Penta Corp. v. Town of Newport, 212-2015-CV-00011
| Decision Date | 11 May 2016 |
| Docket Number | No. 212-2015-CV-00011,212-2015-CV-00011 |
| Parties | Penta Corporation v. Town of Newport v. AECOM Technical Services, Inc. |
| Court | New Hampshire Superior Court |
Plaintiff, Penta Corporation ("Penta"), filed an action against the Defendant, the Town of Newport ("Town"), for breach of contract arising from the Town's refusal to pay Penta, the general contractor for building an allegedly defective wastewater treatment plant. The Town brought a counterclaim against Penta and a third-party complaint against AECOM Technical Services, Inc. ("AECOM"), the engineer that designed the plant, alleging in substance that the plant was negligently designed and built. Penta has filed a cross-claim against AECOM, and AECOM brought a counterclaim against the Town and a cross-claim against Penta. The Town has filed Motion for Partial Summary Judgment as to Count IV of the Third Party Complaint against AECOM, which alleges that the Town is entitled to indemnity and to a defense if a claim is made against it as a result of the contract it had with AECOM. The Town has tendered defense of the lawsuit brought against it by Penta to AECOM, and AECOM has refused the tender. For the following reasons, the Town's Motion is GRANTED. AECOM is obligated to defend the Town from the lawsuit brought by Penta.
In ruling on a motion for summary judgment, the Court "consider[s] the affidavits and other evidence, and all inferences properly drawn from them, in the light most favorable to the non-moving party." Pike v. Deutsche Bank Nat. Tr. Co., 168 N.H. 40, 41 (2015). Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Id.; RSA 491:8-a, III. The following facts appear to be undisputed.
The Town operates a Wastewater Treatment Facility ("WWTF"), which discharged treated wastewater into the Sugar River. (Town's Third-Party Compl. ¶ 6 [hereinafter Compl.].) In April 2007, the EPA issued a National Pollutant Discharge Elimination System (NPDES) permit authorizing the Town to discharge treated wastewater from the WWTF with certain effluent limitations. (Compl. ¶¶ 7-9.) On March 6, 2009, the EPA issued an Administrative Order ("AO"), which found that the Town had violated the terms of the NPDES permit exceeding certain effluent limits. (Compl. ¶ 10.) As a result, the AO mandated that the Town submit a report by December 31, 2009, identifying all upgrades and modifications to the WWTF necessary to comply with the effluent limitations in the NPDES permit by October 31, 2012. (Compl. ¶¶ 11-12.)
The Town selected AECOM as an engineer to complete the preliminary evaluation and design services necessary to upgrade the WWTF to satisfy the AO requirements. (Cull Aff. in Supp. of the Town's Partial Mot. Summ. J. as to Count IV of the Third Party Complaint [hereinafter Cull Aff.] Exs. 1-4.) As part of this relationship, the Town and AECOM entered four different contracts: (1) an Engineering Report Phase Contract for Professional Services (the "Study Contract"); (2) a Preliminary EngineeringDesign Phase Contract ("Preliminary Design Contract"); (3) a Final Engineering Design Phase Contract ("Final Design Contract"); and (4) an Engineering Construction Phase Contract for Professional Services (the "Engineering Construction Contract").
On or around, August 21, 2009, the Town and AECOM entered into the Study Contract. The purpose was to "examine the need, alternatives and cost of constructing Treatment Works including an evaluation of the alternatives and a recommendation for the upgrade of the WWTF necessary for the purpose of complying with the phosphorous limits contained in [the Town's] NPDES permit." (Cull Aff. Ex. 1, at 1.) The Study Contract included an indemnity provision, which provided:
The Engineer hereby agrees to protect, defend and indemnify and hold the Town of Newport and its employees agents, officers and servants free and harmless from losses, claims, liens, demands and causes of action to the extent arising out of negligent acts of the Engineer of every kind and character including but not limited to, the amounts of judgments, penalties, interests, court costs, legal fees and all other expenses incurred by the Town arising in favor of any party including claims, liens, debts, personal injuries sustained by employees of the Town, death or damage to property (including property of the Town).
(Cull Aff. Ex. 1, at Ex. C § 1.2.) Pursuant to the Study Contract, AECOM issued its January 2010 report recommending the coagulation followed by direct filtration method, which utilized a disc filter system. The Town followed AECOM's recommendation and selected the disc filter system as part of the phosphorous upgrade (the "Project"). (Compl. ¶¶ 19-20.)
