Phillips & Jordan, Inc. v. McCarthy Improvement Co.
| Decision Date | 29 September 2020 |
| Docket Number | Civil Action No. 5:18-cv-00559-JMC |
| Parties | Phillips and Jordan, Inc., Plaintiff, v. McCarthy Improvement Company; Western Surety Company, Defendants. |
| Court | U.S. District Court — District of South Carolina |
This action arises from a contract dispute between Plaintiff Phillips and Jordan, Inc., ("P&J") and Defendants McCarthy Improvement Company ("MCI") and Western Surety Company ("WSC") (together "Defendants").1
1. P&J filed a Complaint against MCI and WSC on February 27, 2018, seeking damages arising from a highway construction project in Orangeburg, South Carolina (the "Santee Project"). (ECF No. 1.)
2. After Defendants filed a Motion to Dismiss for failure to state a claim pursuant to Rules 12(b)(4), 12(b)(5), 12(b)(6), and 12(b)(7) of the Federal Rules of Civil Procedure (ECF No. 7 at 2), P&J submitted an Amended Complaint on June 1, 2018, alleging five claims against MCI: (1) Breach of Contract; (2) Quantum Meruit or Unjust Enrichment; (3) Violation of SouthCarolina's Prompt Pay Act, S.C. Code Ann. § 29-6-30 (West 2020); (4) Recovery of Attorney's Fees and Interest for Improvement of Real Estate, § 27-1-15 (West 2020); and (5) Breach of Payment Bond; as well as two claims against WSC for: (1) Recovery of Attorney's Fees and Interest for Improvement of Real Estate; and (2) Breach of Payment Bond. (ECF No. 11 at 11-15.) Defendants withdrew the Motion to Dismiss on June 4, 2018. (ECF No. 12.)
3. On June 15, 2018, Defendants filed an Answer and Counterclaim against P&J, asserting a claim for breach of contract against P&J. (ECF No. 18 at 17.)
4. P&J Answered Defendants' Counterclaim on July 2, 2018. (ECF No. 25.)
5. P&J filed a Motion for Partial Summary Judgment on October 15, 2019. (ECF No. 83.)
6. On the same day, Defendants filed a Motion for Partial Summary Judgment (ECF No. 84) as to P&J's breach of contract claim and a Motion for Partial Summary Judgment as to their Counterclaim against P&J for breach of contract (ECF No. 85).
7. The court issued an Order denying the parties' respective Motions for Partial Summary Judgment. (ECF No. 130.)
8. Thereafter, the court conducted a bench trial starting on December 2, 2019, through December 6, 2019, continuing on December 16, 2019, through December 19, 2019, and concluding January 27, 2020, through January 31, 2020. (ECF Nos. 132-133, 135-137, 141-142, 144-145, 149-153.)
9. The court received two deposition transcripts (ECF Nos. 143, 146) and a video deposition2 (ECF Nos. 154, 166), and it heard live testimony from seventeen (17) witnesses:
10. The parties stipulated to the admission of the expert witness reports (Pl. Ex. Nos. 135, 205; Def. Ex. No. 2), and the court granted the parties' request to present witnesses out of order pursuant to Rule 611 of the Federal Rules of Evidence to facilitate efficiency through the examination of the witnesses for the parties' cases-in-chief. See Fed. R. Evid. 611(a)(1)-(3).
11. Following the bench trial, the parties filed written closing arguments to the court. (ECF Nos. 161, 162.)
12. After reviewing the testimony, carefully considering all of the evidence, weighing the credibility of the witnesses, evaluating the exhibits, and studying the applicable law, the court makes the following Findings of Fact and Conclusions of Law, in accordance with Rule 52 of the Federal Rules of Civil Procedure. Fed. R. Civ. P. 52(a)(1) () To the extent any Findings of Fact constitute Conclusions of Law, they are adopted as such; to the extent any Conclusions of Law constitute Findings of Fact, they are so adopted.
1. P&J is organized under the laws of North Carolina and has a principal place of business in Tennessee. (ECF Nos. 11, 18; Pl. Ex. No. 207 at 1.)
