James Corp. v. North Allegheny Sch. Dist.
| Decision Date | 30 November 2007 |
| Docket Number | No. 1268 C.D. 2007.,1268 C.D. 2007. |
| Citation | 938 A.2d 474 |
| Court | Pennsylvania Commonwealth Court |
| Parties | JAMES CORPORATION d/b/a/ James Construction v. NORTH ALLEGHENY SCHOOL DISTRICT, Thomas & Williamson, LLC, D & L, Inc., Foreman Architects Engineers, Inc., and Chambers Vukich Associates, P.C. Appeal of North Allegheny School District. |
David Raves, Pittsburgh, for appellant.
David E. Sweitzer, Pittsburgh, for appellee, James Corporation d/b/a James Construction.
Matthew M. Hoffman, Pittsburgh, for appellee, Foreman Architects Engineers, Inc.
Scott W. Stephan, Pittsburgh, for appellee, Chambers Vukich Associates, P.C.
BEFORE: COLINS, Judge, SIMPSON, Judge, and KELLEY, Judge.
OPINION BY Judge SIMPSON.
A matter of first impression and a primary issue in this appeal is whether the Allegheny County Common Pleas Court (trial court) erred by awarding James Corporation, d/b/a James Construction (Contractor) acceleration damages under the "measured mile" theory of recovery.
Contractor's claims arose out of a contract with the North Allegheny School District (School District) for renovations to Hosack Elementary School (Project). Contractor sought acceleration damages resulting from School District's refusal to extend the Project completion date after construction delays. Contractor also averred School District breached the parties' contract by failing to pay for additional work and materials. After a three-week non-jury trial, the trial court entered a verdict in Contractor's favor. School District appeals. Upon review, we reverse the trial court's award of expenses but affirm in all other respects. In addition, we remand to the trial court for calculation of post-judgment interest and attorney's fees in accord with the Commonwealth Procurement Code.1
In 1998, School District undertook steps to renovate five of its elementary schools. It retained the services of Foreman Architects Engineers, Inc. (Architect) for architectural services, and D & L, Inc. (First Construction Manager), for construction management services. Architect then contracted with Chambers Vukick Associates (Consultant) for consulting and landscape services.
The five projects were individually and publicly bid, but financed through the same bond issue. The Project here, Hosack Elementary, is located in McCandless Township (Township) and involved five construction phases. School District completed Phase I, site preparation, prior to soliciting bids for the Project. Phase II, slated for completion in May 1999, consisted of construction of an addition to the school, including an administrative suite, an entry, a kitchen, a multipurpose room and classrooms. Phase III consisted of converting an old multipurpose room into a library, and Phase IV called for building renovations. Phases III and IV were to begin after completion of the multipurpose room in Phase II. Although there was no physical connection between Phase II and Phases III and IV, there was a logical connection in that upon completion of the new multipurpose room in Phase II, School District would utilize the space while Contractor converted the old multipurpose room into a library. School District established a September 19, 1999 Project completion date.
Contractor submitted the lowest bid for the Project. Accordingly, the parties entered into a construction contract in the amount of $2,591,400. Importantly, the Project lacked a general contractor coordinating the work of all contractors.
Initially scheduled to commence September 1, School District issued a notice to proceed to Contractor on September 17, 1998. In addition to this two-week delay, several other notable delays occurred early in the Project. First, the Project required excavation for a sedimentation pond pursuant to an erosion and sedimentation (E & S) plan. The Township requires an E & S permit to be issued by the Allegheny County Conservation District (Conservation District),2 and Architect and Consultant were responsible for obtaining the permit. Prior to Conservation District's issuance of the permit, however, the Township supplied School District with a building permit on September 28, 1998. Contractor did not engage in any earth moving activities until issuance of the E & S permit on October 15, 1998.
Another delay involved the location of a fence. The fence, erected during Phase I, was located in the new addition's footprint. Contractor and School District disagreed as to which party was responsible for moving the fence. Contractor moved it and, therefore, incurred additional costs.