On or around May 9, 2011, the Town and AECOM entered into the Preliminary Design Contract, under which AECOM was to perform "all preliminary engineering, surveying, drafting, calculations, borings, and other work as required and necessary to develop and produce preliminary plans, specifications, and associated contractdocuments involved in the construction of [the WWTF]." (Cull Aff. Ex. 2, at 2.) The Preliminary Design Contract contained an indemnity provision stating:
To the fullest extent permitted by law, the Engineer shall indemnify, exonerate, protect, defend (with counsel acceptable to the Town of Newport), hold harmless and reimburse the Town of Newport and its employees, officers and representatives from and against any and all damages (including without limitation, bodily injury, illness or death or property damage), losses, liabilities, obligations, penalties, claims (including without limitation, claims predicated upon theories of negligence, fault, breach of warranty, products liability or strict liability), litigation, demands, defenses, judgments, suits, proceedings, costs disbursements, or expenses of any kind or nature whatsoever, including without limitation, attorneys' and experts' fees, investigative and discovery costs and court costs, which may at any time be imposed upon, incurred by, asserted against, or awarded against the Town of Newport which are in any way related to the Engineer's performance under this Agreement but only to the extent arising from (i) any negligent act, omission or strict liability of Engineer, Engineer's licenses, agents, servants or employees of any third party, (ii) any default by the Engineer under any of the terms or covenants of this Agreement, or (iii) any warranty given by or required to be given by Engineer relating to the performance of Engineer under this Agreement.
(Cull Aff. Ex. 2, at Ex. D § 6.) As required by the Preliminary Design Contract, AECOM prepared a preliminary design of the Project. (Compl. ¶¶ 25-27.)
On or around September 9, 2011, the Town and AECOM entered into the Final Design Contract, in which AECOM agreed to prepare final drawings and specifications with all criteria necessary to meeting the Town's NPDES permit effluent limits. (Cull Aff. Ex. 3, at Ex. D § 6.) The Final Design Contract included an indemnity provision identical to that in the Preliminary Design Contract. (Cull Aff. Ex. 3, at Ex. D § 6.) As required by the Final Design Contract, AECOM issued specifications for bid entitled "Information for Bidders Forms for Bid, Agreement and Bonds, Specifications for Phosphorous Removal Upgrade Newport Wastewater Treatment Facility Newport, New Hampshire" (the "Specifications"). (Compl. ¶ 31.) The Town awarded the construction contract toPenta in March 2012. The Specifications formed the basis for the Town's contract with Penta (the "Construction Contract"). (Compl. ¶ 44.)
On or around March 2, 2012, the Town and AECOM entered into the Engineering Construction Contract, which provided for construction administration and related services. (Cull Aff. Ex. 4, at 2.) The Engineering Construction Contract contained an indemnity provision identical to those in the Preliminary and Final Design Contracts. (Cull Aff. Ex. 4, at Ex. D § 6.)
The Engineering Construction Contract required AECOM to verify and approve Penta's "estimates for periodic and final payments" and to prepare "certificate[s] of substantial completion and contract completion." (Cull Aff. Ex. 4, at ¶ I(1).) To comply with the AO, the Project's final completion date was set for December 31, 2012. However, the upgrade never reached substantial completion due to a number of deficiencies, which ultimately forced the WWTF to shut down. (Compl. ¶ 53.) Consequently, AECOM has neither certified substantial nor final completion, and it therefore refused to verify and approve Penta's requests for payments from the Town. (Cull Aff. Ex. 11.)
On January 26, 2015, Penta filed this action to recover payments it alleges the Town owes under the Construction Contract. Penta makes claims of breach of contract, unjust enrichment, quantum meruit, and negligent misrepresentation. (Cull Aff. Ex. 6.) Penta's complaint alleges AECOM designed the upgrade, which included preparing the Specifications that form the basis of Penta's contract with the Town. Penta states that it completed construction according to AECOM's plans and specifications, which called for the use of WesTech disc filters. (Cull Aff. Ex. 6, at ¶¶ 4, 8.) However, Penta alleges the WWTF failed to meet the required effluent limits due to the WesTech disc filters'inability to handle the required flow of wastewater, which was a condition outside of Penta's control. (Cull Aff. Ex. 6, at ¶¶ 9-12.) Accordingly, Penta maintains it has achieved full contract performance and is entitled to payment of the balance of its contract price, which the Town refused to pay. (Cull Aff. Ex. 6, at ¶ 15.)
On February 26, 2015, the Town sent a letter to AECOM demanding that AECOM defend and indemnify the Town against Penta's claims. (Cull Aff. Ex. 7.) On March 11, 2015, AECOM responded and refused to defend or indemnify. It maintained that "Penta's Complaint does...
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