Tricon Kent Co. v. Lafarge North America, 06CA0595.

Citation186 P.3d 155
Decision Date01 May 2008
Docket NumberNo. 06CA0595.,06CA0595.
PartiesTRICON KENT CO., Plaintiff-Appellee, v. LAFARGE NORTH AMERICA, INC.; Lafarge West, Inc.; and Safeco Insurance Co. of America, Defendants-Appellees.
CourtCourt of Appeals of Colorado
186 P.3d 155
TRICON KENT CO., Plaintiff-Appellee,
LAFARGE NORTH AMERICA, INC.; Lafarge West, Inc.; and Safeco Insurance Co. of America, Defendants-Appellees.
No. 06CA0595.
Colorado Court of Appeals, Div. II.
May 1, 2008.

[186 P.3d 156]

Berg, Hill, Greenleaf, & Ruscitti, LLP., Daniel M. Gross, Heidi C. Potter, Boulder, Colorado, for Plaintiff-Appellee.

Wells, Anderson, & Race, LLC, Larry S. McClung, Denver, Colorado, for Defendants-Appellees.

Preeo Silverman Green & Egle, P.C., Gilbert R. Egle, Denver, Colorado, for Amici Curiae American Subcontractors Ass'n, Inc. and American Subcontractors Ass'n of Colorado.

Opinion by Judge ROTHENBERG.

I. Background

In 2003 and 2004, Lafarge was the general contractor for a highway construction project in Douglas County, Colorado, involving the regrading and resurfacing of State Highways 83 and 86. The project was supervised by the Colorado Department of Transportation (CDOT), and Lafarge sought bids from subcontractors to perform the earthwork on the project. Tricon was the successful bidder, and in March 2004, the parties entered into a subcontract drafted by Lafarge. It provided, as relevant here, that Tricon agreed to work "in accordance with the terms and provisions of the Contract between the Owner [CDOT] and Contractor [Lafarge], including all general and special conditions, drawings, specifications and other documents."

186 P.3d 157

The subcontract also included a clause commonly referred to in the construction industry as a "no damages for delay" clause. It provided:

Section 6. Delays. (a) In the event the Subcontractor's performance of this subcontract is delayed or interfered with by acts of the Owner, Contractor or other Subcontractors, he may request an extension of time for the performance of same, as herein provided, but shall not be entitled to any increase in the subcontract price or to damages or additional compensation as a consequence of such delays or interference, except to the extent that the prime contract entitled the Contractor to compensation for such delays and then only to the extent of any amounts that the Contractor may, on behalf of the Subcontractor, recover from the Owner for such delays.

This action arose because the parties could not agree on the amount of Tricon's final compensation. Tricon alleged in its complaint that Lafarge breached the express and implied covenants of the subcontract, including the implied covenants of good faith and fair dealing. According to Tricon, the scope of its work was changed during the performance of the subcontract because of Lafarge's failure to schedule and sequence the project in accordance with the requirements of the prime contract and with the ordinary custom and practice in the industry. Tricon maintains that Lafarge's interference with Tricon's performance of the subcontract caused it to encounter significant obstacles and costly delays.

At trial, Tricon presented evidence that its estimator and project manager prepared its bid after reviewing the contract between CDOT and Lafarge and used the project plans and specifications for Tricon's calculations. The bid documents in the CDOT-Lafarge contract included the project phasing plan, which contained important information regarding the construction project, including the anticipated construction sequence, conditions under which the work would be performed, and the work zones that would be available during a particular phase. According to Tricon's witnesses, CDOT's phasing plan was crucial in Tricon's bid preparations and planning because it divided the earthwork into two segments of the job and helped Tricon determine where fill material would come from and the type of equipment to use.

Under CDOT's phasing plan, a new phasing lane was to be built first and while it was under construction, traffic was to flow in two lanes next to the work zone where earthen fill and retaining walls were being built. The retaining wall was to be constructed by another subcontractor, 5L, and the traffic was then to be switched to the eastbound side of the road. The last phase involved paving all three lanes with a final layer of asphalt, grading, landscaping, and installing guardrails.

