Steward Mach. Co., Inc. v. White Oak Corp.
| Citation | 462 F.Supp.2d 251 |
| Decision Date | 16 November 2006 |
| Docket Number | Civil Action No. 3:00cv834(SRU). |
| Court | U.S. District Court — District of Connecticut |
| Parties | STEWARD MACHINE CO., INC., Plaintiff, v. WHITE OAK CORP. and National Union Fire Insurance Co. of Pittsburgh, PA, Defendants. |
Barbara E. Crowley, William J. Egan, Eagan & Crowley, New Haven, CT, for Plaintiff.
Frederick E. Hedberg, Jane I. Milas, Raymond A. Garcia, Garcia & Milas, New Haven, CT, Gary M. Case, Jason W. Glasgow, Matthew M. Horowitz, Wolf, Horowitz, Etlinger & Case, Hartford, CT, for Defendants.
Steward Machine Co., Inc. ("Steward") has sued White Oak Corp. ("White Oak") and White Oak's surety, National Union Fire Insurance Co. of Pittsburgh, PA ("National Union"). The action arises out of the construction of the Tomlinson Bridge in New Haven, Connecticut. In 1994, the Connecticut Department of Transportation ("ConnDOT" or "the State") engaged White Oak to be the project's general contractor. White Oak then procured a payment bond, with National Union as surety, and sub-contracted with Steward for the latter to furnish certain machinery for the project.
Steward filed suit against the defendants seeking damages for White Oak's failure to pay Steward in full on a timely basis, White Oak's failure to accept delivery of the machinery, and the lengthy, ensuing storage of the Tomlinson Bridge machinery at Steward's plants.
The parties tried the case to the court over six days. My findings of fact and conclusions of law are set forth below. See Fed.R.Civ.P. 52.
I. Background
The parties presented conflicting testimony regarding the effect of their contracts. My findings of fact are largely based on the written purchase order contract, documents relating to the contracts at issue, the parties' written correspondence, and the testimony of Steward's President Whitney DeBardeleben, whom I find credible.
Steward is a family-owned, specialized job shop located in Birmingham, Alabama. Among other large-scale items, Steward manufactures mechanical equipment, including sheaves and counterweight ropes, for moveable bridges.
During the design phase of the Tomlinson Bridge project, the engineering firm Hardesty & Hanover, the project's design engineers, contacted Steward to inquire about the feasibility of the bridge design plans. As a result of that contact, Steward became interested in the project. Once the engineers submitted their design to the State, ConnDOT solicited bids from general contractors. Steward submitted its bids to the general contractors that were bidding on the project, including White Oak. ConnDOT eventually awarded White Oak the contract for State Project 92-435, the construction of the Tomlinson Bridge in New Haven, Connecticut.
As required by Conn. Gen.Stat. § 49-41, White Oak secured a payment bond to guarantee the public work project. On June 6, 1994, National Union issued that payment bond, guaranteeing the project in the amount of $87,868,378.10. Pl.Ex. 1.
White Oak subcontracted with Steward for the latter to furnish large-scale equipment for the Tomlinson Bridge. On August 8, 1994, Steward and White Oak executed a written purchase order contract setting forth the details of the parties' subcontract. Pl.Ex. 3.
The introductory paragraph of the purchase order specifies that the bid items "shall be in accordance with the plans and specifications prepared by" ConnDOT, the project owner. Pl.Ex. 3 at 1.
The purchase order contract included four items and a delivery allowance. Id. The four items were identified by ConnDOT bid item numbers, corresponding to the items as listed on White Oak's prime contract with the State. With their corresponding values, the items were:
Operating machinery $1,215,000
Main and auxiliary counterweight
ropes and accessories 1,465,000
Counterweight sheaves, shafts and
bearings 4,400,000
Lock machinery 253,000
__________
Total for bid items $7,333,000
3. Delivery
In addition to the four bid items, the purchase order included a delivery allowance in the amount of $220,000. Thus, the value of the purchase order contract totaled $7,553,000.
The purchase order contract included the following provision regarding delivery:
Delivery will commence within 12 months from approval of drawings and be complete within 18 months from approval of drawings. Seller shall make all deliveries in accordance with the Buyer's schedule.
