Swink v. Lasiter Const., Inc.

• Decision Date: 22 February 2006
• Docket Number: No. CA 05-563.,CA 05-563.
• Citation: 229 S.W.3d 553
• Parties: Jim D. SWINK, Appellant, v. LASITER CONSTRUCTION, INC., Appellee.
• Court: Arkansas Court of Appeals

229 S.W.3d 553

Jim D. SWINK, Appellant, v. LASITER CONSTRUCTION, INC., Appellee.

No. CA 05-563.

Court of Appeals of Arkansas, Division I.

February 22, 2006.

Quattlebaum, Grooms, Tull & Burrow P.L.L.C., by: E.B. Chiles IV and Brandon B. Cate, Little Rock, for appellant.

Newland & Associates, P.L.L.C., by: J. Richard Newland, Joel F. Hoover, and Ray S. Pierce, Little Rock, for appellee.

ROBERT J. GLADWIN, Judge.

Appellant Jim Swink appeals from a jury verdict awarding appellee Lasiter Construction a judgment for $60,500 for money Swink withheld as liquidated damages for delays in a construction project. The jury also awarded Lasiter $6,941.85 for additional landscape work. The trial court awarded Lasiter $71,037.40 in attorney's fees after reducing the hourly rates charged by Lasiter's attorneys and paralegals. Lasiter cross-appeals from the fee award, alleging that the hourly rates were reasonable. We affirm in part and reverse in part on direct appeal. We reverse and remand on cross-appeal.

Swink owns property on Highway 10 in western Pulaski County that he sought to develop in a project known as Montagne Court Phase I. White-Daters & Associates, Inc., were to be the project engineers. On September 12, 2002, Swink and Lasiter entered into a contract for the construction of the project. The contract, inter alia, provided that Lasiter would complete the project within 120 days of being ordered to begin construction. The contract also provided that, if Lasiter failed to timely complete the project, it would pay Swink liquidated damages of $500 per day, to be withheld from the final amount due Lasiter. The contract also provided a method for Lasiter to request additional time to complete the project. An extension of time would not be automatically granted but granted upon terms Swink considered reasonable. If the delay was a continuing one, then only one notice was necessary. Lasiter began work on September 23, 2002, and substantially completed the project by June 2, 2003. The City of Little Rock accepted the project on June 19, 2003.

On October 20, 2003, Lasiter filed suit against Swink, seeking to collect $115,298.53, the balance due under the contract. The complaint also sought $41,599 in extended overhead costs generated by delays allegedly caused by Swink or his engineer. Lasiter also sought to foreclose on a lien filed contemporaneously with the complaint. Finally, Lasiter sought attorney's fees for enforcing its lien and for breach of contract.

Swink answered, denying liability and asserting that Lasiter had been paid all sums to which it was entitled. Swink filed a counterclaim, alleging that Lasiter had breached the contract by not completing work within 120 days after beginning construction and by not requesting extra time to complete the project as allowed under the contract. The counterclaim also alleged that Lasiter violated Ark.Code Ann. § 5-37-226 (Repl.1997) by filing its lien and that Lasiter had damaged Swink by not properly giving notice of its lien. The counterclaim sought both compensatory and punitive damages, treble damages under section 5-37-226, and attorney's fees.

Michael Lasiter, a contractor for over twenty years, testified that the project engineers issued a work order to proceed with construction on September 16, 2002; however, Lasiter stated that he did not receive such a work order. He stated that there were delays almost from the start of the project, including not having a full set of plans until December 13, the waterline to Swink's residence not being noted or located on the plans, and groundwater seeping into the work. He added that these problems were part of Swink's responsibility in planning the project. He also identified three letters, dated October 15, 2002; December 31, 2002; and March 13, 2003, to the project engineers that he contended served as requests for additional time to complete the project.

The October 15 letter listed all three problems. The December 31 letter, written by estimator Lynn Harrell, contained a schedule calling for twenty-nine additional work days, weather permitting, to complete the project. Also attached to this letter were notes showing the daily weather conditions and the work performed each day. The March 13 letter discussed the groundwater problem and stated that Carl Garner, a soils engineer, had suggested installing a French drain to alleviate the problem. The letter also noted that the groundwater problem was brought to the attention of the project engineers earlier in the project construction. Finally, the letter stated that Lasiter would not be responsible for delays attributable to the lack of engineering regarding the groundwater problem, delays from the lack of an easement necessary for the installation of the sewer line, and delays for having to relocate Swink's waterline.

