Havens Steel Co. v. Randolph Engineering Co., 80-0898-CV-W-0.

• Decision Date: 07 May 1985
• Docket Number: No. 80-0898-CV-W-0.,80-0898-CV-W-0.
• Citation: 613 F. Supp. 514
• Parties: HAVENS STEEL COMPANY, Plaintiff, v. RANDOLPH ENGINEERING COMPANY, et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

613 F. Supp. 514

HAVENS STEEL COMPANY, Plaintiff, v. RANDOLPH ENGINEERING COMPANY, et al., Defendants.

No. 80-0898-CV-W-0.

United States District Court, W.D. Missouri, W.D.

May 7, 1985.

COPYRIGHT MATERIAL OMITTED

Kevin E. Glynn, Kansas City, Mo., for plaintiff.

Paul L. Waldron, Washington, D.C., Thomas J. Wheatley, Daniel M. Dibble, Karen Iverson, Kansas City, Mo., for defendants.

MEMORANDUM OPINION AND JUDGMENT

ROSS T. ROBERTS, District Judge.

Plaintiff Havens Steel Company ("Havens") seeks damages allegedly incurred as the result of defective or deviate work performed under a construction subcontract between it and defendant Randolph Engineering Company ("Randolph"). Randolph counterclaims for various damages it believes it suffered by reason of job interference, work delays and uncompensated extra work. Jurisdiction is based upon diversity of citizenship.

The matter has been tried to the court. For the reasons which follow I render judgment in Randolph's favor on both claims, the amount thereof with respect to its counterclaim being in the sum of $364,790.93, exclusive of the pre-judgment interest allowed on its claim under Count VII.

I. GENERAL BACKGROUND

Havens is a Missouri corporation having its principal place of business in Kansas City, Missouri. Randolph is a Pennsylvania corporation with its principal place of business in Pittsburgh, Pennsylvania.

The dispute between the parties concerns a large cement plant located in Charlevoix, Michigan, owned by Medusa Cement Company ("Medusa"). Prior to the year 1979, that plant had produced cement by means of a "wet" manufacturing process. For various reasons Medusa decided to convert the plant to a "dry" system of production and in that connection, sometime in the year 1978, employed Kaiser Engineers of Michigan ("Kaiser") to design and supervise construction of the necessary facilities. The project involved at least 25-30 "prime" contracts, many more subcontracts, and a total cost in excess of $50,000,000.

One of the contracts related to the fabrication and erection of an "electrostatic precipitator" — work which was ultimately the subject of a subcontract between American Air Filter Company ("AAF") (the prime contractor for that segment of the project) and Randolph, under which Randolph was responsible for erection of the precipitator. This subcontract is important here only insofar as reference to it is necessary in dealing with the dispute between Randolph and Havens, which concerns another part of the project.

The part of the project which actually gives rise to the present claims involved the fabrication, insulation and erection of the ductwork necessary to the plant conversion. That ductwork was composed of pieces of ¼ inch carbon steel duct, most of which were 10 to 12 feet in diameter and weighed hundreds of tons, with some rising to a height in excess of 180 feet when fully erected. Havens was to fabricate those pieces of duct (uninsulated), deliver them to the site, and act as the prime contractor in connection with their insulation and erection. The actual erection effort, however, was carried out by Randolph, with the insulation work being performed by Mechanical Insulation Services, Inc. ("M.I.S.") under a subcontract between it and Randolph.

In essence, Havens claims that Randolph and M.I.S. deviated from contract specifications in applying the "cladding" (the exterior metal sheath — also called "lagging" or "jacketing" — which covered the insulation) to the ductwork, which in turn ultimately necessitated the repair or replacement of much of that cladding and the underlying insulation. The cost incurred in that repair and replacement is said to have been $499,479.91, toward which Havens alleges it paid the sum of $192,799.69. The claims for the remainder of that $499,479.91 are not in issue here.¹

For its part, Randolph asserts that Havens was approximately four months late in delivering the pieces of fabricated ductwork to the site, with a consequent delay in Randolph's ability to begin insulation and erection of the ductwork. Because of that delay, Randolph claims, the buildings on the site were in a far more advanced stage of construction than would otherwise have been the case, all of which led to difficulties and delay in the performance of its work, with associated costs and expenses. In addition, Randolph asserts it was caused to perform extra work, outside its contract requirements, by reason of certain defective materials furnished by Havens or Medusa or both. For all its various sorts of alleged damage Randolph seeks an amount of $464,303.06, together with prejudgment interest on one claim and its "cost of capital" (calculated at 15% per annum) on the others.

