EC Ernst, Inc. v. General Motors Corporation

• Decision Date: 24 July 1973
• Docket Number: No. 72-2201.,72-2201.
• Citation: 482 F.2d 1047
• Parties: E. C. ERNST, INC., Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION and the Whiting-Turner Contracting Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

482 F.2d 1047 (1973)

E. C. ERNST, INC., Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION and the Whiting-Turner Contracting Company, Defendants-Appellees.

No. 72-2201.

United States Court of Appeals, Fifth Circuit.

July 24, 1973.

COPYRIGHT MATERIAL OMITTED

Glower W. Jones, Aubrey L. Coleman, Jr., Atlanta, Ga., for plaintiff-appellant.

R. Byron Attridge, Joseph B. Haynes, Atlanta, Ga., Ross L. Malone, Detroit, Mich., for Gen. Motors Corp.

Charles T. Lester, Jr., James P. Groton, Atlanta, Ga., for Whiting-Turner.

Before JOHN R. BROWN, Chief Judge, and WISDOM and AINSWORTH, Circuit Judges.

JOHN R. BROWN, Chief Judge:

The question is whether summary judgment should have been granted below against an electrical subcontractor¹ in an action seeking damages for breach of contract against the general contractor² and the owner.³ The trial court concluded that the action was barred because Plaintiff below had failed to comply with the notice provision in the contract under which it was suing.⁴ After carefully reviewing the record, under the usual standard, we have concluded that the court below erred in finding the nonexistence of any triable issue of fact and entering judgment for Defendants below as a matter of law. Dunnington v. First Atlantic National Bank of Daytona Beach, 5 Cir., 1952, 195 F.2d 1017.

Summary judgment as envisioned by F.R.Civ.P. Rule 56, 28 U.S.C. A. is a method of testing in advance of trial, not as formerly on bare contentions found in the legal jargon of pleadings, but on the intrinsic merits, whether there is in actuality a real basis for relief or defense. Bruce Construction Corp. v. United States, 5 Cir., 1957, 242 F.2d 873, 874. When a movant makes out a convincing showing that genuine issues of fact are lacking, it becomes incumbent on the adversary to adequately establish by receivable facts that a real, not formal, controversy exists. Stopping short of expressing any opinion as to how the trier should resolve the fact issue ultimately, we think Appellant has made the required showing and should have been allowed to go to trial.

Perspective into the posture of the parties in this dispute may be gained by briefly reciting the events preceding the filing of the suit. On April 18, 1967 Appellant entered into a contract with General Motors Corporation which required that it provide labor and materials to perform electrical work in the construction of the General Motors Lakewood New Final Process Building in Atlanta. The contract required that General Motors pay Appellant $356,950.00 therefor. Though the contract was negotiated and concluded between only Appellant and General Motors Corporation, it was generally understood between the parties that ultimately the contract would be assigned by General Motors to a general contractor such that Appellant would perform its contractual obligations as a subcontractor. In the contract General Motors specifically reserved the right to make such an assignment.⁵

Prior to the conclusion of Appellant's contract, General Motors, on April 6, 1967, had entered into a contract in the amount of $1,279,470.00 with Whiting-Turner Contracting Company for construction of the Lakewood New Final Process Building. The contract specifically provided that Whiting-Turner, as the general contractor for the project, would assume the contract covering the electrical work.⁶

In its contract with GM, it was expressly stated that Appellant would be able to (i) "start work immediately and proceed with the utmost dispatch and diligence" and (ii) "complete all work contemplated hereunder in accordance with the schedule set forth on page 1-E-11 of the Special Conditions." It was further declared that "time was to be of the essence."

Notwithstanding the urgency expressed in the contract, and through no fault of its own, Appellant was unable to begin work immediately. The project, initially scheduled to be fully completed in less than one year hence, was seriously delayed from the beginning by GM's rough grading contractor who was approximately six weeks behind schedule in site preparations. GM's Field Representative at the project site testified that the reasons for the delay, at least partially, were that the rough grading contractor had failed to follow instructions, failed to have sufficient men and equipment on the job, and failed to have adequate supervision on the job. Appellant was formally advised of this delay at a "contractors progress meeting" held on May 1, 1967.⁷ Immediately after this meeting Appellant protested its inability to begin work "without delay" by a letter addressed to Whiting-Turner.⁸

