S. Indus. Contractors, LLC v. O'Brien & Gere, Inc. of N. Am.

• Decision Date: 12 April 2021
• Docket Number: Civil Action No. 2:19-cv-1691-RMG
• Parties: Southern Industrial Contractors, LLC, Plaintiff, v. O'Brien and Gere, Inc. of North America, and Western Surety Company, Defendants.
• Court: U.S. District Court — District of South Carolina

Southern Industrial Contractors, LLC, Plaintiff, v. O'Brien and Gere, Inc. of North America, and Western Surety Company, Defendants.

Civil Action No. 2:19-cv-1691-RMG

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA CHARLESTON DIVISION

April 12, 2021

ORDER AND OPINION

Before the Court are the parties' cross-motions for partial summary judgment. (Dkt. Nos. 84 and 86). For the reasons set forth below, the Court denies Plaintiff's motion for partial summary judgment and grants Defendants' motion for partial summary judgment.

I. Background

By written contract dated July 24, 2018, J.W. Aluminum, Inc. ("JWA") hired Defendant O'Brien and Gere, Inc. of North America ("Defendant OBG") to design and construct a private construction project known as the Boilermaker Expansion Project at JWA's facility in Berkeley County, South Carolina (the "Project"). See (Dkt. No. 50 ¶ 83). Defendant OBG's scope of work included design and construction services on two structures at JWA's facility—the Melt Building and the Rolling Mill Building. (Id. ¶ 84).

By written subcontract dated August 7, 2018, (the "Subcontract"), Defendant OBG subcontracted a portion of the scope of work on the Project to Plaintiff Southern Industrial Contractors, LLC for the lump sum of $2,860,432.00. (Id. ¶ 85). Plaintiff's original scope of work under the Subcontract was for it to construct a portion of the concrete foundation for the Melt Building only. (Id. ¶ 86); see also Subcontract, (Dkt. No. 86-3).

Subsequently, Defendant OBG requested that Plaintiff furnish a proposal to perform additional work items related to the sheet-pile cofferdam system on the Rolling Mill Building. See (Dkt. No. 85 at 2); (Dkt. No. 50 ¶¶ 92-93). Plaintiff furnished a proposal dated September 5, 2018 containing four cost items. (Dkt. No. 85-1). In early September 2018, Defendant OBG Project Manager Doug Feeney authorized Plaintiff to proceed with "driving sheet piles." Doug Feeney Deposition, (Dkt. No. 85-2 at 3-4) (testifying that Feeney authorized Plaintiff to begin "driving sheet piles" before "the change order was signed"); (Dkt. No. 50 ¶ 94) ("While OBG reviewed the cofferdam design, it permitted [Plaintiff] to perform limited mobilization and other design work based on [Defendant OBG's] feedback.").

Around October 26, 2018, Plaintiff "executed and returned to [Defendant OBG] the version of Change Order No. 1¹ provided by [Defendant OBG] . . . which increased the contract sum for the additional work relating to the Sheet Pile Cofferdam." See (Dkt. No. 10 ¶ 13). Change Order 1 ("CO1") provides that the "work [detailed therein] will be authorized in phases." (Dkt. No. 85-3 at 3). CO1 states that "[d]ue to various unknowns that cannot be clarified until design completion, [Plaintiff] would like to propose this work to be performed on a Time and Material (T&M) Basis with a Cost-Not-to-Exceed." (Id.). The four line items which comprise CO1's scope of work are: (1) "Sheet pile cofferdam around the rolling mill pit installation" with a cost-not-to-exceed of $1,356,000.00; (2) "Engineering Design Costs for designing the Sheet Pile Cofferdam System" with a cost-not-to-exceed of $46,000.00 including a "15% mark-up"; (3) "Permanent Sheet Pile materials" with a cost-not-to-exceed of $683,604.27; and (4) "W-Beams, Walers, and miscellaneous Structural Steel required to stiffen the cofferdam" at a unit cost of "$2.00 per pound(plus 15% mark-up)" with a cost-not-to-exceed of $2,205,102.00. (Id. at 3) (further providing a credit of $200,000.00 for the "[r]e-sell of Steel Material Scrap"). CO1 explicitly states that Defendant OBG "reserves the right to rescind this change order pending an audit of subcontractor's scope-of-work, unit pricing, and final costs." (Id. at 2).

On December 12, 2018, Defendant OBG signed CO1 after striking line item 4, reducing the value of CO1 from $4,090,706.27 to $1,885,604.27. (Dkt. No. 86-4). Defendant OBG argues that it struck line 4 because Plaintiff "submitted a waler design that [was] unworkable" and "defective." See (Dkt. No. 50 ¶¶ 145, 159); (Id. ¶ 97) ("After reviewing [Plaintiff's] proposed cofferdam design, which was received on October 12, 2018, [Defendant OBG] determined that the design did not work within other Project parameters; thus, [Defendant OBG] informed [Plaintiff] that it would not use [Plaintiff's] design and that [Defendant OBG] was removing line item number 4 . . . from CO#1's scope.").

