Penzel Constr. Co. v. Jackson R-2 Sch. Dist., Warner-Nease-Bost Architects & Henthorn, Sandmeyer & Co.

Decision Date14 February 2017
Docket NumberNo. ED 103878,ED 103878
Citation544 S.W.3d 214
Parties PENZEL CONSTRUCTION COMPANY, INC., Appellant, v. JACKSON R–2 SCHOOL DISTRICT, Warner–Nease–Bost Architects and Henthorn, Sandmeyer and Company, Respondents
CourtMissouri Court of Appeals

Michael E. Wilson, John C. Drake, St. Louis, MO, for Appellant Penzel.

Matthew R. Hale, Kansas City, MO, for Respondent/Cross–Appellant Jackson R–2 School District.

John M. Waldeck, for Cross–Respondent Henthorn, Sandmeyer and Company.

Gary E. Snodgrass, William S. Thomas, for Cross–Respondent Warner–Nease–Bost Architects.

OPINION

Colleen Dolan, Judge

Penzel Construction Company, Inc. ("Penzel"), on the behalf of Total Electric, Inc. (Total Electric) through a liquidating agreement, brought a breach of contract action against Jackson R–2 School District ("the District") based on a breach of implied warranty for furnishing "deficient and inadequate plans and specifications" to Penzel for a construction project. The District brought third-party claims against Henthorn, Sandmeyer and Company ("Henthorn") and Warner–Nease–Bost ("WNB"). The District, Henthorn, and WNB (hereinafter collectively "Respondents") filed motions for summary judgment in July of 2015, and the trial court granted the motions on November 30, 2015. We reverse and remand for further proceedings consistent with this opinion.

I. Procedural and Factual Background
A. Factual Background

The District entered into a contract with WNB as architect to build an addition to the Jackson High School ("the Project") on October 10, 2005. Subsequently, WNB entered into a subcontract with Henthorn to produce electrical plans and specifications for the Project. During the bidding phase, the District furnished the plans and specifications ("the Plans") for the Project to Penzel, who in turn gave a copy of the Plans to Total Electric. Neither Penzel nor Total Electric noticed any errors in the Plans during the bidding process. Based on the Plans, Total Electric submitted a bid of $1,040,444 to Penzel to furnish and install electrical work for the Project. On September 15, 2006, the District entered into a contract ("the Contract") with Penzel to be a general contractor for the Project. In turn, Penzel entered into a subcontract ("the Subcontract") with Total Electric to provide electrical work on the Project based on the submitted bid. The District issued a notice to proceed to Penzel on September 18, 2006, requiring substantial completion of the Project within 550 days. Total Electric substantially completed its contracted work around May 27, 2009 and claims this sixteen month delay was the direct result of the Plans' defects and inadequacies.

B. Procedural History

The procedural history surrounding the Contract and the Subcontract is fairly complicated. It involves multiple parties and causes of action that are not relevant to this appeal.1 The case on appeal involves only Count V: a breach of contract claim by Penzel against the District under the theory that the District made an implied warranty that the Plans for the Contract were adequate and complete, pursuant to the Spearin Doctrine.2 Penzel claims the District breached this warranty by rendering defective plans and specifications that caused damages to Total Electric. Additionally, derivative of Penzel's breach of contract claim, the District, as a third-party plaintiff and cross-appellant, filed third-party claims against Henthorn and WNB as the third-party defendants and cross-respondents.3 Our analysis focuses on Penzel's breach of contract claim against the District, although all five parties play relevant roles.

In July of 2010, Penzel executed a liquidating agreement with Total Electric authorizing Penzel to prosecute Total Electric's claim for damages caused by its reliance on the Plans furnished by the District. Penzel filed its First Amended Petition on July 21, 2010 seeking recovery for Total Electric's damages, as well as damages for Penzel's markup for overhead and profit caused by the Plans' inadequacies and deficiencies.

C. Penzel's Petition

Penzel claims that, under the Spearin Doctrine, the District impliedly warranted that the Plans it furnished were adequate for completing the Project, and the District breached the Contract by providing inadequate and defective plans and specifications, which caused damages to Total Electric. Penzel alleges the Plans were defective in a number of material ways, including (1) the inadequate low voltage switching and wiring design affecting the gymnasium and some student areas; (2) incorrect kitchen drawings; (3) the failure of the plans and specifications to call for emergency ballasts; (4) incorporating a defective gymnasium lighting design; (5) the failure to depict all the water heaters and circulating pumps requiring wiring; (6) specifications calling for outdated products; (7) non-compliance with building codes; and (8) an incorrect depiction of some site electrical work as work to be performed by others.

