Spotsylvania County School Bd. v. Seaboard Sur. Co., 910428
| Decision Date | 28 February 1992 |
| Docket Number | No. 910428,910428 |
| Citation | 415 S.E.2d 120,243 Va. 202 |
| Parties | , 73 Ed. Law Rep. 561 SPOTSYLVANIA COUNTY SCHOOL BOARD v. SEABOARD SURETY COMPANY, et al. Record |
| Court | Virginia Supreme Court |
Jack E. McClard, Richmond (Ann T. Burks, Hunton & Williams, on briefs), for appellant.
R. Terrence Ney, McLean (Thomas F. Farrell, II, M. Melissa Glassman, McGuire, Woods, Battle & Boothe, on brief), for appellee Sherman Const. Corp.
William W. Thompson, Jr., Alexandria (Richard F. Lane, Thompson & Waldron, on brief), for appellee Seaboard Sur. Co.
Present: CARRICO, C.J., COMPTON, STEPHENSON, WHITING, LACY and KEENAN, JJ., and HARRISON, Retired Justice.
On May 14, 1987, the Spotsylvania County School Board (the School Board or the Board) and Sherman Construction Corporation (Sherman) entered into a contract for the construction of Courtland Elementary School in Spotsylvania County. The agreed cost of construction was $4,360,000, and the stipulated completion date was not later than August 15, 1988.
The School Board was empowered to terminate the contract "[i]f the Contractor ... persistently disregard[ed] laws, ordinances, rules, regulations or orders of any public authority having jurisdiction, or otherwise [was] guilty of a substantial violation of a provision of the Contract Documents." The School Board's right to terminate, however, was conditioned upon "certification by the Architect that sufficient cause exist[ed] to justify such action."
Construction commenced, but the School Board and the project architect (the architect) soon became dissatisfied with the quality of Sherman's performance. On May 9, 1988, upon certification by the architect that sufficient cause existed, the School Board gave Sherman notice that the construction contract was terminated.
On the same date, the Board gave notice of Sherman's default to Seaboard Surety Company (Seaboard), Sherman's surety on the performance bond required by Code § 11-58. In the notice, the Board called upon Seaboard to "move promptly to discharge its responsibilities under the Bond."
By an agreement dated June 6, 1988, Seaboard undertook to perform all work not completed by Sherman. Seaboard employed Sherman as its subcontractor to complete the project, and Sherman proceeded with the work in that role. However, the School Board and the architect again complained about Sherman's performance, and, on November 23, 1988, upon certification by the architect that sufficient cause existed, the Board gave notice that it was terminating Seaboard as replacement general contractor and taking possession of the construction site. The Board then engaged another contractor, and the project was completed at a total cost of "well over $8,000,000.00," with occupancy delayed one full year past the August 15, 1988 date required under the Board's contract with Sherman.
On December 6, 1988, the School Board filed a bill of complaint praying for a declaration that Seaboard had violated the terms of its performance bond by failing to pay the cost of completing the school building. The Board also prayed for an award of damages against Seaboard for its alleged breach.
On March 30, 1989, Sherman filed a motion for judgment against the School Board seeking damages for the Board's alleged breach of the construction contract. In that action, the School Board filed a counterclaim against Sherman for damages resulting from Sherman's alleged breach. The Board also moved to join Seaboard as an involuntary plaintiff to Sherman's motion for judgment.
The trial court transferred the School Board's bill of complaint from equity to law, consolidated that suit with Sherman's law action, and denied the Board's motion to join Seaboard as a party plaintiff. Later, the School Board filed a motion for judgment against Seaboard in place of the Board's original bill of complaint. The Board then amended that motion for judgment as well as its original counterclaim to add a claim that Seaboard had refused in bad faith to "perform or settle" under its performance bond.
By pretrial order, the trial court directed that the trial consist of three phases, first, liability of the parties, second, damages, and third, remaining issues. Over the School Board's objection, the case was submitted to a jury on the question whether the School Board was justified in terminating its contract with Sherman. On that issue, the jury decided in favor of Sherman. The trial court then conducted a hearing on damages and entered judgment in favor of Sherman in the amount of $146,430.
