River Cities Const. Co., Inc. v. Barnard & Burk, Inc.

• Decision Date: 22 December 1983
• Docket Number: No. 83,83
• Court: Court of Appeal of Louisiana — District of US
• Parties: RIVER CITIES CONSTRUCTION COMPANY, INC., et al. v. BARNARD & BURK, INC. CA 0238.

Page 1260

444 So.2d 1260

RIVER CITIES CONSTRUCTION COMPANY, INC., et al. v. BARNARD & BURK, INC.

No. 83 CA 0238.

Court of Appeal of Louisiana, First Circuit.

Dec. 22, 1983.

Rehearing Denied Jan. 19, 1984.

Writ Denied March 16, 1984.

John S. White, Jr., and John Dardeen, Baton Rouge, for plaintiffs-appellants River Cities Construction Company, Inc. and J. King Woolf, Jr., Judicial Liquid.

Boolus J. Boohaker, Baton Rouge, for plaintiff-appellee Louisiana National Bank of Baton Rouge.

Ray Dawson, Baton Rouge, for defendant in reconvention-appellee Ohio Casualty Insurance Co.

Henry J. Klein, and Gary J. Rouse, New Orleans, for defendant-appellant Barnard & Burk, Inc.

Before PONDER, WATKINS and CARTER, JJ.

CARTER, Judge:

This is a suit for damages arising out of the alleged breach of two construction contracts and for damages for wrongful destruction and defamation of a construction business.

FACTS

On August 27, 1976, River Cities Construction Company, Inc. (River Cities) and Barnard & Burk, Inc. (B & B) entered into a subcontract for the construction of dock facilities on the Mississippi River at the Peavy Grain Terminal in Remy, Louisiana. The ship and barge dock subcontract was to be performed for a price of $2,851,475.00; subsequent change orders extended the completion date and increased the contract price to $2,984,975.67.

On August 31, 1977, River Cities again entered into a subcontract with B & B. This subcontract was for the construction of a barge anchorage system at the same site. The contract price was $68,607.00, and the work was to commence upon receipt of a permit from the Army Corps of Engineers and be completed 45 days from commencement. B & B obligated itself to obtain the necessary permit and to furnish a copy to River Cities.

In February, 1978, River Cities notified B & B that it was unable to complete the barge anchorage subcontract and that it no longer intended to pursue construction contracts in the open market. Thereafter, B & B terminated the barge anchorage subcontract and obtained the services of another subcontractor.

River Cities filed the present suit on June 5, 1979, seeking recovery against B & B under three separate grounds: tort, contract, and unjust enrichment. ¹ Plaintiff alleged that B & B wrongfully withheld payment of funds after completion of the ship and barge dock contract and then wrongfully attempted to cancel the second contract for the construction of the barge anchorage system. These wrongful acts allegedly caused the failure of River Cities' business and the losses suffered by plaintiff. B & B filed a reconventional demand alleging breach of contract by River Cities. ²

Trial Court Findings

At the close of plaintiff's case, B & B moved for a directed verdict as to River Cities' defamation claim. The trial judge granted the motion, finding that two elements of a claim for defamation were not present, viz., publication and malice. This ruling by the trial judge was not appealed. The remaining portions of the case were submitted to the jury.

The jury found that River Cities was not entitled to recovery based on the fault of B & B nor was River Cities entitled to recovery for breach of contract, but the jury did find that B & B had been unjustly enriched at the expense of River Cities. As a result, the jury rendered judgment on the principal demand in favor of River Cities for $29,567.00. The jury rendered judgment in favor of B & B for $7,905.42 on the reconventional demand upon finding that River Cities breached its contract with B & B.

ASSIGNMENTS OF ERROR

Both River Cities and B & B appealed suspensively from the trial court judgment. River Cities alleges that it was error for the trial court to deny recovery for the wrongful destruction of its business. River Cities further assigns as error the denial of recovery to them for additional expenses under the barge anchorage subcontract and the grant of recovery to B & B for breach of the barge anchorage subcontract by River Cities. B & B contends that the trial court erred in granting a motion to strike B & B's claim for attorney fees incurred in defense of a frivolous defamation claim.

