Board of Water & Sewer Commissioners of the City of Mobile v. Bill Harbert Construction Company and Federal Insurance Company

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REL: 07/31/2009 Notice: T h i s o p i n i o n i s s u b j e c t t o formal r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e R e p o r t e r o f D e c i s i o n s , A l a b a m a A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , A l a b a m a 3 6 1 0 4 - 3 7 4 1 ( ( 3 3 4 ) 2 2 9 ¬ 0 6 4 9 ) ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r . SUPREME COURT OF ALABAMA SPECIAL TERM, 2009 1041091 Board o f Water & Sewer C o m m i s s i o n e r s o f t h e C i t y of Mobile v. Bill H a r b e r t C o n s t r u c t i o n Company and F e d e r a l Company Appeal PER Court CURIAM. The Mobile of from M o b i l e C i r c u i t (CV-99-3979) Insurance Board of Water & Sewer C o m m i s s i o n e r s ("the B o a r d " ) a p p e a l s Bill Harbert f r o m a summary Construction Company of the City of judgment i n f a v o r ("Harbert") and 1041091 Harbert's summary surety, judgment, which under Rule the 54(b), Board discussed. 1992, out projects known as P., of court certified adjudicated Harbert's for as claims Board, as and Procedural The final made performance the the Background B o a r d r e t a i n e d BCM to perform engineering involved, trial Civ. projects Factual Wastewater the ("Federal"). of by two hereinafter 1 I. two I n s u r a n c e Company A l a . R. arising construction In Federal and associated Treatment in part, reactor the basin related with the Plant. 3 One The Inc. consultation Board's construction #2. Converse, History of other services Clifton project a large project ("BCM"), 2 C. for Williams ("Project 15") reactor basin ("Project 16") This i s the Board's second appeal i n t h i s case. See B o a r d o f W a t e r & S e w e r Comm'rs o f M o b i l e v . B i l l Harbert Constr. Co., 870 So. 2d 699, 701 ( A l a . 2003) . The first appeal concerned the i s s u e whether the t r i a l court e r r e d i n denying the Board's motion to a r b i t r a t e Harbert's claims a g a i n s t i t . We h e l d t h a t i t d i d n o t . 1 B C M s u b s e q u e n t l y c h a n g e d names a n d changes are not r e l e v a n t to t h i s appeal. 2 ownership, but the The reactor basin is a large containment vessel c o n s t r u c t e d of p o u r e d c o n c r e t e w a l l s , w i t h a r o o f of p r e - c a s t double-T concrete beams. The reactor basin included an oxygen-dissolution system f o r the p r o c e s s i n g of waste. The s y s t e m c o n s i s t e d , i n p a r t , o f s i x e l e c t r i c a e r a t o r s m o u n t e d on top of the r e a c t o r b a s i n . The a e r a t o r s t u r n e d b l a d e s t h a t 3 2 1041091 involved modifications facility. BCM projects, and construction contracts and the the bid 16"). then upon and and Project performing 15 Board, awarded ("Contract projects construction and Project 16 to i n accordance with the plans i n accordance with Specifications for Water Mains, Sanitary standard Pumping The Stations" ("the price for performing the the work Taking under into Contract account o r b e f o r e December 26, be 1996, 16 and was extensions t h e w o r k u n d e r C o n t r a c t 15 was to the Harbert agreed to the c o n t r a c t s , a p p r o x i m a t e l y $11,106,963, required the 15") was $1,298,125. for and Sewage 15 bids the BCM specifications"). Contract specifications for requested was s p e c i f i c a t i o n s p r e p a r e d by Sewers and sludge-treatment projects. the r e s p e c t i v e "Standard was the plans Pursuant Board's on improvements to a Board f o r both ("Contract complete prepared of Harbert and required work under the p r i c e granted t o be by extended i n t o the r e a c t o r basin b a c t e r i a i n t o a waste sludge. the work under C o n t a c t or May and t h a t m i x e d pure the completed and before for approximately on completed the 2, 16 1996. oxygen 4 and As h e r e i n a f t e r d i s c u s s e d , some d o c u m e n t a t i o n indicates t h a t t h e c o m p l e t i o n d a t e f o r C o n t r a c t 16 , a s e x t e n d e d , was April 28, 1996. An August 9, 1996, letter from a 4 3 1041091 Federal and a g r e e d t o a c t as H a r b e r t ' s Harbert documents and F e d e r a l i n favor The p r i m a r y the Board's executed of the Board issue and t h e e f f e c t claims against f o r each of Contract of those Harbert that were f o r both and d e l i v e r e d i n the present terminations proper surety contracts, surety bond project. appeal concerns 15 a n d C o n t r a c t terminations adjudicated on whether 16 were the Board's b y t h e summary judgment. As a preliminary specifications the matter, describe we note that the standard BCM's r o l e i n t h e p r o j e c t s , i n c l u d i n g following: "5.01 AUTHORITY OF THE ENGINEER: "To prevent misunderstandings, disputes, and l i t i g a t i o n , [ B C M ] s h a l l d e c i d e any and a l l q u e s t i o n s w h i c h a r i s e c o n c e r n i n g t h e q u a l i t y and a c c e p t a b i l i t y of m a t e r i a l s f u r n i s h e d and work p e r f o r m e d , t h e r a t e o f p r o g r e s s o f t h e Work, i n t e r p r e t a t i o n o f t h e P l a n s and S p e c i f i c a t i o n s , and t h e a c c e p t a b l e fulfillment of the C o n t r a c t on t h e p a r t o f [ H a r b e r t ] . [BCM] w i l l d e t e r m i n e t h e amount, q u a n t i t y , c l a s s i f i c a t i o n , and q u a l i t y o f t h e s e v e r a l k i n d s o f w o r k p e r f o r m e d a n d m a t e r i a l s f u r n i s h e d w h i c h a r e t o be p a i d f o r under t h e C o n t r a c t and [ i t s ] d e c i s i o n and e s t i m a t e s h a l l be c o n c l u s i v e and b i n d i n g on b o t h p a r t i e s t h e r e t o and such d e c i s i o n and e s t i m a t e o f [BCM], i n case any q u e s t i o n s arise, shall be a c o n d i t i o n r e p r e s e n t a t i v e o f BCM completion date, as discussion, infra. to Harbert states that extended, was May 2, 4 the contract 1996. See 1041091 p r e c e d e n t t o t h e r i g h t o f [ H a r b e r t ] t o r e c e i v e any m o n e y due [ i t ] u n d e r t h e c o n t r a c t . Explanations concerning the meaning of the Plans and Specifications and Contract, a l l directions n e c e s s a r y t o c o m p l e t e o r make d e f i n i t e t h e P l a n s , S p e c i a l P r o v i s i o n s , S p e c i f i c a t i o n s or C o n t r a c t and t o g i v e t h e m due e f f e c t w i l l be g i v e n b y [ B C M ] and [ i t s ] f i n d i n g s s h a l l be f i n a l a n d b i n d i n g on both parties hereto. [BCM] shall have authority to e n f o r c e a n d make e f f e c t i v e d e c i s i o n s a n d o r d e r s as apply to conformance w i t h the C o n t r a c t . [ I t ] s h a l l decide disputes and mutual rights between Contractors." The standard "7.16 specifications NO WAIVER OF further provided, LEGAL however: RIGHTS: "The [ B o a r d ] or [BCM] s h a l l n o t be p r e c l u d e d or s t o p p e d by any measurement, e s t i m a t e , o r c e r t i f i c a t e made o r g i v e n b y e i t h e r o f t h e m b e f o r e o r a f t e r t h e c o m p l e t i o n and a c c e p t a n c e o f t h e Work and payment t h e r e f o r , p u r s u a n t t o any measurement, e s t i m a t e , o r certificate, from showing the true and correct amount and c h a r a c t e r o f t h e Work p e r f o r m e d and m a t e r i a l s f u r n i s h e d by [ H a r b e r t ] ; or from showing at any t i m e t h a t any s u c h measurement, e s t i m a t e , or c e r t i f i c a t e i s u n t r u e o r i n c o r r e c t l y made i n any p a r t i c u l a r ; o r f r o m s h o w i n g a t any t i m e t h a t t h e Work o r m a t e r i a l s , o r any p a r t t h e r e o f , do not conform i n f a c t t o the C o n t r a c t . [BCM] s h a l l have t h e r i g h t t o r e j e c t t h e w h o l e o r any p a r t o f t h e aforesaid work or materials should the said m e a s u r e m e n t s , e s t i m a t e , o r p a y m e n t be f o u n d , o r b e known, t o be i n c o n s i s t e n t w i t h the terms of the Contract, or otherwise i m p r o p e r l y g i v e n ; and the [ B o a r d ] s h a l l n o t be p r e c l u d e d f r o m d e m a n d i n g and r e c o v e r i n g f r o m [ H a r b e r t ] and [ F e d e r a l ] s u c h damages a s i t may s u s t a i n b y r e a s o n o f [ H a r b e r t ' s ] f a i l u r e to comply w i t h the terms of the C o n t r a c t . Neither the acceptance by [BCM], o r any r e p r e s e n t a t i v e o r e m p l o y e e ; nor any c e r t i f i c a t e by [BCM] f o r payment 5 1041091 o f money; nor any payment f o r nor a c c e p t a n c e o f the w h o l e o f any p a r t o f t h e Work by t h e [ B o a r d ] , o r [ B C M ] ; n o r any e x t e n s i o n o f t i m e ; n o r any p o s s e s s i o n taken by the [ B o a r d ] or i t s employees, s h a l l operate as a w a i v e r o f any p o r t i o n o f t h e C o n t r a c t o r o f any power h e r e i n r e s e r v e d by t h e [ B o a r d ] o r o f any r i g h t t o damages h e r e i n p r o v i d e d , n o r s h a l l any b r e a c h o f t h e C o n t r a c t be h e l d t o b e a w a i v e r o f a n y o t h e r o r subsequent breach." We also note specifications, notices of that entitled d e f a u l t and subsection "Default of termination. 8.11 of the standard Contract," provided Subsection 8.11 states: " I f [ H a r b e r t ] ... f a i l s to perform the work w i t h s u f f i c i e n t workmen, e q u i p m e n t or m a t e r i a l s t o i n s u r e its prompt completion, or performs the Work unsuitably, or neglects or refuses to remove m a t e r i a l s or p e r f o r m anew s u c h w o r k as s h a l l be rejected as defective and unsuitable, or d i s c o n t i n u e s p r o s e c u t i o n o f t h e Work, o r f r o m any o t h e r c a u s e w h a t s o e v e r d o e s n o t c a r r y t h e W o r k i n an acceptable manner, ... the [Board] or [ i t s ] representative may give notice in writing by r e g i s t e r e d m a i l t o [ H a r b e r t ] and [ F e d e r a l ] o f s u c h d e l a y , n e g l e c t , or d e f a u l t . I f w i t h i n 10 d a y s a f t e r such n o t i c e [ H a r b e r t ] does not p r o c e e d t o remedy t o the s a t i s f a c t i o n of the [ B o a r d ] the f a u l t s p e c i f i e d i n s a i d n o t i c e , or [ F e d e r a l ] does not p r o c e e d to t a k e o v e r t h e Work f o r c o m p l e t i o n , t h e [ B o a r d ] s h a l l h a v e f u l l power and a u t h o r i t y , w i t h o u t i m p a i r i n g t h e o b l i g a t i o n of the C o n t r a c t or the C o n t r a c t Bonds, to t a k e o v e r t h e c o m p l e t i o n o f t h e W o r k ; ... t o e n t e r i n t o agreements w i t h others f o r the completion of t h e C o n t r a c t a c c o r d i n g t o t h e t e r m s and p r o v i s i o n s t h e r e o f ; or t o use s u c h o t h e r m e t h o d s as i n i t s o p i n i o n may be r e q u i r e d f o r t h e c o m p l e t i o n o f t h e C o n t r a c t . [ H a r b e r t ] a n d [ F e d e r a l ] s h a l l be liable f o r a l l c o s t s and e x p e n s e s i n c u r r e d by t h e [Board] i n c o m p l e t i n g t h e Work, and a l s o f o r t h e l i q u i d a t e d 6 for 1041091 damages in Contract." A. conformity Further with the to satisfy i n the 15 15 Background 1. Contract Factual Combiflex The required that c e r t a i n pressure reactor basin, required the of tests. the as to the 15 System To and of Project reactor basin the plans use terms help #2 be constructed maintain pressure specifications for Sikadur-Combiflex System C o m b i f l e x s y s t e m " ) , m a n u f a c t u r e d by S i k a C o r p o r a t i o n The Combiflex system consisted of strips of and T-sections that were used to foam construct ("the ("Sika"). "glued w e l d e d " o v e r seams t h a t e x i s t e d a t j o i n t s b e t w e e n t h e slabs Project or concrete the reactor basin. After a Harbert subcontract ("Spiderman"), the Combiflex purchased 1996, the after with entered into Contract Spiderman's pursuant system Combiflex Harbert had Spiderman reactor system i t entered into Services, Inc. Professional to which on 15, from basin a constructed agreed #2. 5 supplier. reactor to install Spiderman In October basin #2, T h e r e c o r d c o n t a i n s a D e c e m b e r 1, 1 9 9 4 , document from Sika that states that "Spiderman ... has successfully i n s t a l l e d S i k a P r o d u c t s d u r i n g t h e p a s t few y e a r s . B a s e d on t h e i r past h i s t o r y using Sika Products, we recommend them highly." 5 7 1041091 Spiderman completed the allegedly i n accordance with Contract 15 and representative In installation accordance from October respective in the Sika. 1996, as plans with and Combiflex specifications for on-site directions Sika to and any defects in 7.14 s p e c i f i c a t i o n s provided "shall standard accept final acceptance the overall subcontractors and material and Combiflex system. responsibility of for Project and issued material with the the Spiderman workmanship a s s o c i a t e d of system, of a 6 both warranties of the and that Harbert and work equipment provided or Subsection completion including their by final done by vendors suppliers." After Spiderman construction arose between continued Harbert installed on and the rest some o f the of Combiflex Project 15. i t s subcontractors, system, Disputes on the According to d e p o s i t i o n testimony from George A t c h i s o n , Jr., p r e s i d e n t of P h o e n i x C o a t i n g s , I n c . , Spiderman d i d not i n s t a l l the C o m b i f l e x system p r o p e r l y . E v e n t u a l l y , the Board r e t a i n e d Phoenix Coatings to r e i n s t a l l the C o m b i f l e x system a f t e r the initial installation repeatedly failed pressure t e s t s ; P h o e n i x C o a t i n g s ' i n s t a l l a t i o n was n o t c o m p l e t e d u n t i l a f t e r t h e C o n t r a c t 15 was t e r m i n a t e d , h o w e v e r . A s h e r e i n a f t e r discussed, S p i d e r m a n d i s p u t e d t h a t i t s i n s t a l l a t i o n was at f a u l t i n the i n i t i a l f a i l u r e of the s e a l a n t system. I t argued t h a t t h e C o m b i f l e x s y s t e m was not an appropriate sealant system f o r the r e a c t o r b a s i n . Harbert u l t i m a t e l y agreed with Spiderman's p o s i t i o n . See d i s c u s s i o n , i n f r a . 6 8 1041091 one hand, under a n d BCM, Contract specifications "interlock change over called for Harbert On Asarisi, Board 15 would not requirements the plans installation of requested that controls. During change with order, an P r o j e c t 15, p a r t i c u l a r l y Project completion the whether the f o r the i n t e r l o c k provide as t o c e r t a i n including the i n t e r l o c k - c o n t r o l completing 15 15, controls." order Harbert that on t h e o t h e r , be BCM updated when BCM by certain approve a the dispute requested that schedule for i t became completed and the apparent scheduled date. April 10, 1997, H a r b e r t sent a letter to Joseph N. BCM's " C o n s t r u c t i o n a n d S e r v i c e M a n a g e r " f o r P r o j e c t and P r o j e c t 16. The l e t t e r stated: "It i s i m p o s s i b l e f o r u s t o p r o v i d e y o u w i t h an a c c u r a t e s c h e d u l e o f c o m p l e t i o n when t h e r e a r e s t i l l items of o m i s s i o n i n t h e c o n t r a c t documents t h a t d i r e c t l y a f f e c t t h e p r o g r e s s a n d s t a r t up o f t h e plant. We h a v e s u b m i t t e d a R e q u e s t f o r C h a n g e O r d e r c o n c e r n i n g t h i s w o r k a n d w h e n we r e c e i v e y o u r go a h e a d , we w i l l be a b l e to provide you w i t h a schedule. "I r e a l i z e you have been a s k i n g f o r a s c h e d u l e f o r a w h i l e , b u t w i t h t h e c h a n g i n g s c o p e o f w o r k on t h e c r i t i c a l p a t h , we c a n n o t f u r n i s h y o u w i t h o n e . " On A p r i l he refused 14, 1997, A s a r i s i to issue sent Harbert t h e change 9 order a letter Harbert had i n which requested 1041091 because, according interlock change order Asarisi office controls Asarisi, no i s required." later than the bonding did not receive and that approximately states, Friday company under The an your letter updated April "clear schedule over to the a n d no stated that i n [BCM's] 18, 1 9 9 7 " ; t h a t to take that contract further BCM the project would i f BCM a s a t i s f a c t o r y , u p d a t e d s c h e d u l e by t h a t " l i q u i d a t e d damages [ w e r e ] c o n t i n u i n g [BCM] As i t was are required " e x p e c t [ e d ] t o have request date, to estimate[s] the liquidated date; to accrue. damages To to be Contract 15 $59,950." liquidated damages, paragraph 6 of in part: "[The B o a r d ] may r e t a i n t h e sum o f $ 5 5 0 . 