Concerning the School Board's claims against Seaboard, the trial court granted Seaboard's demurrer to the Board's bad-faith claim but overruled it with respect to claims for indemnification and fraudulent inducement. After the jury verdict, the court granted Seaboard's motion for summary judgment as to all claims asserted against Seaboard, with the exception of the claims for indemnification and fraudulent inducement. The court then allowed the School Board to nonsuit the indemnification and fraudulent inducement claims. We awarded the School Board an appeal to review its assignments of error as well as Sherman's assignments of cross-error and Seaboard's cross-appeal.
The major points of dispute between the School Board and Sherman involve the manner in which roof joists and a second-floor concrete slab were anchored to supporting walls, the way a bond beam was constructed, the method used to install a fire wall, the condition in which utility trenches were left, and the effectiveness of efforts to control erosion. The Board maintains that the defects resulting from Sherman's treatment of these items constituted contract violations and that the shortcomings in the anchoring of the roof joists and the second-floor slab also violated "the BOCA Code," creating per se breaches of the contract. 1
Sherman makes no real contest of the fact that defects resulted from its treatment of the foregoing matters or that the defects may have constituted violations of the contract documents and even the BOCA Code. Sherman says, however, that "[w]hether those mistakes are so persistent and so sufficient as to amount to a substantial violation of the contract justifying termination ... is a factual question to be decided by the trier of fact." Hence, Sherman concludes, the trial court properly submitted the question to the jury. 2
The School Board argues on the other hand that the evidence established as a matter of law that Sherman "persistently disregard[ed applicable] laws ... or otherwise [was] guilty of a substantial violation of a provision of the Contract Documents" and, therefore, that the trial court erred in refusing to strike Sherman's evidence and set aside the jury's verdict. In support of this argument, the School Board cites what it describes as "dramatic evidence from Sherman's own witnesses about serious violations of the BOCA Code."
The Board says the BOCA Code requires that "every roof joist be 'positively anchored' down" and "this requirement was to be accomplished in this elementary school by welding the joists to steel bearing plates, each plate having two 'Nelson' studs that were to be embedded in the grout of the bond beam." Yet, the Board points out, a company hired by Sherman to inspect the joists determined that of 109 bearing plates inspected, 55 had no reinforcing and only 11 met the BOCA Code requirements.
Furthermore, the Board asserts, Thomas E. Speight, Sherman's project superintendent, admitted that "Nelson" studs were removed from the bearing plates with a cutting torch and that installation of the plates with the studs removed was a BOCA Code violation. And, the Board states, Thomas A. Downey, Jr., an expert witness called by Sherman, admitted that the bearing-plate condition "was a significant structural defect" while Michael E. Matthews, another Sherman expert, conceded that the failure to anchor so many bearing plates was a "persistent" BOCA Code violation.
Matthews also conceded, the Board continues, that the "bearing-plate condition at the roof joists" was "a material violation" and that the as-built condition of the bond beam was a "material noncompliance." 3 Hence, the Board asserts, Matthews admitted that Sherman was guilty of at least two substantial violations of the contract, viz., the failure to anchor roof joists properly and the unworkmanlike construction of the bond beam.
Even if we assume, however, that the School Board is correct in its assertion that the admissions of Sherman's witnesses were sufficient to establish as a matter of law that Sherman persistently disregarded applicable laws and otherwise was guilty of substantial violations of the contract documents, it does not follow that the Board is entitled to judgment in its favor. The admissions cannot be considered alone and in the abstract but must be considered in the context of other issues the trial court submitted to the jury, issues of a defensive nature which impacted directly upon the question of Sherman's liability. And, if it is determined that the trial court properly submitted those issues to the jury, then Sherman's ultimate liability would also be a jury question.
The other issues were two, namely, whether the School Board interfered with Sherman's performance of the contract and whether errors in the design of the school building and discrepancies in the plans caused problems Sherman encountered during construction. With respect to the first issue, the School Board maintains that the trial court erred in granting this instruction:
A party to a contract who wrongfully hinders or prevents the other party from performing his obligations under a contract has breached the contract. This implied condition is founded upon the principle that he who prevents a thing from being done may not avail himself of the nonperformance for...
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