Southwest v. Sbbi, Inc. ( 2018 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
SOUTHWEST CONCRETE PAVING CO.,
Plaintiff/Appellee/Cross-Appellant,
v.
SBBI, INC., et al.,
Defendants/Appellants/Cross-Appellees.
No. 1 CA-CV 17-0294
FILED 5-22-2018
Appeal from the Superior Court in Maricopa County
No. CV2014-005443
The Honorable Kerstin G. LeMaire, Judge
AFFIRMED IN PART; REVERSED AND REMANDED IN PART
COUNSEL
Cheifetz Iannitelli Marcolini, PC, Phoenix
By Claudio Eduardo Iannitelli, Cynthia R. Estrella, Jason Kelly Thomas
Counsel for Plaintiff/Appellee/Cross-Appellant
Thompson Krone PLC, Tucson
By Evan L. Thompson, Russell E. Krone
Counsel for Defendants/Appellants/Cross-Appellees
SOUTHWEST v. SBBI, INC., et al.
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Maria Elena Cruz delivered the decision of the Court, in
which Judge Jennifer B. Campbell and Judge James P. Beene joined.
C R U Z, Presiding Judge:
¶1 We are asked to review several disputes between a general
contractor, SBBI, Inc. (“SBBI”), and concrete paving subcontractor
Southwest Concrete Paving Co. (“Southwest”). We affirm the trial court’s
delay damages, extra work, and attorneys’ fee award to Southwest. We
reverse and remand for further proceedings to address whether SBBI
properly deducted the cost of dowel basket installation from Southwest’s
contract price.
FACTUAL AND PROCEDURAL HISTORY
¶2 Southwest performed concrete paving work at the UAS
Maintenance Hangar at Holloman Air Force Base in New Mexico (the
“Project”). Hensel Phelps Construction Co. (“Hensel Phelps”) was the
general contractor for the Project. SBBI contracted with Hensel Phelps to
perform certain site work and paving work on or about February 22, 2012
(the “SBBI Contract”). SBBI then contracted with Southwest on March 12,
2012, to complete paving work (the “Southwest Contract”).
¶3 The SBBI Contract obligated SBBI to “[f]urnish and install
reinforcing, dowels, and dowel baskets for the apron paving.”1 Both the
Southwest Contract and Southwest’s “Final Proposal” included “drilling
and installing of dowel bars” but neither mentioned dowel baskets. That
same language appeared in SBBI’s Bid Proposal to Hensel Phelps.
¶4 SBBI asked Southwest to price the removal of dowel baskets
from the Project plans and specifications. Southwest told SBBI that it did
not include dowel baskets in its Final Proposal because it did not believe
the owner would approve their use. Nonetheless, Southwest prepared a
1 Dowel baskets are a method of installing dowel bars used in certain
concrete applications. Dowel baskets are placed on grade and new concrete
is poured over the basket assembly. Dowel bars are installed by drilling
into the vertical edge of existing concrete. The parties do not dispute that
dowel baskets and dowel bars are not the same.
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Decision of the Court
report showing dowel basket installation would cost $106,278.00. Hensel
Phelps later removed dowel baskets from the final plans and specifications
and issued a change order reducing SBBI’s contract price by $106,278.00.
SBBI then issued a deductive unilateral change order reducing Southwest’s
contract price by the same amount.
¶5 The paving portion of the Project suffered numerous delays.
The parties disputed who caused the delays; Southwest contended that
SBBI failed to properly coordinate other subcontractors’ work and that one
subcontractor, Bray Construction, caused significant delays through
surveying and aggregate base layer errors. SBBI, on the other hand,
contended Southwest was responsible for some of the delays alongside
Bray. Southwest sued SBBI and its surety seeking $172,852.40 in damages
based on twenty-five days of delay. Southwest also sought $21,575.64 for
power washing, $11,706.56 for repairs to freshly poured concrete, and
$6,875.40 to remove and replace a concrete panel, all of which it contended
constituted extra work beyond the scope of the Southwest Contract.
