Haden v. Krupp Asset Management Corp.
| Decision Date | 24 October 1990 |
| Docket Number | Civ. A. No. J89-0509(W). |
| Citation | 776 F. Supp. 1151 |
| Parties | Michael A. HADEN, Plaintiff/Counter-Defendant, v. KRUPP ASSET MANAGEMENT CORPORATION, Defendant/Counter-Claimant. |
| Court | U.S. District Court — Southern District of Mississippi |
James W. Nobles, Jr., Jackson, Miss., for plaintiff/counter-defendant.
Mark D. Herbert, Gram G. Meadors, Ott & Purdy, Jackson, Miss., for defendant/counter-claimant.
This case was tried before the court sitting without a jury on August 27, 28, and October 3, 1990. Parties of the dispute are the plaintiff, Michael Haden, who is an adult resident citizen of Hinds County, Mississippi, and the defendant, Krupp Asset Management Corporation, a corporation domiciled in the State of Massachusetts. This court has diversity jurisdiction to hear this cause pursuant to 28 U.S.C. § 1332.1 The dispute between these parties centers around a construction contract, where the plaintiff was to rehabilitate the exterior of defendant's buildings within an apartment complex. The plaintiff claims defendant breached the contract and is suing for damages, while defendant, who has entered a counterclaim, in turn, claims plaintiff is the party who has breached the contract. Now, pursuant to Rule 52, Federal Rules of Civil Procedure, the court sets out below the reasons which persuade the court to find for the defendant.
This case originated from the desire of Krupp Asset Management Corporation (hereinafter referred to as "Krupp" or "Krupp/Countryside") to rehabilitate buildings in its apartment complex, Countryside Apartments, located in Ridgeland, Mississippi. Krupp made it known that it would accept bids for the rehabilitation of buildings within the complex. Haden is a construction contractor. He placed a bid and was chosen by Krupp as the contractor for the project. The parties entered into contract on February 26, 1988. This agreement provided that the exterior siding, trim, and paint on the buildings would be redone. Originally the total value of the contract price was $247,800.00. However, Haden's bid for accomplishment of work and total cost of labor and materials reduced and revised the contract price to $226,800.00 by an agreement of both parties on February 22, 1988. But when the subsequent change orders were approved, the total contract became $274,845.00.
Krupp/Countryside issued Haden a notice to proceed with the work on March 8, 1988. Completion date for the entire construction project was July 18, 1988. The buildings were to be repaired in the following order: buildings # 2, 3, 4, main office, 11, 12, 5, 6, 7, 8, 9, and 10. Initially, the project called for the contractor to complete one building before moving on to rehabilitate the next. Haden worked out an arrangement with Johnny Yates, the Division Engineer and Representative for the Krupp Realty Company, which altered this arrangement. Under the new understanding, crews were assigned to do certain tasks in each building, rather than repair an entire building at one time. Eventually, with the succession of each work crew, the building would become completely rehabilitated.
Krupp/Countryside arranged to pay Haden in six anticipated draw payments. Krupp made the initial payment of $24,500.00 to Jackson Wholesale Building Supply Company (hereinafter referred to as "Jackson Wholesale") as a prepayment of materials. All subsequent payments were jointly paid to Haden and Jackson Wholesale. The amount of money for each draw was made upon submission of an estimate for payment application. The estimates could be submitted before work on each building was finished.
Haden began the work upon issuance of the notice to proceed, March 18, 1988. Krupp paid Haden a total of $226,472.00 based upon the five estimates submitted for payment, withholding $25,163.00 in retainage as called for by the contract. (Article 4.3 allowed a retainage for ten percent (10%) of the value of the work.) After receiving payment for estimate No. 5 in what Haden considered a delayed manner, he contacted an attorney. The attorney sent a letter dated August 3, 1988, which gave formal notice that Haden would cease labor on the project because Krupp/Countryside was in breach of contract, pursuant to Article 20.1,2 due to delays in properly processing the draw payments. On August 8, 1988, Haden removed his crews from the Countryside Apartments worksite. Haden directed Jackson Wholesale to pick up all the unused materials left from the project and credit Krupp's account for what was returned.
