Klipper Constr. Assocs., Inc. v. Warwick Twp. Water & Sewer Auth. & Carroll Eng'g Corp.
| Decision Date | 16 December 2014 |
| Docket Number | No. 471 C.D. 2014,No. 792 C.D. 2014,471 C.D. 2014,792 C.D. 2014 |
| Parties | Klipper Construction Associates, Inc. v. Warwick Township Water and Sewer Authority and Carroll Engineering Corporation Appeal of: Warwick Township Water and Sewer Authority Klipper Construction Associates, Inc. v. Warwick Township Water and Sewer Authority and Carroll Engineering Corporation Appeal of: Klipper Construction Associates, Inc. |
| Court | Pennsylvania Commonwealth Court |
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION NOT REPORTED
These consolidated matters are an appeal by defendant Warwick Township Water and Sewer Authority (the Authority) and a cross-appeal by plaintiff Klipper Construction Associates, Inc. (Contractor) from an order of the Bucks County Court of Common Pleas (trial court) molding a $726,809.08 jury verdict in a construction case brought by Contractor against Authority and its engineer, Carroll Engineering Corporation (Engineer). These appeals do not challenge the jury's liability verdict against the Authority or the amount of damages awarded by the jury to Contractor. The Authority appeals from the trial court's molding of the jury's verdict to disregard the jury's finding in the Authority's favor on its claim for indemnity against Engineer and from the trial court's awards of interest under 62 Pa. C.S. § 3941 and attorney fees under 62 Pa. C.S. § 3935(b), in the subchapter of Title 62 Part II commonly referred to as the Prompt Pay Act. Contractor cross-appeals the trial court's denial of a penalty under Section 3935(a) of the Prompt Pay Act and from the amount of attorney fees awarded by the trial court and its denial of litigation expenses. For the reasons set forth below, we reverse except as to the trial court's award of attorney fees and denial of expert witness fees, and remand.
In 2007, Contractor was the low bidder for and entered into a construction contract with the Authority for upgrades of the Authority's Fish Creek Wastewater Treatment Plant (the Contract). (Plaintiff's Ex. 7 Notice of Award, Reproduced Record (R.R.) at 11a; Plaintiff's Ex. 2 Contract Agreement, R.R. at 12a-18a.) The Contract required substantial completion of the project by July 7, 2008 and readiness for final payment by August 5, 2008. (Plaintiff's Ex. 2 Contract Agreement ¶4.02, R.R. at 13a; Plaintiff's Ex. 8 Notice to Proceed; 7/9/13 Trial Notes of Testimony (N.T.) at 91, R.R. at 249a.) The Contract provided for liquidated damages of $700 per day for failure to meet these deadlines, but provided for extension of the deadlines for delays beyond Contractor's control, including delays due to the Authority's negligence or to conduct of parties other than Contractor and its subcontractors and suppliers. (Plaintiff's Ex. 2 ContractAgreement ¶4.03, R.R. at 13a; Plaintiff's Ex. 3 General Contract Conditions ¶¶12.03-12.04; ; 7/9/13 N.T. at 87-89, R.R. at 245a-247a.) The Contract price was $2,091,500, but the Contract provided that it could be increased to compensate Contractor for delay, interference or disruption attributable to actions or inactions of the Authority or anyone for whom the Authority was responsible. (Plaintiff's Ex. 7 Notice of Award, R.R. at 11a; 7/9/13 N.T. at 90-91, R.R. at 248a-249a; Plaintiff's Ex. 3 General Contract Conditions ¶12.06.B.)
The project was substantially completed in October 2008, beyond the Contract deadlines. (7/9/13 N.T. at 225-27, 229, R.R. at 383a-385a, 387a; 7/11/13 N.T. at 125, R.R. at 858a.) Contractor's work was significantly delayed by subsurface rock conditions on the project. (7/9/13 N.T. at 116-19, 137-40, 150-53, 157-58, R.R. at 274a-277a, 295a-298a, 308a-311a, 315a-316a; 7/10/13 N.T. at 37, 87-88, 231, R.R. at 441a, 491a-492a, 635a.) Contractor requested extension of the Contract deadlines, but was given only three weeks of extensions, to July 28, 2008. (7/9/13 N.T. at 177-79, R.R. at 335a-337a; 7/11/13 N.T. at 47, 72, R.R. at 780a, 805a.)