¶6 SBBI moved for partial summary judgment, contending the
unilateral deductive change order was appropriate because both the SBBI
Contract and the plans and specifications included dowel baskets when the
parties entered into the Southwest Contract. SBBI also contended that the
Southwest Contract precluded Southwest’s delay damages claim:
Should the Subcontractor, without fault or neglect on its own
part, be delayed in the commencement or completion of the
Work by the fault or neglect of the Contractor or another
subcontractor on the project, Subcontractor shall be entitled
to a reasonable extension of time only. . . . In no event shall
the Subcontractor be entitled to receive compensation or
damages for any aforementioned delays except to the extent
that the Contractor shall receive such compensation or
damages from the Agency/Owner or another third party.
The trial court granted partial summary judgment as to the unilateral
change order, finding Southwest’s Final Proposal “included dowel baskets
in its bid price[.]” The court denied summary judgment on Southwest’s
delay damages claim, however, finding genuine issues of material fact
remained as to who had caused the delays.
¶7 Following a bench trial, the court denied Southwest’s concrete
repair claim but awarded its full power washing and concrete panel
replacement claims, finding both constituted extra work under the
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Decision of the Court
Southwest Contract. The court also awarded $40,094.20 in delay damages,
finding the clause quoted above did not apply because “SBBI willfully and
knowingly delayed Southwest’s ability to timely perform” by “fail[ing] to
appropriately supervise Bray.”
¶8 The court also invited Southwest to submit an attorneys’ fee
application and statement of costs. Southwest did so, seeking $78,124.50 in
attorneys’ fees. SBBI opposed the application and filed its own attorneys’
fee application requesting a similar amount of fees. The court determined
that Southwest was the successful party and awarded it $20,000 in
attorneys’ fees.
¶9 SBBI timely appealed the final judgment as well as the ruling
denying summary judgment on Southwest’s delay damages claim.
Southwest timely cross-appealed the court’s ruling granting summary
judgment to SBBI on the unilateral deductive change order. We have
jurisdiction over both the appeal and cross-appeal pursuant to Arizona
Revised Statutes (“A.R.S.”) section 12-2101(A)(1).
DISCUSSION
I. The Court’s Denial of Summary Judgment on Southwest’s Delay
Damages Claim Is Not Appealable.
¶10 SBBI first challenges the trial court’s order denying summary
judgment on Southwest’s delay damages claim. An order denying
summary judgment typically is not appealable even after entry of a final
judgment. Cal X-Tra v. W.V.S.V. Holdings, L.L.C., 229 Ariz. 377, 408 n.50,
¶ 105 (App. 2012). This is because such orders do not necessarily affect the
final judgment; they only indicate the trial court’s belief that the issues
raised should proceed to trial. Navajo Freight Lines, Inc. v. Liberty Mut. Ins.
Co., 12 Ariz. App. 424, 428 (1970). We may review the order, however, if
the denial is based on a purely legal issue or if the proponent reasserts the
issue in a motion for judgment as a matter of law pursuant to Arizona Rule
of Civil Procedure 50 or other post-trial motion. Desert Palm Surgical Grp.,
P.L.C. v. Petta, 236 Ariz. 568, 577, ¶ 22 (App. 2015). We review de novo
whether a pure question of law precluded the denial of summary judgment.
Id.
¶11 SBBI contends, as it did below, that the Southwest Contract
limited Southwest’s remedy for delays “in the commencement or
completion of the Work by the fault or neglect of the Contractor or another
subcontractor on the project” to “a reasonable extension of time only.” The
parties agree on appeal that “no delay damages” clauses generally are
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enforceable. See United Dairymen of Ariz. v. Schugg, 212 Ariz. 133, 138, ¶ 16
(App. 2006) (“Express contract provisions governing remedies or damages
are generally binding on the parties.”). Southwest argues, however, that
we should adopt an “active interference” exception to enforcement that has
been recognized by other courts. See, e.g., C & H Elec., Inc. v. Town of Bethel,
96 A.3d 477, 486 (Conn. 2014) (“Many, if not most, other states recognize a
separate, judicially created active interference exception to ‘no damages for
delay’ clauses.”); Triple R Paving, Inc. v. Broward Cty., 774 So. 2d 50, 54 (Fla.
