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W.C. English, Inc. v. Rummel

United States District Court, W.D. Virginia, Lynchburg Division

March 6, 2018

W.C. English, Inc., Plaintiff,
v.
Rummel, Klepper & Kahl, LLP, ET AL., Defendants.

          MEMORANDUM OPINION

          NORMAN K. MOON, SENIOR UNITED STATES DISTRICT JUDGE.

         This case concerns a contract dispute between the construction company W.C. English, Inc. (“English”) and two of its inspectors: Rummel, Klepper & Kahl, LLP (“RK&K”) and CDM Smith, Inc. (“CDM Smith”). English won a Virginia Department of Transportation (“VDOT”) bid to build a bridge across I-81, near Lexington, Virginia. As part of the job, it was required to hire inspectors to verify that the construction of the bridge conformed to VDOT's quality standards. It hired RK&K and CDM Smith. During the bridge's construction, English switched the size of the steel supports that it was using. Employees of all three companies were aware of this change. Because of this change, the bridge did not meet VDOT's standards. VDOT required English to tear the bridge down and rebuild it. English sued RK&K and CDM Smith for breaching their contracts (Counts I and III) and for indemnification (Counts II and IV). RK&K and CDM Smith counterclaimed for unpaid fees.

         The parties have now filed cross-motions for summary judgment on all claims and counterclaims, (dkts. 43, 54, 56, 58), and English has also filed motions to exclude the defendant's experts. (Dkts. 50, 46). I will grant the defendants' motions because English was fundamentally responsible for its own damages. It, and neither of its inspectors, changed the structure of the bridge; it cannot now hold its inspectors liable as guarantors of its work. Relatedly, both defendants are entitled to their unpaid fees, and so I grant their motions for summary judgment on the counterclaims. Because I grant the defendants summary judgment, I do not reach English's motions to exclude the defendants' experts from testifying at trial.[1]

         I. Legal Standard

         Federal Rule of Civil Procedure 56(a) provides that a court shall grant summary judgment “if the movant shows that there is no genuine dispute as to any material fact.” “As to materiality . . . [o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. When considering cross-motions for summary judgment, the court must “consider each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law.” Defs. of Wildlife v. N.C. DOT, 762 F.3d 374, 392 (4th Cir. 2014).

         II. Facts

         I must view the record as a whole and draw all reasonable inferences in the light most favorable to the nonmoving party. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986). Because I first address the defendants' motions for summary judgment, this recitation of the facts draws all reasonable inferences in the English's favor.

         A. The contract formation

         On February 20, 2009, VDOT and English entered into a contract for the construction of a bridge over I-81. (Dkt. 55-1 at ECF 3, 23). English was responsible to VDOT for designing and constructing the bridge to certain specifications. (Id. at ECF 5).

         To assist it with its design, English entered into a subcontract with the engineering firm AECOM. (Dkt. 55-2). Per its contracts with the other parties, English was required to build the bridge in accordance with AECOM's approved plans. (Dkt. 55-5 at ECF 20; dkt. 55-6 at ECF 16). English was required to get any change to the bridge design approved through written requests submitted to AECOM. (Dkt. 55-3 at ECF 9, 12). AECOM was then responsible for making sure that any requested revision to the design would still meet VDOT standards. (Id. at ECF 13).

         To assist it with its construction, English entered into subcontracts with two inspectors. English entered into a “quality assurance” services contract with RK&K on October 6, 2009. (Dkt. 55-6). RK&K's quality assurance responsibilities involved inspecting whether construction of the project conformed with the contract documents and VDOT standards. (Dkt. 59-9). RK&K was to keep written documentation of these inspections, including the identification of any potential quality and non-conforming work issues. (Dkt. 59-4 at ECF 5). RK&K had the authority to advise VDOT not to pay English if the project was not in conformity with the plans. (Dkt. 14-2 at ECF 137; dkt. 43-16; dkt. 59-4 at ECF 3).

         English also entered into a subcontract with CDM Smith on March 26, 2009 for “quality control” services. (Dkt. 43-5). CDM Smith's quality control responsibilities involved measuring “quality characteristics” and inspecting construction to make sure the work conformed to the plan and regulations. (Dkt. 59-9). Taken together, these contracts anticipate a clear hierarchy: English retained ultimate responsibility, RK&K oversaw inspection, and CDM Smith fell under both RK&K's and English's leadership.

