Peach State Roofing, Inc. v. Kirlin Builders, LLC

PEACH STATE ROOFING, INC., Plaintiff, v. KIRLIN BUILDERS, LLC, formerly known as John J. Kirlin Special Projects, LLC,and BMH ENGINEERING, LLC. Defendants.

KIRLIN BUILDERS, LLC, Counter Claimant, v. PEACH STATE ROOFING, INC., Counter Defendant.

KIRLIN BUILDERS, LLC, Third Party Plaintiff, v. North America Specialty Ins. Co., Third Party Defendant.

CIVIL ACT. NO. 1:15cv526-CSC (WO)

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF ALABAMA SOUTHERN DIVISION

June 22, 2018

MEMORANDUM OPINION and ORDER

I. INTRODUCTION

Plaintiff Peach State Roofing, Inc. ("Peach State" or "PSR") filed this action on July 22, 2015, against defendants Kirlin Builders, LLC ("Kirlin")¹ and BMH Engineering, LLC ("BMH")² alleging claims of anticipatory breach of contract and breach of contract, wrongful termination, promissory estoppel, quantum meruit, negligence, negligent misrepresentation, respondeat superior, suppression, deceit, non-disclosure and concealment of material facts.³ Also before the court is Kirlin's counterclaim alleging breach of contract, or in the alternative, quantum meruit against Peach State and North American Specialty Insurance Co., ("NAS"), Peach State's bonding company.

The court has jurisdiction over these claims pursuant to its diversity jurisdiction and will apply Maryland law due to choice of law provisions in the contract documents. See 28 U.S.C. § 1332(a)(1). Pursuant to 28 U.S.C. § 636(c)(1) and M.D. Ala. LR 73.1, the parties consented to the United States Magistrate Judge conducting all proceedings inthis case and ordering the entry of final judgment. A bench trial was held in December 2016, and the court now makes the following findings of fact and conclusions of law.⁴

II. FINDINGS OF FACT⁵

This is a tale of two contracts. The United States Army Corps of Engineers ("the Government") awarded Kirlin the Prime Contract to act as Prime Contractor on a roofing project at Lyster Army Health Clinic, Fort Rucker, Alabama. In conjunction with the Prime Contract⁶ with the Government, Kirlin awarded Peach State Roofing a Subcontract for it to act as the Roofing Subcontractor on the project. Unfortunately, the Subcontract drafted by Kirlin is inconsistent with some requirements under the Prime Contract. For example, the Prime Contract called for a roof that met a FMI -120 wind uplift requirement. The Subcontract called for a roof that met a 120 mph wind zone requirement. The distinction is significant because a wind uplift requirement refers to uplift pressure and the forces underneath the roof while a wind zone requirement refers to wind over the top of the roof. (Tr. Trans. at I-205-06). The other significant difference concerns insulation. The Prime Contract referenced construction standard Section 07 22 00 which in part requires installation two layers of insulation. As will be seen, theSubcontract does not contain that requirement. The conflicts caused by these fundamental differences as well as the manner in which Kirlin administered the contract form the basis of the disputes at issue in this case.

Furthermore, much of the difficulty in this case began with a lack of precision in the terms used in the contracts. The contracts are a labyrinth of attachments and references which would confound even lovers of the impossible constructions art of M.C Escher.⁷ Nonetheless, the court has painstakingly reviewed the salient documents submitted by the parties, and now attempts to set forth the facts in a coherent fashion. It does so as much as possible in chronological order.

A. Prime Contract between the Government and Kirlin

On January 27, 2014, the Government requested Kirlin and six other companies to offer proposals to replace and repair the roof at Lyster Army Health Clinic in Fort Rucker, Alabama. (Tr. Ex. 1).⁸ The Government requested the companies to submit a "Firm-Fixed Price (FFP) proposal for Design and Repair/Renewal/Construction, as detailed in the enclosed Scope of Work." (Id. at 1). The Government's Scope of Work constitutes the project documents that describe the work to be completed in detail and includes all the Government's specifications and requirements for the project. Attached to the Request for Proposal was a Scope of Work dated January 24, 2014, and Attachments 2 and 1. (Id.) Proposals were due by February 27, 2014. (Id.) Thedocuments contain the crucial project specifications related to the PVC membrane roofing system and insulation for the wind uplifts and wind zone requirements of the building.

On February 28, 2014, the Government amended its Scope of Work.⁹ Section 2.1.3 of the Scope of Work as amended outlines the work to be performed under a contract with the Government.