Dist. Ct. App. 2000) (“Clauses providing for ‘no damages for delay,’ except
in the case of fraud, bad faith, or active interference by the owner, are legal
and enforceable.”). SBBI, meanwhile, relies on other out-of-state cases
holding that the active interference exception requires “an affirmative,
willful act.” C & H, 96 A.3d at 486 (citing cases); see also Pellerin Constr., Inc.
v. Witco Corp., 169 F. Supp. 2d 568, 583 (E.D. La. 2001); Phx. Contractors, Inc.
v. Gen. Motors Corp., 355 N.W.2d 673, 677 (Mich. Ct. App. 1984).
¶12 While the parties argue these legal issues on appeal, the trial
court did not directly address them in its summary judgment ruling. It
instead denied SBBI’s motion based on its conclusion that material issues of
fact remained as to who caused the project delays. SBBI did not seek
judgment as a matter of law during or after trial, nor did it file any post-
trial motions. SBBI thus waived its right to appeal this ruling. John C.
Lincoln Hosp. & Health Corp. v. Maricopa County, 208 Ariz. 532, 537, ¶ 19
(App. 2008) (concluding, because the trial court denied the motion for
partial summary judgment due to the existence of material factual disputes,
party had waived its right to appeal the sufficiency of the claims at issue by
not reasserting the issue during or after trial).
II. The Trial Court Did Not Abuse Its Discretion in Awarding
Southwest Extra Work Compensation.
¶13 SBBI also challenges the court’s damages awards relating to
power washing and concrete panel replacement. Because these issues were
resolved in the bench trial, we review the court’s legal conclusions de novo
but defer to its findings of fact unless they are clearly erroneous. Town of
Marana v. Pima County, 230 Ariz. 142, 152, ¶ 46 (App. 2012). We review any
factual issues in the light most favorable to upholding the court’s ruling.
Bennett v. Baxter Grp., Inc., 223 Ariz. 414, 417, ¶ 2 (App. 2010).
¶14 SBBI first contends these tasks fell within paragraph 24 of the
Southwest Contract, which provides:
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Except to the extent of any proceeds received by the
Contractor for the benefit of Subcontractor under a policy of
builders’ risk or fire insurance, Contractor shall not be liable
or responsible for any loss or damage to the Work;
Subcontractor shall be responsible for any loss or damage to
the work; Subcontractor shall be responsible for the correction
or restoration of any such loss or damage to the Work, or to
the work of the Contractor or any other subcontractor,
resulting from the operations of the Subcontractor . . .
Subcontractor shall take reasonable precautions to protect the
Work from loss or damage prior to acceptance by the
Agency/Owner.
¶15 SBBI cites no evidence to show the concrete panel repair at
issue fell under this provision. As for concrete cleaning, Southwest
presented evidence that it consistently excluded traffic control and concrete
cleaning from its bids because it did not have the necessary equipment for
those tasks. SBBI contends on appeal that “[t]raffic control . . . did not entail
the protection of the concrete surface which Southwest was required to
protect” but again cites no supporting evidence. The court did not clearly
err in finding that these items were beyond the scope of the Southwest
Contract.
¶16 SBBI also contends Southwest never obtained written
authorization to proceed with the power washing or concrete panel
replacement pursuant to paragraph 8 of the Southwest Contract:
In addition to Change Orders issued under paragraph 7 . . .
Contractor may from time to time . . . require by written order
that Subcontractor perform extra Work reasonably related to
the original Work hereunder. . . . Such extra Work shall be
invoiced weekly, in reasonable detail and amply supported
on the basis of the performing party’s actual direct costs and
without overhead or profit or allowance therefore. Payment
of such invoices shall be made at the time of the next ensuing
progress payment or final payment hereunder.