Penzel further alleges that Total Electric's damages were compounded by the District's and WNB's slow response time in dealing with problems on the Project. Penzel stated that Total Electric notified Penzel by e-mail of various problems encountered with the Plans, and Penzel then forwarded the e-mails to the District and WNB. Total Electric alleges it would frequently have to wait several weeks, and "sometimes months," for a response. Moreover, oftentimes the responses did not resolve the initial issue. Penzel contends that the delayed, and often ineffective, responses caused inefficiencies for Total Electric, obligating it to pay workers for being at the work site without making progress on the Project. Accordingly, Total Electric was forced to pay for an increased total of labor hours to finish the Project, which significantly increased its cost. Total Electric also claims the deficiencies and delayed responses caused the company to incur higher hourly costs for manual labor due to trade labor wage escalation.

Initially, Total Electric created daily logs for the Project to track the deficiencies in the Plans and their associated damages. However, Total Electric stopped maintaining these logs as problems persisted. Total Electric claimed it was unable to specifically track the amount of damages and extra hours attributable to each delay or distribution because the "sheer volume and variety of interfering and disruptive events" made it highly impractical. Total Electric further stated that accurately tracking and categorizing the defects and corresponding damages would have required the company to "devote multiple professionals to tracking costs," which would further increase its costs.

To prove damages for Total Electric's electrical labor loss of productivity, Penzel sought to use the "total cost method" or "modified total cost method." Penzel contends it can prove the remaining four categories of damages—consisting of (1) additional project management and supervision costs, (2) wage escalation, (3) unpaid change order work, and (4) its electrical consultant's estimated fee—without relying on either total cost method.

Due to the complexity and volume of facts in this case, we will adduce additional facts as necessary under the relevant portions of the Discussion in Sec. III.

II. Standard of Review

Whether a court should grant summary judgment is purely an issue of law.

Storey v. RGIS Inventory Specialists, LLC , 466 S.W.3d 650, 654 (Mo. App. E.D. 2015). Accordingly, appellate review of a circuit court's grant of summary judgment is de novo . Id. Summary judgment is only appropriate "when the moving party has demonstrated, on the basis of facts as to which there is no genuine dispute, a right to judgment as a matter of law." Binkley v. Am. Equity Mortgage, Inc. , 447 S.W.3d 194, 196 (Mo. banc 2014) ; Rule 74.04(c).4 We review the record in the light most favorable to the party against whom summary judgment was entered. Binkley , 447 S.W.3d at 196.

Our Court has articulated the standard a defendant-movant must meet to make a prima facie case on a motion for summary judgment:

A defendant, as the movant can establish a prima facie case for summary judgment by showing any of the following: (1) facts that negate any one of the elements of a claimant's cause of action; (2) that the non-movant, after an adequate period of discovery, has not been able to produce, and will not be able to produce, evidence sufficient to allow the trier of fact to find the existence of any one of the claimant's elements; or (3) that there is no genuine dispute as to the existence of each of the facts necessary to support movant's properly pleaded affirmative defense."

Storey , 466 S.W.3d at 654 (emphasis added). After the movant-defendant has made a prima facie case showing that he is entitled to judgment as a matter of law under Rule 74.04(c), "the [plaintiff's] only recourse is to show—by affidavit, depositions, answers to interrogatories, or admissions on file—that one or more of the material facts shown by the movant to be above any genuine dispute is, in fact, genuinely disputed." ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp. , 854 S.W.2d 371, 381 (Mo. banc 1993).

For the purposes of summary judgment, a "genuine dispute" exists if the record contains competent evidence of two plausible, but contradictory, accounts of essential facts. Id. at 382. In the context of summary judgment, there is a genuine dispute of a material fact only if the factual disputes might affect the outcome of the case. Am. Standard Ins. Co. of Wis. v. Stinson , 404 S.W.3d 303, 311 (Mo. App. E.D. 2012).

Before addressing Penzel's points on appeal, we will address Respondents' joint motion to strike Penzel's statement of facts and dismiss this appeal. Rule 84.04(c) controls the contents for the statement of facts in appellant ...

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