CRS Sirrine, Inc. v. Dravo Corp.
| Decision Date | 16 June 1994 |
| Docket Number | A94A0893,Nos. A94A0892,s. A94A0892 |
| Citation | 213 Ga.App. 710,445 S.E.2d 782 |
| Court | Georgia Court of Appeals |
| Parties | CRS SIRRINE, INC. v. DRAVO CORPORATION et al. DRAVO CORPORATION et al. v. CRS SIRRINE, INC. |
Gleaton, Scofield, Egan & Jones, M. Michael Egan, Jr., Atlanta, Heiskell, Donelson, Bearman, Adams, Williams & Caldwell, Thomas O. Helton, Chattanooga, TN, for appellant.
Jones, Day, Reavis & Pogue, Gregory R. Hanthorn, John H. Williamson, Atlanta, for appellees.
Dravo Corporation (Dravo) and its wholly owned subsidiary, Weyher/Livsey Constructors, Inc. (Weyher/Livsey), entered into an agreement with CRS Sirrine, Inc. (Sirrine) to jointly pursue the contract for construction of a large, technically complex power plant for the United States Navy at the Norfolk Naval Shipyard in Portsmouth, Virginia. The agreement combined the parties' capabilities to design and construct the project. Although Weyher/Livsey had experience in constructing large power plants, it lacked the necessary expertise and experience to design the power plant and perform the engineering work on the project. Although Sirrine had expertise and experience in the design and engineering aspects of the power plant project, it lacked the capability to construct the power plant. Dravo was included in order to assure bonding capacity on the project.
As a summary of the intended project, the Navy prepared conceptual diagrams, drawings and initial performance specifications and a narrative about the power plant and required that potential bidders on the project first submit technical proposals explaining their qualifications and how they would design and construct the project. If the Navy accepted a potential bidder's technical proposal, then it became eligible to submit a bid on the project. The power plant was a design-build project in which fixed-price competitive bids were submitted on the basis of preliminary design and engineering done by the bidders and the detailed design and engineering work was done after the award of the contract on a fast track basis in conjunction with the construction of the project.
In a letter agreement, the parties agreed that Sirrine would take the lead in preparing and submitting the technical proposal and, if the technical proposal was accepted, Weyher/Livsey would assume primary responsibility for preparing and submitting the bid based on the technical proposal. Sirrine was responsible for supplying the technical information needed to prepare the bid. The agreement further provided that Sirrine, as design engineer, would not guaranty the accuracy of Weyher/Livsey estimates used in preparing the bid. Pursuant to their agreement, a technical proposal was submitted and accepted and a bid of over $100,000,000 was submitted to the Navy in the name of the Weyher/Livsey-Dravo-Sirrine Joint Venture. The joint venture was the low bidder and was awarded the contract. The parties subsequently signed a formal joint venture agreement setting forth their respective responsibilities in pursuing and performing the construction contract and executed a contract with the Navy to build the project.
The power plant cost substantially more to construct than the winning bid and Dravo and Weyher/Livsey incurred losses on the construction aspects of the project in excess of $30,000,000. Dravo and Weyher/Livsey brought suit against Sirrine alleging that breaches by Sirrine caused over $12,500,000 of the loss in added costs to construct the project. The action was tried before a judge. The trial court found that Sirrine breached contractual and fiduciary duties owed to Dravo and Weyher/Livsey under the joint venture agreement and entered judgment against Sirrine in the amount of $5,518,812.
The trial court's rulings on liability and damages are contained in the court's 24-page order and judgment setting forth its findings of fact and conclusions of law. In general, the court ruled that Sirrine breached contractual and fiduciary duties imposed upon it to provide sufficient, accurate information to Weyher/Livsey upon which to base the bid; to make reasonable efforts to design the project within budgeted quantities; to track quantities in its design, and to promptly notify Weyher/Livsey or Dravo that budgeted quantities would be exceeded.
The trial court considered evidence relating to the various types of damages that Weyher/Livsey and Dravo claimed were caused by Sirrine breaches.