On January 18, 2019, Plaintiff requested a punch list² for the sheet pile work under CO1 for line items 1 and 3 and confirmed Defendant OBG's "understanding . . . that the walers and cross beams will be installed by other contractors. Therefore, [Plaintiff] currently have [sic] no remaining work that can be performed . . . on the rolling mill pit cofferdam." (Dkt. No. 86-5 at 2) (emphasis added); see also (id.) (noting Plaintiff "would like to start disassembly of our onsite crawler cranes and demobilization of our equipment if [Defendant OBG] considers [Plaintiff's work] complete with the cofferdam installation"). On January 28, 2019, Defendant OBG sent a letter to Plaintiff conveying its understanding that Plaintiff had completed its work and was demobilizing. (Dkt. No. 86-6 at 2).

By letter dated February 8, 2019, Plaintiff objected to the removal of line item 4 from CO1 and invoked the dispute resolution procedures found at Article 26 of the Subcontract. (Dkt. No. 86-8). In its letter, Plaintiff argues that CO1's "cost-not-to-exceed" requirement applied to all work on CO1 and not the individual line items. (Id. at 2). Plaintiff argues that because CO1 was a time and materials change order and Defendant OBG had signed at least some of Plaintiff's daily time sheets, Defendant OBG owed Plaintiff for all costs incurred in performing the work associated with CO1. See (id.).³ Neither party disputes, however, that Plaintiff performed no work pertaining to line item 4 of CO1. See Sam Estis Deposition, (Dkt. No. 86-9 at 5) ("Q. But Mr. Estis, you never did install the walers, right? A: [Plaintiff] did not install the walers.").

On April 4, 2019, Plaintiff sent Defendant OBG a payment and demand letter pursuant to S.C. Code Ann. § 27-1-15. (Dkt. No. 86-15). On May 17, 2019, Defendant OBG responded to said letter. (Dkt. No. 86-17).

On April 8, 2019, Plaintiff sent notice that it was filing a mechanic's lien on the Project property pursuant to S.C. Code Ann. § 29-5-10, et seq. (Dkt. No. 86-11). The mechanic's lien filed by Plaintiff was in the amount of $5,039,693.01. (Id. at 2). On May 24, 2019, Plaintiff filed anAmended and Restated Notice and Certificate of Mechanic's Lien (the "Amended Lien") in the amount of $4,220,679.28, which Plaintiff claimed revised "the previously filed Mechanic's Lien to reflect the correct amount it has been paid by" Defendant OBG. (Dkt. No. 86-13 at 4).

On or about June 24, 2019, Defendant OBG discharged the Amended Lien by filing a surety bond (the "Lien Bond") issued by Defendant Western Surety Company ("Western"). (Dkt. No. 86-14).

On July 25, 2019, Plaintiff filed an amended complaint against Defendants OBG and Western (collectively "Defendants") alleging five causes of action: (1) breach of contract against Defendant OBG; (2) suit on a bond against Defendants OBG and Western; (3) unjust enrichment quantum meruit against Defendant OBG; (4) failure to investigate and pay per S.C. Code. Ann. § 27-1-15 against Defendant OBG; and (5) intentional interference with prospective contractual relations against Defendant OBG.

On October 6, 2020, Defendants filed an Amended Answer. (Dkt. No. 50). Defendants bring the following counterclaims: (1) breach of contract—delays and deficiencies; (2) breach of contract—defective work; (3) violation of S.C. Code Ann. § 29-5-100 for submitting an overstated lien; (4) violation of S.C. Code Ann. § 29-5-90 for submitting an overstated lien; (5) fraudulent misrepresentation; and (6) negligent misrepresentation.

On February 23, 2021, Plaintiff moved for partial summary judgment on Defendants' counterclaims. (Dkt. No. 84). First, to the extent Defendants' claims for breach of contract rely on CO1, Plaintiff moves for summary judgment on the basis that CO1 is not a valid contract. (Dkt. No. 85 at 4-9) (arguing that there was no "meeting of the minds" as to CO1). Second, Plaintiff argues it is entitled to summary judgment on certain aspects of Defendants' breach of contract claims. Specifically, Plaintiff argues it is entitled to summary judgment on these claims to theextent that Defendants allege Plaintiff failed to furnish adequate waler designs for the sheet-pile cofferdam system—line item 4 of CO1—"as [Defendant OBG] lacks the requisite expert evidence to establish such a claim." (Id. at 1); see (Dkt. No. 50 ¶ 145) ("[Plaintiff] also submitted a waler design that proved unworkable, and that improper design further delayed both the completion of its work and the overall Project progression"); (Id. ¶¶ 157-159) (alleging that "[Plaintiff] failed to timely provide a waler design" and "[b]y submitting an untimely and defective waler design, [Plaintiff] delayed the Project and caused [Defendant OBG] to incur substantial damages"). Defendants oppose Plaintiff's motion. (Dkt. No. 92). Plaintiff filed a reply. (Dkt. No. 94).

On February 23, 2021, Defendants also moved for partial summary judgment. (Dkt. No. 86). Defendants argue as follows:

(1) Defendants are entitled to summary judgment in part on Plaintiff's claim for breach of contract "because there is no genuine dispute of material fact that [Plaintiff] is . . . entitled to [no] more than $1,885,604.27 for the work it performed pursuant to CO1."

(2) Defendants are entitled to summary judgment on Plaintiff's claim for suit on a bond "because there is no genuine dispute of material fact that [Plaintiff] willfully overstated the amount of its mechanic's lien."

(3) Defendants are entitled to summary judgment on Plaintiff's claim for unjust

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