Unity Sch. Dist. v. Vaughn Assocs., Inc.

• Decision Date: 19 November 2019
• Docket Number: Case No. 15-cv-155-SM
• Citation: 2019 DNH 195
• Parties: Unity School District, Plaintiff v. Vaughn Associates, Inc., and Scott Vaughn, Defendants v. School Administrative Unit #6, Excel Mechanical, Inc., Superior Walls of Hudson Valley, Inc., and Town of Unity, Third-Party Defendants
• Court: U.S. District Court — District of New Hampshire

2019 DNH 195

Unity School District, Plaintiff v. Vaughn Associates, Inc., and Scott Vaughn, Defendants v. School Administrative Unit #6, Excel Mechanical, Inc.,Superior Walls of Hudson Valley, Inc., and Town of Unity, Third-Party Defendants

Case No. 15-cv-155-SM

UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

November 19, 2019

ORDER

In 2010, the Unity School District hired Vaughn Associates and Scott Vaughn (collectively, "Vaughn") to design and oversee construction of a new elementary school in Unity, New Hampshire. The project did not proceed as the School District had envisioned. Construction was beset with delays and forced work stoppages (by, for example, the state fire marshal) and costs ballooned from the $4.7 million that Vaughn had promised to more than $9 million. Eventually, Vaughn's contracts with the School District were terminated and the School District sued Vaughn for damages. Those claims were settled and, in April of 2017, the School District's suit against Vaughn was dismissed, by agreement of the parties. See Stipulation of Dismissal (document no. 100).

What remain are Vaughn's third-party claims against two subcontractors on the project: Excel Mechanical, Inc., and Superior Walls of the Hudson Valley, Inc. Pending before the court is Excel Mechanical's motion for summary judgment, in which Excel asserts that it is entitled to judgment as a matter of law as to each of the three state law claims Vaughn advances against it. Vaughn objects.

For the reasons discussed, Excel's motion for summary judgment is granted.

Standard of Review

When ruling on a motion for summary judgment, the court is "obliged to review the record in the light most favorable to the nonmoving party, and to draw all reasonable inferences in the nonmoving party's favor." Block Island Fishing, Inc. v. Rogers, 844 F.3d 358, 360 (1st Cir. 2016) (citation omitted). Summary judgment is appropriate when the record reveals "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In this context, a factual dispute "is 'genuine' if the evidence of record permits a rational factfinder to resolve it in favor of either party, and 'material' if its existence or nonexistence has the potential to change the outcome of the suit." Rando v. Leonard, 826 F.3d 553, 556 (1st Cir. 2016) (citation omitted). Consequently, "[a]s to issues on which the party opposing summary judgment would bear the burden of proof at trial, that party may not simply rely on the absence of evidence but, rather, must point to definite and competent evidence showing the existence of a genuine issue of material fact." Perez v. Lorraine Enters., 769 F.3d 23, 29-30 (1st Cir. 2014). In other words, "a laundry list of possibilities and hypotheticals" and "[s]peculation about mere possibilities, without more, is not enough to stave off summary judgment." Tobin v. Fed. Express Corp., 775 F.3d 448, 451-52 (1st Cir. 2014). See generally Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

Background

The factual background of this case has been set forth in prior orders of the court. See, e.g., Order on Third-Party Defendants' Motion to Dismiss (document no. 42); Order on Defendants' Motion for Summary Judgment (document no. 55). It need not be recounted again in detail. It is sufficient to note the following. In 2010, the Unity School District entered into two contracts with Vaughn to design and oversee construction of a new elementary school. Construction began in late 2011. Then, in August of 2012, the Unity School District hired Excel Mechanical to perform rough and finish plumbing services. On the same date, the School District entered into a separate contract with William Knight, d/b/a LSE ("LSE"), to perform HVAC and mechanical work on the project. LSE, in turn, entered into a subcontract with Excel to provide "design drawings with engineer's stamp for both plumbing and mechanical."

The upshot of all of this is the following: Vaughn had two contracts with the Unity School District. It did not, however, have any contractual relationship with Excel; Excel's contracts were with the School District itself, and with LSE. Moreover, Excel's contractual obligation to provide mechanical drawings stamped by a licensed engineer - the critical element of Vaughn's claims - ran to LSE, not Vaughn. See AIA Standard Agreement between Contractor and Subcontractor (document no. 139-7) at Article 8, and "Notes and Clarifications" to Contract (document no. 139-8) at 3.

