N. Am. Mech., Inc. v. Walsh Constr. Co.

• Decision Date: 18 September 2015
• Docket Number: Case No. 12–CV–598.
• Parties: NORTH AMERICAN MECHANICAL, INC., Plaintiff, v. WALSH CONSTRUCTION COMPANY II, LLC, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

132 F.Supp.3d 1064

NORTH AMERICAN MECHANICAL, INC., Plaintiff,

v.WALSH CONSTRUCTION COMPANY II, LLC, Defendant.

Case No. 12–CV–598.

United States District Court, E.D. Wisconsin.

Signed Sept. 18, 2015.

Eric L. Nelson, Garrett E. Miller, Smith Currie & Hancock LLP, Atlanta, GA, John A. St. Peter, Edgarton St. Peter Petak & Rosenfeldt, Fond Du Lac, WI, for Plaintiff.

Anthony J. Anzelmo, Joshua B. Levy, Whyte Hirschboeck Dudek SC, Milwaukee, WI, for Defendant.

DECISION AND ORDER

WILLIAM E. DUFFIN

, United States Magistrate Judge.

I. Facts and Procedural History

When in 2010 Mercy Walworth Hospital and Medical Center in Lake Geneva, Wisconsin wanted to remodel and expand its facility ("the Project"), it hired Walsh Construction Company II, LLC (Walsh) as the general contractor. (Ex. 519.) The Project consisted of renovating the existing hospital and constructing new spaces to expand the size of the hospital and medical center. The construction work was to be phased so that the hospital could remain open during construction. On June 24, 2010, Walsh entered into a Subcontract Agreement with North American Mechanical, Inc. (NAMI) to install the heating, ventilation, and air conditioning (HVAC) systems, including air-handling units, ductwork, boilers, and chillers for the Project. (Tr. 24; Ex. 501). Plumbing work was subsequently added, and NAMI subcontracted that work to Masterson Plumbing. (Tr. 25–26.) The subcontract amount was $3,996,000. (Ex. 501.)

In preparing its bid, NAMI requested information from Walsh regarding its schedule for the Project. (Tr. 24, 29–30; Ex. 531.) Significant in NAMI's bid was its expectation, based upon the schedule provided by Walsh, that it would begin its work on August 24, 2010, immediately after the exterior framing of the building. (Tr. 31.) The preliminary schedule indicated that interior rough-in work would not begin until approximately a month after NAMI's installation work began. (Tr. 32.) Other segments of the Project indicated the same sort of sequencing. (Tr. 33–34.) NAMI personnel made clear in an email to Walsh its expectations regarding the sequencing of work and the lead time it would be afforded to complete its work before certain other subcontractors commenced their work. (Tr. 36–39; Ex. 15.)

Walsh had no problems with NAMI's expectations regarding the sequencing of work (Tr. 993–94) and the preliminary schedule was subsequently incorporated into the parties' contact as Exhibit K. (Ex. 501.) These scheduling and sequencing expectations were a factor in NAMI's bid. For example, NAMI's bid anticipated that it would be able to prefabricate large sections of ductwork and install them as single units rather than piecemeal (Tr. 47–48) and that it would be working in an enclosed building so that it would not be impacted by the weather (Tr. 50).

The subcontract, however, obligated NAMI to proceed with its work in accordance with Walsh's schedule as amended from time to time. (Ex. 501 at 2.1.) Walsh was empowered to direct the sequence and pace of NAMI's work, "including overtime, without monetary compensation to [NAMI]." (Ex. 501 at 2.1.) In coordinating the Project, Walsh was tasked with allocating site resources, which the contract defined as "site access and access to work areas, utilities, storage space, and all other characteristics of the Project site and the Project work." (Ex. 501 at 5.1.) Provided Walsh acted in good faith in allocating site resources, NAMI waived "any and all claims for damages, extensions of time or for increase to the Subcontract Amount as the result of any delay, disruption, interference, obstruction, hindrance, suspension, acceleration, constructive acceleration, out-of-sequence work, change or other cause arising from [Walsh's] allocation of Site Resources." (Ex. 501 at 5.1.)

NAMI similarly waived any claim against Walsh "for any damages or additional compensation as a consequence of delay, hindrance, interference or other similar event, caused by [Walsh]...." (Ex. 501 at 4.4.) The subcontract provided that NAMI's "sole and exclusive remedy for any delay, hindrance, interference or other similar event, shall be an extension in time for performance of [its] work." (Ex. 501 at 4.4.) If NAMI believed an extension of time or other relief with respect to the terms of the subcontract was necessary, it was required to submit a written claim to Walsh within one week of when NAMI planned to begin the affected work or within one week of NAMI first learning of the event giving rise to the claim, whichever occurred first. (Ex. 501 at 4.3.) If NAMI failed to make a timely claim, it waived the claim. (Ex. 501 at 4.3.) During the time that Walsh was considering any claim, NAMI was required to proceed diligently with its work unless the parties agreed otherwise in writing. (Ex. 501 at 4.3.)

