J. F. Allen Corp. v. Sanitary Bd. of Charleston

J. F. Allen Corporation, a West Virginia corporation, Plaintiff Below, Petitioner, v. The Sanitary Board of the City of Charleston, West Virginia, a municipal utility,and Burgess and Niple, Inc., an Ohio corporation, Defendants Below, Respondents,AndBurgess and Niple, Inc., an Ohio corporation, Defendant Below, Petitioner, v. J. F. Allen Corporation, a West Virginia corporation, Plaintiff Below/Respondent.

No. 19-0369

No. 19-0394

STATE OF WEST VIRGINIA SUPREME COURT OF APPEALS

October 16, 2020

(Kanawha County 14-C-1182)

MEMORANDUM DECISION

These consolidated appeals were filed by parties to a breach of contract/negligence action arising out of a sewer improvement project, which action was tried to jury verdict in the Circuit Court of Kanawha County. The jury rendered a verdict in favor of plaintiff J. F. Allen Corporation (hereinafter "J. F. Allen"),¹ finding that defendant The Sanitary Board of the City of Charleston (hereinafter "the Sanitary Board") breached its contract with J. F. Allen and awarded damages in the amount of $1,300,000.20. The jury further determined that defendant Burgess & Niple, Inc. (hereinafter "B & N"),² had committed professional negligence, awarding damages in the amount of $3,000,000.20, which was reduced by a 10% apportionment of comparative negligence against J. F. Allen, resulting in a net judgment of $2,700,000.18.

Upon post-trial motions filed by the Sanitary Board and B & N (collectively "defendants"), the circuit court granted a new trial on damages only, finding that the jury's verdict was inconsistent, unsupported by evidence, violated the "single recovery" rule, and could not becorrected with remittitur. More specifically, the circuit court found that J. F. Allen had submitted evidence in support of only $1.2 million in damages, yet the jury awarded well in excess of that amount both as against each defendant and in the aggregate. Because of such excess, the court concluded that while it could theoretically remit the verdict, it could not properly apportion damages between the defendants. The circuit court also denied defendants' renewed motions for judgment as a matter of law, finding that in viewing the evidence in the light most favorable to J. F. Allen, the jury's liability verdict should stand. All three parties appealed, which appeals were consolidated for consideration by the Court.³

This Court has considered the parties' briefs, oral arguments, and the record on appeal. Upon consideration of the standard of review and the applicable law, we find no substantial question of law presented nor prejudicial error. For these reasons and those set forth herein, a memorandum decision affirming the circuit court's order is appropriate under Rule 21 of the West Virginia Rules of Appellate Procedure.

I. Factual and Procedural History

J. F. Allen contracted with the Sanitary Board to serve as contractor for a sanitary sewer replacement project on Kanawha Two-Mile Creek; B & N contracted separately with the Sanitary Board to serve as engineer/architect for the project, providing design and contract administration services including review of disputes and requests for adjustments. The project began on January 9, 2012, and was scheduled for completion by February 1, 2013; however, certain delays occurred which were caused by strikes on unmarked or mismarked underground facilities.

J. F. Allen submitted its request for final payment on November 4, 2013, which payment was issued on November 20, 2013. Nearly six months later, on May 7, 2014, J. F. Allen submitted a "Request for Equitable Adjustment" ("REA") in the amount of $1,309,943.00 pursuant to the contract, for additional costs and expenses resulting from delays occasioned by the underground facility strikes. B & N, as arbiter of disputes under the contract, advised that since the construction phase had been completed, it was "no longer authorized to provide professional services for this project." Accordingly, the REA was rejected, prompting the filing of the instant action.

The parties' handling of the delays caused by the underground utility strikes and the resultant extra costs are primarily at issue in the instant action.⁴ In the trial below, J. F. Allen admitted that it did not file a written claim for additional delay costs as described in its contractwith the Sanitary Board. However, witnesses testified that the Sanitary Board's contractual representative—B & N—provided resident project representatives who were onsite daily and maintaining written reports about the strikes. J. F. Allen presented evidence that these representatives were made aware of the resulting delays and told to take careful notes about them for purposes of a future claim for reimbursement. Alan Shreve, an employee of J. F. Allen, testified that he regularly advised B & N representatives of the strikes, delays, and mounting costs and was told, "We'll make you good on it." Testimony was also adduced that change orders for additional costs were handled in a manner that did not strictly comply with the contract, but rather through informal dealings. J. F. Allen contended B & N was advised through a series of letters about delays and interruptions in the work and that the contract required B & N to immediately address such unexpected delays by way of change orders.

