J.A. Jones Construction Company v. Lehrer McGovern Bovis, Inc., 120 Nev. Adv. Op. No. 32 (NV 5/19/2004), No. 39235.

Docket NºNo. 39235.
Citation120 Nev. Adv. Op. No. 32
Case DateMay 19, 2004
CourtSupreme Court of Nevada

Page 1

120 Nev. Adv. Op. No. 32
J.A. JONES CONSTRUCTION COMPANY, Appellant,
v.
LEHRER MCGOVERN BOVIS, INC.; AND NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, Respondents.
No. 39235.
Supreme Court of Nevada.
May 19, 2004.

Appeal from a judgment entered pursuant to a jury verdict in an action concerning a construction contract. Eighth Judicial District Court, Clark County; Gene T. Porter, Judge.

Affirmed in part, reversed in part and remanded.

Haney, Woloson & Mullins and Wade B. Gochnour and Dennis R. Haney, Las Vegas; Braude & Margulies, P.C., and Herman M. Braude, Washington, D.C., for Appellant.

Harrison Kemp & Jones, LLP, and Kirk R. Harrison and Richard F. Scotti, Las Vegas, for Respondents.

Jolley Urga Wirth & Woodbury and L. Christopher Rose and Roger A. Wirth, Las Vegas; Kegler, Brown, Hill & Ritter and Donald W. Gregory, Columbus, Ohio, for Amicus Curiae American Subcontractors Association.

BEFORE SHEARING, C.J., ROSE and MAUPIN, JJ.

OPINION

PER CURIAM:


This appeal concerns a dispute over a contract for structural concrete work at the Sands Exposition Center. Although subcontractor J.A. Jones Construction Company obtained a judgment for $1,152,912 against the construction management contractor, Lehrer McGovern Bovis, Inc. (LMB), Jones asserts that various district court errors resulted in an inadequate judgment.

We conclude that the district court erred in refusing to instruct the jury on exceptions to enforcement of "no damages for delay" clauses in construction contracts, and in dismissing Jones's claim of cardinal change/abandonment/quantum meruit. Additionally, although Jones was improperly required to prematurely elect between suing either on the contract or in quantum meruit, Jones's fraud-in-the-inducement claim was properly dismissed. We therefore affirm in part, reverse in part, and remand for a new trial.

FACTS

Las Vegas Sands, Inc., awarded LMB a construction management contract for the Sands Exposition Center expansion. After substantial negotiations, LMB awarded the project's structural concrete portion to Jones. Jones's original bid for the concrete work was approximately $8.4 million. In order to reduce the bid amount, LMB agreed to perform various site preparation tasks and to streamline other tasks to shorten, by about half, the time needed for Jones to complete its concrete construction, thus reducing Jones's labor, materials, equipment and overhead costs. Both parties made concessions and ultimately agreed that Jones would perform the structural concrete work for $7.4 million.

The parties' contract provides that the first phase of Jones's work (Phase I) would begin on July 1, 1997, and had to be completed by October 7, 1997. This fourteen-weeks-long phase included the construction of three levels of reinforced concrete slabs, along with slab-supporting concrete footings, reinforced concrete columns, and some walls and stairs. According to Jones, it was able to significantly reduce its bid and to agree to specific, expedited "milestone" dates in large part because LMB promised to prepare and maintain the site in a manner that would allow Jones to efficiently perform its work in a continuous sequence. For instance, Jones was to pour the concrete footings directly against bearable caliche (subsurface rock) "neat cut" by LMB's excavator, work on a relatively level subgrade provided by LMB's excavator, use a rolling formwork system for many of the concrete pours, and be able to sequence work around the various emergency egresses that would necessarily run through parts of the construction site so that the adjoining exposition center could remain open for business throughout the project's duration. Due to various complications, some of which are discussed below, Jones did not complete Phase I until June 1998, eight months after the original completion date.

Pursuant to various requests for change orders, LMB paid Jones an additional $1,078,303 for some of the changed-work expenses incurred during those eight months; however, outstanding requests remained. After negotiations proved unsuccessful, Jones ultimately filed a complaint against LMB and National Fire Insurance Company of Hartford, holder of a surety bond related to the project. In its amended complaint, Jones alleged claims for breach of contract, fraud in the inducement, cardinal change/abandonment/quantum meruit, and for enforcement of a mechanic's lien bond. On each of its first three claims, Jones sought more than $5 million in damages.