0 0 p e r d a y for each day thereafter, Sundays and holidays i n c l u d e d , t h a t t h e Work r e m a i n s u n c o m p l e t e d , w h i c h sum s h a l l r e p r e s e n t t h e a c t u a l damages w h i c h t h e [ B o a r d ] w i l l have s u s t a i n e d p e r day by f a i l u r e o f [Harbert] to complete t h e Work w i t h i n the time s t i p u l a t e d , a n d t h i s sum i s n o t a p e n a l t y , b e i n g t h e s t i p u l a t e d damages t h e [ B o a r d ] w i l l have sustained i n t h e event o f such d e f a u l t by [ H a r b e r t ] . " On schedule April 17, for Project 1997, 15 t o Harbert Asarisi. 10 forwarded a completion 1041091 At the an A p r i l Board meeting on state, 21, the in 1997, status of meeting Project of the Board, 15. The BCM minutes updated of part: "The c o n t r a c t t i m e was 600 d a y s , w i t h a s t a r t i n g date of February 13, 1995, and the original c o m p l e t i o n s h o u l d h a v e b e e n O c t o b e r 17, 1 9 9 6 . The engineers met in November 1995, telling the c o n t r a c t o r we w e r e v e r y c o n c e r n e d a b o u t t h e p r o g r e s s on t h e p r o j e c t a n d d i d n o t f e e l t h e c o n t r a c t o r c o u l d f i n i s h on t i m e . Mr. [ J o h n ] S t e g e o f H a r b e r t a s s u r e d u s a t t h a t t i m e t h a t t h e r e was 6 months of f l o a t t i m e on t h e i r s c h e d u l e a n d he was a h e a d o f s c h e d u l e and w o u l d p r o b a b l y f i n i s h e a r l y . Another meeting was held i n November 1996, a month after the o r i g i n a l c o m p l e t i o n d a t e . [ B C M ] and B o a r d ' s staff agreed i n t h a t meeting to a 70-day time e x t e n s i o n w h i c h p u t c o m p l e t i o n d a t e December 26, 1996. We w e r e a s s u r e d b y Mr. S t e g e a t t h a t t i m e t h a t t h e new r e a c t o r w o u l d be on l i n e a n d t h e [ B o a r d ] w o u l d h a v e b e n e f i c i a l use. B a s e d on t h a t , we a g r e e d t o s t o p liquidated damages or to not assess liquidated damages at that time until December 26, 1996. H o w e v e r , t h a t r e a c t o r i s s t i l l n o t on l i n e . [W. Malcolm] S t e e v e s [ , a s s i s t a n t d i r e c t o r of the Board,] i n t e r j e c t e d t h a t l i q u i d a t e d damages b e g a n December 26. "Mr. A s a r i s i [ o f B C M ] s a i d we h a v e a r e c e n t schedule from the c o n t r a c t o r received last week s h o w i n g t h e r e a c t o r w i l l be on l i n e f i r s t w e e k i n J u n e , w h i c h i s s i x months l a t e r t h a n t h e c o n t r a c t o r originally anticipated. "... [Mr. A s a r i s i s a i d ] [ t ] h e whole p r o j e c t w o n ' t be c o m p l e t e u n t i l t h e f i r s t o f A u g u s t . has "... Mr. A s a r i s i e n o u g h money i n s a i d the c o n t r a c t o r p r o b a b l y there to f i n i s h , but he's 11 the 1041091 saying, once the Board deducts the liquidated d a m a g e s f r o m t h a t , t h e n t h e r e w i l l be l i t t l e left. In other words, the Board c o u l d n ' t f i n i s h the j o b plus collect on t h e l i q u i d a t e d damages f o r t h e amount l e f t i n t h e p r o j e c t . " fl " C h a i r [ L e w i s G.] O d o m [ , J r . ] s a i d we n e e d t o d e c i d e t o see w h e t h e r t h e c o n t r a c t o r w i l l meet h i s own s c h e d u l e commitment o f J u n e o r go a h e a d a n d r e f e r t h e m a t t e r t o t h e b o n d i n g company and a s k them to complete the j o b or both. C a n we do b o t h ? Mr. Steeves responded t h a t one o f t h e t h i n g s t h a t h a s h a p p e n e d i s H a r b e r t h a s r e p l a c e d t h e p e r s o n who came f r o m A t l a n t a t o do t h i s s t a t i o n . T h i s l a s t one t h a t came i n J a n u a r y was d o i n g a g r e a t j o b a n d t h e y h a v e recalled him. We t o l d t h e m t h e y h a v e t o g e t an a c c e p t a b l e s c h e d u l e t o us b y F r i d a y . The s c h e d u l e t h e y g a v e u s i s n o t an a c c e p t a b l e s c h e d u l e . " In May 2007, test. Asarisi Harbert and also sent r e a c t o r b a s i n #2 discussed requested the Board that the failed pressure-test i t correct a letter i t sfirst that pressure failure the problem. Asarisi stated: " E n c l o s e d a r e t h r e e c o p i e s o f E s t i m a t e No. 23 f r o m ... H a r b e r t ... i n t h e a m o u n t o f $ 1 4 7 , 4 3 7 . 7 3 f o r work p e r f o r m e d [ f r o m December 21, 1996, through January 20, 1997] on the referenced project. L i q u i d a t e d damages have b e e n a s s e s s e d a t t h e r a t e o f $550 p e r d a y f o r December 27, 1996 t o J a n u a r y 20, 1997, totaling $13,750. This amount has been d e d u c t e d f r o m t h e t o t a l a m o u n t due t h e C o n t r a c t o r . "We and have checked t h i s e s t i m a t e , recommend t h a t i t be p a i d . " 12 find with i t i n order, 1041091 We n o t e t h a t H a r b e r t ' s the "Contract" In was the late "Estimate No. 2 3 " s t a t e s t h a t 98.58% o f " i n place." spring a n d e a r l y summer o f 1 9 9 7 , H a r b e r t a n d S p i d e r m a n made s e v e r a l a t t e m p t s t o c o r r e c t p r o b l e m s a l l e g e d l y associated with the i n s t a l l a t i o n certain construction basin. Those Sika stating attempts that provide an columns and t h e On stated, July problems the airtight 14, of the Combiflex associated failed. Thereafter, Combiflex seal at with system the not wrote able details or reactor Spiderman was the d i f f i c u l t system "to at the T-sections." 1997, H a r b e r t sent Asarisi a letter in part: " S i n c e May 1, 1 9 9 7 , when t h e p r e s s u r e t e s t o f R e a c t o r No. 2 f a i l e d d u e t o d i s c o v e r e d l e a k s i n t h e s t r u c t u r e ' s j o i n t s , ... H a r b e r t h a s p r o a c t i v e l y a n d d i l i g e n t l y pursued the r e p a i r of these leaks to prevent further delays to this project. As e v i d e n c e d b y o u r May 7, 1 9 9 7 , l e t t e r t o ... BCM, we f u l l y complied with [the contract s p e c i f i c a t i o n s ]i n i m p l e m e n t i n g a r e p a i r p r o c e d u r e b a s e d on u s i n g t h e stipulated combiflex polyurethane sealant system m a n u f a c t u r e d and i n s t a l l e d by t h e S i k a C o r p o r a t i o n . ... A s y o u a r e w e l l a w a r e o f , i t h a s now b e e n o v e r two months and t h e r e p a i r s have n o t y i e l d e d t h e expected and intended results that everyone envisioned. "It i s [Harbert's] p o s i t i o n , at t h i s point i n t i m e , t h a t we h a v e t h o r o u g h l y e x h a u s t e d a l l r e q u i r e d means a n d m e t h o d s i n p e r f o r m i n g t h i s r e p a i r w o r k i n a c c o r d a n c e t o t h e c o n t r a c t documents and as d i r e c t e d 13 that 1041091 by ... BCM. As o f J u l y 1 1 , 1 997, we h a v e c e a s e d repair operations until further notice. We are hereby requesting that ... BCM now provide an a l t e r n a t i v e r e p a i r method t h a t w i l l resolve this situation. I t i s i m p e r a t i v e t h a t we r e c e i v e y o u r r e s p o n s e a n d d i r e c t i o n no l a t e r t h a n J u l y 17, 1997 to p r e v e n t f u r t h e r d e l a y to the s t a r t - u p of R e a c t o r No. 2 a n d t h e t i m e l y c o m p l e t i o n of t h i s p r o j e c t . fl " I f you h a v e any q u e s t i o n s o r r e q u i r e a d d i t i o n a l information regarding this matter, please feel free t o c o n t a c t t h i s o f f i c e . We l o o k f o r w a r d t o r e c e i v i n g your d i r e c t i o n i n completing these r e p a i r s to the mutual s a t i s f a c t i o n of a l l p a r t i e s concerned." On That August letter 12, 1997, Harbert sent Asarisi another letter. stated: "[I]t r e m a i n s u n c l e a r as t o w h e t h e r t h e s p e c i f i e d c o m b i f l e x s e a l a n t s y s t e m was t h e a p p r o p r i a t e p r o d u c t t o use a t t h e t e e s and c o l u m n s . " I n an e f f o r t t o e x p e d i t e t h e i m m e d i a t e s o l u t i o n of t h i s m a t t e r , ... Harbert ... has engaged the s e r v i c e s o f an i n d e p e n d e n t s e a l a n t e x p e r t t o i n s p e c t the combiflex sealant s y s t e m t h a t was previously installed in accordance to [the contract specifications]. T h i s i n s p e c t i o n w i l l be c o n d u c t e d on W e d n e s d a y , A u g u s t 13, 1 9 9 7 . " H a r b e r t r e t a i n e d Raymond J . S h u t z , examine basin the #2. Combiflex but installation After his system t h a t i t was was "not of the a materials Combiflex consultant, system on i n v e s t i g a t i o n , Shutz concluded "a good system reactor that the f o r many a p p l i c a t i o n s , " s u i t a b l e f o r s e a l i n g the 14 to double curvature 1041091 j o i n t s which top of the On stated, e x i s t between the stems of double columns" August in 18, i n reactor 1997, basin Harbert Tees and on the #2. sent Asarisi a letter that part: "Based on t h e r e s u l t s o f t h e i n s p e c t i o n a n d Mr. Shutz's assessment t h e r e o f , i t i s the p o s i t i o n of ... H a r b e r t ... t h a t ... BCM w i l l now h a v e t o s e l e c t an a p p r o p r i a t e a l t e r n a t i v e method [ t o s e a l r e a c t o r basin #2]. "We trust that ... BCM will provide the appropriate r e p a i r method a c c o r d i n g l y t o m i n i m i z e any f u r t h e r d e l a y s t h a t h a v e o c c u r r e d t o t h e p r o j e c t as a r e s u l t o f t h i s m a t t e r . For the record, a l l w o r k on R e a c t o r No. 2 c e a s e d A u g u s t 1 3 , 1 9 9 7 . We look forward to r e c e i v i n g a p o s i t i v e response from ... BCM In response, August 27, no later 1997, than August Asarisi which 22, sent stated, 1997." Harbert in a letter dated part: " B u d d y B o n i n e f r o m [ S i k a ] , w i l l be a t t h e [ P r o j e c t 15 s i t e ] on T u e s d a y , S e p t e m b e r 2, 1 9 9 7 , t o i n s p e c t t h e i n s t a l l a t i o n and p r o v i d e t h e i r o p i n i o n . A s Mr. S t e e v e s h a s p r e v i o u s l y i n d i c a t e d , we w i l l p r o v i d e ... H a r b e r t ... an a l t e r n a t i v e s e a l a n t system to s e a l the Reactor i f [ S i k a ] agrees that the Combiflex system i s not s u i t a b l e f o r the a p p l i c a t i o n . " In September 1997, after Sika i n s t a l l a t i o n of the Combiflex system inspected and t h e a t t e m p t e d to the i n s t a l l a t i o n , the Board proposed installer to Combiflex be hired system i n one remove of the 15 and eight Spiderman's that then repairs a certified to reinstall compartments in Sika the reactor 1041091 basin #2 as a t e s t sent A s a r i s i an and S t e e v e s alternative alternative Boot." section. sealant system was the removal roof, "reinstallation the j o i n t ( s ) with September September a letter system insisting 17, 1997, H a r b e r t that f o r the reactor subsequently Harbert's proposed part, On referred alternative from approve basin; t o as method of the e x i s t i n g sealant BCM the "Liquid involved, i n the reactor o f a new b a c k e r r o d ; a n d t h e s e a l i n g o f a two ( 2 ) p a r t 17, 1997, l e t t e r , epoxy material." Harbert argued In i t s position: "We b e l i e v e t h a t t h e ... p r o p o s e d m e t h o d b y t h e [Board] fails to address the r e a l problem. By i n j e c t i n g a requirement that the sealant installer be p r e - a p p r o v e d b y t h e v e r y same m a n u f a c t u r e r w h o s e p r o d u c t ' s s u i t a b i l i t y and i n t e g r i t y i s q u e s t i o n e d w o u l d , a t o n e a n d t h e same t i m e , b o t h m o d i f y a n d tighten previously applicable specification requirements (which d i d not require the sealant i n s t a l l e r t o be p r e - a p p r o v e d a n d s u p e r v i s e d b y t h e manufacturer), thereby subjectively permitting the s e a l a n t m a n u f a c t u r e r t o c o n t r o l t h e a p p l i c a t i o n , and not the installer. By insisting that the p e r f o r m a n c e o f t h i s p r o p o s e d w o r k be r e s t r i c t e d t o a c e r t i f i e d i n s t a l l e r who was n e v e r b e f o r e u s e d o n this project and by enabling the continuous supervision by the supplier of the questioned product, i t i s quite obvious that the a p p l i c a t i o n m e t h o d s a n d t e c h n i q u e s w o u l d d i f f e r , t o some d e g r e e , from those of the o r i g i n a l i n s t a l l e r , Spiderman Moreover, t h e use o f t h i s method, i f then e x t e n d e d t o a l l s e v e n ( 7 ) r e m a i n i n g c e l l s i n R e a c t o r No. 2, would d r a s t i c a l l y increase the cost of r e p a i r while not n e c e s s a r i l y b r i n g i n g about a permanent f i x , s i n c e t h e i n a p p r o p r i a t e p r o d u c t w o u l d s t i l l be u s e d . 