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Miller Construction Co., LLC v. PC Construction of Greenwood, Inc.

Court of Appeals of South Carolina

September 14, 2016

Miller Construction Company, LLC, Respondent/Appellant,
v.
PC Construction of Greenwood, Inc. and Safeco Insurance Company of America, Appellants/Respondents. Appellate Case No. 2014-002749

          Heard May 4, 2016

         Appeal From Greenwood County Eugene C. Griffith, Jr., Circuit Court Judge

          E. Wade Mullins III and Caitlin Creswick Heyward, both of Bruner Powell Wall & Mullins, LLC, of Columbia, for Appellants/Respondents.

          David J. Brousseau, of McIntosh Sherard Sullivan & Brousseau, of Anderson, for Respondent/Appellant.

          MCDONALD, J.

         In this breach of contract action seeking damages for failure to pay the balance due on a subcontract, Appellants/Respondents PC Construction of Greenwood, Incorporated (PC) and Safeco Insurance Company of America (Safeco) (collectively, PC) appeal the circuit court's denial of its Rule 59(e), SCRCP, motion to alter or amend, arguing the court erred in finding PC could not recover delay damages from Respondent/Appellant Miller Construction Company (Miller Construction). PC further argues the circuit court failed to consider the overwhelming evidence that Miller Construction caused delays on the project. On cross-appeal, Miller Construction argues the court erred in denying it prejudgment interest on its recovery for breach of contract. We affirm in part, reverse in part, and remand the question of prejudgment interest to the circuit court.

         FACTS AND PROCEDURAL HISTORY

         This case arises from a construction project known as the Lander University Recreation, Wellness, and Sports Complex Initiative Field Construction (the Project) in Greenwood County. The Project involved the site work and construction of soccer, baseball, softball, and tennis facilities at the Lander University (Lander) Jeff May Sports Complex (the Complex). Lander put the Project out for bids and awarded it to general contractor PC pursuant to the South Carolina Consolidated Procurement Code.[1] On December 15, 2009, PC contracted to complete the work for $7, 005, 310.

         PC subcontracted with Miller Construction[2] on December 17, 2009, for certain construction services, including but not limited to site work, grading, paving, and installation of a storm sewer for the Project (the Subcontract). Specifically, the Subcontract required Miller Construction to perform the work set forth in two specification provisions: (1) Section 31-1000 Site Clearing, Demo and Erosion Control (the Site Clearing and Demo Specification) and (2) Section 33-4100 Site Storm Drainage (the Storm Drain Specification). The Site Clearing and Demo Specification required Miller Construction to demolish and remove the existing storm drain system along with all other subgrade site improvements. The Storm Drain Specification set forth the requirements for Miller Construction's installation of the storm drain pipes and manholes. The original amount of the Subcontract was $492, 424.

         During the course of the Project, Miller Construction submitted eighty-seven change orders to PC. Change Order #40 included a request to adjust the overall cost of the project as well as the schedule (Schedule) to include additional days due to delays caused by the discovery and removal process of nearly 10, 000 tons of asbestos in early 2010. PC added additional days to the Schedule to address the asbestos issue.[3] The parties later agreed the asbestos was more widespread than originally anticipated.

         Throughout the project, PC paid Miller Construction upon receipt of Miller Construction's pay applications. However, upon receipt of the final pay application in November 2011, PC withheld payment. At that time, Lander had not yet made final payment to PC due to a dispute over how much Lander owed PC. In spring 2013, Lander and PC reached an agreement regarding final payment.[4]Nevertheless, PC continued to withhold final payment from Miller Construction, alleging that delay damages caused by Miller Construction exceeded the balance PC owed on the Subcontract.

         Miller Construction sued PC on May 25, 2012, seeking breach of contract damages for PC's failure to pay the balance due on the Subcontract. Miller Construction also asserted a cause of action on a payment bond against Safeco. On April 23, 2013, PC filed an amended answer and counterclaim, seeking damages due to Miller Construction's alleged delay of the Project. Prior to trial, PC further amended its answer, adding an affirmative defense that Miller Construction was not properly licensed and, therefore, was barred from pursuing a claim for breach of contract. In late 2013, the circuit court denied the parties' cross-motions for summary judgment; a nonjury trial was held in November 2013.

