Magnum Construction Management Corp., Etc. v. City of Miami Beach

Third District Court of Appeal
State of Florida
Opinion filed December 14, 2016.
Not final until disposition of timely filed motion for rehearing.
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No. 3D15-2239
Lower Tribunal No. 10-61979
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Magnum Construction Management Corp., etc., et al.,
Appellants,
vs.
The City of Miami Beach, Florida,
Appellee.
An Appeal from the Circuit Court for Miami-Dade County, John W.
Thornton, Jr., Judge.
Armas & Bertran, and J. Alfredo De Armas and Eduardo E. Bertran, for
appellants.
Lydecker Diaz, and Joan Carlos Wizel and Colby E. Grossman, for appellee.
Before ROTHENBERG, FERNANDEZ, and LOGUE, JJ.
ROTHENBERG, J.
Magnum Construction Management Corporation (“MCM”) and its surety,
Travelers Casualty and Surety Company of America (“Travelers”), appeal the trial
court’s entry of a final judgment against them and in favor of the City of Miami
Beach, Florida (“the City”), who claimed, in part, that MCM was liable for
playground defects and landscaping defects at South Pointe Park (“South Pointe
Park” or “the park”). Because the City failed to provide MCM with an opportunity
to cure the defects in the playground, as required by the contract between the
parties, we reverse the trial court’s finding that MCM was liable for the playground
defects. Additionally, because the trial court’s award of damages in connection
with the landscaping defects on the project was speculative, we reverse the award
and remand for a new trial on damages.
BACKGROUND
The underlying lawsuit arose out of a construction project that was intended
to redesign and improve South Pointe Park. The City awarded Hargreaves
Associates, Inc. (“Hargreaves”) the contract for designing the park and supervising
the construction project. Thereafter, the City awarded MCM the general contract
for the construction of the park. Travelers issued a performance bond for the
project and named MCM as the principle and the City as the obligee.
The park was designed to include, in part, a new children’s playground and a
variety of new grassy turfs and other landscaping features. Construction
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commenced in 2007, and on March 20, 2009, Hargreaves issued a Certificate of
Substantial Completion, which according to the contract documents indicated that
“all conditions and requirements of permits and regulatory agencies have been
satisfied and the Work, is substantially complete in accordance with the Contract
Documents, so the Project is available for beneficial occupancy by CITY.”
Although Hargreaves stopped working on the park by October 2009 due to a
payment dispute Hargreaves had with the City, the City did not officially terminate
its contract with Hargreaves until 2011, and in the interim, the City did not hire a
replacement for Hargreaves.
In the aftermath of a major flood in 2009, several aspects of the park’s
landscaping began to decline, including the deterioration of the sod in certain areas
of the park. Although the parties attempted to maintain the park and remediate the
problems with the landscaping features, when it became obvious that these
attempts were not going to solve the problem, the City hired Rosenberg Gardner
Design to create a remediation plan. It was eventually determined that one of the
primary causes for the problems with the sod and other landscaping features was
the over compaction of the soil, and the City ultimately awarded Superior
Landscaping & Lawn Service, Inc. the construction bid to remediate the park.
In addition to the landscaping defects, it also became apparent that some of
the aspects of the park’s playground were not in compliance with certain
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contractually required safety standards. On December 6, 2010, the City unilaterally
performed an audit of the playground and initiated the underlying litigation. As the
trial court correctly noted below, several of the playground defects were minor and
could have been easily corrected, such as a missing slide side rail, properly sized
metal cap covers, and the relocation of a sculpture. The City did not, however,
offer MCM the opportunity to repair or cure any of the defects in the playground,
but instead removed, redesigned, and replaced the playground in its entirety. It is
particularly noteworthy that the City’s own expert witness, Teri Hendy, never
recommended that the playground be entirely removed.1
After a bench trial, the trial court entered a verdict adjudicating the City’s
claims against MCM, Travelers, and Hargreaves. The trial court found that: (1)
MCM was liable for breach of contract and breach of warranty; (2) Travelers was
liable for breach of performance; and (3) Hargreaves was liable for breach of
contract, negligence, and negligence per se.