At the time, Haden walked off the project site, the unpaid balance on the Countryside/Haden contract was $48,373.00, including the $25,163.00 held as retainage. On September 20, 1988, Krupp/Countryside gave Haden written notice that under Article 20.23 of their contract if Haden did not return to the construction site within seven (7) days, then that writing would constitute a notice to stop work and that Krupp would take necessary steps to protect its interest. When Haden did not return to the site ten days later, Krupp/Countryside sent a letter dated September 30 which gave final notice that the contract was terminated in accordance with Article 20.2.
Krupp obtained another contractor to complete the work required under the February 26, 1988, contract. Construction Corporation of America (hereinafter referred to as "CCA") was awarded the bid to complete the project and to remedy any previous work performed by Haden that was done in a defective manner. A contract between Krupp and CCA for the completion of the apartment complex was entered into on October 6, 1988. CCA received $88,293.20 in total and completed the Countryside project on January 13, 1989. An additional cost of $46,436.96 was necessary to purchase materials used by CCA.
Plaintiff contends that the breach by Krupp/Countryside justifies his abandonment of the project, and that he is due the remaining money under the contract for the work performed. Haden maintains that he substantially completed the work at the Countryside apartment complex. He argues that Krupp is precluded from claiming any type of recovery from Haden since, says Haden, Krupp accepted the work. In addition, plaintiff asserts that any claims made by the defendant against him are unsupported by the evidence.
Haden claims that noncompliance with the payment schedule was the main reason why he left the Countryside project. From his understanding of the contract, payment was to be received within thirty (30) days from the date of estimate request. The plaintiff says that payments # 3, 4, and 5 were late. Plaintiff contends that Krupp was having financial difficulties and as a result consistently delayed issuance of payments. Haden says the time period covered by estimate no. 3 began on April 1 and ended on April 30, 1988. Haden submitted the application for payment on April 5, and a sum of $65,250.00 was received on May 6, 1988. According to Haden, the money for estimate no. 3 was six days late. Estimate no. 4 covered the period from May 1 to May 31, 1988. The request for $58,163.00 was submitted on April 29. Haden says that the funds from estimate no. 4 were received on June 15, 1988, about two weeks late. The latest received payment was from estimate no. 5 which was submitted on June 27, for the period covering June 1 to June 30, 1988. Haden contends that estimate no. 5 was finally approved and paid approximately one month after the application had been submitted. The estimate amount of $70,459.00 was paid out by the authorization of Johnny Yates on July 26, 1988. Haden claims that payment was inexcusably held up by the defendant. During the time that estimate no. 5 was withheld, Haden gave notice to Krupp of the alleged breach of contract. On or about August 8, 1988, the plaintiff took his work crews off the Countryside premises based on that breach.
When plaintiff left the project site, he contends that the major portion of work had been performed by him. During trial Haden testified that the state of completion on buildings # 2, 3, 4, 5, 6, 11, 12, and the main office were substantially complete. Buildings # 8 and 9 were still under construction. And building # 10 had some work remaining to be done before it could be substantially complete. Plaintiff seeks the retainage amount of $25,163.00 held by Krupp, plus an award of $15,000 for expenses he incurred when payment delays caused a loss of some workers, so he had to hire and train others to replace them. This inconvenience caused him to waste time and duplicate work. He wishes the court to find that Krupp has not been damaged as a result of his leaving the project site. Therefore, the defendant is not entitled to anything from him by way of its counterclaim. Haden asserts that the defendant is also responsible for the attorneys' fees that he has incurred as a result of this suit.
The defendant, Krupp, responds that since its payments were made on a timely basis, the plaintiff abandoned the project without just cause. Further, says the defendant, at the time of plaintiff's departure, there was not substantial completion of the specified work under the terms of the Countryside/Haden contract. And, continues the defendant, since adequate notice was not given concerning the abandonment pursuant to Article 104 which dealt with the Warranty of Workmanship, plaintiff breached his contractual obligation. As a consequence of this alleged breach, defendant claims that it had to bear the costs of another construction contractor to complete the project. Furthermore, Krupp alleges that the Countryside work site suffered water damage when it was left incomplete and exposed to inclement weather conditions due to Haden's sudden departure.
Pursuant to Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82...
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