Big River Constr., Inc. v. City of Tillamook

Decision Date26 October 2016
Docket NumberA152131
Citation386 P.3d 19,281 Or.App. 787
Parties Big River Construction, Inc., an Oregon corporation, dba Big River Excavating, Plaintiff–Respondent Cross–Appellant, v. City of Tillamook, an Oregon public body, Defendant–Appellant Cross–Respondent. City of Tillamook, an Oregon public body, Third–Party Plaintiff–Appellant, v. Safeco Insurance Company of America, a surety, Third–Party Defendant–Respondent. City of Tillamook, an Oregon public body, Plaintiff, and Ferguson Enterprises, Inc., a corporation of Virginia, foreign corporation, Plaintiff, v. Big River Construction, Inc., an Oregon corporation, dba Big River Excavating; and Safeco Insurance Company of America, a surety, Defendants.
CourtOregon Court of Appeals

John J. Hickey, Lake Oswego, argued the cause for appellant-cross-respondent. With him on the briefs were John H. Baker and Jordan Ramis PC.

Sara Kobak, Portland, argued the cause for respondent-cross-appellant Big River Construction, Inc. With her on the joint answering brief were Darien S. Loiselle and Schwabe, Williamson & Wyatt, P.C.; and Jan D. Sokol and Stewart Sokol & Gray LLC for respondent Safeco Insurance Company of America. With her on the cross-opening and reply on cross-appeal briefs were Darien S. Loiselle and Schwabe, Williamson & Wyatt, P.C.

Ellen F. Rosenblum, Attorney General, Anna M. Joyce, Solicitor General, and Judy C. Lucas, Assistant Attorney General, filed the brief amicus curiae for Oregon Department of Transportation.

Before Armstrong, Presiding Judge, and Sercombe, Judge, and Egan, Judge.*

SERCOMBE, J.

Plaintiff, a general contractor, brought this action against defendant City of Tillamook alleging a breach of contract and related claims regarding the parties' contract to expand the city's wastewater treatment facility. Plaintiff sought compensation for the direct and indirect costs it incurred due to delays in the construction project. The city denied that it breached the contract and asserted counterclaims against plaintiff for breach of contract and unjust enrichment, and asserted a bond claim against plaintiff and plaintiff's surety.1 The case was tried before a jury, which found that the city had breached the contract and plaintiff had not, and that plaintiff was entitled to money damages.

The city appeals a general judgment and money award to plaintiff and third-party defendant in the amount of $1,527,907.38, and a supplemental judgment awarding attorney fees, costs and disbursements, and prevailing party fees to plaintiff and third-party defendant. The city raises seven assignments of error on appeal. We reject the city's second and fourth through seventh assignments of error without discussion, and write to address the first and third assignments of error, in which the city contends that the trial court erred in denying certain portions of its motions for directed verdict. As we explain below, we agree in part with the city's first and third assignments of error, in that claims for certain categories of plaintiff's damages should not have been submitted to the jury, and, accordingly, we reverse the general judgment and remand for a new trial on damages only. As a result of that disposition, the supplemental judgment is also reversed and remanded. ORS 20.220(3)(a).

Plaintiff cross-appeals the prejudgment interest award of the general judgment entered in its favor. Plaintiff contends that the trial court erred when it denied plaintiff's request for an award of penalty interest under ORS 279C.570(8) in addition to prejudgment interest awarded pursuant to ORS 279C.570(9). We reject plaintiff's argument and conclude that ORS 279C.570 does not authorize the application of more than one interest rate to a money award. Consequently, we affirm on plaintiff's cross-appeal.

In reviewing the denial of the city's motions for directed verdict, we will set the verdict aside only if we conclude that there was no evidence from which the jury could have found for plaintiff. Brown v. J.C. Penney Co. , 297 Or. 695, 705, 688 P.2d 811 (1984). "A directed verdict is appropriate only if there is a complete absence of proof on an essential issue or when there is no conflict in the evidence and it is susceptible of only one construction." Malensky v. Mobay Chemical Corp. , 104 Or.App. 165, 170, 799 P.2d 683 (1990), rev. den. , 311 Or. 187, 808 P.2d 91 (1991). Because the jury rendered a verdict in plaintiff's favor, we "consider the evidence, including inferences, in the light most favorable to plaintiff" and do not weigh the evidence. Brown , 297 Or. at 705, 688 P.2d 811. We state the relevant facts consistently with that standard.

In June 2007, plaintiff and the city entered into a construction contract in which plaintiff agreed to be the contractor for the city's wastewater treatment plant expansion project and the city agreed to pay plaintiff almost $11 million for that work. The city hired Kennedy/Jenks Consultants, Inc. (engineer), an engineering firm, to design and manage the construction project. The city and the engineer agreed to provide plans and specifications to plaintiff that were sufficient to build the project.