In no event shall Subcontractor proceed with a Change Order
without a written Change Order under paragraph[] 7 above
or a written order from the Contractor for extra Work under
paragraph 8; and contractor shall not be liable for any
additional costs incurred or delays encountered in the
performance of such Work without such a written notice
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Decision of the Court
approved by the Contractor’s home office or a duly
designated representative from the Contractor’s home office.
SBBI did not issue written extra work orders for the power washing or
concrete panel repairs. But Southwest presented evidence showing SBBI
did not always enforce this requirement.
¶17 Southwest also presented evidence that SBBI verbally
directed it to proceed with the concrete panel repairs and directed it to
proceed with concrete cleaning in a punch list. Southwest also presented
evidence showing it was only responsible for approximately forty-five
percent of the tire marks that necessitated cleaning. Moreover, SBBI’s
project manager testified that formal orders were not always prepared and
that he knew Southwest would dispute responsibility for the power
cleaning costs. Given this evidence, the court’s awards did not constitute
clear error. See Kocher v. Dep’t of Revenue of State of Ariz., 206 Ariz. 480, 482,
¶ 9 (App. 2003) (“A finding of fact is not clearly erroneous if substantial
evidence supports it, even if substantial conflicting evidence exists.”).
III. The Trial Court Did Not Abuse Its Discretion in Awarding
Attorneys’ Fees to Southwest.
¶18 Section 12-341.01(A) affords the trial court discretion to award
attorneys’ fees to the successful party in an action arising out of contract.
McAlister v. Citibank (Ariz.), a Subsidiary of Citicorp, 171 Ariz. 207, 216 (App.
1992). We will affirm a successful party determination absent an abuse of
discretion. Am. Power Products, Inc. v. CSK Auto, Inc., 242 Ariz. 364, 367,
¶ 12 (2017).
¶19 SBBI contends Southwest was not the successful party
because it only recovered approximately $68,000 of its original $442,602.63
demand. The fact that a party does not recover all of its requested relief
does not preclude it from being deemed the successful party.2 Sanborn v.
Brooker & Wake Prop. Mgmt., Inc., 178 Ariz. 425, 430 (App. 1994); see also Lee
v. ING Inv. Mgmt., LLC, 240 Ariz. 158, 161, ¶ 10 (App. 2016) (providing a
party may be successful for purposes of A.R.S. § 12-341.01(A) “even when
the recovery it obtains is ‘significantly reduced’”) (quoting Berry v. 352 E.
2 We also decline SBBI’s invitation to “remand . . . to the trial court
directing [it] to articulate” its methodology in awarding fees to Southwest.
The trial court need not explain its fee award so long as the record contains
a reasonable basis for it. Fulton Homes Corp. v. BBP Concrete, 214 Ariz. 566,
569, ¶ 9 (App. 2007).
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Virginia, L.L.C., 228 Ariz. 9, 14, ¶¶ 23-24 (App. 2011)). Moreover, the fact
that Southwest obtained a money judgment, while not dispositive, is an
important consideration in determining who is the successful party. Lee,
240 Ariz. at 161, ¶ 10. The trial court did not abuse its discretion in
awarding attorneys’ fees to Southwest.
IV. Issues of Material Fact Remain as to Whether the Southwest Contract
Excluded Dowel Baskets.
¶20 In its cross-appeal, Southwest challenges the court’s ruling
granting partial summary judgment to SBBI affirming its unilateral
deductive change order regarding dowel basket installation. We review a
grant of partial summary judgment de novo. Dobson Bay Club II DD, LLC v.
La Sonrisa de Siena, LLC, 242 Ariz. 108, 112, ¶ 18 (2017).