Lasiter also testified that the French drain resolved the groundwater problem and allowed the project to be substantially completed by June 2, although some additional work was done on June 23 and in August. He stated that Swink's engineers stopped calculating liquidated damages on June 2. Lasiter stated that the October 15 letter was sent within seven days of encountering the groundwater problem and the lack of an easement for the sewer. He also stated that he did some extra work placing sod and grass over the easement area for which he was not paid.

Lasiter identified two estimates where liquidated damages were not withheld. He stated that his company was not paid for pay estimate 5. He identified the final pay estimate and revised final estimate, which withheld $69,500. Lasiter testified that he wrote a September 2, 2003, letter stating that Swink was responsible for all of the delays mentioned in the March 13 letter. The September 2 letter also stated that Swink did not have the property ready to begin construction until December 13 and that, by not issuing a notice to proceed, Swink waived his right to withhold liquidated damages.

Lasiter stated that he was seeking $150,000, which included the withheld liquidated damages. He stated that Lasiter had spent $318,223.21 to complete the project and that Swink had agreed to pay $321,000, although that sum was increased by the change orders. He said that Swink had paid only $181,655 to date.

On cross-examination, Lasiter admitted that the easement agreement was sent to his office on October 21 but that it did not include the grade plans. He also noted that the contract's special provisions concerning completion of the work and liquidated damages appear conflicting: one sentence stated that, should the contractor fail to complete the project on time, the owner shall immediately begin to withhold liquidated damages, while the last sentence of that special provision stated that all liquidated damages shall be withheld from the final pay estimate.

Jim Burt, the former superintendent for Lasiter, testified that he had worked on two projects where White-Daters served as the engineer and that, in both cases, he never began work with a complete set of plans. He said that, although it is customary to receive a notice to proceed, one was not received on this project. He stated that the project was not completed within 120 days, as provided by the contract, because of several delays, including not having an easement for part of the sewer, a groundwater problem, and not having a full set of plans. He also said that the plans did not locate all existing utilities. He said that additional work was performed but that no additional days were sought or granted for this additional work.

Burt testified that Lasiter received the sewer plans on November 2 but did not receive the plans for the storm drain until mid-December, causing a delay. According to Burt, the lack of an easement for the sewer caused a delay because sewers are built from the deepest part first. He stated that work could not have started in the middle of the line due to possible misalignment. Another delay resulted from not having the plans approved by the city. Burt said that obtaining the easement and obtaining approval of the plans by the city was the responsibility of Swink or the engineers.

He next described the problem with groundwater keeping the site muddy all of the time. Burt said that the engineers were advised of the problem several times before Lasiter hired its own soils engineer, Carl Garner, who suggested a French drain, which solved the problem. He also described several instances of additional work by Lasiter for which Lasiter did not seek additional time because it did not believe that the contract time had started due to the lack of a notice to proceed. He also stated that Swink and the engineers did not mention liquidated damages until the end of the project. According to Burt, the project was substantially complete but additional work was done on June 23, 2003, installing storm-drain pipe.

Terri Mathis, Lasiter's bookkeeper and controller, testified that she did not receive payment for pay estimate 5 in the amount of $60,956.68. She stated that she called Swink about the matter but that he did not mention liquidated damages. She stated that all of the extra costs that Lasiter incurred, including the landscaping, totaled $55,289.09. On cross-examination, she admitted that the contract allowed Lasiter a method to request payment for this extra work but that she was not familiar with that method. She also admitted that she had no knowledge of Lasiter's billing Swink for this extra work. The charge for the landscape work was $6,941.85. She stated that this was the "hard" cost.

Jim Swink testified that the site was wet in December 2002, due to a lot of rain, and asserted that the only delay Lasiter told him about was due to the weather. He also stated that Lasiter never asked for an extension of time but that, if the engineer had so recommended, he would have agreed to one. Swink stated that the time for completion had...