Bakers Constr. Servs., Inc. v. Greeneville-Greene Cnty. Airport Auth.

BAKERS CONSTRUCTION SERVICES, INC. v. GREENEVILLE-GREENE COUNTY AIRPORT AUTHORITY

No. E2014-01395-COA-R3-CV

COURT OF APPEALS OF TENNESSEE AT KNOXVILLE

March 11, 2015 Session

MAY 14, 2015

Appeal from the Chancery Court for Greene County

No. 20110352

Hon. Douglas T. Jenkins, Chancellor

This is a breach of contract action concerning a construction project. The plaintiff argued that the defendant's failure to provide access to the job site hampered its ability to complete the project in an efficient manner. The defendant responded that the plaintiff waived the failure to provide access to the site and that the plaintiff was the first to breach the contract by failing to provide a construction schedule. Following a bench trial, the court ruled in favor of the plaintiff. The defendant appeals. We affirm the decision of the trial court as modified to reflect an adjustment in the award of discretionary costs.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed as Modfied; Case Remanded

JOHN. W. MCCLARTY, J., delivered the opinion of the Court, in which CHARLES D. SUSANO, JR., C.J., and D. MICHAEL SWINEY, J., joined.

Ronald W. Woods, Jeffrey M. Ward, and Brandy M. Burnette, Greeneville, Tennessee, for the appellant, Greeneville-Greene County Airport Authority.

Reggie E. Keaton, Knoxville, Tennessee, and C. Thomas Davenport, Jr., Bristol, Tennessee, for the appellee, Baker's Construction Services, Inc.

OPINION

I. Background

On September 4, 2009, Baker's Construction Services ("Plaintiff") entered into a $2,039,811.60 contract with Greeneville-Greene County Airport Authority ("Defendant") to provide grading, excavation, embankment, utilities, and drainage work necessary to extend the runway and taxiway of the Greeneville-Greene County Airport. The extensionwas intended to correct a line of site deficiency on the runway. The project was federally funded through the American Recovery and Reinvestment Act ("ARRA") and administered through the Tennessee Aeronautics Division of the Tennessee Department of Transportation ("TDOT"). Barge Waggoner Sumner Cannon, Inc. ("BWSC") served as the design engineer firm for the project.

The job site was surrounded by private property. Defendant was tasked with securing the properties and providing rights-of-way for the area where the work was to be performed. Prior to signing the contract, Plaintiff was informed that some of the properties had not been secured. Four days later, Defendant issued a notice to proceed, requiring Plaintiff to commence operations the following day, September 9, 2009. Plaintiff was tasked with completing the project within 260 days. While Plaintiff commenced operations on the project, the contract was revised several times to correct clerical errors. The final contract was not received by Plaintiff until October 21, 2009.

On October 26, 2009, Plaintiff submitted a notice of claim asserting that Defendant's failure to provide access to the job site impeded the work of excavation and embankment. Thereafter, Plaintiff continually requested access to the job site and repeatedly informed Defendant of problems caused by the lack of access. Despite the repeated requests, Plaintiff did not obtain full access to the job site until September 24, 2010.

On December 6, 2011, Plaintiff filed suit against Defendant, alleging breach of contract because Defendant impeded Plaintiff's efforts by failing to provide access to the job site.¹ Plaintiff argued that its inability to utilize the site caused disruption and delay damages; additional costs; general administrative expenses; and other damages. Plaintiff requested damages in excess of $2,351,000, prejudgment interest, and discretionary costs. Defendant requested dismissal of the complaint, asserting that it informed Plaintiff prior to the execution of the contract that the rights-of-way had not been acquired but that work needed to commence by a certain date in order to secure funding. Defendant asserted that Plaintiff had waived any claim for breach of contract by proceeding with the work with the knowledge that the rights-of-way were not secured.

The case proceeded to a bench trial. Bart Allen Devore, who served as the vice president and project manager for Plaintiff during the time period in question, stated that Plaintiff was responsible for clearing and grading the site before the paving of the runway could be completed in the second phase of the project. Prior to signing the contract at issue, he attended a pre-construction meeting on September 3, 2009.

