Centex-Rooney Const. Co., Inc. v. Martin County

• Decision Date: 31 December 1997
• Docket Number: CENTEX-ROONEY,No. 96-2537,96-2537
• Citation: 706 So.2d 20
• Parties: 23 Fla. L. Weekly D94 CONSTRUCTION CO., INC., Seaboard Surety Company, St. Paul Fire and Marine Insurance Company, and The American Insurance Company, Appellants/Cross-Appellees, v. MARTIN COUNTY, Florida, Appellee/Cross-Appellant.
• Court: Florida District Court of Appeals

Page 20

706 So.2d 20

23 Fla. L. Weekly D94

CENTEX-ROONEY CONSTRUCTION CO., INC., Seaboard Surety Company, St. Paul Fire and Marine Insurance Company, and The American Insurance Company, Appellants/Cross-Appellees, v. MARTIN COUNTY, Florida, Appellee/Cross-Appellant.

No. 96-2537.

District Court of Appeal of Florida Fourth District.

Dec. 31, 1997.

Rehearing,

Rehearing En Banc and Certification of Conflict Denied March 11, 1998.

John E. Beranek of McFarlane Ausley Ferguson & McMullen, Tallahassee, and Michael E. Jaffe, David T. Dekker, and Bryan J. Sinclair of Arent Fox Kintner Plotkin & Kahn, Washington, DC, for Appellant/Cross-Appellee Centex-Rooney Construction Co., Inc.

James E. Glass, Sara Joanne Greer, and Andre Zamorano of James E. Glass Associates, Miami, for Appellants/Cross-Appellees Seaboard Surety Company, St. Paul Fire and Marine Insurance Company, and The American Insurance Company.

Daniel S. Pearson, Leslie K. O'Neal and Steven R. Schooley of Holland & Knight LLP, Orlando, for Appellee/Cross-Appellant Martin County, Florida.

PER CURIAM.

This appeal arises from a final judgment of over $14 million against the construction manager of the Martin County Courthouse, resulting from construction defects revealed in a "sick building" case. The construction manager and its sureties appeal, claiming several evidentiary failings in the record. The appellee cross-appeals the trial court's set-off of the jury verdict by amounts paid by settling defendants. We affirm on all issues.

Martin County ("County") commenced plans to construct its courthouse and constitutional office building in 1985. The project architect completed the original plans and specifications for these buildings in April of 1987. Several months later, appellant Centex-Rooney Construction, Inc. ("Centex") entered into a construction management agreement with the County to serve as the construction manager for the entire project. Centex and the other appellants, Seaboard Surety Company, St. Paul Fire & Marine Insurance Company, and the American Insurance Company (collectively "the Sureties"), jointly issued a performance bond and a payment bond to the County, jointly and severally binding themselves to ensure the proper performance of the construction management agreement. Centex also assumed complete oversight and control of the project, including responsibility for the selection of all subcontractors as well as the supervision, coordination, management, and inspection of their work.

Centex retained several trade contractors to perform various aspects of the construction, and the courthouse complex was certified substantially complete on December 12, 1988. Following its occupation of the courthouse and office building in early 1989, the County made several complaints to Centex about window and exterior wall leaks in these buildings, mold growth and excessive humidity. Centex's own employees acknowledged and documented water infiltration through the exterior synthetic hardcoat systems ("EIFS system"), as a result of defective installation, which led to leaks and resultant mold growth in the buildings. An investigation also revealed several problems with the buildings' heating, ventilation and air conditioning ("HVAC") systems. In addition, the County received several complaints of health problems from the buildings' occupants and visitors, and approximately twenty-five percent of the occupants evacuated the buildings before December of 1992. Concerned with the health issues, the County retained an environmental firm to perform tests to identify the potential causes of the indoor air quality problems and engaged an engineering consultant to conduct a complete analysis of their HVAC systems. Although the County took several measures to improve the buildings' air quality and repair the leaks, the humidity problems remained unresolved.