16 i t s 1041091 The [ B o a r d ] w o u l d m i t i g a t e the cost t h u s be v i o l a t i n g of r e s o l v i n g t h i s i t s own d u t y problem. to fl "We w o u l d h o p e t h a t t h e [ B o a r d ] w o u l d n o t , i n a desperate e f f o r t to avoid r e s p o n s i b i l i t y f o r the misapplication of an improperly suited product, a t t e m p t t o now c o v e r - u p t h e p r o b l e m b y t u r n i n g o n c e a g a i n t o t h e same m a n u f a c t u r e r w h o s e p r o d u c t h a s caused the problem i n the f i r s t p l a c e . I t i s our s t e a d f a s t p o s i t i o n t h a t we c e r t a i n l y c a n n o t a n d w i l l n o t a c q u i e s c e t o t h e p r o p o s e d method and a p p r o a c h by the [Board] i n d e a l i n g w i t h t h i s problem." On October stating that alternative stated been described the the information 1997, had Asarisi sent investigated over specific system. system basin recommended by p r e s e n t e d we letter do not The had recommend the letter had tees," and about concludes: letter Harbert prestressed concerns A s a r i s i a recommended #2. structural The Harbert Harbert's for sealing reactor sealant used two proposed BCM method that "never 16, the use of "Based on use Liquid of the Boot." Subsection 5.10 of the standard s p e c i f i c a t i o n s s t a t e s : " A l l w o r k w h i c h has b e e n r e j e c t e d s h a l l be r e m e d i e d o r e l s e r e m o v e d a n d r e p l a c e d i n an a c c e p t a b l e manner by [ H a r b e r t ] at [ i t s ] own expense, and no c o m p e n s a t i o n s h a l l be a l l o w e d [ i t ] f o r s u c h r e m o v a l o r r e p l a c e m e n t . ... Upon f a i l u r e on t h e p a r t o f [ H a r b e r t ] t o i m m e d i a t e l y comply w i t h any o r d e r o f [ B C M ] made u n d e r t h e p r o v i s i o n o f t h i s S e c t i o n [ 5 ] , [ t h e B o a r d ] s h a l l have a u t h o r i t y t o cause d e f e c t i v e 17 1041091 w o r k t o b e r e m e d i e d , o r r e m o v e d a n d r e p l a c e d ... a n d t o d e d u c t t h e c o s t f r o m any m o n i e s due o r t o become due [Harbert]. In case no such monies are a v a i l a b l e , t h e amount shall be charged against [Federal]." On O c t o b e r 2 0 , 1 9 9 7 , A s a r i s i The O c t o b e r 20 l e t t e r d i d n o t c a l l Combiflex Sika. system Instead, contracted with using a sent Harbert another letter. on H a r b e r t t o r e i n s t a l l t h e certified contractor the l e t t e r informed Harbert that selected by the Board had a " c e r t i f i e d S i k a c o n t r a c t o r t o remove and r e p l a c e t h e C o m b i f l e x m a t e r i a l i n one c e l l ... i n R e a c t o r No. 2. The c e l l w i l l be t e s t e d f o r a i r t i g h t n e s s b e f o r e a n d after the r e p a i r i s made. I f the r e p a i r i s successful a l l associated c o s t s w i l l be deducted f r o m money due ... H a r b e r t ... i n a c c o r d a n c e w i t h [ s u b s e c t i o n ] 5.10 o f t h e C o n t r a c t Documents." (Emphasis added.) t o remove the The B o a r d r e t a i n e d Phoenix Coatings, and r e i n s t a l l t h e C o m b i f l e x s y s t e m i n a t e s t reactor basin #2. Inc., cell of 7 B a s e d on G e o r g e A t c h i s o n ' s deposition testimony, see n o t e 6 s u p r a , i t s u b s e q u e n t l y was d e t e r m i n e d t h a t i t was n o t p o s s i b l e t o s e a l o f f o n e c e l l i n r e a c t o r b a s i n #2 s o a s t o allow f o r a pressure test of only that c e l l . Atchison stated, h o w e v e r , t h a t t h e C o m b i f l e x s y s t e m , i f p r o p e r l y i n s t a l l e d , was an a p p r o p r i a t e p r o d u c t t o s e a l t h e r e a c t o r b a s i n , and P h o e n i x C o a t i n g s u s e d t h e C o m b i f l e x s y s t e m f o r t h e r e p a i r p r o j e c t on r e a c t o r b a s i n #2. We h a v e n o t b e e n d i r e c t e d t o a n y p o r t i o n o f the r e c o r d t h a t r e f l e c t s whether the r e i n s t a l l a t i o n s a t i s f i e d o r i g i n a l d e s i g n p r e s s u r e t e s t , n o r h a v e we b e e n d i r e c t e d to a p o r t i o n of the record that r e f l e c t s , with c l a r i t y , the 7 18 1041091 The communications continued October in a letter between from the Harbert Board to the and Board Harbert dated 27, 1997: " D u r i n g o u r m e e t i n g on S e p t e m b e r 24 , 1997 , ... i t was o u r u n d e r s t a n d i n g t h a t t h e B o a r d a g r e e d i n principle to our proposed 'Liquid Boot System' s e a l a n t r e p a i r m e t h o d f o r R e a c t o r No. 2 a n d t h a t a l l t h a t was n e c e s s a r y f o r u s t o p r o c e e d w i t h t h i s w o r k was BCM's a c k n o w l e d g e d approval. To d a t e we h a v e yet t o r e c e i v e BCM's a p p r o v a l n o r w r i t t e n d i r e c t i v e to p r o c e e d w i t h t h e r e p a i r work. ... [ 8 ] "In o r d e r t o a v o i d any f u r t h e r d e l a y s t o t h e p r o j e c t , we r e q u e s t t h a t y o u p r o m p t l y i n t e r c e d e i n r e s o l v i n g t h i s m a t t e r b y i s s u i n g an i m m e d i a t e n o t i c e t o p r o c e e d w i t h t h e L i q u i d B o o t S y s t e m r e p a i r . ... Harbert ... reserves i t s right t o seek full c o m p e n s a t i o n f o r a l l d e l a y damages r e s u l t i n g from t h i s matter to date." Asarisi responded i n an October 29, 1997, l e t t e r to Harbert: "As y o u r e q u e s t e d , we h a v e r e v i e w e d y o u r o f f e r t o i n s t a l l a t e s t s e c t i o n o f t h e L i q u i d Boot b e f o r e making a f i n a l d e c i s i o n t o r e j e c t i t . I t i s our o p i n i o n t h a t a t e s t s e c t i o n w o u l d need t o be i n p l a c e about s i x months t o d e t e r m i n e t h e e f f e c t s o f v a r i o u s t e m p e r a t u r e d i f f e r e n t i a l s on t h e c o n c r e t e been b a s e d on s p e c i f i c a t i o n s d i f f e r e n t from t h o s e i n t h e original contract specifications or that f e l l outside the r e s p o n s i b i l i t y o f H a r b e r t and/or Spiderman under t h e o r i g i n a l specifications. The p a r t i e s have n o t d i r e c t e d us t o any p l a c e i n t h e r e c o r d on a p p e a l t h a t p r o v i d e s f u r t h e r i n f o r m a t i o n r e g a r d i n g the September 24, 1997, meeting. 8 19 1041091 cap and t h e L i q u i d B o o t . As y o u k n o w , a d e l a y o f t h i s m a g n i t u d e i s n o t a c c e p t a b l e . We a l s o f e e l t h a t t h e d r a i n l i n e s f r o m t h e m i x e r s y o u p r o p o s e d w i l l be a constant maintenance problem. B a s e d on t h i s and our p r e v i o u s c o r r e s p o n d e n c e , we cannot recommend L i q u i d B o o t as an a c c e p t a b l e a l t e r n a t i v e t o seal Reactor 2." 2. During 1997 -- 15. to this BCM certain same and Load frame had by Duke on Harbert the an the ongoing for proposed to a previous its "right extension Project dates agreed that and to c l a i m work order) that (which and ... wire of a to from and this extra 20 day the order was change 1997, $134,271.40 adjustment reserving compensable milestone work." be During t h a t i t was (56) projects to Harbert's i n c l u d e d an the conduit. was of 16. referred I n an A u g u s t 5, stated for a fifty-six resulted for one H a r b e r t r e q u e s t e d an a d d i t i o n a l change fall concerning work Project position t o recommend t h a t t h e B o a r d $14 , 0 7 3 . 4 0 dispute Service, 15 the change-order impact and what t h e p a r t i e s needed f o r l o a d - s h e d d i n g m o d i f i c a t i o n s . l e t t e r to A s a r i s i , summer load-shedding Instrument took Shedding i n s t r u m e n t a t i o n components f o r P r o j e c t shedding"; subcontractors dispute, and over the d i s p u t e concerned "load performed time Harbert electrical In p a r t , as Disagreements time completion Eventually, BCM approve a change o r d e r f o r However, BCM did not 1041091 recommend t h a t t h e B o a r d load-shedding failed order to p r o v i d e adequate On A u g u s t of change approve which 14, i t also 1997, sent the remainder because Harbert of the had i n f o r m a t i o n to j u s t i f y Asarisi proposed allegedly the order. sent Harbert a l e t t e r , to F e d e r a l . That letter a copy stated: "As y o u are aware, ... H a r b e r t ... informed the [Board] and BCM i n November 1 996 that the new R e a c t o r a n d C l a r i f i e r s w o u l d be on l i n e b y D e c e m b e r 2 6 , 1996 a n d t h e p r o j e c t w o u l d be c o m p l e t e b y M a r c h 1997. To d a t e , n o n e o f t h i s h a s h a p p e n e d . Our d a i l y r e c o r d s i n d i c a t e t h a t your p r e s e n t work f o r c e c o n s i s t s o f 1 s u p e r i n t e n d e n t and 3 l a b o r e r s . We a r e a w a r e o f y o u r e f f o r t s t o s e a l R e a c t o r 2. However, t h e r e a r e s t i l l a number o f i t e m s t h a t w o u l d keep t h e p r o j e c t f r o m s t a r t i n g up i f R e a c t o r 2 was ready today. We h a v e e n c l o s e d a p a r t i a l l i s t o f i t e m s t h a t h a v e t o be c o m p l e t e d b e f o r e R e a c t o r 2 i s p u t on line. T h i s i s n o t a c o m p l e t e l i s t a n d t h e r e may be o t h e r i n c o m p l e t e i t e m s t h a t d e l a y s t a r t up. "We are q u i t e concerned about the slow r a t e of p r o g r e s s on t h e p r o j e c t a n d t h e i m p a c t t h a t d e l a y s h a v e on t h e [ B o a r d ] a n d t h e o p e r a t i o n o f t h e p l a n t . T h e r e f o r e , i n a c c o r d a n c e w i t h [ s u b s e c t i o n ] 8.11 of the [Standard] Specifications you are hereby n o t i f i e d t h a t y o u h a v e 10 d a y s t o s t a r t w o r k on e a c h of the items on the enclosed list, with the exception of items that are dependent on the c o m p l e t i o n o f R e a c t o r 2. I f w o r k h a s n o t b e g u n on all noted items w i t h i n 10 d a y s t h e [Board] will n o t i f y [Federal] that the p r o j e c t i s i n d e f a u l t . We t r u s t t h a t y o u w i l l p r o v i d e an a d e q u a t e w o r k f o r c e to c o m p l e t e t h e work w i t h i n t h e s p e c i f i e d t i m e and to a v o i d f u r t h e r a c t i o n s a g a i n s t you." The list of items e n c l o s e d w i t h the l e t t e r one of which is referred t o as 21 "load includes shedding." 19 items, 1041091 On September Asarisi's it letter disagreed 10, 1997, dated August with the p r o g r e s s t o d a t e " and to declare in part, this the contract Harbert 14, 1997. "assessment that contract completion responded the modifications, Project which had t o May Harbert, in problems reactor basin and the interim, #2 occurred. allocation project also the Harbert delays are contended well that the and indecisiveness field "the issues, R e a c t o r No. 2, progress." specified August 14 specifically has items letter] [on have of t h r e a t ... the contributed Further, your a c t i o n s of the BCM list already to d e c l a r e 22 According to sealing of the "BCM's supported." on this actions Harbert Project in promptly 15 that resolving contract with slow rate " a l l of accompanied completed. was completed" associated project's asserted been the for i t s role i n these problems that two delayed r e m a i n s t o be to t h i s Harbert that, 1997. level" amount o f w o r k t h a t of threat had with and i t s "manpower rate asserted asserted, documented "in-line with that 12, of r e s p o n s i b i l i t y t h e r e o f that been d e l a y e d by allegedly c o m p l e t i o n d a t e f r o m M a r c h 1997 stated to to your Harbert 15 letter project's exception in default." of Harbert of i t "[took] by ... of the Asarisi's We in default feel are 1041091 premature and (Emphasis On without that approval 25, i t had 1997, Harbert provided sent sufficient evidence." representative of of further. BCM was Duke The scheduled Instrument letter Asarisi a information of the l o a d - s h e d d i n g change order representative matter supporting added.) September arguing adequate letter f o r the and s t a t i n g t h a t a to a Service meet to with discuss the continued: " C u r r e n t l y , we a r e a w a i t i n g BCM's n e x t c o u r s e o f action. I n t h e meantime, t h e work r e m a i n i n g f o r t h e l o a d s h e d d i n g s y s t e m i s on h o l d a n d w i l l c o n t i n u e t o delay t h e p r o j e c t u n t i l we r e c e i v e the required approval and authorization to proceed with the change o r d e r work. " T h i s l e t t e r w i l l s e r v e as o u r f i n a l request t h a t BCM issue the appropriate change o r d e r , as p r e v i o u s l y s u b m i t t e d , i n t h e amount o f $ 1 3 4 , 2 7 1 . 4 0 . S h o r t o f r e c e i v i n g a p o s i t i v e r e s p o n s e from you by O c t o b e r 3, 1 9 9 7 , ... H a r b e r t ... w i l l e x e r c i s e i t s legal right to ensure that we receive full compensation, from the [Board] f o r the above requested amount, including a l l relevant legal fees." B a s e d on t h e f o r e g o i n g , shedding change-order shedding August item 14, 1997, on Harbert evidently considered work the letter, to be different list that which i t stated completed." 23 from accompanied had the the load load¬ Asarisi's "already been 1041091 On October 3, 1997, Asarisi r e s p o n d i n g t o i t s S e p t e m b e r 25, in part, that the representative scheduled o f BCM and Harbert letter. had that the portion of dispute required the submission had provided. letter the of a letter Asarisi stated, occurred a representative but The 1997, meeting Service not sent change between o f Duke order information a Instrument that was Harbert in still continued: "You s t a t e t h a t t h e w o r k on L o a d S h e d d i n g i s on h o l d until you receive approval and authorization to proceed. However, the Load S h e d d i n g d e s i g n i s q u i t e c l e a r and the o n l y o u t s t a n d i n g i s s u e i s how much e x t r a , i f any, [Harbert] i s e n t i t l e d to. This issue h a s i n no way k e p t y o u f r o m c o m p l e t i n g t h e w o r k a n d no a d d i t i o n a l t i m e w i l l be r e c o m m e n d e d f o r delays a s s o c i a t e d w i t h Load Shedding." (Emphasis Also that added.) on stated, October in part, 3, 1997, that Harbert Harbert sent Asarisi a letter would " p r o c e e d as s t a t e d i n a c c o r d a n c e t o o u r S e p t e m b e r 25 letter. A t t h e same t i m e , as an a c t o f g o o d f a i t h , ... Harbert ... is currently proceeding with i m p l e m e n t i n g t h e l o a d s h e d d i n g m o d i f i c a t i o n s so t h a t flow t h r o u g h R e a c t o r No. 2 will not be further delayed. "... H a r b e r t ... m a i n t a i n s i t s p o s i t i o n t o c l a i m for a l l compensatory time impact costs to the project's milestone completion dates that r e s u l t e d from t h i s e x t r a work." 24 1041091 On October accompanied meeting 1997. by about The Harbert a A Asarisi closed: of to the sent A s a r i s i "We the sent summarizing load-shedding copy response 1997, memorandum the letter Memorandum." In 14, what issue held welcome letter on a letter occurred at September your a 16, comments t o sent was memorandum, a letter Harbert to Federal. on October that stated, in this 15, 1997, part: "... H a r b e r t ... d o e s n o t c o n c u r w i t h a n y o f BCM's a l l e g a t i o n s o r comments [as t o t h e load¬ shedding-change-order issue]. Our p o s i t i o n on t h i s matter remains unchanged. "Due t o BCM's u n w i l l i n g n e s s t o n e g o t i a t e i n g o o d f a i t h , we w i l l i n c l u d e a l l o u t s t a n d i n g c o s t s f o r t h e load shedding modification in our impending l i t i g a t i o n c l a i m a g a i n s t t h e B o a r d ... a n d BCM Any f u r t h e r c o r r e s p o n d e n c e on t h i s m a t t e r w i l l be issued through [Harbert's] attorney." Harbert also Service authorizing stating that i t had will "informed faith are] a s s u m i n g t h a t you impede system proceed On N o v e m b e r 14, of which was the w i t h l o a d - s h e d d i n g work [Board] with this will begin Instrument this that as an act and of work under p r o t e s t . [We work i m m e d i a t e l y to as start-up." 3. a copy t r a n s m i s s i o n t o Duke i t to proceed good not we sent a f a c s i m i l e Termination 1997, sent of C o n t r a c t Asarisi i n f o r m e d H a r b e r t by t o F e d e r a l , as 25 15 follows: letter, 1041091 " I t a p p e a r s t h a t a number o f i t e m s r e m a i n i n c o m p l e t e t h a t w i l l k e e p t h e new s y s t e m f r o m g o i n g o n l i n e when R e a c t o r 2 i s s a t i s f a c t o r i l y s e a l e d a n d t e s t e d . Most i f n o t a l l o f t h e items a r e e l e c t r i c a l ( i . e . loadshedding, etc.). In order t o avoid further d e l a y s o n t h i s p r o j e c t we r e q u e s t t h a t y o u p r o v i d e an updated schedule which includes a l l work associated with starting t h e new s y s t e m . This schedule s h o u l d be i n o u r o f f i c e no l a t e r than N o v e m b e r 2 4 , 19 97. F a i l u r e t o provide a schedule within t e n days will be grounds f o r finding [Harbert] i n d e f a u l t of the Contract i n accordance w i t h [ s u b s e c t i o n ] 8.11 o f t h e S p e c i f i c a t i o n s . " (Emphasis apart added.) from BCM's The l e t t e r request or not the p a r t i c u l a r that Harbert having before the date The to schedule had breached already Board the minutes no i n d i c a t i o n i n the l e t t e r d o c u m e n t s i m p o s e d on H a r b e r t Board contained itself, the obligation that, the contract to provide to the o f work d e s c r i b e d i n t h e l e t t e r i t s contractual provided the requested obligations schedule by on o r of the l e t t e r . h e l d a meeting from on D e c e m b e r 8, 1 9 9 7 . the meeting, According Asarisi "said, based on h i s N o v e m b e r 14 l e t t e r t o ... Harbert[, that] Harbert was a s k e d to provide a s c h e d u l e o f c o m p l e t i o n and t h e y were g i v e n t e n days as r e q u i r e d i n t h e c o n t r a c t . They f a i l e d t o p r o v i d e t h i s w i t h i n t h e 1 0 - d a y t i m e f r a m e a n d t o d a y we s t i l l have n o t r e c e i v e d t h i s . I t i s BCM's r e c o m m e n d a t i o n t h a t t h e B o a r d f i n d H a r b e r t ... i n d e f a u l t . " (Emphasis carried added.) A motion to accept unanimously. 