Randy Kinder Excavating, Inc. v. JA Manning Constr. Co.

• Court: U.S. Court of Appeals — Eighth Circuit
• Writing for the Court: SHEPHERD, Circuit Judge.
• Citation: Randy Kinder Excavating, Inc. v. JA Manning Constr. Co., 899 F.3d 511 (8th Cir. 2018)
• Decision Date: 07 August 2018
• Docket Number: No. 17-2886,17-2886
• Parties: RANDY KINDER EXCAVATING, INC., Plaintiff-Appellant Tricon Precast, Ltd., Plaintiff v. JA MANNING CONSTRUCTION COMPANY, INC.; Granite Re, Inc., Defendants-Appellees.

899 F.3d 511

RANDY KINDER EXCAVATING, INC., Plaintiff-Appellant

Tricon Precast, Ltd., Plaintiff

v.JA MANNING CONSTRUCTION COMPANY, INC.; Granite Re, Inc., Defendants-Appellees.

No. 17-2886

United States Court of Appeals, Eighth Circuit.

Submitted: April 12, 2018

Filed: August 7, 2018

Counsel who presented argument on behalf of the appellant and appeared on the brief was Matthew Wayne Willis, of Dyersburg, TN.

Counsel who presented argument on behalf of the appellee was Robert L. Magrini, of Oklahoma City, OK. The following attorney also appeared on the appellee brief; Evan B. Gatewood, of Oklahoma City, OK.

Before COLLOTON, ARNOLD, and SHEPHERD, Circuit Judges.

SHEPHERD, Circuit Judge.

This construction dispute arises from a government contract to build a pumping station for the purpose of managing water levels around parts of the lower White River in Arkansas. As with many large-scale projects, this venture was plagued with delays from its inception. These delays were caused by weather events, scheduling conflicts, and other unforeseen conditions. The district court found, however, that they were not the fault of J.A. Manning Construction Co. ("Manning"), a subcontractor on the project. These facts notwithstanding, the general contractor—Randy Kinder Excavating, Inc. ("Kinder")—repeatedly threatened Manning, contending that Manning would be responsible for any fees incurred as a result of the delays. In the face of these threats, Manning continued to perform its obligations until its involvement in the project was prematurely terminated by Kinder. After this termination, Kinder sued Manning, claiming that Manning breached the contract. Manning counterclaimed, alleging wrongful termination and seeking to recover the cost of unpaid labor and materials incurred on the project prior to the termination. The district court¹ conducted a bench trial, after which it decided the matter in favor of Manning. Kinder appeals, and we affirm.

I. Background

In June 2010, the U.S. Army Corps of Engineers (the "COE") awarded a contract to Kinder to serve as the general contractor on a project called the Grand Prairie Pump Station on the White River. Kinder’s winning bid was $9,449,161, and Kinder was allotted 425 calendar days to complete the project. That same month, Kinder entered into a subcontract with Manning, under which Manning would be paid $950,000 to engineer, furnish, and install a mechanically stabilized earth wall (the "MSEW"). In brief, an MSEW is a concrete retaining wall with gaps between the panels to allow water to escape.

Although the original schedule showed a completion date of September 26, 2011, Kinder submitted revised schedules to the COE on November 18 and December 8, 2010. According to these revised schedules, there were two parts of the project that needed to be completed before Manning could begin constructing the MSEW: (1) Kinder had to excavate dirt to achieve the specified starting elevation of the MSEW, and (2) pump station inlet walls had to be poured by the concrete subcontractor for the project. Manning requested to begin work on a number of occasions in 2010 and 2011, but Kinder refused each of these requests due to delays in completing these two prerequisites.

In May and June 2011, the area experienced a significant amount of rainfall, further delaying progress. As a result, Kinder did not begin its MSEW dirt work excavation until July 2011. In August of that year, the COE agreed to formally extend the completion date of the project to November 1, 2011. Manning was first able to mobilize to the project on August 16, 2011, but, at that point, Kinder still had not completed the excavation, and the concrete subcontractor had not installed the pump station inlet walls. On August 24, the COE advised Kinder that it was significantly behind schedule, and Kinder responded that the COE had overlooked significant weather events that led to excusable delays.

These extensive delays resulted in Manning not being able to use its intended supplier for the MSEW panels, so Manning then hired a company called EarthTec to construct the panels. The COE rejected EarthTec’s first panels because of a variety of issues. Ultimately, Manning terminated EarthTec and, on November 8, 2011, Manning hired another company to finish the work.