Dr. Hodgson, one of the County's retained experts specializing in indoor air quality, conducted tests in conjunction with a pulmonary physician and concluded that several of the buildings' occupants had signs and symptoms consistent with work-related asthma. In September of 1992, representatives of the County, the constitutional officers, and the building occupants formed a courthouse advisory committee for the purpose of investigating the occupants' concerns. The following month, the County filed suit against several defendants, including Centex, the Sureties, the project architect, and the concrete and masonry construction company, for breach of contract and negligence, alleging improper design and construction. ¹

Because health complaints continued, the County retained Dr. Morey, another expert in indoor air quality, for a second opinion on the courthouse's and office building's indoor air quality issues. The results of Dr. Morey's air and bulk sample testing in the buildings indicated a significant presence of two highly unusual and toxigenic molds. He reported the presence of these molds to the advisory committee and recommended that the County obtain a medical opinion to advise the building's occupants about the potential risks associated with the molds. When Dr. Morey's follow-up testing revealed the same results, he advised the County to remove the moldy ceiling tiles, wallboards, carpet, and other moldy material from the buildings, using hazardous waste disposal techniques.

On December 8, 1992, on its own initiative, the advisory committee voted in favor of evacuating the courthouse and office building. The committee relied upon information obtained from Dr. Hodgson and Dr. Morey in making its decision but did not receive any specific directive to evacuate from them. The committee members did not believe that they could, in good faith and good conscience, ask the County's employees, the litigants, the attorneys, and the general public to enter these buildings under the existing conditions. This evacuation required the relocation of all County employees from these buildings to remote work sites. The County hired a coordinator for the remediation of the buildings, an engineering firm to advise on building repair, and an environmental firm to assist with removal of the molds.

The County subsequently engaged a remediation firm and instructed it initially to remove dry wall and outer coverings in only specified contaminated areas of the courthouse and office building. However, as the rough walls were exposed, there was more visible mold and water damage than previously anticipated, requiring extensive demolition. Sixty to sixty-five percent of the exterior walls had visible mold on them. During this procedure, the County became aware of a multitude of hidden and dangerous structural and electrical defects, ² which substantially expanded the scope of the remediation process and increased the cost for redesign, reconstruction, and relocation.

At the conclusion of the trial, the jury returned a verdict in the amount of $11,550,000 against Centex and the Sureties, which the court reduced by $2,750,000, representing the amount which the County had received in pretrial settlements. The court subsequently entered an amended final judgment for $14,211,156, comprised of $8,800,000 in damages, plus $5,411,156 in prejudgment interest calculated from December 12, 1988 through June 18, 1996. Centex and the Sureties appeal this final judgment.

The thrust of the County's cause of action against Centex for breach of contract was that Centex failed to properly supervise the construction, resulting in shoddy workmanship and extensive damage. We find that the County presented sufficient evidence to meet its burden of proving that Centex's breach of its contractual responsibilities was a substantial factor in causing the County's extensive damages. See Tuttle/White Constructors, Inc. v. Montgomery Elevator Co., 385 So.2d 98, 100 (Fla. 5th DCA 1980) (citing 5 Corbin, Corbin on Contracts § 999, at 24-25 (1964)). First, it proved that Centex's construction defects caused moisture problems in the buildings, resulting in extensive mold growth. Centex's own employees acknowledged that its subcontractors' defective installation of the EIFS system and windows led to extensive water infiltration and resultant mold growth. Second, the County established through expert testimony that, because of this moisture, the buildings were infested with two highly unusual toxic molds. Third, several experts attested to the accepted scientific principle linking exposure to these two molds with health hazards. Fourth, the County established that the purpose of its ensuing remediation process was to remove the existing mold and prevent new mold growth by finding and correcting exterior wall and window leaks and other causes of excessive moisture and humidity. It was during this process that the County became aware of a myriad of previously unknown and serious structural and electrical defects, several of which contributed to the water infiltration and resulting mold infestation. Finally, the County demonstrated that these defects, caused by Centex's subcontractors, expanded the scope of the remediation process, thereby justifying the increased costs for redesign, repair, reconstruction, and relocation. Based on the foregoing, we find that the County established Centex's liability by proving that its breach of the construction management agreement was a substantial factor in causing the County's significant damages.

Centex's claim that the County was required to prove that the construction defects caused an actual health hazard misses the mark. It places great importance on the lack of proof of an actual health threat to justify an evacuation of the buildings. As we understand this position, if the County had not evacuated, then it would not have stripped down the walls which revealed the serious construction defects in the buildings. The County, however, could have called for the evacuation of the buildings just so that it could have...