Board of Com'Rs v. Bill Harbert Constr. Co.

• Decision Date: 31 July 2009
• Docket Number: 1041091.
• Citation: 27 So.3d 1223
• Parties: BOARD OF WATER & SEWER COMMISSIONERS OF the CITY OF MOBILE v. BILL HARBERT CONSTRUCTION COMPANY and Federal Insurance Company.
• Court: Alabama Supreme Court

27 So.3d 1223

BOARD OF WATER & SEWER COMMISSIONERS OF the CITY OF MOBILE v. BILL HARBERT CONSTRUCTION COMPANY and Federal Insurance Company.

1041091.

Supreme Court of Alabama.

July 31, 2009.

E.J. Saad and James H. Crosby of Crosby Saad, LLC, Mobile; and James E. Atchison of The Atchison Firm, Mobile, for appellant.

Edward P. Meyerson, Susan S. Wagner, and James H. White of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Birmingham, for appellees.

James G. Wyly III and Kyle S. Moran of Phelps Dunbar, LLP, Gulfport, Mississippi; and Richard O. Kingrea of Bonner Landreau Kingrea LLC, Foley, filed a brief on behalf of ATC Group Services, Inc.

PER CURIAM.

The Board of Water & Sewer Commissioners of the City of Mobile ("the Board") appeals from a summary judgment in favor of Bill Harbert Construction Company ("Harbert") and Harbert's surety, Federal Insurance Company ("Federal"). The summary judgment, which the trial court certified as final under Rule 54(b), Ala. R. Civ. P., adjudicated claims made by the Board arising out of Harbert's performance of two construction projects for the Board, as hereinafter discussed.¹

I. Factual Background and Procedural History

In 1992, the Board retained BCM Converse, Inc. ("BCM"),² to perform engineering and related consultation services for two projects associated with the Board's Clifton C. Williams Wastewater Treatment Plant. One project ("Project 15") involved in part, the construction of a large reactor basin known as reactor basin # 2.³ The other project ("Project 16") involved modifications and improvements to a sludge-treatment facility. BCM prepared the plans and specifications for the projects, and the Board then requested bids for the construction of the projects.

Harbert bid upon and was awarded the construction contracts for both Project 15 ("Contract 15") and Project 16 ("Contract 16"). Pursuant to the contracts, Harbert agreed to complete the respective projects in accordance with the plans and specifications prepared by BCM and in accordance with the Board's "Standard Specifications for Water Mains, Sanitary Sewers and Sewage Pumping Stations" ("the standard specifications"). The price for performing the work under Contract 15 was approximately $11,106,963, and the price for performing the work under Contract 16 was approximately $1,298,125. Taking into account extensions granted by the Board, the work under Contract 15 was required to be completed on or before December 26, 1996, and the work under Contact 16 was required to be completed on or before May 2, 1996.⁴ Federal agreed to act as Harbert's surety for both contracts, and Harbert and Federal executed and delivered surety bond documents in favor of the Board for each project.

The primary issue in the present appeal concerns whether the Board's terminations of Contract 15 and Contract 16 were proper and the effect of those terminations on the Board's claims against Harbert that were adjudicated by the summary judgment.

As a preliminary matter, we note that the standard specifications describe BCM's role in the projects, including the following:

"5.01 AUTHORITY OF THE ENGINEER:

"To prevent misunderstandings, disputes, and litigation, [BCM] shall decide any and all questions which arise concerning the quality and acceptability of materials furnished and work performed, the rate of progress of the Work, interpretation of the Plans and Specifications, and the acceptable fulfillment of the Contract on the part of [Harbert]. [BCM] will determine the amount, quantity, classification, and quality of the several kinds of work performed and materials furnished which are to be paid for under the Contract and [its] decision and estimate shall be conclusive and binding on both parties thereto and such decision and estimate of [BCM], in case any questions arise, shall be a condition precedent to the right of [Harbert] to receive any money due [it] under the contract. Explanations concerning the meaning of the Plans and Specifications and Contract, all directions necessary to complete or make definite the Plans, Special Provisions, Specifications or Contract and to give them due effect will be given by [BCM] and [its] findings shall be final and binding on both parties hereto. [BCM] shall have authority to enforce and make effective decisions and orders as apply to conformance with the Contract. [It] shall decide disputes and mutual rights between Contractors."