Roughly two weeks after Manning arrived onsite, Ryan McLaughlin—the project manager and a part owner of Kinder—sent an email to Manning stating the following:

Clock is ticking and we are burning precious daylight. We have 8 weeks to build the walls and backfill or we are dewatering and carrying jobsite overhead all winter and spring. Tic toc tic toc.

The very next day, Kinder sent Manning a deficiency notice that stated:

As it currently stands, Manning’s inability to perform work on this contract will jeopardize the required completion date on this project, force [Kinder] into liquidated damages, and cause [Kinder] to maintain its dewatering system through the summer of 2012, at which time [Kinder] would be forced to return to the job site and complete earth work.

Unknown to Manning, however, Kinder was telling the COE that weather and other issues were delaying the project into the summer of 2012. On the updated schedule submitted to the COE in October of 2011, Kinder represented to the COE that its projected date of completion was in September 2012. At the same time, Kinder was telling Manning that the MSEW needed to be completed by November of 2011 and that Kinder would seek damages from Manning if this did not occur.

By the time Manning could begin constructing the MSEW, only six days remained until the original projected date of completion of the entire project. Manning attempted to build the wall on two separate occasions thereafter, but Kinder and/or the COE claimed that Manning was failing to perform in accordance with the subcontract. Specifically, Kinder and the COE demanded that the panels be placed 0.75 inches apart, with absolutely no variance. Manning repeatedly told the COE and Kinder that the industry standard was to allow a quarter-inch variance, but the COE and Kinder refused to authorize such a variance. The relationship between the two ended when Kinder directed Manning to suspend operations on March 7, 2012, at which point Manning had constructed 27.5 feet of the 40-foot wall.

After Kinder unsuccessfully attempted to hire a number of new contractors who rejected the job because no variance was allowed, a company accepted the job and finished the MSEW. The finished, accepted product contained a number of the defects that Kinder and the COE had told Manning were unacceptable.

In October 2012, Kinder filed suit against Manning, alleging breach of contract and tortious interference. Manning answered the complaint and filed a counterclaim against Kinder alleging that Kinder wrongfully terminated the contract and committed slander. In its brief answer to Manning’s counterclaim, Kinder asserted the defenses of failure to state a claim, unclean hands, waiver, laches, estoppel, duress, payment, release, and accord and satisfaction. Additionally, Kinder asserted that "Manning committed the first material breach of the contract" and that Kinder’s "alleged failure to perform ... was legally excused by Manning’s failure to perform its express and implied obligations under the Subcontract." Manning filed a motion for partial summary judgment, arguing that Kinder’s extended-performance costs claim was precluded because Manning was not responsible for the performance delays on the project and Kinder had already been compensated for those delays. The district court denied this motion on November 18, 2016, finding that issues of material fact remained as to whether Manning was responsible for the delays.

Ten days later, a bench trial began before the district court. During the five-day trial, the parties and their experts testified extensively about the factual issues surrounding the construction delays, alleged deficiencies in Manning’s panels, and industry standards for constructing MSEWs. From this evidence, the district court reached the following conclusions relevant to this appeal. First, it held that Kinder, rather than Manning, committed the first material breach of contract. Next, it concluded that Kinder materially breached the contract by wrongfully terminating Manning’s performance. Finally, it noted that any of the alleged deficiencies in Manning’s work were not material breaches of the contract and that Manning had substantially performed its obligations. As a result, the court awarded Manning $215,578.24, which represented Manning’s cost for unpaid labor and materials incurred prior to the date of termination.

II. Discussion

"Following a bench trial, we review the district court’s legal conclusions de novo and its factual findings for clear error." PHL Variable Ins. Co. v. 2008 Christa Joseph Irrevocable Tr., 782 F.3d 976, 979 (8th Cir. 2015). On appeal, Kinder assigns three points of error to the district court’s judgment. Kinder initially contends that Manning committed the first material breach of contract. Next, Kinder asserts that the district court erroneously concluded that Kinder wrongfully terminated the contract. Finally, Kinder argues that the evidence presented to the district court was insufficient to support the damages award. We address each in turn.

A.

Kinder’s primary argument is that the district court erred in concluding that Kinder committed the first material breach of contract. On this point, the district court found that "Kinder first breached the subcontract with Manning by threatening to assess delay-related damages without any justification; interfering in the relationship between Manning and EarthTec; and[ ] failing to provide adequate assurances that Manning would be paid for its work on the MSE Wall." Kinder attempts to counter these findings by arguing that the first breach actually occurred when Manning failed to pay its suppliers or failed to obtain "stamp...