The Project called for certain of the subcontractors, including NAMI, to participate in building information modeling (BIM), a process whereby the initial building plans created by the architect are converted into a virtual three-dimensional computer model and supplemented with details from many of the subcontractors to create a single, comprehensive, digital model of the Project. (Ex. 501 J.) Walsh created the initial BIM based upon the architect's two-dimensional plans, but the BIM did not include everything set forth on the plans. (Tr. 852–53.)

The Project was behind schedule from the outset (Tr. 916–17, 1137) and NAMI quickly encountered conditions very different from those it contemplated in its bid. For example, in areas that NAMI expected to be clear and open so that it could install large sections of prefabricated ductwork, it encountered steel studs and drywall already installed. (Tr. 126, 550–51.) In addition, areas to which it expected to have unfettered access it often found congested with other subcontractors working at the same time. (Tr. 314–15.) As a result, NAMI alleges that during the course of its performance Walsh required it to perform a substantial amount of work outside the scope of the subcontract for which it was not paid. On June 12, 2012 (ECF No. 1), while still working to complete the Project, it filed suit against Walsh, alleging claims for breach of contract and quantum meruit.

The matter was initially assigned to the Honorable Patricia J. Gorence but was reassigned to this court upon Judge Gorence's retirement. All parties consented to the full jurisdiction of a magistrate judge in accordance with 28 U.S.C. § 636(c)

and Fed.R.Civ.P. 73(b). (ECF Nos. 51, 52.) After this court dismissed NAMI's quantum meruit claim but otherwise denied Walsh's motion for summary judgment (ECF No. 54), the matter proceeded to trial. A weeklong trial commenced on May 11, 2015, with the court as the finder of fact. (ECF Nos. 74–80.) The parties submitted post-trial briefs (ECF Nos. 82, 84), proposed findings of fact (ECF Nos. 81, 83), and responses (ECF Nos. 85, 86). The matter is now ready for final resolution.

II. Jurisdiction, Venue, and Applicable Law

Venue is proper in this district under 28 U.S.C. § 1391(b)(2)

. Subject matter jurisdiction is based upon the diversity of citizenship of the parties. 28 U.S.C. § 1332(a)(1). For diversity of citizenship to exist, complete diversity is required, meaning that every defendant must be a resident of a state other than that of every plaintiff, Bankmanagers Corp. v. Fed. Ins. Co., 712 F.3d 1163, 1165 (7th Cir.2013) ; Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 759 (7th Cir.2009), and the amount in controversy must exceed $75,000, 28 U.S.C. § 1332(a).

The citizenship of a limited liability company (LLC) is determined by the citizenship of each of its members. IP of A W. 86th St. 1, LLC v. Morgan Stanley Mortg. Capital Holdings, LLC, 686 F.3d 361, 363 (7th Cir.2012)

. To ensure the existence of complete diversity, Belleville Catering Co. v. Champaign Mkt. Place, LLC, 350 F.3d 691, 693 (7th Cir.2003), the court had Walsh identify the citizenship of all of its members (ECF No. 73). Walsh's membership is comprised of two trusts and one LLC. (ECF No. 73, ¶ 2.) "The citizenship of a trust is that of the trustee." Hicklin Eng'g, L.C. v. Bartell, 439 F.3d 346, 348 (7th Cir.2006). "Citizenship means domicile (the person's long-term plan for a state of habitation)," Myrick v. WellPoint, Inc., 764 F.3d 662, 664 (7th Cir.2014)

, and the trustee of each trust is domiciled in Illinois (ECF No. 73, ¶ 3). The member LLC is itself comprised of eight members—the same two trusts that are separately members of Walsh Construction Company II, LLC (the defendant here) and six individuals, all of whom are domiciled in Illinois. (ECF No. 73, ¶¶ 5–7.) NAMI is a Delaware corporation whose principle place of business is in Wisconsin, and consequently is a citizen of Wisconsin and Delaware. See 28 U.S.C. § 1332(c)(1). Thus, complete diversity exists. The amount in controversy far exceeds $75,000.00 (see ECF No. 1 at 10 (alleging that at the time of the complaint, damages were at least $2.8 million)), and therefore diversity jurisdiction exists.

Pursuant to the parties' contract, the present dispute is governed by Wisconsin law. (Ex. 501 at 11.1.) "The elements for a breach of contract in Wisconsin are familiar; the plaintiff must show a valid contract that the defendant breached and damages flowing from that breach." Matthews v. Wis. Energy Corp., 534 F.3d 547, 553 (7th Cir.2008)

(citing Northwestern Motor Car, Inc. v. Pope, 51 Wis.2d 292, 296, 187 N.W.2d 200 (1971) ). There is no dispute as to the validity of the contract; both parties rely upon it to support their positions. The issue is whether NAMI sustained its burden to prove by a preponderance of the evidence that Walsh breached the contract and that NAMI suffered damages as a result.

III. Analysis

A. Partial Waiver and Release of Claims for Payment Form

The subcontract required NAMI to submit a Partial Waiver and Release of Claims for Payment form ("Partial Waiver and Release") along with each request...