A tape of the pre-construction meeting was played for the court. Mr. Devore; Chad Baker, Plaintiff's President; Ed McHugh, who worked for BWSC; Rick Hudgens, a TDOT employee; Janet Malone, Chairman of the Airport Authority; and others not pertinent to this appeal were present at the meeting. During the meeting, Mr. McHugh asked if they should discuss the property acquisition issues. Rick Hudgens replied, "Let's hold off on that." Later in the meeting, Mr. Devore was informed that there was property along the existing taxiway that had not been acquired. Mr. Hudgens proclaimed that Defendant was "pretty close" to getting the right of entry if they had not already closed on the property. Ms. Malone stated that Defendant had not closed on any of the properties. Mr. Devore opined that "developing the schedule was really critical" in order to understand which fill areas were needed. Ms. Malone later expressed concern regarding a piece of property at the end of the runway, namely the Solomon Property. She related that the occupants would need access to the property, thereby impeding Defendant's ability to close the nearby road for construction purposes. Mr. Baker expressed concern regarding the fact that they would have to "hopscotch[] around" the job site because some of the properties had not been acquired.

After Mr. Devore and Mr. Baker left the meeting, Mr. Hudgens stated,

All right. This property thing, it pissed me off to the point of I'm tired of messing with - it's ridiculous. We have got - we have got some property out here that we know today we could go to the property owner and say this is what it's worth. This is what we are going to give to you, and we ain't got s**t.

The remaining parties, Ms. Malone, Mr. McHugh, Mr. Hudgens, and others not pertinent to this appeal, then discussed the extensive problems related to acquiring the properties.

Mr. Devore testified that he was not apprised of the extent of the problems related to acquiring the properties prior to signing the contract. He identified a provision in the contract that provided as follows:

[Defendant] will be responsible for furnishing all rights-of-way upon which the work is to be constructed in advance of [Plaintiff's] operations.

He claimed that Defendant failed to provide the rights-of-ways as provided in the contract. He identified several properties that were not available prior to the issuance of the notice to proceed. He related that the project was dependent upon a sequence of moving material back and forth in an effort to dry the soil before filling certain areas in compliance with the airport's modified compaction requirements. He opined that theyneeded to place 50 percent of the fill material in an area that was unavailable and that they could have utilized rock material from another piece of unavailable property.

Mr. Devore testified that he submitted a request for information, dated September 19, 2009, that provided as follows:

The construction traffic control sign plans for Old Wilson Road cannot be installed per bid plans due to acquisition of property. We have discussed the need to close off this road to all but local traffic as we will need to cross Old Wilson Road to access stockpile area and obtain the "more suitable" soil from across Old Wilson Road for embankments and haul the "less suitable" soil to stockpile location. We plan to start cul-de-sac and turn around construction as soon as possible. The construction signage plans call for Old Wilson road to be closed to thru traffic with barricades placed across the roadway.

We request a revised plan due to liability reasons should we deviate from the approved plans and construction signage plan. Please see attached existing plans and forward a revised plan for this work on Old Wilson Road due to property acquisition issues.²

He explained that it was extremely important to access the soil across the road because of the moisture content levels. They needed the use of the dryer soil to maintain production and progress. He stated that they were required to cross the road through an access gate because they were unable to completely close the road. Use of the access gate was inefficient because only one unit could pass through the gate at a time, causing delay as the unit traveling in the opposite direction was left to wait its turn.

Mr. Devore identified the notice of claim, dated October 26, 2009, which provided, in pertinent part, as follows:

[Plaintiff] is hereby giving notice in accordance with [the contract] that the work of excavation and embankment is being severely impeded and the project cannot be constructed as bid because [Defendant's] property acquisition issues have limited jobsite area available to [Plaintiff] for the performance of its work. [Plaintiff's] cost and the time required to perform earthwork operations is being increased by lack of access to the entire project site for [Plaintiff] to best utilize cut and fill areas to maximize excavation efficiency. The inability to place embankment in the project area between station 45+00 and station 61+00+/- restricts the volume of project embankment that can be placed by approximately 50%. The existing soil moisture content makes the amount of available area for embankment placement that much more critical to [Plaintiff's] ability to control the cost to perform this work. Another area of the project unavailable for work is excavation area station 86+50 to

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