II. THE CONTRACT

A central issue, touching both the original claim and the counterclaim, is whether an actual contract between Havens and Randolph was ever achieved, and if so what its terms may have been.

The issue is made particularly difficult by reason of the method of proof employed. In contrast to the situation usually encountered with this sort of question, here neither party offered any step-by-step explanation of their negotiations, or even any general overview of their course of dealing. Compare, e.g., United States ex rel. United States Steel Corporation v. Construction Aggregates Corporation, 559 F.Supp. 414 (E.D.Mich.1983), aff'd in part, rev'd in part (without opinion) 738 F.2d 440 (6th Cir.1984). Instead, the record is limited to scattered pieces of documentary evidence, largely unaided by the explanatory or unifying testimony of any witness. The result, while allowing the court to rule the point, leaves one with a distinct feeling of having dealt with matters in a vacuum.

In sequential form, the available evidence reflects the following:

(a) On September 25, 1978, Randolph sent two letters to Havens. The longer of these (Def.Ex. # 24, offered by plaintiff) undertook to "confirm" Randolph's prices for erection and installation of the ductwork and related items ($392,535 for erection, $335,280 for insulation); made reference to an earlier letter (not included in the record) in which the above prices were "broken down and transmitted" to Havens; and continued on to note certain "clarifications" to the "specifications" which had been "discussed previously." The shorter letter (Def. Ex. # 184, first page) simply "confirmed," again, the prices quoted above. There is no other information concerning the parties' discussions prior to September 25, 1978, or indicating what precise point those discussions had reached as of that date. Neither is it entirely clear what information and documents Randolph had in hand as of that point in time.²

(b) On October 18, 1978, Randolph directed another letter to Havens (Def.Ex. # 184, second page), referencing a "previous telephone conversation" and confirming a reduction of $15,000 in the overall price stated in Randolph's letters of September 25.

(c) On October 23, 1978, Havens executed a formal contract with Medusa in connection with the project. By the terms of that contract Havens was to be responsible for the fabrication, delivery, erection and insulation of the ductwork specified in the contract. See Plt.Ex. # 1 (the contract); Plt.Ex. # 2 (a "change order" to the contract, also dated October 23, 1978); and Plt.Ex. # 3 (pp. 15-37 and 40-89, both inclusive). There is no information as to the time frame or nature of the negotiations which preceded this contract.

(d) On November 2, 1978, Randolph directed another letter to Havens (Def.Ex. # 184, third page). In that letter Randolph acknowledged

receipt and acceptance of your letter of intent dated October 27, 1978, and for your purchase of our firm for the erection and installation, complete per plans and specifications dated August 8, 1978, addendum number 1 dated September 27, 1978, and our pricing and qualification letters dated September 25, 1978 and October 18, 1978.

Unfortunately, Havens' "letter of intent" is not a part of the record, and I have not the least idea what its terms might have been. Neither does the record reflect what the parties' discussions or negotiations in connection with it might have been. Randolph's letter does, however, reflect a further revision in the total price for the work, to $715,575.

(e) At some point or points between November 2, 1978 and November 29, 1978, there were one or more telephone conversations between Havens' and Randolph's respective project managers. In those conversations Randolph was asked to state the "exceptions" it wished to take to the general terms and conditions "of the contract ... in the Kaiser documents." This citation to the "Kaiser documents" is not entirely clear, but was apparently a reference to the prime contract between Kaiser and AAF for the AAF phase of the project (see item (h), below). Since Havens was never directly involved in the AAF phase of the project, however, it is obvious that the parties' remarks with respect to "exceptions" were not meant to apply to the AAF contract itself or to any contract between AAF and Randolph,³ and instead address a concern that similar provisions might be included in Havens' contract with Medusa and in turn be included in whatever "general terms and conditions" Havens might propose to Randolph.

(f) On November 20, 1978, Randolph submitted to Havens a schedule for erection of the ductwork (March 19, 1979 to August 1, 1979) (see Def.Ex. # 20). On November 22, 1979 Havens forwarded, for Randolph's "review and concurrence as a result of the Randolph letter of 11/20/78," dates for shipment of the ductwork (extending from March 5, 1979 to June 4, 1979) (Def.Ex. # 189, third page).

(g) On November 29, 1978, Randolph again communicated with Havens by letter (Def.Ex. # 189). That letter enclosed another schedule for ductwork erection, revised to meet Havens' earlier expressed concern over delivery time for the "stack." The schedule was otherwise the...