In its third-party complaint, Vaughn alleges that it sustained compensable damages when it relied, both reasonably and to its detriment, upon allegedly false and material misstatements made by Excel concerning the presence of an in-house mechanical engineer. Specifically, Vaughn alleges:

Excel represented to VAI [Vaughn] that it had a mechanical engineer who could complete the mechanical components of design and construction drawings.

Excel did not, in fact, have a mechanical engineer who fulfilled this role.

Excel's purported engineering documents were produced in house by an unregistered engineering school graduate and then stamped by a licensed engineer who was not principally responsible for production of the engineering documents.

Excel knew or should have known that its representations were false when made.

Excel had a duty to VAI as agent for USD to be truthful in describing the scope of its abilities.

Excel made the representations in an effort to convince VAI to recommend that USD use Excel as the mechanical contractor on the project.

The representations were material.

VAI relied on the representations of Excel in recommending their use on the project and in not partnering with a separate mechanical engineer.

Excel's failure to provide accurate stamped engineering drawings and/or to have a mechanical engineer on staff caused significant delays and costs on the project including but not limited to shutdowns from the various government agencies.

The representations of Excel constitute material, intentional misrepresentations.

Third Party Complaint (document no. 8) at paras. 178-87 (emphasis supplied). See also id. at paras. 76-78.

According to Vaughn, Excel's allegedly false and material misstatements about having an in-house mechanical engineer prompted Vaughn to recommend to the School District (and/or LSE) that it contract with Excel, contributed to delays in completing the project, and caused "reputational damages" to Vaughn, which ultimately contributed to the School District's decision to terminate Vaughn as the project's architect and construction manager. See, e.g., Deposition of Scott Vaughn (document no. 139-3) at 197 (alleging that "Excel's delay and this issue with the engineer caused delays on the project and costs increased."); id. at 197-98 ("What specifically relates here and why they [Excel] are a piece of the puzzle is that their nonperformance and failure to perform directly impacted the credibility of Vaughn Associates, and the credibility of Vaughn Associates was important in terms of the confidence on the project and the belief that I could get this done. . . . [T]heir failure injured my reputation. Because it injured my reputation, I . . . it was a piece of the puzzle for why I had to withdraw as construction manager.") (emphasis supplied).

Excel denies that it ever represented to anyone that it employed or maintained an "in-house" mechanical engineer (and asserts that its lack of an in-house engineer is not material). It says all parties were aware that its mechanical drawings would be (and, indeed, were) stamped by a licensed mechanical engineer with whom Excel worked, but did not directly employ. As evidence of Vaughn's knowledge of that fact, Excel points to a written change order, submitted by Excel (and accepted and paid by Vaughn), for fees Excel incurred when the outside engineer reviewed and stamped project drawings. See Exhibit C to Affidavit of William Souza, "Change Order 8" (document no. 139-9) ($6,120 related to "Mechanical Engineering Costs").

Moreover, and critical to this proceeding, Excel's subcontract with LSE did not require Excel to use an "in-house" engineer. Rather it provided that Excel would supply "design drawing[s] with engineer's stamp for both plumbing and mechanical." AIA Standard Agreement between Contractor and Subcontractor (document no. 139-7) at Article 8, and "Notes and Clarifications" to Contract (document no. 139-8) at 3. There is no dispute that Excel complied with those requirements of its contract with LSE.

But, even assuming the truth of Vaughn's claim about alleged misrepresentations, Excel says Vaughn sustained no compensable injuries from its use of an outside engineer. First, Vaughn has pointed to no evidence linking Excel's conduct or alleged misrepresentations to an actual delay in the project. That the project suffered numerous delays is undisputed and undeniable. That Excel's lack of an in-house engineer proximately caused any of those delays is little more than unsupported speculation by Scott Vaughn. Moreover, if any party might legitimately complain about damages resulting from delays allegedly caused by Excel's failure to employ an in-house engineer, it would be the School District (the project owner) or, perhaps, LSE (the HVAC contractor with which Excel had subcontracted and promised to provide stamped drawings). Yet, LSE never sued Excel or complained about its lack of an in-house engineer. Nor did the School District. In fact, when the School District hired a new project manager to replace Vaughn, it retained Excel and, in fact, expanded the scope of work to be provided by Excel. Plainly, then, the School District was neither dissatisfied with Excel's work nor, it would seem, did it blame Excel for any of the numerous and substantial delays the project sustained while Vaughn was project manager.

Indeed, Scott Vaughn testified that, "The plumbing drawings [prepared by...