City of Westminster v. Centric-Jones, No. 01CA0502

Citation100 P.3d 472
Case DateSeptember 11, 2003
CourtCourt of Appeals of Colorado

100 P.3d 472

CITY OF WESTMINSTER, a Colorado municipal corporation, Plaintiff-Appellant,
CENTRIC-JONES CONSTRUCTORS, a Colorado corporation; Centric-Jones Co., a Colorado corporation; Nucon Construction Corp., a corporation; J A Jones Construction Co., a corporation; Jones Group, Inc., a corporation; Travelers Casualty & Surety Co., a corporation; Aetna Casualty & Surety Co., a corporation; and Bates Engineering, Inc., a Colorado corporation, Defendants-Appellees, and
Centric-Jones Co., a Colorado limited partnership, Third-Party-Plaintiff and Cross-Appellant,
Fischbach Masonry, Inc., a Colorado corporation, and Reliance Insurance Company, a foreign corporation, Third-Party-Defendant and Cross-Appellee

Nos. 01CA0502, 02CA0602.

Colorado Court of Appeals, Div. II.

September 11, 2003.

Certiorari Granted November 8, 2004.

100 P.3d 476
Hall & Evans L.L.C., Jeffery B. Stalder, Alan Epstein, Denver, Colorado; Martin R. McCullough, City Attorney, Jeffrey M. Betz, Assistant City Attorney, Westminster, Colorado, for Plaintiff-Appellant

Oviatt, Clark & Gross, L.L.P., Thomas C. Clark, Wheat Ridge, Colorado; Spriggs & Hollingsworth, Douglas L. Patin, Peter J. Skalaban, Jr., Washington, DC, for Defendants-Appellees Centric-Jones Constructors, Centric-Jones Co., Nucon Construction Corp., J A Jones Construction Co., and Jones Group, Inc. and Third-Party-Plaintiff and Cross-Appellant.

Pendleton Friedberg Wilson & Hennessey P.C., L. Jay Labe, Michelle M. Merz, Denver, Colorado, for Defendant-Appellee Travelers Casualty & Surety Co. and Aetna Casualty & Surety Co.

White & Steele, P.C., Robert R. Carlson, James M. Meseck, Denver, Colorado, for Defendant-Appellee Bates Engineering, Inc.

Levy Morse & Wheeler, P.C., Marc R. Levy, Ivan A. Sarkissian, Englewood, Colorado, for Third-Party-Defendant and Cross-Appellee Fischbach Masonry, Inc.

Wolf & Slatkin, P.C., Albert B. Wolf, Denver, Colorado, for Third-Party-Defendant and Cross-Appellee Reliance Insurance Company.

Opinion by Judge WEBB.

In this construction dispute, plaintiff, the City of Westminster (City), appeals the judgments entered against it and in favor of defendants, Centric-Jones Constructors and its affiliates (collectively Jones); Travelers Casualty & Surety Company; Aetna Casualty & Surety Company; and Bates Engineering, Inc. Jones cross-appeals the judgments entered against it and in favor of third-party defendants, Fischbach Masonry, Inc. and Reliance Insurance Company, only to the extent of further proceedings between the City and Jones. We affirm.

The City, as owner, and Jones, as prime contractor, entered into a contract to expand the City's water treatment plant. Travelers and Aetna (collectively Travelers) were sureties to Jones. Fischbach was a subcontractor to Jones and Reliance was its surety. Bates and other engineering firms performed all design work for the City.

The project involved design and construction of three structures, two of which are at the center of this appeal: a five-million-gallon, below ground concrete tank to hold treated water (clearwell); and a high service pumping station to move the treated water into the City's distribution system (HSPS).

In 1995, Jones began construction using designs and specifications prepared by the engineering firms. Work continued beyond the scheduled completion date. Disagreements among the City, Jones, and the engineering firms arose over water leakage from the clearwell into the underlying fill, wetting and destabilization of bedrock below the fill, and resulting movement of the clearwell. Other disagreements arose over structural problems in the walls and foundation of the nearby HSPS.

In late 1997, with most of the work done, the City terminated the contract and asserted a claim against Travelers under the performance bond. Travelers denied the claim on the basis of improper contract termination.

The City then hired new engineers. They recommended that the City demolish and rebuild the clearwell using a significantly different foundation design, demolish and rebuild the masonry walls of the HSPS to new specifications, and change the HSPS foundation. The City did so, although expenses substantially exceeded the original construction costs and the new specifications added features to both the clearwell and the HSPS.

