General Equipment Mfrs. v. Westfield Ins. Co.

Decision Date06 December 1993
Citation430 Pa.Super. 526,635 A.2d 173
PartiesGENERAL EQUIPMENT MANUFACTURERS, Appellee, v. WESTFIELD INSURANCE COMPANY, Appellant.
CourtPennsylvania Superior Court

James R. Cooney, Pittsburgh, for appellant.

Valerie A. Gatesman, Pittsburgh, for appellee.

Before KELLY, POPOVICH and BROSKY, JJ.

KELLY, Judge.

In this opinion, we are called upon to determine whether the trial court properly held that a subcontractor, who was unable to complete a subcontract due to the general contractor's dismissal from the project by the owner, was required to prove the amount of labor and materials supplied to the project, rather than the reasonable cost of completing the subcontract, when attempting to recover payment for unpaid invoices from the general contractor's surety pursuant to a labor and materials payment bond. We are also called upon to determine whether the trial court properly excluded, as irrelevant, evidence pertaining to the percentage of the subcontract completed before the general contractor's dismissal from the project and the amount of the money the subcontract or was paid to complete the subcontract by a different general contractor. We hold that the trial court did not err regarding the subcontractor's burden of proof for recovery of unpaid invoices pursuant to a labor and materials payment bond, nor did it commit error in its evidentiary rulings. Thus, we affirm the judgment entered in favor of General Equipment Manufacturers Inc. (GEM) for $92,221.53.

The relevant facts and procedural history of this case are as follows. On May 23, 1985, Coco Brothers, Inc. (Coco Brothers) entered into a contract with the School Board of Pittsburgh (School Board) to renovate the Oliver High School. The appellant, Westfield Insurance Company (Westfield) furnished Coco Brothers with the statutorily required labor and material payment bond (payment bond). Coco Brothers employed numerous subcontractors to assist with the renovation of the school building, including GEM. Pursuant to the terms of its subcontract with Coco Brothers, GEM was to furnish and install all of the wood casework for the project in accordance with the plans and specifications contained in the construction contract between Coco Brothers and the School Board for the sum of $240,000.00. GEM performed the work under its subcontract with Coco Brothers in stages from August, 1986 to March, 1987. GEM's first two deliveries of casework to the project were acceptable to both Coco Brothers and the School Board; however, GEM's third delivery of casework was initially rejected by the School Board and subsequently remedied by GEM. Additionally, during this time period, Coco Brothers received instructions from the School Board to delete three classrooms from the renovations. Coco Brothers received a credit for these deletions.

In March of 1987, Coco Brothers was dismissed as general contractor by the School Board together with all of its subcontractors, including GEM. At the time of Coco Brothers' termination as general contractor by the School Board, GEM had already billed Coco Brothers $106,552.00 for work and materials provided to the project. Coco Brothers paid GEM $28,065.00, leaving an unpaid balance of $78,486.00.

After Coco Brothers' departure from the job site, the School Board requested a credit from Coco Brothers for the work that had not been completed. Coco Brothers in turn requested a credit from each of its subcontractors. GEM offered Coco Brothers a $123,000.00 credit which in turn was passed on to the School Board without objection.

Coco Brothers' dismissal from the job site caused it to institute a law suit against the School Board; however, the common pleas court refused to proceed with the action because Coco Brothers' construction contract with the School Board contained a compulsory arbitration clause. Coco Brothers then initiated proceedings pursuant to the construction contract's arbitration clause. At the arbitration, John Coco, Jr. testified that Coco Brothers owed GEM money. During this time period, Coco Brothers' attorney, Maurice Nernberg, sent GEM's counsel, Thomas H. Welsh, a letter stating that the arbitration proceeding between Coco Brothers and the School Board was going very well so far and that hopefully Coco Brothers would be able to pay GEM's invoices without any unnecessary expense to GEM. This letter also thanked GEM for its forbearance in bringing a claim on the bill while Coco Brothers was proceeding with its arbitration against the School Board. The arbitration panel subsequently awarded Coco Brothers $467,582.92 plus $28,054.98 for a total award of $495,637.89, an amount considerably less than the nearly $900,000.00 it had been seeking. In the interim, GEM had become a subcontractor to Coco Brothers' replacement on the Oliver High School renovation project, the McAnallen Corporation. Under its contract with the McAnallen Corporation, GEM was paid $172,000.00 for completing the wood casework for the Oliver High School renovation project.