At trial, Jones introduced evidence that some of its Phase I work was changed or modified as a result of several instructions from LMB. Its major complaint, however, stems from the obstructions, hindrances, and inefficiencies that rendered its work more difficult and costly as a result of these changes and other major problems, as well as more minor inconveniences. According to Jones, significant obstacles were encountered from the very start; various witnesses testified about the following major occurrences.

When Jones arrived on site on July 1, 1997, none of the preliminary groundwork, including caliche and footing excavations, had been completed. Because the excavation work was still in progress, Jones's crews were unable to do much work during the first two weeks of their contract. On July 3, Jones was told for the first time that major underground utilities were being planned throughout the Phase I area, including a wide chiller line, and that a vertical permit had not yet been obtained. At about the same time, Jones also learned of a change to the emergency egress plans. The new egress plans rendered at least a portion of the unexcavated area in Phase I inaccessible to any work by Jones or the excavator for a period of time.

Eventually, the excavator mass-excavated a portion of the area, dug about seventeen footings, and then left the site without doing any further work in this area or another important area. But, in digging the chiller line trench, the excavator had blasted the caliche, which then required Jones to "form" the footings, rather than pouring the concrete directly against the caliche as intended. Additionally, after the footings were formed in the excavated area, Jones had to wait to pour the corresponding columns because LMB had not obtained a vertical permit. Jones then worked overtime to timely pour all of those columns on the same day that the permit was obtained. Nevertheless, because Jones had access only to the small excavated area in Phase I, it had to lay off crews and allow equipment to become idle during July and August. And, although the chiller line trench was covered up within a week or so, and for the most part did not itself interfere with Jones pouring the columns and elevated slabs, the pipes and electrical conduit sticking up from it did get in Jones's way. Further, once the elevated slabs in this area were finished, the chiller line trench was reopened, interfering with the removal and storing of the formwork from that area.

The excavator then excavated another Phase I area, also by blasting the caliche and again destroying its bearing capacity where the footings were to be cut. As a result, the footings in this area had to be redesigned to nearly twice their planned size. Because of the footings' increased size, Jones could not maneuver trucks in this area. Consequently, instead of pouring the concrete directly from the concrete trucks, Jones was forced to more expensively pump in the increased amount of concrete.

After the footings were in, the excavator left piles of dirt spoils from the excavation of the footings and some mechanical pad work lying around for various lengths of time, which interfered with Jones's movements. Furthermore, some of the footings were not topped-off, which left gaps in the surface eight inches to a foot below the existing ground level. At the end of September, a water main break flooded the entire site. Nevertheless, Jones continued to work at an accelerated pace throughout much of September and October to complete work on this second Phase I area, which was not finished by the milestone date.

Jones's work in attempting to meet other milestone dates was complicated by similar events. Underground sewer lines, in addition to the chiller line trench, obstructed Jones's movement of materials and equipment and prevented the placement of the slab on grade before the elevated slabs were built. Additional dirt piles left by the excavator in various places further obstructed Jones's work and movement. Having to work around these "rough" ground conditions rendered Jones's work more difficult than anticipated.

Because of the difficulties outlined above, Jones was unable to use the efficient rolling formwork system as it had planned. Nor was it able to keep together and move units of formwork using a forklift or crane because of the general ground conditions, including the still rough grade, the utility trenches, and the dirt piles. Further, Jones claimed that in light of the piecemeal manner in which the site was provided, and because the revised egress areas had to be kept open, it had nowhere to move or store units of formwork, and no opportunity to use it in a continuous manner as planned.

As a result, for each of the project's pours, Jones had to handset, move, and store the formwork piece by piece, which was inefficient and caused much damage to the plywood and lumber. In light of variations in elevation, the height of the formwork structure could not be preset, but rather Jones had to make time-consuming major adjustments to the thousands of shoring posts. But it was not only the ground conditions that prevented Jones from using a more efficient formwork method; many times Jones had to tear down shoring just to be able to store it.

The contract between Jones and LMB contains, among other items, provisions relating to the use of a rolling framework system, changes ordered, scheduling,...

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