The Authority and Engineer had a separate contract that provided that Engineer was to perform design services for the project that was the subject of the Contract, that Engineer was to prepare the bid documents for the Contract, and that Engineer was to administer construction of the project, including reviewing Contractor's applications for payment under the Contract. (Defendant's Ex. 63 Engineering Services Agreement, R.R. at 2a-10a; 7/11/13 N.T. at 176-78, R.R. at 909a-911a.) The Authority could not pay Contractor's applications for payment under the terms of its bonds for the project unless Engineer made a recommendation on whether the payment should be made. (7/11/13 N.T. at 148,188-89, 211-12, R.R. at 881a, 921a-922a, 944a-945a.) Engineer recommended that the Authority pay Contractor only $1,757.50 of Contractor's final $107,137.82 application for payment. (Plaintiff's Ex. 104 Payment Application 16 Engineer Recommendation, R.R. at 45a-47a.) The Authority did not pay the Contract balance because it decided, based on Engineer's recommendations and conclusions, that liquidated damages should be withheld for delays in completing the project. (7/11/13 N.T. at 127-31, 147-49, 166, R.R. at 860a-864a, 880a-882a, 899a; Plaintiff's Ex. 105 7/2/09 Letter from Authority to Contractor.) Engineer never certified the project for final payment based on its conclusion that Contractor failed to complete all punch list items. (7/15/13 N.T. at 104, R.R. at 1132a.)
On February 18, 2009, Contractor filed a 10-count Complaint against the Authority and Engineer seeking payment of the balance under the Contract plus its increased costs of performance, asserting breach of contract and constructive fraud claims and six other legal theories. (Complaint, R.R. at 23a-43a.) On August 3, 2011, Contractor filed a 9-count Amended Complaint against the Authority and Engineer asserting breach of contract and constructive fraud claims and five other legal theories, again seeking payment of the balance under the Contract and its increased costs, and also asserting a claim for lost profits due to inability to obtain bonding, which it contended was caused by the Authority's withholding of payment under the Contract. (Amended Complaint, R.R. at 48a-68a.) The Authority and Engineer both asserted cross-claims against the other for indemnity and contribution. (Authority's Answer and New Matter, R.R. at 98a; Engineer's Answer and New Matter, R.R. at 148a-150a.)
A jury trial was held from July 8, 2013 to July 15, 2013. Contractor testified at trial that it did not receive soil boring reports of the rock conditionsfrom Engineer when it bid the job, although Engineer had possession of those reports. (7/9/13 N.T. at 48-52, 59-62, 94-116, 119, R.R. at 206a-210a, 217a-220a, 252a-274a, 277a.) Contractor also testified that Engineer delayed readiness for final payment under the Contract and increased its costs by adding punch list items beyond the Contract requirements and by sending multiple punch lists adding new items to be completed. (Id. at 215-18, 226-42, R.R. at 373a-376a, 384a-400a.) It was undisputed that the Authority did not make final payment under the Contract and that this unpaid balance was at least $107,137.82. (Plaintiff's Ex. 104 Payment Application 16 Engineer Recommendation, R.R. at 45a-47a; Plaintiff's Ex. 105 7/2/09 Letter from Authority to Contractor.) In addition, Contractor introduced evidence that it incurred over $100,000 in increased costs not compensated by change orders and testified that it was unable to obtain bonding from late 2009 through 2010 as a result of the withholding of the Contract balance. (7/10/13 N.T. at 10-15, 32-46, R.R. at 414a-419a, 436a-450a.) Contractor asserted that it lost over $900,000 as a result of the loss of bonding because it worked when it had no bonding as a subcontractor with a 50/50 profit split on a job that had a $1.8 million profit. (Id. at 15-16, 21-24, 46-56, R.R. at 419a-420a, 425a-428a, 450a-460a.)
Contractor's legal theories other than breach of contract and constructive fraud were all dismissed by voluntary withdrawal or compulsory nonsuit during trial. (Civil Court Sheet, R.R. at 1305a-1306a.) After the close of testimony, Contractor's claims against the Authority for breach of contract and constructive fraud, Contractor's claim against Engineer for constructive fraud, the Authority's cross-claim for indemnification against Engineer, and Engineer's cross-claim for indemnification against the Authority were submitted to the jury onspecial interrogatories. (7/15/13 N.T. at 209-26, R.R. at 1237a-1254a; Jury Verdict Sheet, R.R. at 1307a-1309a.) The trial court instructed the jury that Engineer was liable to the Authority for indemnity if the Authority was held liable to Contractor solely as a result of negligent conduct by Engineer. (7/15/13 N.T. at 219-20, R.R. at 1247a-1248a.) Engineer did not make any objection to this jury instruction or to the submission of this common law indemnity claim to the jury. (Id. at 122-84, 219-26, R.R. at 1150a-1212a, 1247a-1254a.)
The jury verdict sheet asked four questions concerning Contractor's claims against the Authority: whether the Authority breached the Contract (Question 1), whether the Authority "acted in bad faith by withholding Klipper Construction Associates, Inc.'s contract balance" (Question 2), whether the Authority was liable to Contractor for constructive fraud (Question 3), and Contractor's damages from the Authority's conduct (Question 4). (Jury Verdict Sheet, R.R. at 1307a-1308a.) The verdict sheet directed the jury to skip and not answer Question 3 concerning constructive fraud if it answered "yes" to Question 1 and found that the Authority breached the Contract. (Id., R.R. at 1307a.) With respect to damages, the jury was not asked to determine the amount to which Contractor was entitled under the Contract or the...
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