In its defense, B & N argued that J. F. Allen admittedly failed to comply with the contract's claims process, which was the exclusive remedy for any additional costs and required timely written notice of such claims. It argued further that the contract expressly provided that any claims not made or identified by submission of the request for final payment were waived. B & N countered that it was not made aware that the strikes were causing significant delays and that, in fact, J. F. Allen reported "no delays" during monthly meetings. It maintained that the project was expected to be finished on time until a few months prior to the original completion date. B & N also adduced evidence that it urged J. F. Allen to submit any claims for additional payments "as soon as possible," but J. F. Allen failed to do so. When J. F. Allen submitted its request for final payment, no outstanding claims were identified as required by the contract. B & N argued that, after the final payment was issued, the "construction phase" as defined by the contract was completed and therefore, its authority to act on any further claims relating to the contract had ended.

The Contracts

At trial, the parties introduced the pertinent contracts between J. F. Allen and the Sanitary Board (the "Contractor Agreement") and the Sanitary Board and B & N (the "Engineer Agreement"). With respect to underground facilities, the Contractor Agreement contains a section regarding "Underground Facilities" entitled "Not Shown or Indicated." It states that if underground facilities are revealed that were not shown or indicated in the contract documents, the contractor shall, inter alia,

give written notice to . . . [the] Engineer. Engineer will promptly review the Underground Facility and determine the extent, if any, to which a change is required in the Contract Documents to reflect and document the consequences of the existence or location of the Underground Facility. . . . If Engineer concludes that a change in the Contract Documents is required, a Work Change Directive or a Change Order will be issued to reflect and document such consequences. An equitable adjustment shall be made in the Contract Price or Contract Times, or both, to the extent that they are attributable to the existence or location of any Underground Facility that was not shown or indicated or not shown or indicated withreasonable accuracy in the Contract Documents and that Contractor did not know of and could not reasonably have been expected to be aware of or to have anticipated. If Owner and Contractor are unable to agree on entitlement to or on the amount or extent, if any, of any such adjustment in Contract Price or Contract Times, Owner or Contractor may make a Claim therefor . . . .

(emphasis added). With respect to the handling of any such "claims," the Contractor Agreement provides that

[a]ll Claims,⁵ except those waived . . . shall be referred to the Engineer for decision. A decision by Engineer shall be required as a condition precedent to any exercise by Owner or Contractor of any rights or remedies either may otherwise have under the [contract] . . . or by Laws and Regulations in respect of such Claims.

(footnote added). The Contractor Agreement further requires that "[w]ritten notice stating the general nature of each Claim shall be delivered by the claimant to Engineer . . . promptly (but in no event later than 30 days) after the start of the event giving rise thereto" and that "[i]n the event that Engineer does not take action on a Claim within said 30 days, the Claim shall be deemed denied." Further, "[n]o Claim for an adjustment in Contract Price . . . will be valid if not submitted in accordance with [the contract]."

With respect to "Final Application for Payment," the Contractor Agreement provides that such application "shall be accompanied by . . . a list of all Claims against Owner that Contractor believes are unsettled[.]" More specifically,

[t]he making and acceptance⁶ of final payment will constitute . . . a waiver of all Claims by Owner against Contractor . . . [and] a waiver of all Claims by Contractor against Owner other than those previously made in accordance with the requirements herein and expressly acknowledged by Owner in writing as still unsettled.

(footnote added).

The pertinent portions of the Engineer Agreement state, inter alia, that "Engineer will be Owner's representative during the construction period" and "[t]he Construction Phase . . .will terminate upon written recommendation by Engineer for final payment to Contractors." It provides further that B & N will be the "initial interpreter of the requirements of the contract and all...