Repair/Construction Action: Remove all existing and install new tapered roof insulation system to provide positive drainage to roof drains and scuppers. Insulation shall provide a minimum R=20 thermal resistance. On top of new insulation, install a new single ply PVC membrane roof to comply with requirements for a 20 year No Dollar Limit Warranty. New metal coping and re-flashing of scuppers will be required. Extend existing plumbing vents to a minimum of 8" above finished roof surface. Provide new flashing devices, compatible with PVC roofing system, at these and other roof penetrations.

(Tr. Ex. 2 at 1).

Thus, the Scope of Work as amended required a minimum R-20 valued thermal insulation under a PVC membrane roof but did not explicitly require that the insulation be installed in two layers. The Scope of Work as amended also does not reference roofing construction standard Section 07 22 00.

Proposals for the contract were due to the Government by March 17, 2014. (Tr. Ex. 3). An extension was granted to allow proposals to be submitted by March 20, 2014. (Id. at 7).

On April 24, 2014, the Government offered the Prime Contract for the project to Kirlin at a price of $3,436,024.85. (Tr. Ex. 6). Kirlin accepted the Government's offer to contract as the prime contractor on the roofing project on May 6, 2014. The Prime Contract between the Government and Kirlin required Kirlin to replace the roof at Fort Rucker Lyster Army Health Clinic "in accordance with the attached scope of work dated 24 January 2014."¹⁰ (Id.). In addition, Kirlin's proposal was "incorporated" in the contract "and made a part of this task order." (Id.)

The Scope of Work as amended delineates the Task Order as "Roof Replacement" and describes the project as follows.

2.1 Project Description: The objective of this Project is for the Contractor to provide all labor, materials and equipment necessary to repair by replacement the roofing system at Lyster Army Health Clinic, Ft. Rucker, AL, in accordance with all Federal, State, and Installation codes and laws, to include preparation of a Type 3 Work Plan/design as discussed below. The new roof shall be designed using a PVC membrane (72 mil minimum) having the latest in energy efficient systems with pathways to all roof mounted equipment in compliance with regulations/standards, and meet the current health and standard safety requirements. All work in conjunction with this Task order will provide a complete and functional roofing system.

(Id. at 3).

In addition, under the Prime Contract, Kirlin was obligated to develop a site survey and report, and was responsible for preparing "design documents."¹¹

Section 2.1.2. The contractor shall prepare design documents to clearly describe their plan of work for completing the requirements of this project. . . . The Contractor shall base his design per the attached PVCSpecifications (Attachment 1 & 2) Attachment 1 (2009 Specification) should be used as an example of the existing quality standard for PVC roofs and Attachment 2 (2013 Specification) should be finalized as a part of the final work plan deliverable. The SOW shall supersede any conflicts between both attached specifications and Attachment 2 shall supersede any conflicts in Attachment 1.

(Id. at 4) (emphasis added)

The Scope of Work as amended specifies the insulation required by the contract.

Section 2.1.3. Insulation shall provide a minimum R=20 thermal resistance. On top of new insulation, install a new single ply PVC membrane roof to comply with requirements for a 20 year No Dollar Limit Warranty.

(Id. at 6).

The Prime Contract obligated Kirlin to provide to the Government the following work plan documents¹² as deliverables: 35% Work Plan/Design Documents; 65% Work Plan/Design Documents; 100% Work Plan/Design Documents - Unrevised; and 100% Work Plan/Design Documents - Issued for Repair. (Id. at 7). In other words, Kirlin was responsible for creating and providing these documents to the Government pursuant to its contract with the Government.

The Scope of Work as amended was not the only document to which Kirlin was obligated to adhere. It was incumbent on Kirlin to understand its responsibilities under the Prime Contract and to ensure that its subcontractor, Peach State, provided a roofingsystem that met Kirlin's obligations under Prime Contract. Attachments 1 & 2, entitled PVC Roofing Spec, include sections related to Roof Insulation. (Id. at 10).

Insulation system and facer material shall be compatible with membrane application specified and be approved and supplied by the PVC membrane roof manufacturer [and as specified in Section 07 22 00 ROOF AND DECK INSULATION].

(Att. 2 at 10, Section 2.1.9; Att. 1 at 10, Section 2.1.9)

Attachment 2 requires the roof membrane manufacturer to accept the "insulation and other products and accessories to be provided by and warranted under the full system guarantee of the roof membrane manufacturer." (Id. at 10).

Pursuant to its Prime Contract with the Government, Kirlin was responsible for examining and verifying that the roof was installed in compliance with the Scope of Work as amended. See Id. at 12-14, Section 3.2, Section 3.3.2, Section 3.3.3.

Ensure that the following conditions exist prior to application of roofing materials:

j. Insulation boards are installed

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