Essex Contracting, Inc. v. Jefferson County

• Citation: 277 S.W.3d 647
• Decision Date: 24 February 2009
• Docket Number: No. SC 89407.,SC 89407.
• Parties: ESSEX CONTRACTING, INC., and Federal Insurance Company, Appellants/Cross-Respondents, v. JEFFERSON COUNTY, Missouri, Respondent, Patrick J. Acheson, et al., Respondents, J.H. Berra Paving Co., Inc., and Boling Concrete Const., Inc., Respondents/Cross-Appellants.
• Court: United States State Supreme Court of Missouri

277 S.W.3d 647

ESSEX CONTRACTING, INC., and Federal Insurance Company, Appellants/Cross-Respondents, v. JEFFERSON COUNTY, Missouri, Respondent, Patrick J. Acheson, et al., Respondents, J.H. Berra Paving Co., Inc., and Boling Concrete Const., Inc., Respondents/Cross-Appellants.

No. SC 89407.

Supreme Court of Missouri, En Banc.

February 24, 2009.

Dana Hockensmith, Hockensmith Tatlow McKinnis Hammill, P.C., St. Louis, MO, for Appellants/Cross-Respondents.

Ted F. Frapolli, The Law Firm of Ted F. Frapolli, St. Louis, MO, for Respondents/Cross-Appellants Boling Concrete Const., Inc.

Pamela M. Triplett, Law Offices of Donald B. Balfour, Chesterfield, MO, for Respondents/Cross-Appellants J.H. Berra Paving Co., Inc.

Paul V. Rost, Emily Rushing Kelly, Ryan A. Moehlman, Cunningham, Vogel & Rost, St. Louis, MO, for Respondents Patrick J. Acheson, et al.

Dennis Kehm, Jr., Jefferson County Counselor, Hillsboro, MO, for Respondent Jefferson County, Missouri.

PER CURIAM.

Factual Background

Essex Contracting, Inc., was the developer of the Winter Valley subdivision in Jefferson County. Essex agreed to adhere to the county subdivision regulations, which required that a bond be posted or that the improvements be constructed before final plat approval. Essex sought approval before construction and, so, posted three separate bonds for each of the three phases of construction. The bonds totaled $3,598,249.79 and were provided by Federal Insurance Co. In the summer of 2000, the time for completing the streets was drawing near, but Essex had not yet completed the streets. In exchange for a one-year extension of the completion deadline, Essex agreed to a "Guarantee Under Subdivision Regulations" with Jefferson County. The Guarantee incorporated the previous bonds and bond obligations.

The Guarantee provided that the bonds were issued to ensure that "the construction, installation and completion of the required subdivision improvements in Winter Valley Subdivision" were "all in accordance with the Subdivision Regulations of Jefferson County" and that if Essex "abandon[ed] the Subdivision or fail[ed] to complete the improvements within one (1) year hence from the date of the COUNTY'S approval of this Guarantee Agreement," the county would complete the improvements and would gain control of the bond. Under the terms of the Guarantee, Essex was obligated to complete all repairs by July 26, 2001—one year from July 26, 2000, the date of the Guarantee.

The process for releasing the bonds is as follows. After a developer asserts that construction and any needed improvements are completed, the county inspects the property and makes a recommendation to the county commission as to whether to release the bond. The county commission then decides whether the improvements have been made. If the county determines that improvements have not been made, then the county refuses to release the bonds to the developer, and instead, takes control of the bonds to make the repairs itself.

The plat was approved initially, and construction began in 1995. There were three phases in the construction of the Winter Valley concrete streets: 1) Essex was responsible for clearing and grading the land comprising the subdivision; 2) after the land had been cleared, Essex leveled the dirt, a process referred to as preparing and compacting the subgrade (the soil beneath the streets) for the streets; and 3) Boling Concrete and Berra Paving contracted with Essex to pour the streets in a slip-form paving technique in which the concrete is poured in a continuous fashion and control joints are added later, creating the look of separate slabs of pavement.

The process was completed in 1998. After construction, the concrete in some of the roads began to split and crack, and Essex replaced some of the damaged street sections, with Boling and Berra also making some of the repairs.

The repairs revealed that there were problems with the thickness of some of the concrete poured. The subdivision regulations mandate certain thickness levels in the concrete of streets, with the requirement that deficiencies of greater than 0.3 inches necessitate replacing the slabs. In 2000, because of concerns about the thickness of the pavement, the county ordered Essex to test the thickness of the concrete using core sample testing. Testing revealed that in several places, the concrete was thin by more than 0.3 of an inch, in violation of the subdivision regulations.