2. P&J specializes in Heavy Civil Infrastructure Construction, Right-of-Way (ROW), and Disaster Response. PHILLIPS & JORDAN, INC., https://pandj.com/disciplines/ (last visited May
4, 2020).
3. MCI is organized under the laws of, and has a principal place of business in, Iowa. (Id.)
4. MCI specializes in Heavy Highway, Aviation, Industrial, and Commercial Construction. MCCARTHY IMPROVEMENT CO., https://www.mccarthyimprovement.com/ (last visited May 4, 2020).
5. WSC is organized under the laws of, and has a principal place of business in, South Dakota. (Id.)
6. WSC "provides a full range of surety and fidelity bonds in all [fifty] (50) states, Canada[,] and Puerto Rico." CNA SURETY, https://www.cnasurety.com/cna/guest/cnasurety/ (last visited May 4, 2020).
7. On March 15, 2013, SCDOT issued a request for proposals to design and construct a highway interchange between Interstate 95 and U.S. Route 301 in Orangeburg County, South Carolina. (Def. Ex. No. 89; Trial Tr. at 87-88: Dec. 2.)
8. MCI's total adjusted bid of thirty-three million, one hundred eleven thousand, seven hundred dollars, and zero cents ($33,111,700.00) was four million, two hundred fourteen thousand, five hundred twenty-four dollars, and zero cents ($4,214,524.00) lower than any other bid. (Pl. Ex. No. 389-A.)
9. MCI bid four hundred forty (440) days to complete the Santee Project, which was one hundred fifty-five (155) days sooner than any other bid. (Id.)
10. Under South Carolina law, MCI had to provide SCDOT with "design requirements," which "means the written description of the infrastructure facility to be procuredpursuant to this article, including: (1) required features, functions, characteristics, qualities, and properties that are required by the State; (2) the anticipated schedule, including start, duration, and completion; and (3) estimated budgets as applicable to the specific procurement, for design, construction, operation, and maintenance."3 S.C. Code Ann. § 11-35-2910(10) (West 2020).
11. On September 23, 2013, MCI entered into a "Design-Build" contract ("Prime Contract") with SCDOT.4 (Def. Ex. No. 62 at 1-49.) SCDOT paid MCI a lump sum of thirty million, nine-hundred twenty-five thousand dollars ($30,925,000.00). (Id. at 11 ¶ A.)
12. MCI's scope of work under the Prime Contract provides: "[MCI] shall furnish all services, labor, materials, equipment, supplies, tools, transportation, and coordination required to perform all design, preliminary engineering, surveying geotechnical services, scheduling, permitting, right of way services, procurement, construction, utility coordination, demolition, material disposal[,] and any other services necessary to perform the [Santee] Project[.]" (Id. at 6.)
13. The Prime Contract defines "Substantial Completion" as follows: "The Project shall be considered substantially complete when it is serviceable to the public, all lanes and ramps are open, and all work is completed except for 'Project Close-out Activities'[;] 'Project Close-out Activities' are defined as punch list items, site clean-up, demobilization, and final Project documentation, including but not limited to as-built plans. (Id. at 16.)
14. "Final Completion" under the Prime Contract is defined as: "When [MCI] believes that all elements of its work on the Project, including all the requirements of the Contract, havebeen completed, it shall notify SCDOT in writing." (Id. at 18.)
15. The Prime Contract included a liquidated damages clause, assessing a seven thousand, five hundred dollars, and zero cents ($7,500.00) per day penalty on MCI if the Santee Project failed to reach Substantial Completion and one thousand, five hundred dollars, and zero cents ($1,500.00) each day that Final Completion had not been achieved. (Id. at 19 ¶ D; Trial Tr. "A" at 20: Jan. 29.) Under the Prime Contract, "Final Completion shall be achieved within [one hundred eighty] (180) calendar days of Substantial Completion[.]" (Id. at 18 ¶ 5.)
16. MCI entered into a payment bond agreement with WSC, Bond No. 929580183, for a penal sum of thirty million, nine-hundred twenty-five thousand dollars ($30,925,000.00) in accordance with S.C. Code Ann. § 11-35-3030(2)(A)(ii) (West 2020) ("Bond...
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