         B. The quality assurance and quality control plan

         English, RK&K, and CDM Smith jointly developed an overall quality assurance and quality control plan that specified the parties' roles. (Dkt. 14-1; dkt. 14-2; dkt. 57-2; dkt. 59-6 at ECF 11). This plan is part of English's contracts with both defendants. Under this plan, English was still “ultimately responsible for the quality of the construction.” (Dkt. 14-2 at ECF 57). The plan envisioned that a few individuals would oversee the project for English. Bernard Davis was the leader of English's team throughout the relevant time period. (Dkt. 14-1 at ECF 3). Gary Galloway became English's construction manager in 2010. (Dkt. 70-1 at ECF 74; dkt. 59-5 at ECF 3-4). Dylan Frazier was English's project coordinator, and he would replace Galloway as construction manager during the course of construction. (Dkt. 55-4 at ECF 6, 21, 46). It is unclear when exactly this transition occurred. (Dkt. 43-6 at ECF 27).

         According to this contract, RK&K's primary role was “to ensure the work conforms to the ‘approved for construction' plans and VDOT specifications by reviewing the QC data and performing independent sampling and testing to verify the QC test results.” (Dkt. 14-2 at ECF 58). RK&K had no direct control over English's construction means or methods. (Dkt. 55-6 at ECF 16). The plan envisioned that Richard Clarke would oversee RK&K's team of inspectors. (Dkt. 59-5 at ECF 3).

         CDM Smith's primary role was to measure and then report samples and inspection results to RK&K. (Dkt. 14-2 at ECF 140; dkt. 57-7 at ECF 2). CDM Smith likewise had no direct control over English's construction means or methods. (Dkt. 43-6 at ECF 17). Terry Oliver was CDM Smith's manager on the project. (Dkt. 43-26 at ECF 16).

         Importantly, the overall plan lays out different responses that specifically correspond to different levels of “non-conformities.” (Dkt. 14-2 at ECF 66). For the lowest level of non- conformity, a CDM Smith inspector could verbally address the problem with English's foreman and the problem could be fixed immediately. (Id.). The CDM Smith inspector was required to record this exchange in his project diary. (Id.). The second level of non-conformity concerned issues that could not be addressed immediately. (Id.). For these issues, the CDM Smith inspector was required to notify English's foreman and then alert RK&K about the issue. (Id.). CDM Smith would address the issue together with RK&K, but RK&K had final responsibility to determine that the issue was resolved. (Id.). This is because RK&K, but not CDM Smith, had the authority to withhold VDOT payments if the issue was not corrected. (Dkt. 59-4 at ECF 3). The most serious level of non-conformity occurred if English, RK&K, and CDM Smith could not agree on a way to resolve issues or deficiencies. (Dkt. 14-2 at ECF 66; id. at ECF 144 (“If the issues or deficiencies cannot be resolved, the inspector will advise [RK&K] and initiate a Non-Conformance Report (NCR).”)). Non-conformities of this sort involved an even more involved dispute resolution framework. (Dkt. 14-2 at ECF 66). Finally, if work was not in conformity, English and VDOT could still make a final determination to accept the work as non-conforming. (Id.). If they did so, RK&K was required to document the basis of acceptance. (Id.).

         Some more general language in other parts of the plan is in tension with this specific framework for resolving non-conformities. For example, one part of plan states that non-conformance reports should be issued “for all non-conforming work, ” not only that more “serious” category of the issues that could not be resolved. (Dkt. 14-2 at ECF 66, 142). Other parts of the plan state that CDM Smith must report “any” non-conformities to English's construction manager. (Dkt. 14-2 at ECF 142, 144).

         C. The error on the bridge

         VDOT regulations and the bridge's design required steel reinforcement that would be covered by concrete. (Dkt. 57-11; dkt. 57-12 at ECF 4). These regulations then specified how much “cover, ” or concrete on top of the steel, would be required. (Dkt. 57-12 at ECF 4). English started out installing 2.5 inch “slab runners, ” the industry name for the steel reinforcements, in the bridge construction. (Dkt. 55-5 at ECF 6, 21). But they stopped when they were in between one third and one half of the way through the construction of the bridge. (Id.). At that point, a switch was made to 1.75 inch slab runners. The move to use the shorter slab runners caused excess concrete cover over the top of the steel reinforcements and eventually was the source of the non-conformity that forced English to replace the bridge. (Dkt. 55-3 at ECF 51; dkt. 55-4 at ECF 18-20).

         This mistake was an overcorrection to a previous mistake. On another bridge built by English, it had not included enough concrete cover between the steel support and the road. (Dkt. 43-6 at ECF 18; dkt. 55-4 at ECF 16). Matthew Hackney, English's bridge superintendent, and Dylan Frazier, English's project manager who became their construction manager, discussed the problem with RK&K's Richard Clarke on April 6, 2012. (Dkt. 55-11; Dkt. 55-21; dkt. 59-19 at ECF 7-8). Together, they made the decision that English would use the shorter slab runners. (Dkt. 43-6 at ECF 18; dkt. 55-11; dkt. 55-21; dkt. 59-19 at ECF 7-8). CDM Smith did not play a role in this decision. (Dkt. 43-7 at ECF 17). After this decision was made by English and RK&K, a CDM Smith inspector, Khairy Wahba, let a foreman know that his installation of the taller slab runners did not conform to the changed plan. (Dkt. 62-3 at ECF 6-7; dkt. 62-4 at ECF 1-2). English ordered shorter slab runners for the bridge deck, and began using them to finish the bridge. (Dkt. 55-3 at ECF 21; dkt. 55-4 at ECF 17; dkt. 55-13).