As to MCM’s liability for the playground defects, the trial court specifically
found that, although the City did not agree to work with MCM to prepare a joint
audit of the playground and never provided MCM with an opportunity to cure the
deficiencies in the playground, the City suffered damages because the playground
1Additionally, Victor Lowry, Hargreaves’s expert witness, testified at trial that all
of the defects in the playground could have been repaired, and Juan Munilla, one
of MCM’s fact witnesses, testified that each of the safety defects identified by Teri
Hendy were fixable.
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did not comply with the safety standards in the contract documents. The trial court,
however, found that the City’s complete removal and replacement of the
playground was excessive, and therefore reduced the damages accordingly.
As to MCM’s liability for the subgrade, sod, and landscaping defects, the
trial court found that the City was entitled to be reimbursed for the remediation of
the defects in the park, and that MCM was partially at fault for failing to recognize
that over compacting the soil would cause the grass and landscaping to fail.
However, the trial court also found that the City was not entitled to a betterment,
which the trial court calculated as the difference between the total amount sought
by the City and the entire damage award. After the trial court entered a final
judgment, MCM and Travelers timely appealed.2
ANALYSIS
I. Liability for the playground defects
MCM argues that it cannot be held liable for the playground defects because
the City never provided MCM with an opportunity to cure any of the playground
defects, as required by the contract documents. Because section 25.3 of the
General Conditions of the contract documents plainly provides for an opportunity
to cure, we agree.
Section 25.3 provides as follows:
2 Hargreaves has separately appealed, and the two appeals were consolidated only
for purposes of the record.
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If, within one (1) year after the date of substantial completion or such
longer period of time as may be prescribed by the terms of any
applicable special warranty required by the Contract Documents, or
by any specific provision of the Contract Documents, any of the Work
is found to be defective or not in accordance with the Contract
Documents, CONTRACTOR, after receipt of written notice from
CITY, shall promptly correct such defective or nonconforming Work
within the time specified by the CITY without cost to CITY, to do so.
This provision requires the City to notify MCM, the contractor, of any defects it
finds in MCM’s work. Thereafter, MCM “shall” correct the defective work within
the time specified by the City. It follows, therefore, that the City was required to
notify MCM of any defective work and provide MCM with a period of time in
which MCM must cure the identified defects.
Although section 25.3 is dispositive of this issue, we note that had the
contract been performed as intended, MCM would also have been given other
opportunities to cure the playground defects through the project’s “consultant,”
Hargreaves. For example, section 25.1 states as follows: “CONSULTANT shall
have the authority to reject or disapprove work which CONSULTANT finds to be
defective. If required by CONSULTANT, CONTRACTOR shall promptly either
correct all defective work or remove such defective work and replace it with
nondefective work.” Similarly, the contract contains an alternative dispute
resolution provision in section 12.1, which states as follows:
To prevent all disputes and litigation, it is agreed by the parties hereto
that CONSULTANT shall decide all questions, claims, difficulties
and disputes of whatever nature which may arise relative to the . . .
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fulfillment of this Contract . . . and CONSULTANT’s estimates and
decisions upon all claims, questions, difficulties and disputes shall be
final and binding to the extent provided in Section 12.2.
(emphasis added). Thus, either pursuant to section 25.1 or 12.1, the consultant,
Hargreaves, had the obligation to make determinations as to MCM’s work and to
order MCM to correct any defective work. MCM would then have had a
contractual period of time to cure any defective work identified by Hargreaves.
However, after Hargreaves stopped working on the park in October 2009 due to its
payment dispute with the City, and the City failed to replace Hargreaves, no
consultant was available to provide MCM with notice of any defective work or to
provide MCM with an opportunity to cure. Thus, the obligation fell on the City to
insure that these contract provisions, which provided MCM with opportunities to
cure any defects in its work product, were fully honored, and the City’s failure to
provide a replacement consultant frustrated these several provisions that were
intended to prevent litigation between the parties. See N. Am. Van Lines v.
Collyer, 616 So. 2d 177, 179 (Fla. 5th DCA 1993) (stating that “a party who, by
his own acts, prevents performance of a contract provision cannot take advantage
of his own wrong”); see also Knowles v. Henderson, 22 So. 2d 384, 386 (Fla.
1945).
Additionally, the trial court expressly found that “MCM admitted its
responsibility to correct the Playground equipment deficiencies, but the CITY did
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not agree to work with them to prepare a joint audit and never provided MCM an
opportunity to cure deficiencies.” (emphasis added). Instead, the City unilaterally
decided to remove the playground in its entirety. The City has not cross-appealed
these findings in the trial court’s verdict, and any objection to them on appeal has
accordingly been waived. State v. City of N. Miami Beach, 108 So. 2d 764, 765
(Fla. 1959); Philip J. Padavano, Florida Appellate Practice § 8:10 at 173 (2016 ed.)