26 BCM's recommendation 1041091 Also on D e c e m b e r by facsimile the record Board's 8, 1 9 9 7 , H a r b e r t s e n t t h e B o a r d a transmission and by m a i l ; when the l e t t e r December 8 meeting. was letter i t i s not c l e a r received in relation Harbert's letter from to the stated: " T h i s l e t t e r w i l l s e r v e as o u r o f f i c i a l n o t i c e to t h e [Board] t h a t t h e a c t i o n s and/or l a c k t h e r e o f b y y o u r e n g i n e e r , BCM ... , h a v e now d e l a y e d t h e project an a d d i t i o n a l seventy-five (75) c a l e n d a r days. Specifically, t h e s e d e l a y s a r e : (1) t h e t i m e l y a p p r o v a l of our proposed ' L i q u i d Boot' r e p a i r m e t h o d a n d (2) t h e s l o w r a t e o f p r o g r e s s b y y o u r contractor, Phoenix Coatings, i n repairing the s e a l a n t a t one c e l l o f R e a c t o r No. 2. fl "To d a t e , y o u r e n g i n e e r , BCM ... , c o n t i n u e s t o r e j e c t our p r o p o s e d ' L i q u i d Boot' r e p a i r method even t h o u g h t h i s s y s t e m h a s p r o v e n t o be successfully applied i n other treatment plants throughout the country. In c o n t r a s t t o t h e work b e i n g p e r f o r m e d by P h o e n i x C o a t i n g s , t h e ' L i q u i d B o o t ' s y s t e m c a n be i n s t a l l e d , t e s t e d and c o m p l e t e d w i t h i n two o r t h r e e weeks. Y o u r a p p r o v a l and a c c e p t a n c e o f t h i s method w i l l n o t o n l y a l l o w f o r R e a c t o r No. 2 t o b e p u t i n t o o p e r a t i o n much s o o n e r b u t a l s o w i l l m i t i g a t e any f u r t h e r d e l a y s t o t h e p r o j e c t ' s s t a r t - u p t e s t i n g and completion dates. "We t r u s t t h a t y o u s h a r e o u r c o n c e r n s a n d w i l l act a c c o r d i n g l y towards b r i n g i n g t h i s p r o j e c t to completion." The letter updated makes no reference to A s a r i s i ' s schedule f o r Project 15. 27 request f o r an 1041091 In Federal a letter dated December 9, 1997, A s a r i s i informed that "[t]he Board ... , i n c o n f e r e n c e D e c e m b e r 8, 1 9 9 7 , voted to terminate ... H a r b e r t [ ' s ] c o n t r a c t on [ P r o j e c t 15] . A copy o f t h e r e s o l u t i o n w i l l be f o r w a r d e d t o y o u w h e n we r e c e i v e i t . ... Harbert ... i s h e r e b y n o t i f i e d t o c e a s e a l l w o r k r e l a t e d t o this project. We r e q u e s t t h a t F e d e r a l ... p r o v i d e a schedule o f t h e i r p l a n o f a c t i o n t o complete t h e r e m a i n i n g work on t h e p r o j e c t . P l e a s e l e t us have t h i s s c h e d u l e b y J a n u a r y 5, 1 9 9 8 . " (Emphasis added.) A copy of the l e t t e r The r e c o r d c o n t a i n s a n u n d a t e d that was s e n t resolution to Harbert. from the Board states: "WHEREAS, o n N o v e m b e r 1 4 , 1 9 9 7 t h e B o a r d ... a s party to the contract with ... H a r b e r t ... f o r [ P r o j e c t 15] d e c l a r e d H a r b e r t t o b e i n d e f a u l t a n d properly notified Harbert and Harbert's surety, Federal by r e g i s t e r e d m a i l o f s a i d d e f a u l t and; "WHEREAS, t h e B o a r d has a l l o w e d Harbert i n excess o f t e n days from t h e date of d e f a u l t n o t i c e to remedy t h e d e f i c i e n c i e s documented by v a r i o u s l e t t e r s and m u l t i p l e meetings between t h e p a r t i e s t o the p r o j e c t and; "WHEREAS, H a r b e r t has f a i l e d d e f i c i e n c i e s under the c o n t r a c t ; to remedy the " I t h a s b e e n moved, r a t i f i e d a n d a f f i r m e d b y v o t e o f t h e B o a r d o n D e c e m b e r 8 , 1 9 9 7 , t h a t ... H a r b e r t ... c e a s e a l l w o r k on s a i d p r o j e c t a n d t h e c o n t r a c t w i t h ... H a r b e r t ... b e t e r m i n a t e d . " 9 I t i s e v i d e n t t h a t t h e language o f t h e r e s o l u t i o n does correspond t o t h e motion t h a t t h e Board d i s c u s s e d and 9 not 28 1041091 (Emphasis added.) After the Board Project 15 site. further work contractors B. Neither Harbert under Contract to complete nor 15. Project extension Harbert of sent time 15, left the Federal performed any The Harbert Board used other 15. Further F a c t u a l Background After Asarisi terminated Contract b e g a n w o r k on as Project to P r o j e c t 16, to complete the project. Harbert a letter that 16 i t requested On May 9, an 1996, stated: "The B o a r d i n c o n f e r e n c e May 9, 1 9 9 6 , r e c e i v e d y o u r report on the status of this project. Your r e c o m m e n d a t i o n was a c c e p t e d b y t h e B o a r d t o a l l o w a 70-day c o n t r a c t time e x t e n s i o n e x p i r i n g A p r i l 28, 1996, and to assess liquidated damages f o r any a p p r o v e d a s r e c o r d e d i n t h e m i n u t e s o f t h e B o a r d ' s D e c e m b e r 8, 1997, m e e t i n g . The a b o v e - q u o t e d r e c o r d o f t h e m i n u t e s o f t h a t m e e t i n g c o n t a i n no i n d i c a t i o n t h a t t h e B o a r d " m o v e d , r a t i f i e d , a n d a f f i r m e d " t h a t H a r b e r t be t e r m i n a t e d , a s o p p o s e d t o b e i n g declared i n default. T h e r e i s no i n d i c a t i o n i n t h e m i n u t e s o r elsewhere in the record that, after approving BCM's recommendation to d e c l a r e Harbert i n d e f a u l t f o r f a i l i n g to provide the schedule of completion requested i n A s a r i s i ' s N o v e m b e r 14 l e t t e r , t h e B o a r d o r BCM s e n t n o t i c e t o H a r b e r t a d v i s i n g i t t h a t t h i s f a i l u r e c o n s t i t u t e d a d e f a u l t under C o n t r a c t 15 a n d g i v i n g H a r b e r t 10 d a y s n o t i c e u n d e r § 8.11 o f the standard s p e c i f i c a t i o n s to cure the d e f a u l t . Nonetheless, we a s s u m e , a s we m u s t , t h a t t h e r e s o l u t i o n c o r r e c t l y r e f l e c t s what o c c u r r e d a t t h e December 8 m e e t i n g . See, " S t a n d a r d o f Review," i n f r a . 29 1041091 period after that the contract." in accordance with the terms of 1 0 The to liquidated-damages provision for Contract that for Contract On May requesting 24, "a substantially On June 15, as 1996, final discussed Harbert inspection identical above. sent on 16 was Asarisi [Project a letter 16] as we a letter are complete." 4, 1996, Asarisi sent Harbert that stated: "We r e c e i v e d y o u r May 24, 1996 letter requesting final i n s p e c t i o n on the referenced project. We a g r e e t h a t t h e p r o j e c t i s s u b s t a n t i a l l y c o m p l e t e and document t h i s by l e t t e r . "Our f i e l d representative f e e l s t h a t a number o f minor touch-up and clean-up items need to be a d d r e s s e d b e f o r e we h a v e a f i n a l i n s p e c t i o n w i t h t h e [Board]. He h a s p r o v i d e d a l i s t o f t h e s e i t e m s t o the P r o j e c t Superintendent. When t h e s e i t e m s are c o m p l e t e we w i l l c o n d u c t a f i n a l i n s p e c t i o n . " (Emphasis At status added.) a June of 6, Project 1996, 16. meeting The BCM minutes updated of the the Board meeting on state, the in part: Apparently, 70-day e x t e n s i o n . 1 0 an A p r i l 28 d e a d l i n e was c o n s i s t e n t w i t h a I t appears, however, t h a t the A p r i l 28 30 1041091 "Mr. Asarisi explained that i n a previous Board m e e t i n g , t h e B o a r d a u t h o r i z e d l i q u i d a t e d damages t o be a s s e s s e d [ a g a i n s t ] H a r b e r t ... on t h i s p r o j e c t . F o l l o w i n g t h a t a c t i o n , the c o n t r a c t o r s u b s t a n t i a l l y completed the work. The s y s t e m i s o p e r a b l e ; t h e r e a r e some p u n c h - l i s t i t e m s a n d t h e p r o j e c t h a s not b e e n f i n a l l y a c c e p t e d . [BCM's] r e p r e s e n t a t i v e s met with the c o n t r a c t o r along w i t h Board staff and d i s c u s s e d l i q u i d a t e d damages." (Emphasis decided added.) to damages. damages adhere Harbert on Harbert the to was i t s decision protested ground that informed the i t had to that the assess Board had liquidated assessment of liquidated not the delays caused at issue. On June 18, 1996, Asarisi sent Harbert a letter stated: "In accordance with [subsection] 5.14 of the [standard s p e c i f i c a t i o n s ] , a f i n a l inspection was c o n d u c t e d on [ P r o j e c t 16] on J u n e 14, 1 9 9 6 . With t h e e x c e p t i o n o f t h e i t e m s l i s t e d on t h e e n c l o s e d P u n c h L i s t , t h e p r o j e c t was s u b s t a n t i a l l y complete on May 24, 1996, and was placed on 30-day m a i n t e n a n c e a s o f J u n e 14, 1996. " I f the p r o j e c t i s maintained i n accordance w i t h the Specifications and a l l punch list items are s a t i s f a c t o r i l y c o m p l e t e d , t h e w o r k w i l l be r e a d y f o r f i n a l a c c e p t a n c e on J u l y 1 5 , 1996. "You s h o u l d now b e g i n a d v e r t i s i n g c o m p l e t i o n o f t h e project as required by the [standard specifications]. A sample Advertisement of C o m p l e t i o n i s p r o v i d e d on p a g e 1 o f t h e a t t a c h e d Final Inspection/Punch L i s t . " 31 that 1041091 (Emphasis added.) June 1996, 18, "Secondary The p u n c h letter Digester list included Building," Asarisi 5 enclosed items including with h i s relating to the the replacement c e r t a i n pipe supports and t h e i n s u l a t i o n o f " s m a l l water on relating b o i l e r " ; 20 i t e m s centrifuge discharge," lines to the "Centrifuge Structure," i n c l u d i n g the a p p l i c a t i o n of c e r t a i n clamps, f i n i s h i n g on of r e p l a c i n g broken belts, "chutes replacing d r i v e b e a r i n g s , l a b e l i n g v a r i o u s c o n t r o l items, and i n s t a l l i n g "PVC check valve i n polymer lines at c e n t r i f u g e s " ; and "General" items, including the p r o v i s i o n of "record "Operation and Maintenance Manuals," 8 drawings," "spare parts," " p e r f o r m a n c e t e s t i n g on t h e c e n t r i f u g e s ( e m p h a s i s a d d e d ) , " a n d the correction of June 6, 1996." We n o t e "deficiencies on attached dated 1 1 that, i n regard to the completion o f P r o j e c t 1 6 , s u b s e c t i o n 5.13 o f t h e s t a n d a r d entitled letter "Project Completion," c o m p l e t e when a l l p a y i t e m s under t h i s Contract states: "The and acceptance specifications, Work shall be a n d a n y E x t r a Work t o be p e r f o r m e d [are] performed i n [ t h e i r ] e n t i r e t y and i n The parties have n o t d i s c u s s e d t h e c o n t e n t of the June 6, 1 9 9 6 , l e t t e r or otherwise indicated that i t i s i n c l u d e d i n t h e r e c o r d on a p p e a l . 1 1 32 1041091 accordance with Subsection as contractual requirements." 1.47 o f t h e s t a n d a r d "[t]he entire completed specifications defines construction separately i d e n t i f i a b l e parts thereof under the standard Contract Documents." specifications further "5.14 (Emphasis F I N A L CONSTRUCTION or the added.) "Work" various r e q u i r e d t o be f u r n i s h e d (Emphasis added.) state: INSPECTION: "Whenever [BCM] c o n s i d e r s t h e Work p r o v i d e d and contemplated by the Contract i s nearing completion, o r w i t h i n 10 d a y s a f t e r b e i n g n o t i f i e d b y [Harbert] t h a t t h e W o r k i s c o m p l e t e d , [BCM] w i l l i n s p e c t t h e Work i n c l u d e d i n t h e C o n t r a c t . I f [BCM] f i n d s t h a t t h e Work h a s n o t b e e n s a t i s f a c t o r i l y c o m p l e t e d a t the time of such i n s p e c t i o n , [ i t ]shall advise [Harbert] i n w r i t i n g as t o t h e Work t o be done o r t h e p a r t i c u l a r d e f e c t s t o be r e m e d i e d . When t h e s e d e f e c t s h a v e b e e n r e m e d i e d a n d t h e Work h a s b e e n s a t i s f a c t o r i l y c o m p l e t e d [BCM] s h a l l make t h e F i n a l I n s p e c t i o n , and s h a l l n o t i f y [Harbert] i n writing t h a t t h e F i n a l I n s p e c t i o n h a s b e e n made a n d t h a t t i m e c h a r g e s e n d on t h e d a y o f F i n a l Inspection. M a i n t e n a n c e P e r i o d s h a l l s t a r t on t h e d a y a f e r t h i s Final Inspection. "5.15 FINAL ACCEPTANCE: "After the Final Inspection i s made a s o u t l i n e d a b o v e , [ H a r b e r t ] s h a l l m a i n t a i n t h e W o r k f o r 30 d a y s i n t h e same m a n n e r a s s e t f o r t h u n d e r [subsection 4.08] ' M a i n t e n a n c e o f t h e W o r k D u r i n g C o n s t r u c t i o n . ' The W o r k w i l l b e f i n a l l y a c c e p t e d a t t h e e n d o f t h e 30 d a y m a i n t e n a n c e p e r i o d p r o v i d e d a l l w o r k h a s b e e n satisfactorily maintained. 33 The 1041091 "[Harbert], immediately after receiving the l e t t e r of Final Inspection, shall give notice of s a i d completion o f Work b y an a d v e r t i s e m e n t i n some newspaper o f g e n e r a l c i r c u l a t i o n p u b l i s h e d w i t h i n t h e c i t y o r c o u n t y w h e r e i n t h e Work h a s b e e n done f o r a p e r i o d o f f o u r s u c c e s s i v e w e e k s . ... " I n n o i n s t a n c e s h a l l a f i n a l s e t t l e m e n t b e made upon [Harbert] until the expiration of the Maintenance Period and u n t i l the Contract i s completed and P r o j e c t accepted by t h e [Board]. "5.16 MAINTENANCE GUARANTEE AFTER ACCEPTANCE: " N e i t h e r t h e f i n a l c e r t i f i c a t e o f payment n o r any p r o v i s i o n s i n the Contract nor p a r t i a l or e n t i r e use or occupancy o f t h e p r e m i s e s by t h e [Board] shall constitute an a c c e p t a n c e o f work n o t done i n accordance with the Contract or r e l i e v e [Harbert] of l i a b i l i t y i n r e s p e c t t o any express w a r r a n t i e s o r r e s p o n s i b i l i t y f o r f a u l t y m a t e r i a l s or workmanship. [ H a r b e r t ] s h a l l remedy a n y d e f e c t s i n t h e Work a n d p a y f o r a n y damage t o o t h e r w o r k r e s u l t i n g t h e r e f r o m w h i c h s h a l l a p p e a r w i t h i n a p e r i o d o f one y e a r f r o m t h e d a t e o f f i n a l a c c e p t a n c e o f t h e Work u n l e s s a longer period i s specified. The [ B o a r d ] w i l l g i v e notice of observed defects with reasonable promptness and [Harbert] shall repair the defects immediately. [Harbert's] Performance or Contract Bond shall remain i n effect and cover this guarantee. A f t e r completion of t h e P r o j e c t and p r i o r t o f i n a l acceptance, [Harbert] s h a l l provide a s t a t e m e n t a d d r e s s e d t o t h e [Board] from [ F e d e r a l ] a c k n o w l e d g i n g t h a t t h e C o n t r a c t Bonds w i l l remain i n e f f e c t during the one-year warranty p e r i o d . Final p a y m e n t u n d e r t h e C o n t r a c t w i l l n o t b e made u n t i l t h i s statement i s received." (Emphasis added.) 