The Project also called for removal of an underground utility duct bank, and School District required Contractor to hand-dig the area to locate it.3 Subsequently, School District decided to retain the duct bank. This decision necessitated reconfiguration of the sedimentation pond.
The Project incurred additional delays when Contractor found asbestos in the roof flashing of an area to be demolished. As such, removal of the asbestos inhibited Contractor's work. Further delays were attributed to the plumbing contractor's interference with excavation work; the plumbing contractor took two months to perform work originally scheduled for less than a week. Finally, issues arose over dumpsters. Although Contractor had responsibility for trash removal and site clean-up, it disputed an obligation to supply the roofing contractor with dumpsters. School District required Contractor to provide the dumpsters; Contractor complied and incurred additional expenses.
For the first four months of the Project, contractors followed the critical path method (CPM) schedule contained in the bid documents. However, all prime contractors were to submit a proposed schedule so that First Construction Manager could develop a sequencing schedule. Only Contractor complied with this requirement.
In December 1998, Contractor and First Construction Manager, attempting to recover from the Project delays, agreed to new milestone dates for various Phase II events. First Construction Manager recommended to School District that an extension of the completion date would be necessary. The recommendation was set forth in a memorandum.
School District's response was significant. School District's facilities manager responded School District "cannot give [Contractor] any more time to complete the project, and don't tell them we know they need more time because that will open [School District] to claims." Trial Ct. Op., 7/11/06 at 5; see also Trial Ct. Op., 12/30/05 at 12.
Further, School District terminated First Construction Manager and hired in its place Thomas & Williamson (Second Construction Manager).4 In February 1999, Second Construction Manager informed all contractors School District abandoned the December 1998 schedule and the Project would proceed under the original CPM schedule. Each contractor signed the CPM schedule in February 1999.
Despite the aforementioned delays, the Project was completed on time. Contractor informed School District of substantial completion on September 3, 1999, and Township issued School District an occupancy permit. After substantial completion, Contractor performed additional work at School District's direction. In the end, School District terminated the contract in October 2000 citing Contractor's refusal to perform outstanding punch list work.
Contractor subsequently instituted this action against School District and Second Construction Manager alleging economic harm. More specifically, Contractor alleged it accelerated its work because School District refused to recognize the construction delays and adjust the Project completion date accordingly. In order to meet the Project deadline, Contractor accelerated its work and hired additional workers. In addition, Contractor alleged School District withheld payments under the contract in bad faith and failed to pay for additional work and materials. Finally, Contractor set forth a claim of defamation against Second Construction Manager.5
School District joined First Construction Manager and Architect, alleging breach of contract and negligence against both parties. In a counterclaim against Contractor, School District sought damages for costs associated with completing Contractor's outstanding work, which according to School District exceeded any payments due under the contract.
After the usual course of discovery and pre-trial proceedings, the trial court held a non-jury trial in November 2004. Rendering a verdict in Contractor's favor, the trial court awarded the following damages:
1. acceleration/compression of work $215,000
2. unpaid invoices including retainage and
additional work less punch list items of
$34,000 $104,000
3. invoices for wall pads/doors $ 18,934
4. prevailing wages withheld from Contractor $ 28,969
5. attorney's fees $110,000
6. expenses $ 43,000
________
$520,550
Trial Ct. Op., 12/30/05 at 29.
In rendering its verdict, the trial court found several things significant. First, the court recognized the Project lacked a sequencing schedule until four months after it began. Second, the court considered School District's response to the December 1998 extended schedule a "smoking gun" in that School District admitted the revised schedule exposed it to delay claims. And third, the trial court noted School District's construction scheduling expert conceded Contractor's actual labor costs exceeded its estimate by $137,929.
The trial court also found the Project completed on time due to Contractor's acceleration of work. To that end, the trial court found Contractor's "measured mile" theory of recovery, discussed below, persuasive. Notwithstanding, ...
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