Essex had Boling and Berra pay for and replace some of the deficient slabs. The county contended that the testing was unsatisfactory, however, and in 2005, court-ordered core testing revealed that there were an additional 218 slabs of concrete deficient in thickness by more than 0.3 inches.

After making repairs following the court-ordered testing, Essex sought release of the bond to Essex, asserting that it fully had completed the necessary improvements and developments. The county commission refused to release the bonds and provided Essex with a list of deficiencies in the completion of the construction.

Procedural History

After another request for release, denial and receipt of a deficiency list, Essex sought declaratory judgment on May 15, 2001, seeking full release of the bonds, alleging that it fully had completed the improvements. On July 12, 2001, the county conceded that some of the improvements had been made and released part of the bond. After the partial release, $1,015,837.79 of the bond remained unreleased. Essex maintained its suit for full release of the bond, and the county counter-sued Essex, adding Federal as a third-party defendant for its failure to disburse the bonds to the county. Federal cross-claimed against the county for a declaratory judgment, stating either that the bonds were void or that the improvements were complete.

Members of the Winter Valley Homeowners' Association were granted leave to intervene and filed a petition for injunctive relief, declaratory relief and damages against Essex, alleging various counts of negligence, breach of contract and zoning enforcement.

Essex filed third-party petitions against Boling and Berra for indemnity, adding claims for breach of contract.

At trial, one of the county's expert witnesses, Daniel Barczykowski, a licensed geotechnical engineer, testified that typical subdivision streets are designed to have a life of 20 to 30 years. Barczykowski testified there are four factors that impact the quality and longevity of a street: 1) design life; 2) type and volume of traffic over the design life period; 3) the quality of the concrete; and 4) the condition of the subgrade and soil support. Barczykowski identified four problems within the subdivision: 1) settlement of fill; 2) poor subgrade support; 3) shrinkage of concrete after curing and 4) steep grade. Barczykowski identified only settlement and poor subgrade support in connection with slabs necessitating replacement.

Evaluating the potential causes of these problems, Barczykowski testified that there were no failures in design; that the volume of traffic was no more than the streets had been designed to withstand, and therefore, could not be responsible for the cracking and failures; and that the quality of the concrete was sufficient to prevent premature failing. By elimination, Barczykowski determined that poor subgrade condition and support was responsible for the streets' failures.

There was evidence at trial that concrete trucks were allowed to drive on the subgrade during the pouring, an activity that would have disturbed the subgrade condition. The Boling pavers attempted to recompact the subgrade after the trucks had disturbed it, but in at least one spot, they were unable to do so because the trucks had brought in so much moisture that the dirt could not be recompacted. Although Essex had tested the subgrade before the trucks drove on it, it did not retest the subgrade support after the trucks disturbed it. This evidence supported Barczykowski's view that poor subgrade support was at least partially responsible for the failing concrete.

Although there was no evidence at trial that the insufficient thickness of the concrete was exclusively or primarily responsible for the concrete failing, the county and intervenors argued that the thinness of the concrete potentially could affect the longevity of the streets and, further, that Essex was obligated under the subdivision regulations to conform to certain thickness standards, even if the failure to conform could not be tied directly to the failure of the concrete.

The trial court found that Essex failed to meet the standards of the subdivision regulations and the requirements of the Guarantee, which mandated that Essex complete the subdivision improvements. The trial court further found that the county and intervenors were entitled to hold the bonds. The trial court ordered that Essex and Federal pay the remainder of the bonds to the county to fund the county's completion of the subdivision improvements. Because Essex failed to conform to the regulations' thickness requirements, the trial court ordered civil penalties for thin slabs in the amount of $102,174.65 against Essex and Federal, to be paid out of the bonds. The trial court entered judgment in favor of Essex on its claims for indemnity from Boling and Berra, in the amounts of $73,913.28 and $28,261.37, respectively, reflecting each company's share in the $102,174.65 civil penalty award. The court also ordered Boling to pay Essex $6,040.72 and Berra to pay Essex $6,468.92 for the cost of testing the cores. The trial court awarded $35,875.00 in costs against Essex and Federal for the intervenors' costs for work performed to repair the prematurely failing streets. Finally, the trial court awarded the intervenors' attorneys' fees in the amount of $219,277.00 against Essex, $7,088.00 against Berra and $17,013.00 against Boling.

On appeal, Essex argues that the trial court erred in: ...