         Miller Construction's vice president, Michael Miller, testified that he understood and agreed to the terms of the Subcontract; he further acknowledged his understanding that timely completion of the Project was important and required under the Subcontract. He conceded that the Subcontract required Miller Construction to comply with the Schedule and the Schedule durations for Miller Construction's scope of work and that Miller Construction was required to provide the manpower and equipment necessary to meet the Schedule. Miller admitted the Subcontract required Miller Construction to submit a request for a change order if changed conditions required an increase in price or adjustment to the Schedule. Miller testified that by signing the Subcontract he agreed Miller Construction would be liable to PC for any damages that PC could show were a result of Miller Construction's failure to comply with any portion of the Schedule. He admitted that Miller Construction failed to notify PC at any time-other than in Change Order #40-that it was seeking additional time through a request for a change order under the terms of the Subcontract.

         PC's project manager, Gary Piontek (the Project Manager), testified that after the asbestos issue was resolved, Miller Construction failed to maintain the Schedule, and PC encountered consistent and continuous problems with Miller Construction's failure to timely perform its work. The Project Manager and PC's site personnel communicated those concerns to Miller Construction throughout the Project at weekly meetings and by email. However, email correspondence from the Project Manager to Mike Miller supported Miller's contention that the delays were caused not by Miller Construction, but by PC's inability to coordinate its various subcontractors and by other issues not within Miller Construction's control.

         PC's president, Randy Piontek, testified he got involved in an effort to get Miller Construction to comply with the Schedule. Randy Piontek admitted PC owed Miller Construction $51, 270.08 of the claimed $53, 695.08; however, PC refused payment due to alleged delay damages exceeding that figure.

         The Project Manager presented a detailed accounting of the delays allegedly caused by Miller Construction and the impact of those delays on PC's ability to complete the Project. In support of those claims, the Project Manager introduced PC's Activity Duration Schedule Analysis, which included a comparison of the original activity durations for each task with the actual time it took Miller Construction to complete them. PC claimed 145 days in total delays and arrived at its delay damage claim of $137, 035.15 by multiplying the 145 days by its daily rate of $945.07. PC then presented John Bahr, president of a construction consulting firm, as its expert witness on scheduling, construction management, and contract administration services. Bahr testified he was familiar with the Project because his company had been retained to assist in establishing the Schedule. Bahr opined that Miller Construction failed to comply with its contractual obligations to perform and complete its activities in accordance with the Schedule and that the delay calculation of 145 days was reasonable. Moreover, Bahr testified as to the methodology used to calculate the daily rate, explaining that Miller Construction's lack of timely performance impacted PC's completion of the work and caused delay damages, including increased overhead, to PC.

          On July 8, 2014, the circuit court issued a final order and judgment denying PC's claim for delay damages, finding PC owed Miller Construction $51, 270.08, and ordering immediate payment by Safeco on the bond. The court declined to award Miller Construction prejudgment interest. Miller Construction and PC filed timely Rule 59(e), SCRCP, motions to alter or amend, which the circuit court denied.

         ISSUES ON APPEAL

         PC raises four issues on appeal:

         II. Did the circuit court err in concluding Miller Construction did not cause any delays on the Project?

         IV. Did the circuit court err in determining Miller Construction was entitled to recover on the payment bond and in ordering immediate payment from the bond to Miller Construction?

         Miller Construction raises one issue on cross-appeal:

         STANDARD OF REVIEW

         "An action to construe a contract is an action at law reviewable under an 'any evidence' standard." Pruitt v. S.C. Med. Malpractice Liab. Joint Underwriting Ass'n, 343 S.C. 335, 339, 540 S.E.2d 843, 845 (2001). "In an action at law tried without a jury, an appellate court's scope of review extends merely to the correction of errors of law." Temple v. Tec-Fab, Inc., 381 S.C. 597, 599-600, 675 S.E.2d 414, 415 (2009). "The Court will not disturb the trial court's findings unless they are found to be without evidence that reasonably supports those findings." Id. at 600, 675 S.E.2d at 415. "The rule is the same whether the judge's findings are made with or without, a reference." Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976). "The judge's findings are equivalent to a jury's findings in a law action." Id.

         PC'S ISSUES ON APPEAL

         I. ...


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