The City sued Jones, Bates, and the other initial engineering firms for breach of contract and negligence, claiming as damages

100 P.3d 477
the entire cost of removing, redesigning, and rebuilding the clearwell; redesigning and rebuilding the HSPS walls; and modifying the HSPS foundation. The City also sued Travelers for breach of the performance bond and bad faith investigation of the City's claim

Jones counterclaimed for lost profits from unfinished work based on wrongful termination of the contract and for nonpayment for work performed to the termination date. Jones also filed a third-party complaint against Fischbach and Reliance seeking indemnification for damages arising from work done by Fischbach on the HSPS walls.

The court entered summary judgments dismissing the claims against Bates, and in favor of Jones on the City's negligence claim. The other engineering firms then settled with the City.

At trial, after the City rested its case-in-chief, the court directed verdicts for all defendants and third-party defendants. The court concluded that the City had failed to present a reasonable basis on which the jury could apportion damages based on either the benefit of the City's bargain with Jones or Jones' breaches.

At the conclusion of its deliberations on Jones' counterclaims, the jury did not complete the verdict form on the wrongful termination counterclaim. Instead, it completed the verdict form on the other counterclaim and awarded Jones payment for work performed.

The trial court awarded substantial costs to all defendants and third-party defendants. A separate appeal and a cross-appeal of the cost awards were consolidated with this appeal.

I. Directed Verdict for Jones

The City first argues that the trial court erred in directing a verdict based on its failure to prove damages. We disagree.

We review a directed verdict de novo. Campbell v. Burt Toyota-Diahatsu, Inc., 983 P.2d 95 (Colo.App.1998).

A motion for directed verdict should not be granted unless the evidence compels the conclusion that reasonable jurors could not disagree and that no evidence or inference has been received at trial upon which a verdict against the moving party could be sustained. If a trial judge concludes that a reasonable jury could return a verdict in the plaintiff's favor, a defendant's directed verdict motion cannot be granted. The trial judge must view the evidence in a light most favorable to the nonmoving party. Fair v. Red Lion Inn, 943 P.2d 431 (Colo. 1997).

A party attempting to recover for breach of contract must prove: (1) the existence of a contract; (2) performance by the plaintiff or some justification for nonperformance; (3) failure to perform the contract by the defendant; and (4) resulting damages. Western Distrib. Co. v. Diodosio, 841 P.2d 1053 (Colo.1992).

Here, the parties dispute only the sufficiency of the City's damages evidence, and we examine separately the claims for actual damages and for liquidated delay damages.

A. Actual Damages

The trial court concluded that the City failed to provide any basis on which the jury could apportion damages, either between the benefit of the City's bargain with Jones and additional benefit to the City from rebuilding the structures to new specifications, or between particular breaches by Jones and design errors of others for which Jones was not responsible. We agree.

To survive a directed verdict motion challenging proof of actual damages, the plaintiff in a breach of contract action must have presented evidence of both the existence and the cause of damages. See Roberts v. Adams, 47 P.3d 690 (Colo.App.2001). The plaintiff must also provide the factfinder with a reasonable basis for calculating actual damages in accordance with the relevant measure. Husband v. Colo. Mountain Cellars, Inc., 867 P.2d 57 (Colo.App.1993). However, proof of damages with mathematical certainty is not required. Tull v. Gundersons, Inc., 709 P.2d 940 (Colo.1985).

The general measure of damages for breach of a construction contract is that

100 P.3d 478
amount required to place the owner "in the same position he would have occupied had the breach not occurred." Pomeranz v. McDonald's Corp., 843 P.2d 1378, 1381 (Colo. 1993); see also McDonald's Corp. v. Brentwood Center, Ltd., 942 P.2d 1308, 1310 (Colo. App.1997). This rule protects defendants against speculative awards that would otherwise provide plaintiffs with an economic windfall. See Dep't of Health v. Donahue, 690 P.2d 243 (Colo.1984)

Where only rebuilding a defective building will provide an injured party with the benefit of its bargain, costs to rebuild rather than repair may be a reasonable measure of damages. Gold Rush Invs., Inc. v. G.E. Johnson Constr. Co., 807 P.2d 1169 (Colo.App.1991). Costs of rebuilding a defective structure to new specifications may also be reasonable, Hendrie v. Bd. of County Comm'rs, 153 Colo. 432, 387 P.2d 266 (1963), even if they exceed the costs to repair defects. Worthen Bank & Trust Co. v. Silvercool Serv. Co., 687 P.2d 464 (Colo.App.1984).

Nevertheless, the reasonableness of rebuilding a defective structure, even to new specifications and at increased cost, does not permit a plaintiff to recover more than the benefit of its bargain. See Hendrie v. Bd. of County Comm'rs, supra (engineering costs to redesign swimming pool and costs to build different foundation system deducted from award of costs to rebuild pool to new design). Thus, where the plaintiff's own evidence of damages includes advantage beyond the benefit of the bargain, the plaintiff must present more than an unitemized total cost of replacement. See Roberts v. Adams,...

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