The plaintiffs claimed that Sirrine breaches of duty caused increased quantities of construction materials needed to build the project over the amounts in the fixed-price bid, which was based on design and technical information provided by Sirrine. The court concluded that quantities of various materials increased dramatically over the bid quantities; that a part of the increase was attributable to bid errors made by Weyher/Livsey estimators, but that the majority of the increase was attributable to Sirrine breaches of its duties under the joint venture agreement.
The court considered evidence of the increased construction material quantities and noted that in compiling evidence of quantity increases over the bid amounts, the plaintiffs avoided claiming damages caused by Weyher/Livsey's own bid errors by retaining experts to re-estimate and re-bid portions of the project in order to establish the quantity amounts which should have been bid by Weyher/Livsey based on the information available at the time of the original bid. The re-estimated bid amounts were then compared to the quantity amounts in Sirrine's post-bid detailed released for construction drawings to determine the increase in material quantities. The court further noted that the evidence presented excluded any quantity increases resulting from field changes, purchasing errors, change orders, or other post-bid design changes required by the Navy. The trial court concluded that "[c]omparing the re-estimates to the released for construction drawings reveals that the Project grew from what reasonably could have been estimated by experienced estimators with engineering experience (as represented by the re-estimate) and what Sirrine designed into the job (as revealed by the released for construction drawings)."
In total, the court found the evidence showed quantity increases costing the plaintiffs $6,417,086 in additional materials and labor, none of which was attributable to bidding errors of Weyher/Livsey. The court further found We conclude this means the trial court found that in addition to Weyher/Livsey bid errors, which were eliminated from the $6,417,086 in damages claimed, post-bid actions by Weyher/Livsey or others were responsible for 40 percent of the claimed quantity growth damages and breaches of duty by Sirrine caused the remaining 60 percent of the claimed quantity growth damage in the amount of $3,850,252.
The trial court found the evidence showed the plaintiffs incurred costs of $671,202 for disruption and loss of labor productivity caused by quantity growth in the electrical and piping area, lack of prompt notice from Sirrine of such growth, and Sirrine's crowded piping design. The court found that, because of breaches of its contractual and fiduciary duties, Sirrine caused this disruption damage.
The trial court concluded that the end date of the project was delayed 91 days because of Sirrine's failure to give timely notice of quantity growth, Sirrine's late issue of released for construction drawings, and increased material quantities Sirrine designed to be installed into the project. Additionally, the court found another 102 day delay was caused by Sirrine design error. The plaintiff's costs attributable to the delays were $1,944,700 and the court concluded the evidence showed that breaches by Sirrine caused 80 percent of the costs associated with the delays in the amount of $1,555,760.
With respect to additional costs incurred for certain backcharges and Navy punchlist items, the trial court concluded Sirrine breaches caused 50 percent of the $1,442,535 in backcharges claimed (amounting to $721,267) and all of the punchlist items in the amount of $1,111,751.
The plaintiffs also claimed that due to Sirrine breaches they incurred additional costs for re-design ($489,845), software corrections ($430,000), and payments to obtain as-built drawings ($73,500), for a total cost of $993,345. The court concluded that Sirrine was "partially liable for these costs."
After totaling the amount of damages the court found were caused by Sirrine breaches in each claimed area, the trial court then reduced the total amount to account for unspecified risks assumed by Weyher/Livsey and determined that Sirrine breaches caused damage to Weyher/Livsey and Dravo in the total sum of $5,518,812.
In Case No. A94A0892, Sirrine appeals from the trial court's judgment. Dravo and Weyher/Livsey cross-appeal in Case No. A94A0893.
1. In its first enumeration of error, Sirrine claims the trial judge erred by imposing time limits on the time it had to present its case and cross-examine witnesses. This action was tried in a bench trial for seven weeks in the Complex Civil Litigation Division of the Fulton County Superior Court. The pre-trial order, over 500 pages in length, listed more than 2,500 documentary exhibits subject to being tendered at trial (over 1,000 by the plaintiffs and almost 1,500 by the defendant) and over 130 witnesses which the parties indicated they would or might call to testify (83 by the plaintiffs and 53 by the defendant). By defense estimates, millions of pages of documents were produced during extensive pre-trial discovery. Suffice it to say, ...
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