After the completion of the arbitration proceedings between Coco Brothers and the School Board, GEM demanded from Coco Brothers payment of the $78,486.40 unpaid balance. Coco Brothers refused to pay the outstanding balance alleging it had not received proper credit from GEM for the deletions from the project and back charges imposed by the School Board for GEM's defective work. GEM then sought payment from Westfield pursuant to the payment bond. When Westfield refused to pay, Gem filed a complaint against Westfield asserting it was entitled to payment of the $78,486.40 unpaid balance pursuant to the terms of the payment bond.

In its complaint, GEM asserted that it had completed thirty-three percent of the work under the subcontract. This assertion was specifically denied by Westfield. During discovery, Westfield submitted interrogatories and requested production of documents pertaining to the calculation of GEM's invoices to Coco Brothers. When GEM filed objections to Westfield's interrogatories and request for production of documents, Westfield presented a motion to compel discovery before the Honorable Bernard J. McGowan. Judge McGowan denied Westfield's motion to compel discovery. The case was then scheduled for jury trial before the Honorable Frederic G. Weir. Before trial, both parties presented several motions in limine. Westfield's first motion in limine sought to limit GEM's damages to thirty-three percent of the $240,000.00 contract price ($80,000.00) minus the $28,065.60 in payments that its principal, Coco Brothers, had already made to GEM. Westfield's second motion in limine sought to preclude GEM from referring to other lawsuits that had arisen from Coco Brothers' failure to pay other subcontractors from the project. Both of Westfield's motions in limine were denied by the trial court.

GEM also presented two motions in limine. In its motions in limine, GEM sought to exclude from evidence as irrelevant any reference to GEM's subsequent contract with the McAnallen Corporation for the completion of the Oliver High School renovation project and any reference to Coco Brothers' lawsuit against GEM alleging abuse of process and wrongful use of civil proceedings. Both of GEM's motions in limine were granted by the trial court.

At trial, GEM presented the testimony of its president, James T. Majure. Mr. Majure testified that three invoices for the work completed had been sent to Coco Brothers, on August 20, 1986 for $27,514.00, September 26, 1986 for $3,670.00 and January 16, 1987 for $73,368.00. Mr. Majure also testified that Coco Brothers had made payments of $24,762.60 and $3,303.00 for the first two invoices while withholding ten percent which was to be paid to GEM upon the completion of the entire project. Mr. Majure further testified that Coco Brothers had failed to make any payment for the third invoice of $73,368.00. Finally, Mr. Majure testified Coco Brothers owed GEM a total of $78,486.40, stating this figure included the unpaid third invoice and the ten percent which had been retained from Coco Brothers' two previous payments to GEM. GEM also presented the testimony of H. Edward Vero and Robert Capo of the School Board. Both Mr. Vero and Mr. Capo testified that GEM's work on the project was not the subject of any back charge that was imposed upon Coco Brothers by the School Board. At the close of GEM's case, Westfield moved for a compulsory non-suit asserting GEM had failed to make a prima facie case because it had failed to prove the cost of completing the work. The motion for compulsory non-suit was denied by the trial court.

Westfield then presented its case in which it attempted to present evidence pertaining to the difference between the $123,000.00 credit for unfinished work that GEM had given to Coco Brothers and the $172,000.00 it was paid by the McAnallen Corporation to complete the wooden casework for the project. The trial court refused to admit this evidence ruling that it was the subject of GEM's motion in limine which excluded all evidence pertaining to the subsequent contract between GEM and the McAnallen Corporation as irrelevant. At the close of its case, Westfield moved for a directed verdict. Westfield's motion for directed verdict was denied by the trial court. The jury returned a verdict in favor of GEM for $78,486.40. The verdict was then molded by the trial court to include interest. Post-trial motions were denied. This timely appeal followed. 1

On appeal, Westfield raises the following issues for our review:

1. DID APPELLEE FAIL TO PROVE A PRIMA FACIE CASE, SINCE IT OFFERED NO EVIDENCE OF THE REASONABLE COST TO COMPLETE THE UNFINISHED WORK?

2. WAS THE VERDICT CONTRARY TO APPELLEE'S JUDICIAL ADMISSIONS?

3. DID THE COURT ERR IN EXCLUDING EVIDENCE OF THE PERCENTAGE OF COMPLETION AND THE REASONABLE COSTS OF COMPLETING THE WORK?

4. DID THE COURT ERR IN REJECTING EVIDENCE AND DISCOVERY...

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