By the terms of Appellant's contract, the building was to be ready for GM's beneficial occupancy on or before December 1, 1967, with the entire project due to be completed on or before April 11, 1968. To assist in meeting these contract completion dates, Appellant's contract required that the Critical Path Method (CPM) be used to plan and schedule all phases of the project. The preparation and final submitted to GM of a CPM, which was the responsibility of Whiting-Turner, had not been accomplished as late as September 26, 1967. The result was that Ernst and others working on the project received written instructions in the form of progress meeting minutes and bar charts which reflected changing beneficial occupancy dates. The beneficial occupancy date finally achieved was not until late March or early April of 1968 with final completion of the project not occurring until September of 1968. On January 5, 1969, Appellant presented to GM a 180 page "claim booklet" seeking payments in the amount of $134,000.00 for purported delays and inefficiencies in completion of the project.

The suit below, initially filed in state court, alleged breach of an electrical construction contract in that Defendants delayed and disrupted Plaintiff's performance, thereby requiring Plaintiff to perform its contract over an extended period of time and in an inefficient and more costly manner. After removal, Defendants entered general denials and pled certain defenses which were to also provide the grounds for their motion for summary judgment which was made after discovery. On Defendant's motion for summary judgment the court held that the Plaintiff's entire cause of action as to both Defendants was barred by the Plaintiff's failure to strictly comply with the notice provisions contained in paragraph 52 of the contract, entitled "Procedure for Alleged Change in Cost — Contractor's Supervision."⁹ The court specifically found that the procedure contained in section (c-1) of paragraph 52 was directly applicable to claims such as Plaintiff's which sought "damage or loss because of any action or omission of the owner, or others engaged by the owner, during the performance of the work * * * " (note 9, supra).

Plaintiff's rejoinder below, and its contention here on appeal, is two-pronged. The first prong alleges that the provision of paragraph 52 which is applicable to its claims is section (a) which deals with increases in costs resulting from verbal instructions from the Purchasing Department of General Motors (see note 9, supra). Appellant contends that notice was not required because the increased costs resulted from written directives from Appellees. These written directives, it is contended, were in the form of minutes of progress meetings, letters and bar charts. Part (c) of paragraph 52, appellant maintains, only applies to extra work situations.

The trial judge, while agreeing with that the increased costs claimed by Appellant were not barred by part (a) of paragraph 52 as the continuing delay was confirmed in writing, found that part (c) of the paragraph was applicable to the claims and that compliance with its provisions was, as a result of part (d), a condition precedent to any recovery. After studying the provisions of the controverted contract and in view of the settled law in Georgia that the construction and legal effect of a written contract is for determination by the court, Goodwin, Inc. v. City of Lafayette, 5 Cir., 1969, 418 F.2d 698, we cannot conclude that the court's holding on this part of Appellant's argument was clearly erroneous.

The second prong of Appellant's argument upon appeal, however, alleges that it did in fact give notice to Appellees sufficient to satisfy paragraph 52(c-1) by a letter dated May 1, 1967.¹⁰

The trial court rejected this latter contention holding that the letter failed in several respects to comply with the strict terms of part (c-1) of paragraph 52. Specifically, the trial court held that the letter was inadequate notice under the contract because (i) it was not sent to the Architect-Engineer (Argonaut, a division of GM) and the Purchasing Department of GM as expressly required by the contract, and (ii) the letter did not contain the amount of the claim and all details in connection therewith as required expressly by the contract.¹¹ Appellant retorts here that, since its contract with General Motors (GM) envisioned from the beginning that the contract would be assigned from GM to the general contractor for the project (Whiting-Turner)¹² and GM's contract with the general contractor made such assignment mandatory,¹³ it was not thus unreasonable for Appellant to have understood that any letters regarding delays should be sent to Whiting-Turner. Furthermore, it is argued that, considering the ostensible, if not yet formalized,¹⁴ relationships between GM, Appellant and Whiting-Turner, Appellant's letter of May 1, 1967 to Whiting-Turner should have Turner should have served as notice to GM. Appellant asserts as supportive of this proposition the agenda transacted at the first project progress meeting held on May 1, 1967.¹⁵ It is argued that paragraph 25 of its contract¹⁶ made mandatory Appellant's attendance at these progress meetings and full compliance with the instructions promulgated therein.

In response to the lower court's...