         D. The error goes uncorrected

         Victor Niagro, a CDM Smith inspector, provided written notification to English of the problem with the spacing above the steel reinforcement on April 21, 2012. (Dkt. 43-25; Dkt. 62-5 at ECF 6, 11-12, 19; dkt. 57-10 at ECF 6-9, 11-13). He also discussed the problem with English's Foreman, Matthew Hackney. (Dkt. 43-25). On the day of the pour, April 24, 2012, Khairy Wahba of CDM Smith verbally told English and RK&K that the concrete cover was greater than the tolerance approved in the AECOM drawings. (Dkt. 57-9 at ECF 11-13, 20-25). Wahba also recorded the nonconforming measurements and showed them to Hackney, of English, and Clarke, of RK&K. (Id.). Clarke reviewed CDM Smith's measurements and raised similar concerns about the spacing of the slab runners with English. (Dkt. 55-4 at ECF 33; dkt. 59-10 at ECF 17-20). RK&K did not file a written report of any non-conformance. (Dkt. 59-11 at ECF 20-21; dkt. 59-23).

         RK&K and CDM Smith both believed English had cured their concerns before the concrete pour. (Dkt. 55-9 at ECF 11-12; dkt. 57-17; dkt. 59-24). English moved forward and poured concrete over the steel reinforcement.

         E. VDOT discovers the error

         After the bridge was largely finished, VDOT conducted an inspection that noted concerns about the excessive concrete cover (caused by the decrease in slab runner size), and asked for calculations to determine whether it would affect deck structural capacity. (Dkt. 43-18 at ECF 1). After finishing its investigation, VDOT rejected the bridge as non-conforming and asked English to tear down and rebuild the bridge. (Dkt. 57-19; dkt. 57-20; dkt. 57-21). English eventually rebuilt the bridge under protest, denying that there were any structural problems. (Dkt. 43-35). English and VDOT settled, with English receiving a reduction in the amount of liquidated damages assessed by VDOT. (Dkt. 55-19).

         III. Discussion of RK&K's Motion for Summary Judgment

         Count I alleges that RK&K breached its contract with English. Under Virginia law, a plaintiff must establish three elements to demonstrate breach of contract: “(1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant's violation or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach of obligation.” Navar, Inc. v. Fed. Bus. Council, 291 Va. 338, 344 (2016). Count II alleges that English has a contractual right to be indemnified for the damages it incurred in tearing down and rebuilding the bridge. RK&K's counterclaim alleges that English did not finish paying for the services rendered by RK&K, and asks for that payment.

         RK&K treats English's two separate claims together, arguing: (1) the third element of the breach of contract claim has not been satisfied because the terms of the contract absolve RK&K of liability if English was negligent; and (2) English has no right to indemnity because, again, the terms of the contract exempt RK&K from liability if English was negligent. Thus, its argument boils down to that one point: English is entitled to no damages because the terms of its contract demonstrate that RK&K is exempt from liability if English was negligent. Viewing the evidence in English's favor, I grant RK&K's motion for summary judgment on English's claims. Additionally, the parties do not dispute that English never paid RK&K for its final invoices. RK&K is also entitled to summary judgment on its counterclaim for those fees.

         A. The Court's previous opinion

         The Court issued an opinion in this case denying RK&K's motion to dismiss. (Dkt. 36).[2]The opinion's central holding was that “there is ambiguity in the subcontract-the resolution of which is an issue of fact that cannot be settled at [the motion to dismiss] stage.” (Id. at 1). This ambiguity arose because the two terms sheets contain clauses that contradict each other. English's terms sheet envisions at least some circumstances where RK&K would be required to indemnify English; RK&K's does not. Compare dkt. 21-1 at ECF 20 (“Subcontractor shall indemnify and save harmless Contractor . . .”) with Id. at ECF 16 (“RK&K is not responsible for the Contractor[s] failure to perform the construction work in accordance with the Construction documents.”). Under Virginia law, which of these terms control is a factual question. Dkt. 36 at 8 (citing Martin Marietta Corp. v. Int'l Telecommunications Satellite Org., 991 F.2d 94, 97 (4th Cir. 1992)); see also Nehi Bottling Co. v. All-Am. Bottling Corp., 8 F.3d 157, 161-62 (4th Cir. 1993) ...


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