34 1041091 Subsection "Maintenance 4.08 of the standard o f t h e Work D u r i n g specifications, entitled Construction," states: " [ H a r b e r t ] s h a l l be r e q u i r e d t o m a i n t a i n t h e Work from the date of the approval of [ i t s ] C o n t r a c t u n t i l t h e Work i s c o m p l e t e d a n d s h a l l m a i n t a i n i t i n first-class c o n d i t i o n f o r 30 d a y s after i t i s c o m p l e t e d a n d u n t i l t h e Work i s f i n a l l y a c c e p t e d . "The maintenance s h a l l c o n s i s t of continuous and e f f e c t i v e work p r o s e c u t e d day by day, w i t h adequate equipment and f o r c e s t o t h e end of t h e P r o j e c t , keeping t h e e n t i r e work s i t e i n s a t i s f a c t o r y and acceptable c o n d i t i o n at a l l time. "Compensation for maintenance work during c o n s t r u c t i o n a n d b e f o r e t h e Work i s f i n a l l y a c c e p t e d s h a l l be i n c l u d e d i n t h e C o n t r a c t u n i t p r i c e s b i d on t h e p a y i t e m s o f t h e Work a n d t h e [Board] w i l l n o t pay a d d i t i o n a l f o r such work." (Emphasis After added.) i t received Asarisi's H a r b e r t p u b l i s h e d an a d v e r t i s e m e n t Press four Register, a daily 9, 1 9 9 6 , A s a r i s i 18, 1996, letter, of completion i n the Mobile newspaper c o n s e c u t i v e weeks b e g i n n i n g On A u g u s t June published July sent i n Mobile, f o r 11, 1996. a letter to Harbert stated: "Enclosed f o r your i n f o r m a t i o n i s a l e t t e r from t h e B o a r d ... w h i c h s t a t e s t h a t l i q u i d a t e d d a m a g e s w i l l be a s s e s s e d on [ P r o j e c t 1 6 ] . Our r e c o r d s i n d i c a t e that the contract completion date, after the a p p r o v e d 7 0 - d a y t i m e e x t e n s i o n [ , ] was May 2, 1 9 9 6 . The s y s t e m was p u t i n t o s e r v i c e o n May 2 4 , 1 9 9 6 . 35 that 1041091 T h e r e was a 21 d a y o v e r r u n i n t i m e a t $ 5 5 0 p e r d a y w h i c h i s e q u a l t o $11,550 l i q u i d a t e d damages. This amount w i l l be d e d u c t e d f r o m f i n a l p a y m e n t on t h e project. "We w o u l d a l s o l i k e t o r e m i n d y o u t h a t o n e o f t h e conditions f o r acceptance of the Sharples[ ] centrifuge was performance testing after installation to confirm compliance with the performance requirements of the specifications. T h i s t e s t i n g i s r e q u i r e d b e f o r e t h e p r o j e c t w i l l be final accepted. Please give at least 48-hours notice prior to testing." 1 2 (Emphasis added.) H a r b e r t s u b m i t t e d a f i n a l payment r e q u e s t f o r P r o j e c t 16. On S e p t e m b e r 13, 1996, A s a r i s i sent a letter to Harbert that stated: " R e g a r d i n g y o u r S e p t e m b e r 4, 1 9 9 6 r e q u e s t f o r f i n a l p a y m e n t o n t h e r e f e r e n c e d p r o j e c t , we h a v e listed the f o l l o w i n g reasons f o r denying the r e q u e s t : We h a v e n o t r e c e i v e d a r e p l y t o o u r J u l y 2, 1996 letter r e g a r d i n g t h e PLC signals s p e c i f i e d and r e q u i r e d f o r proper o p e r a t i o n of t h e s l u d g e system. II * The s l u d g e pumps c o n t i n u e t o f a i l t o s t a r t . T h i s has been a problem s i n c e t h e pumps were i n s t a l l e d . II * The c o n d i t i o n s o f t h e e n c l o s e d l e t t e r S h a r p l e s have n o t been met. from S h a r p l e s s u p p l i e d an E d d y - C u r r e n t - B r a k e b a c k d r i v e and apparently guaranteed the performance of the sludge-system centrifuges. 1 2 36 1041091 "* "* (Emphasis A l l of the complete. punch list items are not The p r o j e c t h a s n o t b e e n f i n a l a c c e p t e d a n d w i l l n o t be u n t i l a l l o f t h e a b o v e i t e m s are complete." added.) On M a r c h 1 4 , 1 9 9 7 , A s a r i s i sent a l e t t e r to Harbert stated: "[Project 16] was originally scheduled to be c o m p l e t e d i n F e b r u a r y 1996, b u t r e m a i n s i n c o m p l e t e . We h a v e n o t i f i e d y o u n u m e r o u s t i m e s o f t h e p r o b l e m s t h a t e x i s t w i t h t h e p r o j e c t and have r e q u e s t e d t h a t t h e y be c o r r e c t e d . S e v e r a l i t e m s f r o m t h e May 1 9 9 6 Punch L i s t have never been c o m p l e t e d . Although a t t e m p t s h a v e b e e n made t o c o r r e c t t h e p r o b l e m s w i t h the c e n t r i f u g e s , t h e y have been w i t h o u t s u c c e s s . Other Punch L i s t i t e m s have never been a d d r e s s e d . "We j u s t l e a r n e d t h i s m o r n i n g t h a t b o t h c e n t r i f u g e s are not operating. Liquidated damages were p r e v i o u s l y a s s e s s e d on t h i s p r o j e c t l a s t y e a r b u t s t o p p e d i n May when b o t h c e n t r i f u g e s w e r e up a n d running. Now that both centrifuges are not operating the Board w i l l begin assessing liquidated d a m a g e s a g a i n , s t a r t i n g t o d a y , a t $550 p e r d a y i n accordance with the contract f o r e v e r y day that e i t h e r one o f t h e c e n t r i f u g e s i s n o t o p e r a t i n g . "The l o s s o f t h i s s y s t e m h a s a l a r g e i m p a c t on t h e operation o f t h e p l a n t and r e s u l t s in significant costs to the Board. We c a n no l o n g e r r e c o m m e n d f u r t h e r delays i n the p r o j e c t completion to the [Board]." (Emphasis added.) 37 that 1041091 On March March 14, 17, 1997, 1997, letter as Harbert responded to Asarisi's follows: "[We] h a v e r e c e i v e d y o u r l e t t e r ... d a t e d M a r c h 14, and have spoken with Marvin this morning c o n c e r n i n g the c e n t r i f u g e s t r u c t u r e . A technician i s a l r e a d y on s i t e a n d h a s d i s m a n t l e d , cleaned and s t a r t e d the c e n t r i f u g e back i n t o o p e r a t i o n . He i s g o i n g t o s e n d us h i s r e p o r t on t h e p r o b l e m w h i c h will indicate operator error since there was a b s o l u t e l y n o t h i n g w r o n g w i t h t h e e q u i p m e n t . As f a r as t h e o t h e r c e n t r i f u g e , he i s r e p l a c i n g a b e a r i n g and a l s o i n s t a l l i n g r i n g s t o p r e v e n t t h e b u i l d u p o f sludge i n the bowl. The s h u t down o f t h e eastern m o s t c e n t r i f u g e h a d n o t h i n g t o do w i t h u n c o m p l e t e d work. "We are making every effort to have the remaining c r i t i c a l items, s u c h as t h e PLC panel, s t r a i n e r s and centrifuge operation completed this week a l o n g with misc. punch l i s t items such as traffic b o l l a r d s , t o u c h up painting, screws and nuts, etc. We s t i l l h a v e t h e c l o s e o u t d o c u m e n t s t o t u r n i n and various other items of paperwork to c o m p l e t e b u t t h e s e w i l l n o t h o l d up o p e r a t i o n o f t h e system." (Emphasis On added.) April 2, s t a t i n g t h a t BCM 1997, and complete. to and be that until or "[w]e final had Asarisi inspected listing The added 1997, several letter stated the that acceptance of that a letter centrifuge items f i n i s h e d before r e m i n d you sent the that "[a]ll PLC i t of system to on M a r c h said these can be 38 project." 21, were not items need accepted," l i q u i d a t e d damages a r e this Harbert accruing 1041091 At the an A p r i l Board meeting on state, 21, the 1997, status of meeting Project of the Board, 16. The BCM minutes updated of in part: "The B o a r d d i d h a v e b e n e f i c i a l u s e o f t h e facility on May 2 4, 1 9 9 6 . C h a i r [Odom] i s a w a r e l i q u i d a t e d d a m a g e s w e r e a s s e s s e d f o r 21 d a y s o f $ 1 1 , 5 5 0 on t h a t project. S i n c e t h a t t i m e , the p r o j e c t s h o u l d have [been] completed and has not. March 14 both centrifuges went down and the contractor was n o t i f i e d t h a t he was b a c k on l i q u i d a t e d d a m a g e s , n o t j u s t o n l y t o when t h e c e n t r i f u g e s w e r e r u n n i n g b u t , until the project was 100% complete and satisfactory. The c o n t r a c t o r g o t t h e c e n t r i f u g e s b a c k up t h a t same w e e k ; h o w e v e r , he s t i l l r e m a i n s t o c o m p l e t e t h e p r o j e c t as o f t o d a t e . "... The c o n t r a c t o r h a s i n f o r m e d t h a t t h e B o a r d c a n n o t a s s e s s l i q u i d a t e d damages i f t h e B o a r d has b e n e f i c i a l use of i t . " C h a i r Odom a s k e d w h a t i s n e e d e d t o g e t t h e p r o j e c t completed. Mr. A s a r i s i r e s p o n d e d t h e r e i s a computer control system that has never been complete. The c o n t r a c t o r h a s b e e n s t a l l i n g . They t o l d us i t was r e a d y and [BCM's] instrumentation i n d i v i d u a l c h e c k e d i t and f o u n d p i e c e s m i s s i n g w h i c h were required under the contract and were not provided. The contractor i s i n the process of c o r r e c t i n g t h o s e a l t h o u g h no w o r k h a s b e e n s e e n on it. The c e n t r i f u g e s u p p l i e r i s s u p p o s e d t o be i n the 28 of this month to do some performance testing. That s t i l l w i l l not complete the p r o j e c t . t h " T h e y h a v e b e e n t o l d t h e PLC ( C o m p u t e r C o n t r o l s ) w i l l p r o b a b l y be c o m p l e t e d w i t h i n t h e m o n t h . This i s a year over the time of c o m p l e t i o n . " [ A s s i s t a n t d i r e c t o r W. M a l c o l m ] S t e e v e s s t a t e d the o n l y o p t i o n we h a v e i s t o go t o t h e b o n d i n g company and t e l l them t o t a k e o v e r . We d o n ' t t h i n k 39 the 1041091 the b o n d i n g company can p r o c e e d f a s t e r t h a n w h a t ' s g o i n g on now. T h i s h a s b e e n one o f t h e m o s t p o o r l y managed p r o j e c t s of H a r b e r t i t seems t h i s has been a l e a r n i n g p r o j e c t f o r them. There i s no excuse f o r t h i s type delay. For t h a t r e a s o n , we decided to t e l l the contractor we are going to a s s e s s l i q u i d a t e d damages e v e r y day. We may u s e up all the rest of the contractor's money with l i q u i d a t e d damages. That i s what the contractor w i l l be arguing. "Mr. A s a r i s i s t a t e d t h a t t o d a t e we h a v e e n o u g h money t o c o m p l e t e t h e p r o j e c t . Mr. S t e e v e s s t a t e d t h a t we a r e h o l d i n g e n o u g h money t o c o m p l e t e the p r o j e c t w i t h o u t t h e c o n t r a c t o r s h o u l d we d e c i d e t o do t h a t . The c o n t r a c t o r i s g e t t i n g t i g h t a b o u t o u r c h a r g i n g $550 p e r d a y w h i l e we a r e u s i n g t h e s y s t e m . Our r e s p o n s e i s t h a t i t i s c o s t i n g us money n o t t o have t h i s p r o j e c t c o m p l e t e d . We c a n ' t u s e i t l i k e we a r e s u p p o s e d t o be a b l e t o . We have to keep r u n n i n g h e r e a n d t h e r e t o t u r n on t h i s pump a n d t h i s v a l v e a n d we a r e p a y i n g t h e c o n s u l t a n t s t o continue t o w o r k on t h i s p r o j e c t . We a r e e x p e r i e n c i n g a c o s t t h a t we c a n j u s t i f y c h a r g i n g t h e m $550 p e r d a y i f we decide to. We a r e i n t h a t p o s i t i o n a n d we w i l l l e t the contractor move us off that position by f i n i s h i n g the p r o j e c t . We are v e r y unhappy about this project. The c e n t r i f u g e s w o r k w e l l when t h e y w o r k a n d w i l l s a v e us m o n e y . " (Emphasis added.) Harbert On J u n e 16, payment again 1997, request submitted Asarisi and noting a final payment sent Harbert that a letter "there are list i t e m s t h a t have never been a d d r e s s e d . list i s over a year old. Since 40 you request did not to rejecting a number o f The BCM. original make the punch punch corrections 1041091 within t h e a l l o w e d 30 d a y time p e r i o d a new inspection w i l l be required." On July 8, 1997, Asarisi sent Harbert a letter that stated: "A F i n a l I n s p e c t i o n was c o n d u c t e d on t h e r e f e r e n c e d p r o j e c t on J u n e 18, 1 9 9 6 . E n c l o s e d i s a copy of the o r i g i n a l P u n c h L i s t I t e m s t h a t w e r e t o be completed w i t h i n 30 d a y s o f t h e i n s p e c t i o n . Over a y e a r has p a s s e d s i n c e t h e i n s p e c t i o n was made a n d some o f t h e Punch L i s t Items s t i l l have not been completed. You w e r e a l s o n o t i f i e d b y C e r t i f i e d M a i l on M a r c h 14, 1997 that both centrifuges were down and that l i q u i d a t e d d a m a g e s w o u l d be a s s e s s e d i n t h e a m o u n t o f $550 p e r d a y u n t i l t h e p r o j e c t was 100 percent c o m p l e t e and f i n a l a c c e p t e d . A copy of t h i s letter is enclosed. To d a t e , l i q u i d a t e d d a m a g e s exceed $61,000. A l s o , a d d i t i o n a l d e f i c i e n c i e s h a v e shown up s i n c e t h e o r i g i n a l i n s p e c t i o n . A c u r r e n t l i s t of these Punch L i s t Items i s e n c l o s e d . "We h a v e t r i e d u n s u c c e s s f u l l y f o r o v e r a y e a r t o g e t ... Harbert ... to complete this project. In accordance with terms of the Contract, you are h e r e b y n o t i f i e d t h a t t h e w o r k on t h e r e m a i n i n g i t e m s must b e g i n w i t h i n 10 days of the date of this letter. I f a l l w o r k on t h i s p r o j e c t i s n o t 100 p e r c e n t c o m p l e t e b y J u l y 2 7 , 1997 we may n o t i f y your b o n d i n g company t o c o m p l e t e t h e work." (Emphasis Included containing added.) with 88 the A copy July items to of 8, be the 1997, letter letter addressed; 41 was sent was many to Federal. a punch of the list items 1041091 included matters several subitems. Some o f t h e i t e m s described on t h e p u n c h July 1997, On response 15, list Harbert from sent t o h i s J u l y 8, 1 9 9 7 , l e t t e r . of the factual it claimed that statements i n Asarisi's June Asarisi Harbert letter were t h e same 1996. a 1 3 letter disputed in some o f J u l y 8, a n d i t had c o r r e c t e d "all of the d e f i c i e n c i e s noted on the 'Final Inspection/Punch L i s t ' ... with the exception of equipment O & M manuals and j o b s i t e p h o t o g r a p h s . T h i s i n f o r m a t i o n w i l l be p r o v i d e d a t one t i m e , as p r e v i o u s l y d i r e c t e d b y ... BCM. Harbert's J u l y 15, 1997, l e t t e r then quoted subsection 5.14 of the standard discussion, infra, and from a p o r t i o n o f specifications, see continued: " I t i s t h e p o s i t i o n o f ... H a r b e r t ... t h a t o u r w o r k was s a t i s f a c t o r i l y c o m p l e t e d w i t h a l l d e f e c t s h a v i n g The l i s t a l s o i n c l u d e d i t e m s s u c h as t h e i n s t a l l a t i o n o f a m o t i o n d e t e c t o r on " C o n v e y o r M - 1 1 0 " ; " [ c ] o m p l e t e t e s t i n g o f a l l c o n t r o l f u n c t i o n s and a l a r m s " ; p r o v i d i n g numerous s p a r e parts; conducting p e r f o r m a n c e t e s t s a n d on s e v e r a l items; i d e n t i f y i n g and l a b e l i n g a l l l i n e s ; i n s t a l l i n g c e r t a i n gauges; purchasing and installing a computer; installing a i r conditioners on certain instrument and c o n t r o l panels; " r u n n i n g " l i g h t s f o r t h e m a i n d r i v e a n d b a c k - u p d r i v e on t h e centrifuge control panels; installing solenoid valves on c e r t a i n p i p i n g ; " l a b e l i n g and t a g g i n g " v a r i o u s equipment and i n s t r u m e n t s ; p r o v i d i n g a g r o u n d i n g c o n d u c t o r on s e v e r a l i t e m s o f e q u i p m e n t a n d on n o n m e t a l l i c c o n d u i t ; f u r n i s h i n g a " m o t o r disconnect or lock-out"; and providing numerous certifications. 