Scheck Indus. Corp. v. Tarlton Corp.

• Decision Date: 15 July 2014
• Docket Number: No. ED 100371.,ED 100371.
• Citation: 435 S.W.3d 705
• Parties: SCHECK INDUSTRIAL CORPORATION, Plaintiff/Appellant, v. TARLTON CORPORATION, et al., Defendant/Respondent.
• Court: Missouri Court of Appeals

435 S.W.3d 705

SCHECK INDUSTRIAL CORPORATION, Plaintiff/Appellant,

v.TARLTON CORPORATION, et al., Defendant/Respondent.

No. ED 100371.

Missouri Court of Appeals,

Eastern District,

Division Four.

July 15, 2014.

Kurtis B. Reeg, St. Louis, MO, for appellant.

Philip J. Christofferson, St. Louis, MO, for respondent.

PHILIP M. HESS, Judge.

Introduction

In this dispute involving the breach of a construction contract, subcontractor Scheck Industrial Corporation (Plaintiff) appeals the amended judgment of the Circuit Court of the City of St. Louis entered after a bench trial in favor of general contractor Tarlton Corporation (Defendant) on Plaintiff's claims for account stated and breach of contract and on Defendant's counterclaims for breach of contract, breach of warranty, and indemnification, and for Defendant's request for attorney fees. On appeal, Plaintiff claims that the trial court abused its discretion by barring Plaintiff's retained expert from testifying. Plaintiff also claims that the trial court's amended judgment against Plaintiff on its claims of account stated and breach of contract is “against the manifest weight of the evidence and a misapplication of the law” because: (1) Defendant did not dispute Plaintiff's invoices and admitted it owed Plaintiff compensation for work performed; (2) Plaintiff performed its obligationsunder the Subcontract in a “workmanlike manner” and Defendant accepted Plaintiff's work thereby waiving its right to object; and (3) the Subcontract's “pay-if-paid” clause is inapplicable. Plaintiff further claims that the trial court's amended judgment for Defendant on its counterclaims is “against the manifest weight of the evidence and a misapplication of the law” because: (1) Defendant did not prove that Plaintiff's work was not performed in a “workmanlike” manner and Defendant failed to perform its obligations under the Subcontract, the Subcontract's warranty provision is inapplicable, and Defendant failed to mitigate its damages; (2) Defendant failed to establish it was entitled to indemnification under the Subcontract; and (3) Defendant failed to establish that it was entitled to damages or attorney fees. We affirm.

Factual Background ¹

In March 2008, Defendant entered into a Contract with the electric utility company Ameren under which Defendant agreed to perform certain work related to the repair of Ameren's Taum Sauk hydroelectric power plant. Defendant was the general contractor on the project, charged with performing general contracting services pursuant to the terms of the Contract. Pertinent to this dispute, the Contract required Defendant to cut eight drain access ports into the lower section of the plant's “penstock,” weld steel collars composed of A572 carbon steel around each port, and install removable covers or doors over these ports. ² The penstock is a one-mile long tunnel, 18 feet in diameter, which transfers water from a water reservoir to turbines in an electricity-generating facility. The upper portion of the penstock is composed of A201 steel, while the lower portion, where the drain access collars were to be installed, is composed of T–1 steel.³

The Subcontract

Because Defendant did not have the requisite expertise to install the collars on each of the eight drain access ports required under the Contract, it entered into a Subcontract with Plaintiff in January 2009, under which Plaintiff agreed to complete these repairs of the penstock on a “time and materials” basis. ⁴ The Subcontract's opening paragraph incorporated the Contract making it part of the Subcontract, as well as all the “contract documents” that made up the Contract. These contract documents included numerous drawings and specifications as identified in “Attachment A” of the Subcontract, of which drawing 8304–X–26058 specified that the lower portion of the penstock is composed of T–1 steel and the upper portion of A201 steel.

Pertinent to this appeal, the Contract contained a warranty provision, under which Plaintiff warranted “that the Work performed under the Contract will be free from defects in design, [the] workmanship ... will be suitable for its intended purpose [and] the Work will comply with the specifications, drawings, samples and other descriptive information as furnished or specified in the Contract....” In addition, paragraph 33 of the Contract included the following provision pertaining to attorney fees:

In the event it shall become necessary for [Defendant] to retain the services of an attorney for the purposes of enforcing any provisions of this Contract, [Plaintiff] shall pay the costs of the court and the reasonably [sic] attorneys' fees incurred.