¶21 We first consider the relevant terms of the Southwest
Contract. If the terms are clear and unambiguous, we give effect to them as
written. Town of Marana, 230 Ariz. at 147, ¶ 21. If the terms are ambiguous,
“parol evidence may be used to explain [the ambiguity], but in the absence
of fraud or mistake, it may not be used to change, alter or vary the express
terms in a written agreement.” Id. (quoting Brand v. Elledge, 101 Ariz. 352,
358 (1966)).
¶22 Paragraph 1 obligated Southwest to “perform and furnish all
labor, supervision, materials, [and] equipment, to complete the work
identified and described in [S]chedule A: Work.” It also provided that the
work was to be performed “strictly in accordance with the contract
documents including but not limited to the contract between the owner and
contractor, . . . plans, specifications, . . . and other documents identified in
Schedule B attached hereto,” which defined “Contract Documents” to
include the SBBI Contract as well as the project plans and specifications.
Schedule A similarly provided that the work “shall be in compliance with
project plans, specifications, . . . [and] contract documents[.]” But while
Schedule A defined the “Scope of Work” to include “drilling and install of
dowel bars,” it did not include dowel baskets.
¶23 Southwest contends Schedule A demonstrates an agreement
to exclude dowel baskets, but SBBI contends the Southwest Contract
obligated Southwest to follow the plans and specifications available at that
time, which included dowel baskets. When parties submit competing
interpretations of a contract’s meaning, the court should consider “the
offered evidence and, if [the court] finds that the contract language is
reasonably susceptible to the interpretation asserted by its proponent, the
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evidence is admissible to determine the meaning intended by the parties.”
Town of Marana, 230 Ariz. at 147, ¶ 21 (quoting Taylor v. State Farm Mut.
Auto. Ins. Co., 175 Ariz. 148, 154 (1993)).
¶24 Southwest presented evidence showing that Schedule A’s
reference to “dowel bars,” which it contends are installed “by drilling into
the vertical edge of existing concrete,” necessarily excluded the use of
dowel baskets. It also presented evidence showing that it chose not to
include dowel baskets in its Final Proposal because it believed the owner
would not approve them in the final plans. Southwest also presented
evidence that it would have provided dowel baskets at no additional cost
had the owner approved them. Finally, Southwest presented evidence that
SBBI copied the language of Southwest’s “Final Proposal” verbatim in its
own bid proposal to Hensel Phillips and in Schedule A of the Southwest
Contract.
¶25 Based on this evidence, we conclude that the Southwest
Contract is reasonably susceptible to Southwest’s interpretation that it did
not include dowel baskets. This evidence thus is admissible. Johnson v.
Earnhardt’s Gilbert Dodge, Inc., 212 Ariz. 381, 385, ¶ 19 (2006). Construing
the evidence in Southwest’s favor, as we must in reviewing a grant of
summary judgment, we conclude that genuine issues of material fact
remain as to whether the Southwest Contract included dowel baskets and,
therefore, whether the unilateral change order reducing Southwest’s
contract price by the amount estimated for their installation was proper. See
Nat’l Bank of Ariz. v. Thruston, 218 Ariz. 112, 116, ¶ 17 (App. 2008) (“[A] court
must view the [summary judgment] evidence in a light most favorable to
the non-moving party and draw all justifiable inferences in its favor.”). We
thus reverse the grant of partial summary judgment on this issue and
remand for further proceedings.
V. Southwest May Recover Reasonable Attorneys’ Fees and Taxable
Costs Incurred on Appeal.
¶26 Southwest requests its attorneys’ fees incurred on appeal
pursuant to A.R.S. § 12-341.01(A). Southwest is the successful party on
appeal, and its claims clearly arise out of contract. We therefore will award
it reasonable attorneys’ fees and taxable costs upon compliance with
Arizona Rule of Civil Appellate Procedure 21.
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CONCLUSION
¶27 We reverse the trial court’s grant of partial summary
judgment to SBBI on the dowel baskets issue and remand for further
proceedings. We affirm as to all other issues raised.
AMY M. WOOD • Clerk of the Court
FILED: AA
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