PYCA Industries, Inc. v. Harrison County Waste Water Management Dist.

• Decision Date: 27 May 1999
• Docket Number: No. 97-60675,97-60675
• Parties: PYCA INDUSTRIES, INC., et al., Plaintiffs, PYCA Industries, Inc., Plaintiff-Appellant, v. HARRISON COUNTY WASTE WATER MANAGEMENT DISTRICT; et al., Defendants, Max Foote Construction Company, Inc., Defendant-Cross Claimant-Appellee-Appellant, v. Owen and White, Inc., Defendant-Cross Defendant-Cross Claimant-Appellee, v. Harrison County Waste Water Management District, Defendant-Cross Defendant-Appellee-Appellant. Fifth Circuit
• Court: U.S. Court of Appeals — Fifth Circuit

Page 351

177 F.3d 351

PYCA INDUSTRIES, INC., et al., Plaintiffs, PYCA Industries, Inc., Plaintiff-Appellant, v. HARRISON COUNTY WASTE WATER MANAGEMENT DISTRICT; et al., Defendants, Max Foote Construction Company, Inc., Defendant-Cross Claimant-Appellee-Appellant, v. Owen and White, Inc., Defendant-Cross Defendant-Cross Claimant-Appellee, v. Harrison County Waste Water Management District,

Defendant-Cross Defendant-Appellee-Appellant.

No. 97-60675.

United States Court of Appeals,Fifth Circuit.

May 27, 1999.

E. Stephen Williams, Young, Scanlon & Sessums, Jackson, MS, for Plaintiff-Appellant.

Gary Eugene White, Deborah A. Thompson, James B. Wright, Jr., Blackwell & White, Gulfport, MS, for Harrison Cty. Waste Water Management Dist.

Patrick Holt Zachary, Zachary & Leggett, Hattiesburg, MS, for Owen and White, Inc.

Christopher J. Solop, Luther Smith Ott, William R. Purdy, Ronald Alton Yarbrough, Ott & Purdy, Jackson, MS, for Max Foote Constr. Co., Inc.

Appeals from the United States District Court for the Southern District of Mississippi.

Before GARWOOD, BARKSDALE and STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

Before the court is a reprise of the travails of the construction of Harrison County, Mississippi's wastewater treatment facility. We have examined many issues in this case in an earlier opinion, see PYCA Indus., Inc. v. Harrison County Waste Water Management Dist., 81 F.3d 1412 (5th Cir.1996) ("PYCA I "), and here are asked to resolve additional disputes between the county and its contractors. Currently before us is the appeal from a grant of summary judgment in favor of Harrison County Waste Water Management District ("District") on the issue of the District's role in adjusting the cost of and the time for performance under a contract it had with Max Foote Construction Company ("Foote"). Execution of the contract required Foote to subcontract with numerous other companies, and one such subcontract, with PYCA Industries, Inc. ("PYCA"), led to the instant dispute.

The history of this case resides in multiple contract and tort claims among several different parties arising out of the construction of the $9.27 million West Biloxi Wastewater Treatment Facility ("Facility"). After several years of litigation and a previous appeal, the status of the case today is that Foote and PYCA claim that the District violated its contract with Foote, and PYCA claims intentional interference by Defendant-Appellee Owen & White, Inc. ("O&W") with PYCA's contractual relationships. The district court granted sovereign immunity to O&W as an agent of the District, which this court previously held had sovereign immunity as well, see PYCA I, 81 F.3d 1412, 1419-20 (5th Cir.1996). The district court also found that the contract claims raised by PYCA and Foote had not been properly preserved or were otherwise barred. PYCA and Foote (collectively, "Appellants") now argue that their rights were preserved in accordance with the contract documents and that summary judgment was otherwise improvidently granted because material issues of fact exist about the propriety of certain price adjustments under the contract. The parties also submit that they should have been granted summary judgment on the issue whether the District violated its contract with them. PYCA also disputes the extension of sovereign immunity to O&W and requests additional equitable relief.

We begin the opinion with an overview of the factual and procedural background to this case and a statement regarding the standard of review that we will apply. In Part III, we address Foote's claims on appeal; Part IV concerns the District's cross-claim against Foote. Part V of the opinion resolves PYCA's claims against the District, while Part VI addresses the joint claim of Foote and PYCA. Finally, in Part VII, we dispose of PYCA's claim against O&W. For the reasons articulated below, we affirm the judgment of the district court.