The phasing plan showed that Tricon's truckers would have access to the job for hauling material because of the two open lanes and because CDOT required that a specially engineered, imported material, R-50, be placed on top of the fill. Tricon had estimated the amount of this material that would have to be trucked to the project, and Tricon's witnesses testified that before beginning work, it had submitted a method statement to Lafarge as required by CDOT's specifications; that the method statement tracked the phasing plan and categorized Tricon's work based on which side of the road was under construction; and that it also detailed the production rates and the amount of time the work would take.

CDOT's plan also called for native earth to be used on both sides of the roadway and a layer of R-50 to be placed on top of the fill. According to Tricon's estimator, approximately 10,000 cubic yards of R-50 was needed for this project, and the subcontractor performing the earthwork had to truck it in from a pit. Tricon presented evidence that it had to conduct earthwork operations in the midst of traffic and with different equipment than anticipated. Tricon also presented evidence that CDOT's design required the retaining wall to be built by 5L before Tricon could place the fill on top of it, that Lafarge could not begin paving on top of the R-50 layer until Tricon's earthwork was complete, and that the new passing lane could not be

186 P.3d 158

used for traffic until the paving was in place. Tricon's superintendent testified that he was concerned about 5L's slow progress, that he repeatedly notified Lafarge's on-site project manager that the new passing lane could not be completed until 5L had finished its construction of the retaining wall, and that he also notified Lafarge about Tricon's need for better access for its trucks.

Tricon introduced correspondence from Lafarge establishing that Lafarge knew 5L had to complete its work before Tricon could proceed, and that Lafarge nevertheless directed Tricon to proceed and threatened to seek liquidated damages if Tricon did not do so. There was also evidence that 5L did not complete the retaining wall until late September 2004; that Lafarge decided not to open the project to two-way traffic; and that if the phasing plan had been followed, Tricon's work area would have been larger and its access to the project considerably greater. Tricon's witnesses testified to similar problems on the westbound shoulder work, which required Tricon to use smaller equipment in the work area, because it was more confined than as shown in the phasing plan.

In a letter dated December 17, 2004, Tricon sought additional compensation from Lafarge based on alleged delays relating to the construction of the retaining wall and traffic lane closures. Lafarge requested more documentation from Tricon, but after receiving it, Lafarge denied the claim, maintaining that such compensation was precluded by the "no damages for delay" clause in the subcontract. At the end of the project, CDOT also assessed Lafarge twenty-seven days of liquidated damages for the entire project, and Lafarge passed on to Tricon the liquidated damages for three of the twenty-seven days. Tricon denies responsibility for those damages.

The parties disagreed whether, during a preconstruction conference, Tricon had received a schedule from Lafarge showing a different sequence than the one Tricon claimed existed. Lafarge also contended that until Tricon's December 2004 letter, Tricon had not asked for additional compensation for delays relating to the wall, and that its request was untimely.

After Tricon's case-in-chief, Lafarge moved for a directed verdict, contending the "no damages for delay" clause precluded any damages to Tricon as a matter of law; that Tricon's request for compensation was untimely and was barred by the notice provision of the contract; and that Tricon's numerous letters to Lafarge regarding the situation were insufficient notice. The trial court denied Lafarge's motion, stating:

There are certainly factual disputes here ... [s]uch as whether the difficulties ... encountered in the course of the project such as the construction of the retaining wall by 5L and difficulties with lane closures, whether those were or should have been within the original contemplation with the parties at the time of contracting, or rather were sources of additional costs, extensions of time, damages for delays as referenced in section 23 of the subcontract which requires that notice be given of that fact or those facts to justify either an extension of time or damages or additional costs or all of the above.

It's also a jury question as to whether [Lafarge] changed the sequence of work in the phasings or whether [Tricon] was or should have been on notice of the scheduling of these other subcontractors such as 5L. It's a jury question of whether [Lafarge] is justified in holding back the balance due under the contract price.

It is most likely a question of law as to whether section six, the no damages for delays clause[,] applies here but that can't be invoked until these factual issues are adequately resolved....

At the close of its...

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