Bolton Corp. v. T.A. Loving Co.

• Decision Date: 05 July 1989
• Docket Number: No. 8810SC1292,8810SC1292
• Citation: 94 N.C.App. 392,380 S.E.2d 796
• Court: North Carolina Court of Appeals
• Parties: BOLTON CORPORATION, Plaintiff, v. T.A. LOVING COMPANY, Defendant. William E. BOLTON, III, Plaintiff, v. T.A. LOVING COMPANY, and Bolton Corporation, Defendants.

Page 796

380 S.E.2d 796

94 N.C.App. 392

BOLTON CORPORATION, Plaintiff, v. T.A. LOVING COMPANY, Defendant.

William E. BOLTON, III, Plaintiff, v. T.A. LOVING COMPANY, and Bolton Corporation, Defendants.

No. 8810SC1292.

Court of Appeals of North Carolina.

July 5, 1989.

Graham & James by J. Jerome Hartzell and Mark Anderson Finkelstein, Raleigh, for plaintiffs-appellants and plaintiffs-appellees.

Poyner & Spruill by David W. Long, Susan K. Nichols and David M. Barnes, Raleigh, for defendant-appellant and defendant-appellee.

ARNOLD, Judge.

This action presents the following issues to this Court: (1) Was there sufficient evidence of negligence to preclude defendant's motion for directed verdict on that claim? (2) Is the contract provision which identifies Loving as project expediter valid? (3) Is the architect's allocation of responsibility for delay final, absent bad faith? (4) What theory of damages, and what evidence of damages may be presented? (5) When the State granted a change order for extension of time to Loving, what effect, if any, did that have on Bolton's claim against Loving for "undue delay"? (6) Was it error to allow summary judgment for defendant on plaintiff's claims for fraud, and unfair and deceptive trade practices?

In large public construction projects many factors may combine to prevent timely completion:

[T]he complexity of design and quality construction which may be required, the myriad of necessary reviews and approvals, the number of changes required throughout the design/construction cycle, and the possibility of one or more of the contractors becoming delayed in performance.... Clearly, the necessity for effective scheduling, supervision, and coordination is at the heart of the phased design and construction method; and without it, the result may be akin to [a] "battlefield"....

Conner, Construction and Management Services 46 Law & Contemp.Prob. 5, 14 (1983).

N.C.G.S. § 143-128 requires that when a public building project's expected costs exceed $50,000.00 "separate specifications must be prepared, and separate bids must be received, and separate contracts must be awarded for each of four branches of work[:]" heating, ventilating and air conditioning (HVAC); plumbing and gas fittings; electrical wiring and installation; and general work not included in the first three branches. A.F. Bell, Construction Law North Carolina Bar Foundation IV-1 (Institute of Government 1988). The rationale in favor of multiple-prime contracts has been stated:

While there can be additional bidding expenses, proponents of separate contracts also see cost advantages. Breaking down the project into specialty segments generates more bidders and more competition. Finally, some owners believe that they can reduce their costs by performing less expensively and at least as efficiently as the prime contractor. The latter earns part of her compensation for selection, policing, and coordination of the specialty trades.

J. Sweet, Sweet On Construction Industry Contracts § 19.2 at 372 (1987).

Bolton assigns error to the trial court's 16 February 1988 order granting a directed verdict to Loving on Bolton's negligence claim. In its defense, Loving mistakenly relies on N.C. Ports Authority v. Roofing Co., 294 N.C. 73, 240 S.E.2d 345 (1978), which teaches that a breach of contract does not ordinarily give rise to a tort action between the parties to a contract. Both parties miss an essential point, however--Bolton's cause of action is statutory:

N.C.G.S. § 143-128. Separate specifications for building contracts; responsible contractors.

* * * * * *

Each separate contractor shall be directly liable to the State of North Carolina, or to the county or municipality, and to the other separate contractors for the full performance of all duties and obligations due respectively under the terms of the separate contracts and in accordance with the plans and specifications which shall specifically set forth the duties and obligations of each separate contractor.

See, Bell at IV-16. In compliance with the statute the contract states:

Art. 12--Protection of Work, Property and the Public

The Contractors shall be jointly responsible for the entire site and the building or construction of the same and provide all the necessary protections, as required by the Owner or Engineer or Architect, and by laws or ordinances governing such conditions. They shall be responsible for any damage to the Owner's property, or of that of others on the job, by them, their men, or their sub-contractors, and shall make good such damages.