I

The instant case involves the remaining claims between the parties in this litigation arising out of the construction of the Facility. ¹

A

The District hired Foote on September 27, 1989, ² pursuant to Contract No. 88-1, as the general contractor for the project. ³ The contract designated O&W as the project engineer and the authorized representative of the District. PYCA, an electrical subcontractor, provided a bid to Foote for the underground wiring and conduit work and the supply and installation of the electrical equipment at the Facility, and that bid was incorporated by Foote into its own bid to the District. Foote ultimately secured the general contract. Subsequently, Foote hired PYCA (pursuant to Subcontract No. 80-16000) for $1.916 million on December 5, 1989 to perform the electrical work on the project. ⁴ PYCA was bound to Foote under the terms of its subcontract by all the terms and conditions of the prime contract. After its bid was accepted, in February 1990, PYCA entered into a purchase order contract with The Reynolds Company ("Reynolds") for the purchase of all electrical equipment for the project. ⁵ While the project was ongoing (in July 1990), the District and O&W negotiated with Foote and PYCA for certain changes in the electrical distribution system, changes which PYCA and Foote had proposed before the commencement of the project. ⁶ The prime contract required that a change order be issued to effectuate such changes. Because the District had obtained federal funding for the project, Foote's contract and PYCA's subcontract were subject to certain EPA regulations, which, among other things, provided an orderly process for changes in the work. O&W, under the District's direction, was responsible for reviewing and approving these change orders.

The District ultimately directed O&W to implement the changes suggested by PYCA and Foote. Although the parties reached an agreement on a credit for the underground electrical wiring and conduit work, they could not agree on a credit for the revised equipment necessary for the project. Nevertheless, the District made equitable adjustments to the amount due to Foote based on its own calculations. The net effect of the adjustment was that the District paid less than originally planned to Foote, which resulted in less money paid by Foote to PYCA. Foote (and PYCA through Foote) objected to the change order because they disputed whether proper equitable adjustments were made based on the changes to the electrical system. Because PYCA had, in the interim, contracted with Reynolds, PYCA believed that the equitable adjustment should reflect the prices being charged by Reynolds, not the proposed prices made before PYCA's subcontract was executed. Nevertheless, the District initially determined that the proper equitable adjustment was $161,180. The District reached that figure by obtaining price quotes from additional electrical equipment suppliers, a step which PYCA contends was a breach of the prime contract.

The prime contract did require Foote and PYCA to apprise the District and O&W of the costs associated with the purchase of the electrical equipment, and, in March 1991, the District sought that data. ⁷ At the same time, Reynolds refused to allow the District, seeking similar information, to audit its records. ⁸ O&W determined that the pricing by PYCA's suppliers was not substantiated and decided that a further adjustment was required; the District and O&W sought to force PYCA to seek other equipment options based on the price quotations they had obtained from other suppliers. Consequently, and with the approval of the Mississippi Department of Environmental Quality, O&W issued change order # 7 on July 2, 1991, as an "agreed change order" establishing a change in the total credit due to the District from $161,180 to $283,109. Foote refused to agree to the change order, so, on August 7, 1991, the District issued it as a "unilateral change order" as allowed under the prime contract. The change order reduced Foote's payment by $283,109, and Foote in turn reduced its payment to PYCA by an identical amount. PYCA objected on the ground that this increase in the amount deducted forced it to breach its purchase price commitment with Reynolds. Foote objected to the District's unilateral determination in an attempt to preserve PYCA's rights. Although PYCA initially refused to complete its subcontract with Foote until the credit dispute was resolved, PYCA, responding to the threat of contract termination exerted by the District, ultimately finished its portion of the project. ⁹

There is no dispute that the changes to the electrical distribution system resulted in a cost savings which the District was entitled to realize. The District contends that the maximum amount of credit due it is $283,109, while PYCA argues that the reasonable credit is $122,000. Although any adjustment in the amount of credit claimed by the District will pass through Foote directly to PYCA, Foote asserted that the contract completion was delayed 59 calendar days by the District's failure to resolve the dispute regarding the changes to the electrical distribution system and the pricing of these same changes in a timely fashion. ¹⁰

B

On August 28, 1991, PYCA sued the District, O&W, Foote, and Fidelity & Deposit Company of Maryland ("F&D") as surety under the labor and materials bond. ¹¹ In count one, PYCA sought a declaratory judgment on the issue whether the District, O&W, or Foote were authorized under the prime contract to examine Reynolds's price data, bid-shop the price of the electrical equipment, or cause PYCA to breach its agreement with Reynolds by taking unilateral action. In count two, PYCA alleged that actions by the District, O&W, and Foote breached the contract and violated 40 C.F.R. § 33.1030 by failing to provide PYCA an equitable adjustment pursuant to change order # 7, resulting in damages of $161,000. In count three, PYCA alleged that the District, O&W, and Foote breached the contract...