The standard specifications further provided, however:

"7.16 NO WAIVER OF LEGAL RIGHTS:

"The [Board] or [BCM] shall not be precluded or stopped by any measurement, estimate, or certificate made or given by either of them before or after the completion and acceptance of the Work and payment therefor, pursuant to any measurement, estimate, or certificate, from showing the true and correct amount and character of the Work performed and materials furnished by [Harbert]; or from showing at any time that any such measurement, estimate, or certificate is untrue or incorrectly made in any particular; or from showing at any time that the Work or materials, or any part thereof, do not conform in fact to the Contract. [BCM] shall have the right to reject the whole or any part of the aforesaid work or materials should the said measurements, estimate, or payment be found, or be known, to be inconsistent with the terms of the Contract, or otherwise improperly given; and the [Board] shall not be precluded from demanding and recovering from [Harbert] and [Federal] such damages as it may sustain by reason of [Harbert's] failure to comply with the terms of the Contract. Neither the acceptance by [BCM], or any representative or employee; nor any certificate by [BCM] for payment of money; nor any payment for nor acceptance of the whole of any part of the Work by the [Board], or [BCM]; nor any extension of time; nor any possession taken by the [Board] or its employees, shall operate as a waiver of any portion of the Contract or of any power herein reserved by the [Board] or of any right to damages herein provided, nor shall any breach of the Contract be held to be a waiver of any other or subsequent breach."

We also note that subsection 8.11 of the standard specifications, entitled "Default of Contract," provided for notices of default and termination. Subsection 8.11 states:

"If [Harbert] ... fails to perform the work with sufficient workmen, equipment or materials to insure its prompt completion, or performs the Work unsuitably, or neglects or refuses to remove materials or perform anew such work as shall be rejected as defective and unsuitable, or discontinues prosecution of the Work, or from any other cause whatsoever does not carry the Work in an acceptable manner, ... the [Board] or [its] representative may give notice in writing by registered mail to [Harbert] and [Federal] of such delay, neglect, or default. If within 10 days after such notice [Harbert] does not proceed to remedy to the satisfaction of the [Board] the fault specified in said notice, or [Federal] does not proceed to take over the Work for completion, the [Board] shall have full power and authority, without impairing the obligation of the Contract or the Contract Bonds, to take over the completion of the Work; ... to enter into agreements with others for the completion of the Contract according to the terms and provisions thereof; or to use such other methods as in its opinion may be required for the completion of the Contract. [Harbert] and [Federal] shall be liable for all costs and expenses incurred by the [Board] in completing the Work, and also for the liquidated damages in conformity with the terms of the Contract."

A. Further Factual Background as to Project 15

1. The Combiflex System

Contract 15 required that reactor basin # 2 be constructed to satisfy certain pressure tests. To help maintain pressure in the reactor basin, the plans and specifications for Project 15 required the use of the Sikadur-Combiflex System ("the Combiflex system"), manufactured by Sika Corporation ("Sika"). The Combiflex system consisted of strips of foam "glued or welded" over seams that existed at joints between the concrete slabs and T-sections that were used to construct the reactor basin.

After Harbert entered into Contract 15, it entered into a subcontract with Spiderman's Professional Services, Inc. ("Spiderman"), pursuant to which Spiderman agreed to install the Combiflex system on reactor basin #2.⁵ Spiderman purchased the Combiflex system from a supplier. In October 1996, after Harbert had constructed reactor basin # 2, Spiderman completed the installation of the Combiflex system, allegedly in accordance with the plans and specifications for Contract 15 and in accordance with on-site directions of a representative from Sika.⁶

In October 1996, both Sika and Spiderman issued their respective warranties as to any defects in material and or workmanship associated with the Combiflex system. Subsection 7.14 of the standard specifications provided that Harbert "shall accept final responsibility for completion and final acceptance of the overall Project including work done by subcontractors and material and equipment provided by vendors and suppliers."

After Spiderman installed the Combiflex system, construction continued on the rest of Project 15. Disputes arose between Harbert and some of its subcontractors, on the one hand, and BCM, on the other, as to certain requirements under Contract 15, including whether the plans and specifications called for the installation of certain "interlock controls." Harbert requested that BCM approve a change order for the interlock controls. During the dispute over the interlock-control change order, BCM requested that Harbert provide the Board with an updated schedule for completing Project 15, particularly when it became apparent that Project 15 would not be completed by the scheduled completion date.

On April 10, 1997, Harbert sent a letter to Joseph N. Asarisi,...