1 3 42 1041091 b e e n r e m e d i e d p r i o r t o ... BCM c o n d u c t i n g i t s f i n a l i n s p e c t i o n o n J u n e 1 4 , 1 9 9 6 . When t h e p r o j e c t was p l a c e d on a 3 0 - d a y m a i n t e n a n c e p e r i o d o n J u n e 1 4 , 1996, a l l noted punch l i s t / d e f i c i e n c y i t e m s were considered warranty items. We f e e l t h a t t h e e i g h t y e i g h t punch l i s t r e p o r t e n c l o s e d i n y o u r J u l y 8, 1997 l e t t e r are warranty r e l a t e d issues that only preclude f i n a l project acceptance. Harbert also liquidated disagreed with Asarisi's position concerning damages: "As e v i d e n c e d b y t h e a t t a c h e d f i e l d r e p o r t f r o m Sharples, d a t e d March 17, 1997, b o t h centrifuges were f u n c t i o n i n g p r o p e r l y and have been operating henceforth. ... BCM's c o n t i n u e d assessment of liquidated damages i s n o t j u s t i f i e d and without merit. "... Harbert ... w i l l continue to strive towards c l o s i n g out t h i s p r o j e c t to the s a t i s f a c t i o n of t h e [Board]." (Emphasis added.) On A u g u s t 8, 1 9 9 7 , A s a r i s i sent a letter to Harbert stated: "We c a n a s s u r e y o u t h a t t h e 'Work' h a s n e v e r b e e n ' s a t i s f a c t o r i l y completed.' You c l a i m t h a t t h e l i s t of e i g h t y - e i g h t i t e m s t h a t a r e d e f i c i e n t on t h e p r o j e c t are warranty items. Even i f t h i s were t h e case, i t has been over a year s i n c e t h e o r i g i n a l i n s p e c t i o n was made a n d t h e i t e m s a r e s t i l l n o t corrected. Some o f t h e i t e m s o n t h i s l i s t are t h i n g s t h a t w e r e s u p p o s e d t o be i n c l u d e d i n t h e p r o j e c t and a r e n o t t h e r e as o f t o d a y . You c a n n o t consider something missing on t h e p r o j e c t as a warranty item. 43 that 1041091 "... Our M a r c h 14, 1997 l e t t e r s a i d t h a t l i q u i d a t e d d a m a g e s w o u l d be a s s e s s e d until ' a l l ' items were c o r r e c t e d a n d t h e P r o j e c t was F i n a l A c c e p t e d . This h a s n o t b e e n d o n e a n d we h a v e n o t s e e n a n y effort b e i n g made t o c o r r e c t t h e items." [ 1 4 ] (Emphasis Also that added.) on August 8, 1997, Asarisi sent Federal a letter stated: "By c o p y o f o u r J u l y 8, 1997 l e t t e r t o ... Harbert ... y o u w e r e n o t i f i e d t h a t t h e [Board] c o u l d find [ i t ] i n d e f a u l t o f [ C o n t r a c t 16] i f a l l w o r k was not c o m p l e t e d by J u l y 27, 1997. The w o r k was not c o m p l e t e d b y t h i s d a t e a n d we a r e n o t a w a r e o f any work b e i n g p e r f o r m e d at t h i s time. Therefore, in a c c o r d a n c e w i t h [ s u b s e c t i o n ] 8.11 of the Contract, t h e B o a r d ... f i n d s ... H a r b e r t ... i n d e f a u l t o f [Contract 16]." (Emphasis added.) to the The letter r e s o l u t i o n of reflects letter this a that responded v i a a l e t t e r your in a l l e g a t i o n s , ... accordance legal to a c t i o n , as On stated 1 4 letter August that our copy was Harbert ... contract and 1997, neither matter to A s a r i s i deemed 25, closed: "Your prompt a t t e n t i o n will be sent to that closed: "Contrary will complete this reserve appreciated." Harbert. i t s right The Harbert to project to seek letter that necessary." Asarisi Federal A s a r i s i was a p p a r e n t l y to Harbert, discussed nor sent Harbert referring above. 44 Federal to had the a remedied April 2, the 1997, 1041091 default identified i n the letter of August the Board would e x e r c i s e i t s r i g h t of the "Work." On that Contract 16 had with" copy September Asarisi it A 10, took 1997, June a l l work 18, Harbert 1996, sent the Contract list. to The and completion Harbert. to "in letter to declare i t s position 16 that in a letter decision reiterated under punch was responded with Harbert 1997, to take over the letter exception in default. completed the of the 8, that accordance closed: " C o n t r a r y t o y o u r d e c i s i o n , ... H a r b e r t ... w i l l complete t h i s p r o j e c t i n accordance to our c o n t r a c t agreement and we will seek the necessary legal a c t i o n to ensure t h a t t h i s happens." (Emphasis On added.) S e p t e m b e r 11, 1997, Asarisi sent Harbert a l e t t e r that stated: "We were i n f o r m e d by y o u r p r o j e c t superintendent t h a t he p l a n s t o b e g i n w o r k on t h e i t e m s r e m a i n i n g on [ C o n t r a c t 1 6 ] . P r e v i o u s attempts to complete the work by y o u r c r e w s has g e n e r a l l y r e s u l t e d i n o n l y a few i t e m s b e i n g c o r r e c t e d b e f o r e p u l l i n g o f f t h e j o b again. T h i s l a c k of a c t i o n i s the cause f o r f i n d i n g ... Harbert ... in default. Any work left i n c o m p l e t e a f t e r t h i s a t t e m p t w i l l be c o n t r a c t e d o u t a n d p a y m e n t w i l l be made w i t h money h e l d on the p r o j e c t as s t i p u l a t e d i n t h e C o n t r a c t . " (Emphasis On that added.) November 14, 1997, Asarisi stated: 45 sent a letter to Harbert 1041091 "Over f i v e weeks have p a s s e d s i n c e o u r O c t o b e r 7, 1997 meeting t o d i s c u s s d e f i c i e n c i e s on [Project 16]. To d a t e , we h a v e n o t s e e n a n y p r o g r e s s on t h e work. A s y o u know t h e B o a r d has d e c l a r e d ... H a r b e r t ... i n d e f a u l t . A t y o u r r e q u e s t we a l l o w e d [Harbert] to proceed with completing the p r o j e c t . A g a i n , we f a i l t o s e e a n y p r o g r e s s b e i n g made. If we do n o t r e c e i v e a s c h e d u l e b y N o v e m b e r 2 1 , 1997 which shows an acceptable progress rate for completing t h e w o r k , we w i l l continue with the default process." On that stated pursued work November 21, 1997, H a r b e r t Harbert's the performance ... since our position October d i s p u t e d BCM's continues t o be punch l i s t completed also that that a letter i t "ha[d] to Asarisi diligently and c o m p l e t i o n o f a l lw a r r a n t y "strongly asserted sent 18, f o r C o n t r a c t 16. a l l 'warranty' 1997 meeting" ... a l l e g a t i o n i n default t h e June 7, that of i t scontract." 1996, punch Harbert items list contended s h o w n on t h i s and related that i t ... H a r b e r t Harbert was the again final t h a t i t "ha[d] list." Harbert stated: "With regards t o your r e q u e s t f o r a c o m p l e t i o n schedule, the majority of the warranty work r e m a i n i n g to be c o m p l e t e d i s electrical/instrumentation related. As s u c h , we h a v e n o t i f i e d Duke I n s t r u m e n t S e r v i c e t o p r o v i d e a c o m p l e t i o n s c h e d u l e t o us as soon as p o s s i b l e . We e x p e c t t o r e c e i v e t h i s i n f o r m a t i o n f r o m Duke i n t h e n e x t week. U p o n o u r r e c e i p t o f t h e i r s c h e d u l e , we w i l l promptly forward t h i s to you." 46 ... 1041091 On November Contract a 16 a n d resolution default been in 1997, to " f i l e that a given 24, notice to remedy letters and multiple "Harbert ha[d] contract." of the and In which ... Board's the to days meetings to from the ... Harbert Harbert, complete the a remaining sent later to the work on Harbert. Board also As Federal c o r r e c t e d the be and that under the terminated." 1997, informed a copy Federal of i t requested and project." of the that i t demanded t h a t of A action copy discussed i n Part of The to the I.A.3., a 15. neither Harbert deficiencies. 47 various said terminated Contract alleged by a l l w o r k on cease A f t e r t h e t e r m i n a t i o n o f C o n t r a c t 16, default vote [ i t s ] plan the had a f f i r m e d by D e c e m b e r 3, of of deficiencies 16; in Harbert date and adopted Harbert parties"; Harbert Asarisi schedule that the the ... ... terminate Board documented between remedy The 1997; deficiencies to declared a l l w o r k u n d e r C o n t r a c t 16; "provide days 8, to terminate Contract Federal few ten to F e d e r a l dated decision was i t had August contract with sent Harbert cease letter the that a letter was of failed voted " I t has been moved, r a t i f i e d , Board project that dated " i n excess Board a g a i n s t the bond." stated letter the Board nor used 1041091 other left contractors to repair undone by H a r b e r t under C. In December Circuit Board Contract wrongfully that, had Procedural In part, breach 16. of contract terminated as a r e s u l t both as the Board to Harbert i n the Mobile both against the Contract 15 and a l l e g e d t h a t the Board had Contract totaling allegedly 16. alleged claims 15 a n d C o n t r a c t 16 a n d of the contracts, of Board's breach damages t h e work History sued Harbert Specifically, suffered Contract 1999, H a r b e r t Court. of and complete Harbert " i n excess of $3,165,728," including "not l e s s t h a n $769,386 f o r e x t e n d e d f i e l d o v e r h e a d c o s t s , $ 5 1 5 , 0 8 8 f o r e x t e n d e d home o f f i c e overhead costs, $389,965 for the direct cost of changed/additional work on the Projects ... , $172,762 f o r unpaid work under the Contracts, $672,858 f o r t h e c o n t r a c t r e t a i n a g e w i t h h e l d , and $247,988 o f a c c r u e d i n t e r e s t c o s t s , p l u s $397,681 i n a d d i t i o n a l b o n d i n g company, c l a i m p r e p a r a t i o n , a n d attorneys' fees." The Board third-party filed complaint counterclaims against against Federal. 1 5 Harbert The and a Board's The u n d e r l y i n g case i n v o l v e d numerous other claims between o r i n v o l v i n g p a r t i e s other than Harbert, F e d e r a l , and t h e B o a r d , i n c l u d i n g S p i d e r m a n , S i k a , a n d BCM. Some o f t h o s e c l a i m s have been s e t t l e d and those remaining a r e n o t a t i s s u e in t h i s appeal. 1 5 48 1041091 counterclaims contract as to as all to each included of failed against both project. Harbert Contract 1 6 The allegations that the work required 15 and Board's Harbert under failed to Harbert failed to provide projects; that and perform Harbert that Harbert the failed failed 16 to breach and properly contracts; work failed of of breach-of-contract the qualified claims Contract to c o r r e c t d e f i c i e n c i e s i n the Harbert orders; included that fraud claims perform Harbert work i t p e r f o r m e d ; in a timely of that manner; that personnel to complete properly perform to to perform the work the change in a The d i s c u s s i o n of the Board's c l a i m s reflects those c l a i m s a l l e g e d i n t h e B o a r d ' s M a r c h 2 0 0 2 amended and r e s t a t e d c o u n t e r c l a i m and t h i r d - p a r t y c o m p l a i n t , w h i c h was the last amendment t h e t r i a l c o u r t a l l o w e d b e f o r e i t e n t e r e d a summary judgment a g a i n s t the Board. 1 6 We n o t e t h a t i n a d d i t i o n t o t h e c l a i m s d e s c r i b e d i n t h e t e x t of t h i s o p i n i o n , the Board a l s o i n c l u d e d claims a l l e g i n g t h a t H a r b e r t was l i a b l e t o i t b e c a u s e o f " [ t ] h e n e g l i g e n c e of H a r b e r t and i t s s u b c o n t r a c t o r s " b a s e d upon H a r b e r t ' s failure t o p r o v i d e a p p r o p r i a t e c o n c r e t e f o r r e a c t o r b a s i n #2, which a l l e g e d l y c o n t r i b u t e d t o the f a i l u r e of the s e a l a n t s y s t e m and f o r n e g l i g e n t performance of the work under the contracts ( i . e . , b r e a c h o f an a l l e g e d " d u t y t o p e r f o r m t h [ e ] w o r k i n a workmanlike manner"). F u r t h e r , the complaint i n c l u d e d claims o f b r e a c h o f an i m p l i e d w a r r a n t y and a c l a i m b a s e d upon a l l e g a t i o n s t h a t H a r b e r t was l i a b l e t o t h e B o a r d f o r b r e a c h e s of Harbert's bond o b l i g a t i o n s a s s o c i a t e d w i t h the c o n t r a c t s . The B o a r d m a k e s no argument on appeal relating to i t s negligence claims, breach-of-implied-warranty claims, and breach-of-bond-obligations claim. 49 1041091 workmanlike the The B o a r d breaches, Harbert's manner. "the Board projects have been complete sought have incurred and continue incurred by payments made that omissions" correction or (emphasis damages regulatory as penalties of provided complete limited Harbert's Harbert's by t h e Board a l l errors the work, certain because and/or poor workmanship," and " a l l defined herein Board as a r e s u l t o f H a r b e r t ' s breach of both fraud to with i n the contracts, damages n o t s p e c i f i c a l l y Board's costs deficient other The properly the Board associated allegedly incurred of Harbert's a l l e g e d "delay to " a l l repair but not added) i n that and expenses incurred i n part, and/or completion liquidated damages properly, t o be including to correct as a r e s u l t o f In i t s counterclaims, included, the Board, that, has s u f f e r e d completed the P r o j e c t [ s ] . " damages and/or n o t been alleged claims state, i n c u r r e d by t h e contracts." i n pertinent part: "27. Harbert represented t o the Board that i t c o u l d p e r f o r m t h e work as s p e c i f i e d i n t h e p l a n s and s p e c i f i c a t i o n s or fraudulent[ly] suppressed material facts. "28. T h e r e p r e s e n t a t i o n s made b y H a r b e r t w e r e f a l s e a n d H a r b e r t knew t h e r e w e r e f a l s e [ ; ] o r w e r e f a l s e , and Harbert, w i t h o u t knowledge o f t h e t r u e f a c t s , r e c k l e s s l y m i s r e p r e s e n t e d t h e f a c t s ; o r were f a l s e a n d w e r e made b y H a r b e r t b y m i s t a k e , b u t w i t h t h e i n t e n t i o n t h a t t h e B o a r d s h o u l d r e l y on t h e m . 50 1041091 "29. The B o a r d r e l i e d on t h e representations made b y H a r b e r t a n d r e l i e d on t h e m a n d a c t e d u p o n them by a w a r d i n g t h e c o n t r a c t w o r k t o H a r b e r t . "30. As a p r o x i m a t e r e s u l t o f ... Harbert's m i s r e p r e s e n t a t i o n s , t h e B o a r d has s u f f e r e d damages in that the projects have not been completed properly, and expenses have been incurred and continue t o be i n c u r r e d t o p r o p e r l y c o m p l e t e the Project[s]." 1 7 (Emphasis added.) s o u g h t by Board the used B o a r d on of punitive damages an reckless" The Federal In counterclaim the describes fraud claims for i t s breach-of-contract addition and The allegation August for Harbert's same t e r m s the except for the was entitled to "intentional or claims, the Board alleged damages gross conduct. Board based that i n the the also on Federal's 2002, summary j u d g m e n t , filed a third-party complaint against surety obligations. Harbert filed a s s e r t i n g as a motion for a partial follows: "1. T h e r e i s no g e n u i n e i s s u e o f m a t e r i a l f a c t (a) t h a t t h e B o a r d terminated [ C o n t r a c t 16] ... a f t e r t h e w o r k was s u b s t a n t i a l l y c o m p l e t e and (b) t h a t the Board t e r m i n a t e d [ C o n t r a c t 15] ... without p r o v i d i n g H a r b e r t w i t h n o t i c e o f d e f a u l t a n d 10 d a y s T h e f r a u d a l l e g a t i o n s i n t h e M a r c h 2002 amended restated counterclaim and t h i r d - p a r t y complaint appear a l l e g e f r a u d i n the inducement. 