N.C.G.S. § 143-128(a) (1990) (now $100,000). Section 143-128 makes each separate contractor directly liable to the State of North Carolina and to the other contractors. Id. The Court interpreted the statute to allow one prime contractor to sue another prime contractor for economic loss. Thus, Bolton, the heating and ventilating contractor, could sue Loving, the general contractor and "project expediter." 94 N.C.App. at 397, 380 S.E.2d at 800.

The Court also examined whether Bolton could introduce evidence of damages incurred by its subcontractor, Phillips. The Court noted that the contract makes each contractor responsible to other contractors for damages due to undue delay, and the contract makes each contractor responsible for the acts of its subcontractors. Thus, "one prime [contractor] on a multiple-prime project may sue another prime [contractor] for damages incurred by the first prime's subcontractor." Id. at 408, 380 S.E.2d at 806. This was the only relevant holding in that case. The Bolton I Court cited Davidson & Jones v. N.C. Department of Administration, 315 N.C. 144, 337 S.E.2d 463 (1985), but noted that the Davidson Court did not address the issue directly when it allowed a prime contractor to recover duration-related expenses related to work performed by a subcontractor. Bolton I, 94 N.C.App. at 408, 380 S.E.2d at 806. The Court in Davidson did not...