Plaintiff began working on the project in the summer of 2007. The contract provided that the project would be substantially completed within approximately 14 months—in the fall of 2008.2 However, due to delays, which plaintiff attributes to the engineer's design deficiencies and project mismanagement, according to plaintiff, the project was not substantially completed until January 2010. The contract provided that plaintiff would pay liquidated damages to the city if the original or agreed-upon extended substantial completion and final completion dates were not met.3

The scope of the construction contract changed throughout the project. The engineer issued 91 change orders and at least 15 work directive change orders.4 Plaintiff claims that, from the outset of the project, numerous design deficiencies and other problems caused by the city or the engineer resulted in substantial extra costs and delays. In February 2008, plaintiff submitted to the engineer a request for an equitable adjustment to the contract, seeking an increase in price and an extension of time. The parties mediated that claim and eventually settled it in April 2009. The settlement was reflected in Change Order 65, which added $940,000 to the contract price and extended the substantial completion date to June 4, 2009. Certain claims and disputes regarding the project were unresolved at the time of Change Order 65; the city and plaintiff agreed to carve those out to be dealt with at a later date.

By the time of the new substantial completion date in June 2009, plaintiff had completed 97 percent of the scope of work set out in the original contract and the change orders up to that date. However, in 2009, the engineer continued to add scope to the project through additional change orders and work directive change orders, including, according to plaintiff's project manager, 12 work directive change orders that were issued in the last phase of the project in or after February 2009.

Plaintiff used a "critical path" management schedule for the project.5 The construction contract provides that, if the critical path of construction tasks is affected by a change order that is the sole cause for changing the length of time required to complete the work, then the contractor is to be compensated. The parties disagreed on whether certain change orders or work directive change orders affected the critical path toward substantial completion of the project. That disagreement ultimately resulted in a dispute about whether certain costs claimed by plaintiff should be paid.

Plaintiff claimed that changes in design and scope by the city and the engineer delayed the project and resulted in additional costs. Plaintiff submitted claims for those costs but was not paid. Plaintiff claimed that the changes that caused delay and increased costs included changes related to major systems of the wastewater treatment facility such as the sludge transfer and storage system, hypochlorite disinfectant system, and sodium bisulfate system. In addition, plaintiff claimed that other late redesigns and work directive change orders also resulted in extra costs and delays to the final phase of the project.

According to plaintiff, the engineer never provided any written design plans for the sludge transfer and storage system. Instead, for work on that system, the engineer directed plaintiff's work in the field on a daily basis with no written plans and no schedules of the upcoming work. Due to the frequency of those directions and the scope of that work changing often, plaintiff was unable to plan ahead regarding the need for manpower, tools, and equipment. As a consequence, plaintiff kept tools and equipment on site so that whatever was needed to get the work done was available.

In the fall of 2009, the city stopped making payments on plaintiff's monthly pay applications, but plaintiff continued to work on the project. In December 2009 and January 2010, plaintiff and the engineer exchanged correspondence regarding substantial completion of the project, and the engineer eventually recommended certification of the same. Around the same time, the engineer, on behalf of the city, also notified plaintiff that liquidated damages were accruing against plaintiff for not substantially completing the project in July 2009. In January 2010, the engineer issued punch-lists of tasks that plaintiff was required to complete to achieve final completion under the contract. Although plaintiff requested final inspection of the project on March 30, 2010, the engineer did not certify final completion of the contract and continued to issue liquidated damages notices through April 2011. Plaintiff disputed that liquidated damages were owed.

Plaintiff submitted a claim dated March 3, 2010, to the engineer for an equitable adjustment to increase the...

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2 cases
  • Coos Cnty. Airport Dist. v. Special Districts Ins. Servs. Trust of the Special Districts Ass'n of Or.
    • United States
    • Oregon Court of Appeals
    • May 16, 2018
    ...only if there is " ‘some’ or a ‘significant’ likelihood that the error influenced the result." Big River Construction, Inc. v. City of Tillamook , 281 Or. App. 787, 807, 386 P.3d 19 (2016), modified on recons. , 283 Or. App. 668, 391 P.3d 996 (2017). Here, the trial court instructed the jur......
  • Big River Constr., Inc. v. City of Tillamook, A152131
    • United States
    • Oregon Court of Appeals
    • February 15, 2017
    ...J.Plaintiff and third-party defendant petition for reconsideration of our decision in Big River Construction, Inc. v. City of Tillamook , 281 Or.App. 787, 386 P.3d 19 (2016). For the reasons that follow, we allow the petition for reconsideration, withdraw our prior disposition, modify our p......

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