1 7 51 and to 1041091 opportunity to C o n t r a c t 15. cure as required by the terms of "2. T h e r e f o r e , Harbert i s e n t i t l e d t o judgment as a matter of law that the Board's t e r m i n a t i o n of C o n t r a c t s 15 a n d 16 was w r o n g f u l . " As to the termination narrative for summary o f u n d i s p u t e d a partial court's summary attention specifications. the trial standard of Contract judgment, to Harbert subsection attention specifications, which to entitled as i n support 8.11 See d i s c u s s i o n , s u p r a . court's Performance," facts 15, part ofi t s of i t s motion d i r e c t e d the of Harbert subsection "Termination the standard also directed 8.12 of the f o r Failure of states: "In t h e event o f f a i l u r e by [ H a r b e r t ] t o p e r f o r m any and a l l o f [ H a r b e r t ' s ] o b l i g a t i o n s i n a prompt and e f f i c i e n t manner s a t i s f a c t o r y t o t h e [ B o a r d ] , t h e [Board] w i l l have t h e r i g h t t o s u m m a r i l y t e r m i n a t e t h i s agreement, i n c l u d i n g a l l work c o v e r e d hereby, by giving [Harbert] written notice of such termination, after w h i c h t h e [Board] may employ c o n t r a c t i n g s e r v i c e s of h i s choice to complete the Work u n d e r t h i s C o n t r a c t and [ H a r b e r t ] and [ F e d e r a l ] will reimburse t h e [Board] any a d d i t i o n a l costs which may result from such termination and employment o f o t h e r c o n t r a c t i n g s e r v i c e s . Failure by the [Board] to exercise this right t o so terminate this Contract f o r any such d e f a u l t by [Harbert] shall not c o n s t i t u t e a waiver by t h e [Board] o f i t s r i g h t t o so t e r m i n a t e t h i s C o n t r a c t f o r any subsequent d e f a u l t . " 52 trial 1041091 In H a r b e r t ' s brief i n support of i t s motion f o r a p a r t i a l summary j u d g m e n t , H a r b e r t Board failed to s t r i c t l y 8.11 g o v e r n i n g before of default committed in the terms the contract." i t was e n t i t l e d subsection and t h a t to cure Specifically, Harbert t o " c l e a r and u n e q u i v o c a l " and o p p o r t u n i t y that Board terminate As to cure " t h e B o a r d met any d e f a u l t and v o t e d notice i t might to place have Harbert H a r b e r t would have t e n days t o cure t h e d e f a u l t , proceeded Harbert or material breach to issue a resolution as t h e c o n t r a c t o r to Contract terminate 16, H a r b e r t 'rescind' a argued contract of the contract that unless it the the complete (i.e., contract The under no m a t e r i a l was As there to was "may n o t has party" Contract contract breach been and a that 16 b e c a u s e , substantially had occurred) at the time terminated. Board opposed Harbert's judgment. asserted work a party by t h e o t h e r to terminate said, purporting f o r P r o j e c t 15." t h e B o a r d h a d no l e g a l r i g h t the of d e f a u l t , b u t , i n s t e a d o f d e c l a r i n g a d e f a u l t and n o t i f y i n g Harbert the comply w i t h 15, t h a t t h e " n o t i c e o f d e f a u l t and t h e o p p o r t u n i t y terminating argued that a r g u e d , as t o C o n t r a c t motion to the termination for a partial of Contract 15, t h e t h a t H a r b e r t was i n b r e a c h when t h e B o a r d 53 summary Board terminated 1041091 Contract 15 project because, on or before because Harbert and i t said, had the December had not p r o v i d e d p r o j e c t as r e q u i r e d u n d e r t h e subsections were [Board] waiving The may act under Contract 15 that t o be as Board contended letter, the 15 subsection as i t did. because there resolution the conditions with subsection that the plain to of termination language argued The without Contract." i t the subsection right to 8.11, the summary judgment is f a c t s to for exist support the [subsection] November of the another. provisions gave #2, specifications 14, December 8.11." 1997, c o n s t i t u t e d n o t i c e o f d e f a u l t and Board's the As that Asarisi's satisfied to 8.12 date, for Board then one pursuant to l e t t e r o f D e c e m b e r 9, As of both motion Asarisi's complied or The the reactor basin other p r o v i s i o n of the "Harbert's denied to Contract completion standard exclusive either completed updated schedules of the Board's t e r m i n a t i o n of Harbert The not 1996 contract. 8.12 not that argued due and stated terminate Board and i t s r i g h t s u n d e r any Board ... 8.11 "cumulative had not p r o p e r l y c o n s t r u c t e d because Harbert that Harbert 8, letter that that 1997, and 1997, when t a k e n cumulatively, subsection 8.11 or substantially 16, the Board 8.11. of Contract of the 54 standard argued specifications, 1041091 specifically doctrine subsections 5.15, a n d 5.16, of s u b s t a n t i a l performance asserted that because, i t said, required under Contract terminated respond 5.14, i t had Harbert Contract t o BCM's never inapplicable. "finally never 16. rendered the accepted" completed The B o a r d a l s o The Board Project a l lof the asserted 16 work that i t 16 b e c a u s e o f H a r b e r t ' s a l l e g e d f a i l u r e t o request that i t repair d e f i c i e n t work c o m p l e t e P r o j e c t 16 a s r e q u i r e d u n d e r t h e c o n t r a c t . contended that i t s termination of accordance with subsections a n d 8.12 8.11 the The B o a r d contract of and was the in standard specifications. In granting trial January the trial court Harbert's motion f o r a p a r t i a l court's Completion order authorized Project states f o r Contract substantially for 2004, complete Harbert that 16 as of " [ i ] n July that Project Board claimed t o have d i s c o v e r e d 16, w h i c h order that 24, a Certificate Contract 1996"; an a d v e r t i s e m e n t BCM c e r t i f i e d w o r k on P r o j e c t May an summary j u d g m e n t . "issued certifying to publish 16; and t h a t BCM entered 1997, n e a r l y 16 that The of was BCM of completion a year after 16 was s u b s t a n t i a l l y c o m p l e t e , t h e a number o f i t e m s o f w a r r a n t y the Board 55 claimed were d e f i c i e n t . " 1041091 The trial was deficient"; already was court and, cure, that that the of Board "Harbert Harbert been c o m p l e t e d " ; in default noted, noted and Contract declared disputed "maintained that Harbert 16." that Thereafter, Harbert in Board Based on reasoned, in terminated the Contract foregoing [ i t s ] work the "disputed the default a f t e r p r o v i d i n g H a r b e r t w i t h n o t i c e and the that of work that [ i t ] trial Contract 16 an o p p o r t u n i t y to the trial part: of C o n t r a c t 16 was 16 was already "Under the d o c t r i n e of s u b s t a n t i a l p e r f o r m a n c e , an owner may not withhold payment from the c o n t r a c t o r once a b u i l d i n g c o n t r a c t i s s u b s t a n t i a l l y c o m p l e t e , w h e t h e r o r not t h e c o n t r a c t o r has strictly c o m p l i e d w i t h a l l of the terms of the c o n t r a c t . See A.G. Gaston Constr. Co. v . H i c k s , 674 So. 2d 545 (Ala. Civ. App. 1995) (under the doctrine of s u b s t a n t i a l performance, l i t e r a l performance of a l l contract o b l i g a t i o n s i s not required); see also T T - ; ^ ^ ^ r o n e -AT-, ^ ^ ^ -r-rc ^ c ^ oo/i t B r u n e r v . H i n e s , [295 A l a . 1 1 1 , 1 1 5 - 1 6 , ] 324 So. 2 d Dev. 265, 2 6 8 - 6 9 ( A l a . 1972) ( s a m e ) ; H u f f m a n - E a s t D. , . C o r p . v . Summers E l e c [ . ] S u p p l y , [288 A l a . 5 7 9 , 5 8 2 ¬ 83,] 263 So. 2 d 6 7 7 , 680 ( A l a . 1972) (same); M i l e s v . M o o r e , [262 A l a . 4 4 1 , 444,] 79 So. 2 d 4 3 2 , 4 3 4 - 3 5 (Ala. 1955) (same); W i l s o n v. W i l l i a m s , [257 A l a . 445,] 59 So. 2 d 616 (1952); and A l e x a n d e r v. S m i t h , [3 A l a . A p p . 501, 506,] 57 So. 1 0 4 , 106-07 (1911) ( d o c t r i n e of s u b s t a n t i a l performance a p p l i e d f o r the f i r s t time i n Alabama, i n a c o n s t r u c t i o n c o n t e x t ) . As the Supreme Court held in Huffman-East 56 court 16. findings, "The Board's t e r m i n a t i o n wrongful because Project s u b s t a n t i a l l y complete. had court 1041091 D e v e l o p m e n t [ C o r p . ] v . Summers 263 So. 2 d 677 (Ala. 1972): Electrical Supply, " ' I f t h e work done s u b s t a n t i a l l y c o n f o r m s to the c o n t r a c t , i m m a t e r i a l d e v i a t i o n s w i l l not prevent recovery of the c o n t r a c t p r i c e , l e s s t h e amount r e q u i r e d t o i n d e m n i f y for i n j u r i e s s u s t a i n e d by s u c h d e v i a t i o n s . ' "[288 (Emphasis The Ala. at 582-83, So. 2d] at 680." added.) trial terminated court that determined Contract d e c l a r e a d e f a u l t or p r o v i d e opportunity [standard 263 to cure as 15 that because Harbert required specifications.]" the The by B o a r d had the Board with ten-days' [subsection] trial court wrongfully "failed to notice and 8.11 of stated, in part: "The November 2004 l e t t e r , which the Board r e f e r s t o as a ' [ s u b s e c t i o n ] 8.11 n o t i c e , ' d i d not provide Harbert with c l e a r , unequivocal n o t i c e of the Board's i n t e n t to t e r m i n a t e the c o n t r a c t . The l e t t e r n e v e r u s e s t h e w o r d ' n o t i c e , ' and t h e only reference to [subsection] 8.11 i s i n the last sentence, which states, ' F a i l u r e to provide a s c h e d u l e w i t h i n t e n d a y s w i l l be g r o u n d s f o r f i n d i n g [Harbert] i n d e f a u l t of the C o n t r a c t i n accordance with [subsection] 8.11 of the S p e c i f i c a t i o n s . ' R a t h e r t h a n p r o v i d i n g c l e a r and u n e q u i v o c a l notice o f a m a t e r i a l b r e a c h and o p p o r t u n i t y t o c u r e , the N o v e m b e r 14, 1997 l e t t e r d i d j u s t t h e o p p o s i t e . The r e f e r e n c e t o t h e u p d a t e d s c h e d u l e was n o t s t a t e d i n terms of a breach, but of a r e q u e s t - - t h a t i s , 'to a v o i d f u r t h e r d e l a y s on t h i s p r o j e c t we r e q u e s t t h a t you provide an updated schedule.' Indeed, by t h r e a t e n i n g to d e c l a r e a d e f a u l t i f the request was not honored w i t h i n ten days, the l e t t e r l e f t the clear impression that Harbert was not a l r e a d y i n 57 the 1041091 default. T h u s , as a m a t t e r o f l a w , t h e N o v e m b e r 14, 1997 [ l e t t e r ] d i d not p r o v i d e the ten days' n o t i c e an[d] o p p o r t u n i t y t o c u r e r e q u i r e d by [subsection] 8.11 of the [ s t a n d a r d s p e c i f i c a t i o n s ] . . . . " "The B o a r d ' s R e s o l u t i o n t e r m i n a t i n g C o n t r a c t 15 a n d A s a r i s i ' s l e t t e r o f D e c e m b e r 9, 1997 w e r e i s s u e d i n v i o l a t i o n of Harbert's c o n t r a c t u a l r i g h t to ten d a y s ' n o t i c e and t h e o p p o r t u n i t y t o c u r e t h e a l l e g e d default. A t t h e D e c e m b e r 8, 1997 B o a r d m e e t i n g , BCM recommended t h a t the B o a r d h o l d H a r b e r t i n ' d e f a u l t ' on [ C o n t r a c t ] 15 f o r f a i l u r e t o p r o v i d e an u p d a t e d schedule. The Board then voted to accept BCM's recommendation to p l a c e Harbert i n d e f a u l t . At t h a t p o i n t , the Board s h o u l d have p r o v i d e d H a r b e r t with w r i t t e n n o t i c e o f t h e f i n d i n g o f d e f a u l t and a t e n day o p p o r t u n i t y t o c u r e . I n s t e a d , the Board adopted an u n d a t e d R e s o l u t i o n t h a t p u r p o r t e d n o t t o d e c l a r e a default under Contract 15, but to terminate Harbert's contract. Thus, the B o a r d p r o c e e d e d to terminate Contract 15 w i t h o u t g i v i n g Harbert the r e q u i r e d t e n d a y s ' n o t i c e o f t h e a l l e g e d d e f a u l t and the o p p o r t u n i t y to cure. " [ S u b s e c t i o n ] 8.11 i s p a r t o f d o c u m e n t a t i o n u s e d by t h e B o a r d i n a l l o f i t s c o n s t r u c t i o n c o n t r a c t s . I t was d r a f t e d b y t h e B o a r d a n d was n o t s u b j e c t t o negotiation. In a d d i t i o n , the p r o c e d u r e s used w i t h r e s p e c t t o t h e t e r m i n a t i o n o f C o n t r a c t 16 show t h a t the B o a r d was w e l l aware o f and understood the notice requirements. ... T h e s e same procedural r e q u i r e m e n t s were a p p l i c a b l e to C o n t r a c t 15, but were not f o l l o w e d . "The N o v e m b e r 14, 1997 l e t t e r i s u n a m b i g u o u s a n d p l a i n l y d i d n o t p r o v i d e c l e a r and u n e q u i v o c a l n o t i c e of the Board's i n t e n t to terminate Contract 15. E v e n i f t h e l e t t e r w e r e a m b i g u o u s , h o w e v e r , summary j u d g m e n t w o u l d be a p p r o p r i a t e . Because a n o t i c e of d e f a u l t a n d t h e o p p o r t u n i t y t o c u r e m u s t be c l e a r a n d u n e q u i v o c a l , an a m b i g u o u s n o t i c e i s i n s u f f i c i e n t as a m a t t e r o f l a w . ... 58 1041091 "Because the b o a r d d i d not p r o v i d e the n o t i c e r e q u i r e d b y [ s u b s e c t i o n ] 8.11, Harbert i s e n t i t l e d to partial summary j u d g m e n t d e t e r m i n i n g that the B o a r d ' s t e r m i n a t i o n o f C o n t r a c t 15 was wrongful. "... [T]he B o a r d ' s t e r m i n a t i o n o f C o n t r a c t 15 was wrongful because the Board f a i l e d to provide Harbert w i t h t e n d a y s ' n o t i c e and opportunity to cure the alleged default in accordance with [ s u b s e c t i o n ] 8.11 o f t h e [ S t a n d a r d s p e c i f i c a t i o n s ] . " (Emphasis added.) Having wrongful obtained a favorable ruling termination of Contract 15 D e c e m b e r 2004 H a r b e r t and Federal filed summary against In p a r t , judgment Harbert Harbert against and and the Third-Party Federal Board as and to Contract a joint on Complaint the its Board's 16, motion for in a "Counterclaim against Federal." argued: "[T]he Board's wrongful t e r m i n a t i o n of Harbert as t h e c o n t r a c t o r on C o n t r a c t s 15 a n d 16 r e s u l t e d i n a b r e a c h o f t h e c o n t r a c t s by t h e B o a r d t h a t b a r s the Board from r e c o v e r i n g i t s affirmative claim for damages a g a i n s t H a r b e r t . The B o a r d ' s Counterclaim a g a i n s t H a r b e r t i s , t h e r e f o r e , due t o be dismissed. "... The w r o n g f u l t e r m i n a t i o n o f H a r b e r t as t h e contractor for the Projects also discharged F e d e r a l ' s o b l i g a t i o n s to the Board under the Bonds. As a m a t t e r o f l a w , a b o n d c l a i m a n t t h a t d o e s n o t have a r i g h t of r e c o v e r y a g a i n s t the p r i n c i p a l does not have a r i g h t of r e c o v e r y a g a i n s t the s u r e t y . " In January 2005, o p p o s i t i o n to Harbert the and Board filed Federal's 59 a motion and brief in j o i n t m o t i o n f o r a summary 1041091 j u d g m e n t , and i t requested that the t r i a l January 2004 Contract 15 a n d C o n t r a c t 16. Board made summary order in as response judgment, as to the wrongful termination Harbert's Contract 15 motion the basin #2 Harbert and that constituted the subsection 8.11. correct those notice of opportunity Board 1997, also 14, to a argued that letter to had reactor 1997, cure the partial argued d e f i c i e n c i e s as pre-November and The the for Board l e t t e r s w r i t t e n b e f o r e A s a r i s i ' s N o v e m b e r 14, demanded t h a t reconsider i t s In a d d i t i o n to the arguments to to court letters required that by Harbert's r e p e a t e d f a i l u r e s t o a d e q u a t e l y r e s p o n d t o t h e B o a r d ' s demands constituted an Contract 15 so notice." In support of i t s a n t i c i p a t o r y - r e p u d i a t i o n argument, the Board So. 2d cited 931, Honeywell, the Board of 934 as argued material to excuse Congress F.2d that, 274, [subsection] the and Board Insurance from Co. repudiation providing v. of such Barstow, 799 and S o l i t r o n Devices, Inc. 278 (11th C i r . 1988). Further, " [ a ] t the very f a c t e x i s t [ s ] as cure notice breach Life ( A l a . 2001 ) , I n c . , 842 a sufficient of "anticipatory l e a s t , a genuine to whether Harbert t o meet t h e c o n t r a c t u a l 8.11." 