Regarding the relevant provisions of the Subcontract, Part I of the Subcontract concerned “payment” and included the following “pay-if-paid” clause, applicable to both progress payments and final payments:

Progress payments will be made each month from funds received from [Ameren] as and when the funds are received for the proportionate contract value of work completed and/or materials delivered to [the] site.... Such partial payments shall not become due [Plaintiff] unless and until 7 days after [Defendant] has received payment for such work and materials, it being a condition precedent to [Defendant's] obligation to pay [Plaintiff] that [Defendant] has received payment from [Ameren] for work and materials referred to.

Final payment shall not be due until the work described in this contract is fully completed and performed in accordance with the Contract Documents ... and final payment from [Ameren] is received by [Defendant], it being a condition precedent to [Defendant's] obligation to pay [Plaintiff] that [Defendant] has received final payment from [Ameren] for work and materials referred to. (Emphasis in original).

Part II of the Subcontract contained certain “special requirements” and, under subpart (H), listed numerous “general” provisions pertaining to Plaintiff's obligations and further agreements between the parties. Paragraph 17 of Part (II)(H) is an indemnity clause, which provides:

[Plaintiff] agrees to indemnify and hold harmless [Defendant], its Directors, Officers and Employees from and against any and all loss, claims, suits, causes of action, liability, damages, costs, expenses and/or attorney fees incurred by [Defendant] or its successors, assignees and sureties as a result of any failure, neglect or inability of [Plaintiff] to pay its suppliers, material men or subcontractors (i.e., sub-subcontractors of [Defendant] ) or as a result of [Plaintiff's] breach or alleged breach of, or any dispute in connection with, any contract or order, whether expressed or implied, with any such sub-subcontractors, or with suppliers or material men to [Plaintiff], or as a result of any claim made by such sub-subcontractor, suppliers or material men to [Plaintiff] to [Defendant] or on any Performance and/or Payment Bond posted by [Defendant] in connection with the construction job which is the subject of this Agreement, or as a result of any personal injury or property damage arising out of or in connection with this Subcontract or any work or operations under or in connection with this Subcontract, and from personal injury or property damage resulting from use by [Plaintiff] or its sub-subcontractors of any equipment owned or rented by [Defendant].

Further, under paragraphs 30 and 32 of Part (II)(H), Plaintiff and Defendant agreed that Plaintiff would undertake personalinvestigation of the conditions affecting its work and independently determine the criteria necessary to complete its obligations. Those provisions provide as follows:

[Plaintiff] agrees he is fully informed regarding all conditions affecting work to be done under, and material, equipment, apparatus and labor to be furnished for completion of this Subcontract; and also agrees and certifies that his information was secured by personal investigation and research and not from any estimates or representations of any officer, agent or employee of [Defendant].

* * *

[Plaintiff] shall independently determine and verify all field measurements, field construction criteria, etc., as required to accomplish, erect and complete his work requirements.

Execution of the Subcontract

In March 2009, Plaintiff selected a welding procedure appropriate for welding A572 carbon steel to the A201 steel in the upper portion of the penstock. After Plaintiff had successfully completed the placement of the invert plates on this upper portion of the penstock, it began, in early June 2009, the welding work on the eight drain access ports located in the lower portion of the penstock. Although the lower portion of the penstock is composed of a different type of steel than the upper portion of the penstock, Plaintiff did not investigate whether a different base metal was present and did not submit a new welding procedure for welding the A572 carbon steel collars to the T–1 steel of the penstock. Shortly thereafter, on June 25th when 85 percent of the welding on the drain access ports was complete, Plaintiff identified cracking in the penstock just outside the completed welds and reported this information to Defendant.

Welding continued based on the parties' belief that the cracking was an isolated incident. However, by July 2, 2009, the parties realized that the cracking was widespread and Defendant directed Plaintiff to stop its welding work and requested Plaintiff to submit a new welding method. Around the same time, James Sopata, Plaintiff's superintendent for the project, learned for the first time that the lower portion of the penstock was composed of T–1 steel.

Several weeks later, around July 29th, Plaintiff applied its new proposed welding method to a single access collar. This required Plaintiff to remove the faulty access collar, remove the cracks in the penstock, and re-weld a new access collar using the new method. After its application, Plaintiff discovered additional...