Wrongful Destruction of Business

River Cities contends it was error for the trial court to deny recovery by River Cities against B & B for the wrongful destruction of its business. In support of this contention, River Cities reasons that B & B should have timely paid the $298,497.57 due under the ship and barge dock subcontract pursuant to Article A6 of the subcontract. The provision requires the contractor to make final payment to the subcontractor within 30 days of completion of the work as certified by the contractor and after receipt of executed release of liens. River Cities contends that Article 6, when construed in light of Article G 2.1 and G 2.2.2 of the general conditions of the subcontract, indicates that payment is due 30 days after the contract representative has inspected and accepted the work.

River Cities contends that the trial court erroneously instructed the jury as to the final payment conditions and, in the alternative, that River Cities fully complied with the final payment conditions. River Cities Contends that B & B, by wrongfully withholding the monies due under the contract and by breaching the contract, caused the destruction of River Cities' business.

Under the terms of the contract, B & B was to make monthly progress payments for 90% of the work performed, thereby contemplating a 10% retainage of $298,497.57. The method whereby final payment would be made was also provided for in the contract.

In instructing the jury as to the law applicable in the case, the trial judge gave the following charge with respect to interpreting the final payment provisions under the contract.

"Article A6, Subcontract, termed FINAL PAYMENT:

'Final payment, constituting the entire unpaid balance of the subcontract sum, shall be paid by the contractor to the subcontractor 30 days after completion of the work as certified by the contractor and after receipt of a properly executed release of liens.'

Under the GENERAL CONDITIONS of the subcontract, which are designated G1.2.2, is provided:

'The subcontract documents are complementary, and what is required by one shall be as binding as if required by all. If there is any discrepancy between the provisions of the various subcontract documents, the provisions of a given subcontract document shall prevail over those of all subcontract documents named subsequent thereto in the following list:

1) Agreement, including addenda and modifications thereto.

2) Drawings.

3) Specifications.

4) Special conditions of the subcontract.

5) Supplementary GENERAL CONDITIONS of the subcontract.

6) GENERAL CONDITIONS of the subcontract. (That's what we're reading from.)

7) All subcontract documents other than those named in clauses G1.2.2.1 through G1.2.2.6 above.

And, finally, under GENERAL CONDITIONS of the subcontract, we have G9.3.3, and it also relates to FINAL PAYMENT:

'FINAL PAYMENT shall be made 30 days after approval of the invoice for final payment and subcontractor's delivery to the contractor of (1) a notarized affidavit that all payroll, bills for materials and equipment, and other indebtedness connected with the work for which the contractor or owner or his property might in any way be responsible, have been paid or otherwise satisfied; (2) consent of surety, if any, to final payment; (3) releases and waivers of liens, notices of intention to lien and/or liens or claims; and (4), if required by the contractor or the owner, other data establishing payment or satisfaction of all such obligations, such as receipts, releases and waivers of liens arising out of the subcontract, to the extent and in such form as may be designated by the contractor. If any subcontractor refuses to furnish a release or waiver required by the contractor or the owner, the subcontractor may furnish bond satisfactory to the contractor and owner to indemnify them against any such lien. If any such lien remains unsatisfied after all payments are made, the subcontractor shall refund to the contractor or the owner all monies that the latter may be compelled to pay in discharging such liens, including all costs and reasonable attorneys' fees.'

Now, those are the pertinent contract provisions in this case. The court interprets these contractual provisions consistent with the first sentence of G1.2.2 of the GENERAL CONDITIONS of the subcontract which provides that: '... what is required by one shall be as binding as if required by all.' Therefore, if there are two requirements for final payment under the agreement and four requirements for final payment under the GENERAL CONDITIONS, the latter provision is controlling.

As the court appreciates the word 'discrepancy' utilized in the second sentence of G1.2.2, it is controlling where in the instance, and I'll give you an example, the agreement tells the contractor or owner to do a certain act whereas the GENERAL CONDITIONS tell the contractor or owner not to perform that act. That would be a discrepancy. But where there are requirements to be performed, if one says one requirement and the other says two, or in this case one says two requirements and the other says four requirements, it is not a discrepancy it is an additional requirement and the latter provision controls."

The trial court properly instructed the jury as to final payment conditions; therefore, it was necessary for River Cities to provide: (1) a notarized affidavit that all indebtedness for work for which contractor could be liable had been paid; (2) consent of surety to final payment; (3) releases and waivers of liens; and (4) any other data establishing payment of obligations as required by contractor to owner.

This River Cities did not do. Although River Cities submitted a notarized affidavit to B & B, it was made with the knowledge that the statement was false. All of River...