(“Although an appellate court may affirm an order based on a point not made by
the appellee or respondent, the court will not reverse an order based on a point that
was not made by the appellant or petitioner.”).
Because MCM was not provided with an opportunity to cure the defects in
the playground, as required by the contract documents, we find that the trial court
erred by holding MCM liable as to the playground defects. Underwater Eng’g
Servs., Inc. v. Util. Bd. of City of Key W., 194 So. 3d 437, 445 (Fla. 3d DCA
2016) (holding that the trial court erred by entering judgment in favor of the
plaintiff where the contractor was not provided with the contractually required
notice and opportunity to cure the alleged defects in the project); see also City of
Hollywood v. Diamond Parking, Inc., 950 So. 2d 472, 474 (Fla. 4th DCA 2007).
II. The trial court’s damages award for the landscaping defects
MCM contends that the trial court’s award of damages for the landscaping
defects was speculative, and we agree. The City sought approximately $3 million
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in damages against MCM and Hargreaves in connection with the landscaping
defects, but the trial court only awarded the City $1,290,037. The trial court stated
that the difference between its total award and the amount sought by the City
constituted a “betterment,” which the trial court defined as aspects of the City’s
remediation plan which improved upon and differed significantly from the original
designs and specifications in the contract documents.
The trial court was correct to exclude betterments from its award, as the
measure of damages for breaching a construction contract is “the reasonable cost
of construction and completion in accordance with the contract, if this is
possible and does not involve unreasonable economic waste.” Grossman Holdings
Ltd. v. Hourihan, 414 So. 2d 1037, 1039 (Fla. 1982) (quoting § 346(1)(a),
Restatement (First) of Contracts (1932)) (emphasis added); Kritikos v. Andersen,
125 So. 3d 885, 888 (Fla. 4th DCA 2013) (stating that if an owner elects to adopt a
more expensive design in the course of making repairs in a construction defect
case, then “the recovery should be limited to what would have been the
reasonable cost of repair according to the original design”) (quoting Temple
Beth Sholom & Jewish Ctr., Inc. v. Thyne Constr. Corp., 399 So. 2d 525, 526 (Fla.
2d DCA 1981)) (emphasis added).3
3The measure of damages in a breach of warranty action similarly does not include
what the trial court defined as betterments. See §§ 672.714, 672.715, Fla. Stat.
(2010); Miles v. Kavanaugh, 350 So. 2d 1090, 1093 (Fla. 3d DCA 1977).
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However, the City has not cited to any evidence and we have found no
evidence in the record as to the value of the betterments in the remediation plan, or
what it would have cost to restore the City “to the condition [it] would have been
in if the contract had been performed.” Grossman Holdings Ltd., 414 So. 2d at
1039. The only measure of damages provided by the City was the costs associated
with the planning, permitting, and construction of a park that is fundamentally
different from the one it contracted with MCM to build. Therefore, we find that the
trial court speculated as to the value of the betterments in the City’s remediation
plan and, thus, speculated in its ultimate calculation of the damages owed to the
City in connection with the landscaping defects in the park. Smith v. Austin Dev.
Co., 538 So. 2d 128, 129 (Fla. 2d DCA 1989) (“Damages cannot be based upon
speculation or guesswork, but must have some reasonable basis in fact.”);
Kingswharf, Ltd. v. Kranz, 545 So. 2d 276, 278 (Fla. 3d DCA 1989) (reversing a
speculative damage award in a breach of construction contract case and remanding
for a new trial on damages). We find the City’s remaining arguments are without
merit, and we therefore decline to specifically address them here.
CONCLUSION
In summary, because the City never provided MCM with an opportunity to
cure the defects in the playground, as required by section 25.3 of the contract, the
trial court erred by holding MCM liable for the playground defects. The trial court
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also erred by speculating as to the damages the City suffered in connection with
the landscaping defects. We therefore reverse the trial court’s entry of a final
judgment against MCM for the playground defects, as well as the trial court’s
award of damages as to the landscaping defects. We remand for a new trial on
damages as to the landscaping defects alone.
Reversed and remanded.
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