White Oak and National Union have argued, in essence, that the second sentence of the delivery provision ("Seller shall make all deliveries in accordance with the Buyer's schedule.") overrides the first sentence. Accordingly, the defendants argue that Steward (the Seller) agreed to abide by White Oak's (the Buyer's) delivery schedule even if that schedule included a delay of several years after the approval of drawings. In other words, they argue that Steward — not White Oak — bore any risk of delay.
Based on the language of the purchase order's delivery provision and the testimony of DeBardeleben, however, I find that the parties did not agree to an indefinite delivery date or one that could extend several years beyond the twelve- to eighteen-month window set forth in the contract's delivery provision. The parties' contract provided that Steward would make deliveries in accordance with White Oak's schedule, with respect to each bid item, but that schedule was limited to the six-month period commencing twelve months after the approval of Steward's drawings.
The approval of drawings for each bid item spanned several years. The last approval of drawings for the lock machinery was May 15, 1998; the last approval of drawings for the sheaves was January 29, 1996; the last approval of drawings for the counterweight ropes and accessories was March 19, 1996; and the last approval of drawings for the operating machinery was January 6, 2000. Def. Ex. 785.
White Oak had until eighteen months after each of those dates to request and accept delivery of the respective bid item. Thus, under the purchase order contract, delivery of the lock machinery was to occur by November 16, 1999; delivery of the sheaves was to occur by July 30, 1997; delivery of the counterweight ropes was to occur by September 20, 1997; and delivery of the operating machinery was to occur by July 7, 2001.
4. Terms and Conditions
The purchase order contract included the following terms of payment:
Buyer [White Oak] will cooperate with Seller [Steward] to submit requests for payment on a timely basis to Owner [ConnDOT] for all items of work incorporated herein or a portion thereof. Invoices will be paid within 10 days of receipt of payment by Buyer from Owner for said items of work or 60 days from invoice date, which ever [sic] is sooner. Any portion of the purchase price Buyer may be entitled to retain shall become due and payable upon acceptance of all goods purchased under this agreement or within 180 days after final shipment, whichever event occurs first in time.
At trial, there was conflicting testimony regarding White Oak's responsibility for payment under the contract. Defense witnesses testified that White Oak was merely a conduit that forwarded invoices from Steward to ConnDOT and paid Steward only what it received from ConnDOT as payment for Steward's work. They testified that White Oak was not responsible for any amounts beyond what ConnDOT paid.
Paul Mayotte, former Chief Financial Officer of White Oak, testified that the sixty-day term, described in the purchase order, was "academic," and that he understood that if ConnDOT did not pay for Steward's work, White Oak was not required to pay Steward.
Robert Hackling, a White Oak project manager, testified that White Oak would pass payment to Steward from ConnDOT, but that the State would not pay Steward for work unless the equipment was fully fabricated. He testified that White Oak complied with the purchase order because it made payment in full for all the money received from ConnDOT for Steward equipment.
The defendants also offered many letters from White Oak to ConnDOT, requesting payments for Steward's work, as well as responses from ConnDOT, in order to show White Oak's compliance with the contract.
DeBardeleben testified, however, that White Oak was responsible for payment within ten days from receipt of payment by ConnDOT or sixty days from the invoice date, whichever occurred first. DeBardeleben disputed the claim that White Oak was not responsible for invoiced amounts not covered by the State. He testified that payment by ConnDOT was not a prerequisite to White Oak's obligation even though Steward understood that White Oak would invoice ConnDOT for Steward's work and Steward cooperated with White Oak's billing.
I credit the testimony of DeBardeleben, which is consistent with the language of the contractual provision regarding terms of payment. I find that White Oak agreed to pay properly invoiced amounts within sixty days after the invoicing or within ten days of receiving payment by ConnDOT, whichever occurred first. Action or inaction on the part of ConnDOT did not affect the later, sixty-day deadline.
Finally, I find that White Oak did, in fact, invoice ConnDOT for Steward's work, but that some of the funds received from the State for the subcontractor's work were not passed on to Steward within ten days.
During contract negotiations, Steward provided White Oak with a quotation that included provisions concerning "progress payments." Pl.Ex. 56. The final purchase order did not...
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