Art. 14--Construction Supervision

* * * * * *

All Contractors shall be required to cooperate and consult with each other during the construction of this project. Each Contractor shall lay out and execute his work so as to cause the least delay to other Contractors. Each Contractor shall be held responsible for any damage to other Contractors' work, and each Contractor shall be held financially responsible for undue delay caused by him to other Contractors on the project.

The parties to this suit did not contract one with the other, they are not promisee and promisor. Rather, each contracted with the owner, and in that contract each affirmed its statutory duty to be liable to the other for damage to the other's property or work. Because the parties are not promisee and promisor they are not bound by the limitations of Ports Authority.

We interpret N.C.G.S. § 143-128 to mean that a prime contractor may be sued by another prime contractor working on a construction project for economic loss foreseeably resulting from the first prime contractor's failure to fully perform "all duties and obligations due respectively under the terms of the separate contracts."

A directed verdict in favor of Loving on the negligence claim was correct; however, Bolton does have a claim pursuant to the statute. On retrial, Bolton must provide sufficient evidence to support a cause of action under N.C.G.S. § 143-128.

To identify the extent of Loving's potential liability to Bolton it is necessary to understand what Loving's "duties and obligations" were under the terms of its separate contract. N.C.G.S. § 143-128. On appeal, both parties question the significance of the "project expediter" provisions of Loving's contract to Bolton's claim for delay damages. On cross-appeal Loving argues that the trial court erred in refusing to grant its motion for a directed verdict on the ground that Loving could not be liable for failure to expedite because it "cannot be held liable for breach of a duty to coordinate the work of contractors." We disagree.

Loving's argument ignores the terms of the contract which separate the duty to coordinate from the duty to expedite, and assigns the duty to coordinate to the architect. The duty to coordinate derives from the owner's duty to "furnish a work site," and to cooperate to allow the contractor to perform. Goldberg, The Owner's Duty to Coordinate Multi-Prime Construction Contractors, A Condition of Cooperation, 28 Emory L.J. 377, 380-81 (1979). At common law "one who contracts to render a performance or produce a result for which it is necessary to obtain the co-operation of third persons is not excused by the fact that they will not co-operate." 6 Corbin § 1340 (1962). However an owner's duty to cooperate and its ancillary duty to coordinate may be delegated in a contract. Broadway Maintenance Corporation v. Rutgers, 90 N.J. 253, 265, 447 A.2d 906, 912 (1982).

At Articles 14 and 31 of the contract in the instant case each prime contracts to cooperate with the other primes in the execution of the project. In addition, Loving specifically contracted to assume the "project control responsibility" of project expediter:

Article 14--Construction Supervision The Owner may designate a "Project Expediter" for State-owned projects involving two or more prime contractors....

It shall be the responsibility of the Project Expediter to schedule the work of all prime contractors; to maintain a progress schedule for all prime contractors for this project; and to notify the designer of any changes in the progress schedule.

By its terms the contract defines the project expediter as the entity which schedules the work of all primes and maintains the progress schedule. The project expediter is charged with using proper procedures to obtain information to evaluate the progress of the project. See Goldberg at 385-87. In Article 31 the contract states that the responsibility to coordinate work schedules remains with the engineer or architect. Article 14 contemplates that the project expediter's scheduling of the project will assist the architect, who has the power to sanction contractors who do not keep up with their work. See Conner at 14.

As General Contractor, Loving was responsible for "General work relating to the erection [and] construction" of the building not included in the three other prime contracts. N.C.G.S. § 143-128. As project expediter Loving's work was to facilitate and assist in the smooth and efficient production of the building. By statute Bolton may sue Loving for breach of these contract duties.

To prove Loving's liability Bolton attempted to establish that the architect's allocation of responsibility for delay was final, absent bad faith. By its order dated 2 November 1987, the trial judge denied Bolton's motion for partial summary judgment which, among other claims, stated that "[t]he architect was designated by the contract to rule on requests for extensions of time." Bolton's motion was denied, and it is not appealable. "Improper denial of a motion for summary judgment is not reversible error when the case has proceeded to trial and has been determined on the merits by the trier of facts, either judge or jury." Harris v. Walden, 314 N.C. 284, 286, 333 S.E.2d 254, 256 (1985).

At trial, Bolton's attempt to introduce the project architect's testimony concerning responsibility for...