60 was v. issue provided requirements 1041091 As to Contract should have Board's 16, t h e B o a r d denied the argued that the t r i a l summary-judgment breach-of-contract claim motion because, "notice-and-opportunity-to-cure letter" Harbert Harbert and because, deficiencies warranty i t said, i n i t s work that period described as i t said, was to the a valid provided failed appeared court during to to correct one-year 5.16 o f t h e i n subsection the standard conducted hearing specifications. On J a n u a r y on Harbert "any other orders information urging joint provide that might 31, 2005, f o r the motion, j o i n t motion that the parties brief Federal's court f o r a summary at the conclusion of the hearing, On J a n u a r y letter the t r i a l and F e d e r a l ' s Apparently, requested 14 2 0 0 5 , trial be filed court to (1) a deny motion f o r a summary judgment, trial court Harbert denying (3) a m o t i o n r e q u e s t i n g t h a t t h e t r i a l complaint the t r i a l against Federal, 61 court helpful." B o a r d t o amend i t s c o u n t e r c l a i m a g a i n s t H a r b e r t party judgment. i t w i t h p r o p o s e d o r d e r s and the Board the a and supplemental Harbert and (2) p r o p o s e d and Federal's court allow the and i t s t h i r d - (4) a p r o p o s e d "Fourth 1041091 Amended Counter-Claim proposed orders Federal's joint included motion u r g e d by t h e B o a r d , " that and no s u f f i c i e n t Third-Party an order for a denying summary letter viable In court of warranty and "the order order "that would find was s e n t a s t o C o n t r a c t 15 a n d t h a t C o n t r a c t 16 was s u b s t a n t i a l l y c o m p l e t e d , the breach The 1 8 Harbert judgment, a n d an a l t e r n a t i v e cure Complaint." but would [ s u b s e c t i o n 5.16] a n d f r a u d retain counts as claims." F e b r u a r y 2005, t h e Board filed a l e t t e r with the t r i a l " t o p r o v i d e a l i m i t e d r e s p o n s e " t o H a r b e r t ' s most r e c e n t submission. The B o a r d ' s letter states, i n part: " H a r b e r t d i d not even c h a l l e n g e t h e Board's p o s i t i o n that there are v a l i d breach of warranty claims f o r b o t h C o n t r a c t 15 a n d 1 6 . ... H a r b e r t a l s o knows t h a t i t made m u l t i p l e false statement[s] of i t s degree of completeness and i s l i a b l e f o r such misrepresentations. H a r b e r t o b v i o u s l y hopes i t s i l l f o u n d e d a r g u m e n t as t o ' i n a d e q u a t e c u r e n o t i c e ' w i l l be b l i t h e l y a c c e p t e d a s t o t h e s e o t h e r c o u n t s -¬ b o t h as t o w a r r a n t y and f r a u d . F o r t h e s e a n d many o t h e r r e a s o n s , H a r b e r t ' s m o t i o n f o r p a r t i a l summary j u d g m e n t i s d u e t o be d e n i e d . " The r e c o r d r e f l e c t s t h a t t h e t r i a l c o u r t d i d n o t the Board's motion to allow a fourth amendment c o m p l a i n t b e f o r e e n t e r i n g t h e summary j u d g m e n t t h a t subject of this appeal. The p r o p o s e d f o u r t h amendment b e f o r e us i n t h i s a p p e a l . 1 8 62 r u l e on to the i s the i s not 1041091 On March judgment findings order. 16, ("the of The 2005, March f a c t and March the 2005 trial court judgment") conclusions 2005 judgment of law also entered a summary incorporating the from i t s January 2004 states: "2. In i t s C o u n t e r c l a i m ... the Board seeks damages f o r t h e c o s t s t h e B o a r d a l l e g e d l y i n c u r r e d in completing certain construction projects after t e r m i n a t i n g H a r b e r t as t h e g e n e r a l contractor. "3. The d a m a g e s s o u g h t by t h e B o a r d i n e a c h o f the counts (contract and tort) are the same: (1) the costs the Board allegedly incurred in c o m p l e t i n g the work ( c o n s i s t i n g of c o m p l e t i o n work and the c o r r e c t i o n of a l l e g e d d e f i c i e n c i e s ) a f t e r Harbert exited the job site; and (2) other consequential damages that the Board allegedly suffered as a result of Harbert's failure to c o m p l e t e t h e w o r k on t h e p r o j e c t s . "4. The B o a r d s e e k s d a m a g e s a g a i n s t H a r b e r t , as the general contractor, and against Federal, as surety, under the p e r f o r m a n c e bonds t h a t Federal i s s u e d to secure H a r b e r t ' s o b l i g a t i o n s to the Board on t h e c o n s t r u c t i o n c o n t r a c t s . "5. evidence The B o a r d h a s n o t come f o r w a r d w i t h o f any o t h e r k i n d o f a l l e g e d damages. any fl "B. The t e r m i n a t i o n o f H a r b e r t ' s c o n t r a c t s was wrongful, f o r the reasons set f o r i n the Court's Memorandum O p i n i o n and O r d e r o f J a n u a r y 22, 2004, and e f f e c t i v e l y prevented Harbert from c o m p l e t i n g t h e w o r k on t h e p r o j e c t s . "C. The Board's wrongful termination of Harbert's c o n t r a c t s c o n s t i t u t e s a m a t e r i a l breach of the contracts that excuses Harbert's future 63 1041091 p e r f o r m a n c e , and bars t h e Board's C o u n t e r c l a i m f o r completion costs. F e d e r a l I n s . Co. v . I . K r u g e r , Inc., 829 S o . 2 d 732 ( A l a . 2 0 0 2 ) ( w h e r e c o n t r a c t o r prevented subcontractor from performing under subcontract, subcontractor was excused from performance); s e e a l s o S h i r l e y v . L i n , 548 S o . 2 d 1329, 1334 ( A l a . 1 9 8 9 ) ('Once a p a r t y t o a c o n t r a c t r e p u d i a t e s the agreement, the other p a r t y i s excused from f u r t h e r performance.'); H e a l t h C a r e Mgmt. C o r p . v. R u b e n s t e i n , 540 S o . 2 d 7 7 , 78 ( A l a . C i v . A p p . 1989) ('Because o f t h e d e f e n d a n t ' s m a t e r i a l b r e a c h of the c o n t r a c t , the p l a i n t i f f ' s f u t u r e performance o f t h e c o n t r a c t was e x c u s e d a n d t h e p l a i n t i f f h a d a n immediate cause of a c t i o n f o r t h a t breach.'); Ex p a r t e A . B . / W i l d w o o d L t d . P ' s h i p , 793 S o . 2 d 7 8 4 , 790 (Ala. 2000) ( L y o n s , J . , c o n c u r r i n g i n t h e r e s u l t ) ('Once a p a r t y h a s c o m m i t t e d a n a n t i c i p a t o r y b r e a c h , the other party is excused from further performance.'). "D. The d i s c h a r g e of Harbert's obligations under the c o n t r a c t s d i s c h a r g e d F e d e r a l ' s o b l i g a t i o n s to t h e Board under t h e p e r f o r m a n c e bonds. ... "E. T h e r e i s no j u s t r e a s o n t o d e l a y e n t r y o f a f i n a l j u d g m e n t on t h e B o a r d ' s C o u n t e r c l a i m a n d T h i r d Party Complaint. This order disposes of a l l of the Board's c l a i m s a g a i n s t H a r b e r t and F e d e r a l . ... " The trial after court certified which the Board i t s judgment filed as a f i n a l judgment, a t i m e l y n o t i c e of appeal to this Court. II. Preliminary A. By Board's Claims at Matters Issue i t s t e r m s , t h e M a r c h 2005 j u d g m e n t d i s p o s e d claims against Harbert 64 and F e d e r a l . of a l lthe The c l a i m s that 1041091 were before judgment the t r i a l were court the claims when described amended a n d r e s t a t e d counterclaim see In that note 16, s u p r a . i t e n t e r e d t h e March i n the Board's March 2005 2002 and t h i r d - p a r t y c o m p l a i n t , regard, the claims at issue i n t h i s appeal are the Board's claims a l l e g i n g breach o f c o n t r a c t a s t o C o n t r a c t 15 a n d C o n t r a c t 16 ( i n c l u d i n g , to, breach subsection contract) of 5.16 the of the standard and t h e c l a i m s B. one-year alleging Preliminary warranty but not l i m i t e d described specifications fraud as as t o each to in each project. 1 9 M a t t e r s a s t o BCM We h a v e n o t b e e n a s k e d t o a d d r e s s t h e p r o p r i e t y o f t h e summary judgment as t o t h e Board's claims sounding i n n e g l i g e n c e o r i m p l i e d w a r r a n t y o r as t o t h e c l a i m s r e l a t i n g t o H a r b e r t ' s , as o p p o s e d t o F e d e r a l ' s , bond o b l i g a t i o n s . See n o t e 16, s u p r a . S e e Muhammad v . F o r d , 986 S o . 2 d 1 1 5 8 , 1 1 6 5 ( A l a . 2 0 0 7 ) ("'An a r g u m e n t n o t made o n a p p e a l i s a b a n d o n e d o r waived.'" ( q u o t i n g A v i s R e n t A C a r S y s . , I n c . v . H e i l m a n , 876 So. 2 d 1 1 1 1 , 1124 n. 8 ( A l a . 2 0 0 3 ) ) . L i k e w i s e , t h e B o a r d d o e s not argue t h a t t h e b r e a c h o f C o n t r a c t 15, w h i c h H a r b e r t a l l e g e s was c o m m i t t e d b y t h e B o a r d ( i . e . , t e r m i n a t i n g t h e contract without f i r s t complying with the notice p r o v i s i o n i n s u b s e c t i o n 8.11), does n o t p r e v e n t t h e B o a r d from r e c o v e r i n g damages f o r d e f e c t i v e p e r f o r m a n c e b y H a r b e r t b e c a u s e , a s t h e arguments would go, H a r b e r t ' s d e f e c t i v e performance o c c u r r e d b e f o r e t h e Board's breach and/or because such d e f e c t s i n p e r f o r m a n c e were o f a n a t u r e t h a t t h e y c o u l d n o t have been remedied w i t h i n a 10-day cure p e r i o d . See Dunlap v . R e g i o n s F i n . C o r p . , 983 S o . 2 d 3 7 4 , 378 ( A l a . 2 0 0 7 ) ( s t a t i n g t h e w e l l s e t t l e d p r i n c i p l e that i ti s not t h e f u n c t i o n o f t h i s Court t o make a n d a d d r e s s l e g a l a r g u m e n t s f o r t h e a p p e l l a n t ) . 19 65 1041091 Before that addressing BCM, through Services, adopts and judgment. favor claims to might that Harbert Board's support of 2005 judgment and F e d e r a l . an of appeal, BCM Group however, the and i s not a judgment adjudicated the an a Board's Court as t o t h e B o a r d ' s file as not was d i d not 2005 designated i f this BCM makes March judgment Even note ATC arguments, judgment March must i n which i t In i t sb r i e f , h a d some i n t e r e s t support brief c a n n o t be p r o p e r l y the we corporation appellate t h e M a r c h 2005 BCM; a s s u m e t h a t BCM that in Likewise, against an the a n d BCM against arguments, a s an a p p e l l e e . Clearly, appellee. judgment filed arguments, o f BCM, Board's successor incorporates additional in i t s I n c . , has denominates i t s e l f the a were claims separate n o t i c e o f a p p e a l as t o t h e M a r c h 2005 j u d g m e n t , and i t d i d n o t join the Board's App. P. BCM has not Board's appeal. brief of notice appealed, T h u s , we and t h e arguments our d e c i s i o n of appeal. and i t i s not Rule an 3 ( b ) , A l a . R. appellee h a v e n o t c o n s i d e r e d BCM's contained i n the present III. See case. Standard 66 i n that of Review brief i n the appellate f o r purposes 1041091 We standard Top As review a summary j u d g m e n t that the de novo trial court applied. Indoor Flea Market, Inc., 601 this Court Thorough-Clean, stated in Capital Inc., 639 So. So. 2d and M c C l e n d o n v. 2d 957, Alliance 1349 apply (Ala. 958 the same Mountain (Ala. Insurance 1992). Co. v. 1994): "A s u m m a r y j u d g m e n t i s p r o p e r when t h e r e i s no g e n u i n e i s s u e o f m a t e r i a l f a c t and t h e m o v i n g p a r t y i s e n t i t l e d t o a j u d g m e n t as a m a t t e r o f l a w . Rule 5 6 ( c ) ( 3 ) , A l a . R. C i v . P. The b u r d e n i s on the moving p a r t y t o make a p r i m a f a c i e s h o w i n g that t h e r e i s no g e n u i n e i s s u e o f m a t e r i a l f a c t a n d that i t i s e n t i t l e d t o a j u d g m e n t as a m a t t e r o f l a w . In determining whether the movant has carried that burden, the c o u r t i s to view the evidence i n a l i g h t most f a v o r a b l e t o t h e n o n m o v i n g p a r t y and t o draw a l l reasonable inferences i n favor of that party. To defeat a properly supported summary judgment motion, the nonmoving party must present ' s u b s t a n t i a l evidence' c r e a t i n g a genuine i s s u e of material fact -'evidence of such weight and q u a l i t y t h a t f a i r - m i n d e d persons i n the e x e r c i s e of impartial judgment can reasonably infer the e x i s t e n c e o f t h e f a c t s o u g h t t o be p r o v e d . ' Ala. Code 1975, § 12-21-12; West v. Founders Life A s s u r a n c e Co. o f F l o r i d a , 547 So. 2d 8 7 0 , 871 (Ala. 19 8 9 ) . " 639 So. 2d at 1350. IV. A. As the to the The Board's Board's Board argues, in fraud Analysis Fraud claims, part: 67 Counterclaim in i t s appellate brief 1041091 "The [March 2005] O r d e r ' s s t a t e d g r o u n d s f o r g r a n t i n g summary j u d g m e n t , i . e . , t h a t H a r b e r t was wrongfully terminated, even i f true, (which is d i s p u t e d ) , w o u l d n o t be a d e f e n s e t o t h e Board's f r a u d c l a i m s . ... As s u c h , t h e T r i a l C o u r t e r r e d i n d i s m i s s i n g the Board's claims of f r a u d under the c o r r e c t standard of review." In support of from Cooley Civ. App. v. i t s argument, the Gulf 1999), Bank, listing c i t e s pages i n three listed, (Ala. Co. , Foremost 1997); 849 So. 2d Board 977, terminated breach of Board's to viability this of on elements Ezell, Co. v. 981 v. 2d of 757 contracts and Court a 1043 fraud a So. Parham, (Ala. Civ. 15 claims. 1039, claim, The for 2d 693 App. and Board its claim or suppression of contract. 68 cites contrary plaintiff's i t s performance this 2d Life 2002). (Ala. and 429 also (Ala. 409, 422 Insurance The trial manner i n w h i c h Contract that 423, So. Liberty National Contract misrepresentations depend So. found, however, t h a t the those fraud 773 statement cases where those elements are v. Carter implicitly not other Insurance and court brief the namely Brushwitz 2000); Inc., Board quotes a 16 constituted breach no the defeated authority position alleging a the in i t s that the fraudulent r e l a t i n g to a contract does i t s o b l i g a t i o n s under that 1041091 It i s the appellant's burden to r e f e r t h i s Court to a u t h o r i t y t h a t supports i t s argument. App. P., requires include "citations authorities ... party's ( A l a . 1992) 483 S o . 2 d 392, cite any nor 392 contractual The Alabama A the 460 So. the court 601 be our research 1346, 1347 failure to claims consider whether as to this trial the court's trial 69 January court an Civ. authority perform i t s fraud to duty for (Ala. party's reversed 76, fails legal not 2d a appellant c i t e d no will "[w]e t o do So. B o a r d has a 2005 j u d g m e n t , 28, University, legal 2d other & M Board's Claim of Breach of as t o C o n t r a c t 16 paraphrase March a l l Nix, judgment should B. its we this Spradlin, ("'Where an obligations defeats contracts, Rule R. brief [and] affirm, for i t is neither perform whether appellant's with f u n c t i o n of S p r a d l i n v. may (10), A l a . statutes, Consistent the Because the addresses To on." G i b s o n v. i n an cases, ( A l a . 1986) to 1984)."). court's the i t i s not a u t h o r i t y , we appellant.' argument ( c i t i n g H e n d e r s o n v. function those to legal research." 78 that the relied have s t a t e d t h a t App. that R u l e 28(a) legal its relating the to trial issue. Contract 2004 order concluded: and 1041091 1. There was no issue but s u b s t a n t i a l l y completed Project that Harbert had 16 on May 24, 1996. 2. As a m a t t e r o f l a w , a f t e r i t h a d s u b s t a n t i a l l y p e r f o r m e d i t s o b l i g a t i o n s , H a r b e r t was e n t i t l e d t o the balance of the c o n t r a c t p r i c e under Contract 16, l e s s the c o s t s , i f any, o f c o r r e c t i n g any minor d e v i a t i o n s t h a t e x i s t e d as o f t h a t d a t e . 3. The Board's t e r m i n a t i o n of Contract 16 a f t e r P r o j e c t 16 was s u b s t a n t i a l l y c o m p l e t e was a m a t e r i a l breach of C o n t r a c t 16. 4. The B o a r d ' s w r o n g f u l t e r m i n a t i o n o f C o n t r a c t 16 prevented Harbert from fulfilling its remaining c o n t r a c t o b l i g a t i o n s , i . e . , c o r r e c t i n g any d e f e c t i v e work or unperformed work t h a t i t had been p a i d f o r a n d t h a t e x i s t e d a s o f May 24, 1 9 9 6 , and p e r f o r m i n g its one-year-warranty obligation, at its own expense. 5. As a matter of law, the Board's wrongful t e r m i n a t i o n o f C o n t r a c t 16 e x c u s e d H a r b e r t ' s f u t u r e performance and barred the Board's counterclaim seeking completion costs ( " c o n s i s t i n g of c o m p l e t i o n w o r k and t h e c o r r e c t i o n o f a l l e g e d d e f i c i e n c i e s " ) and c o n s e q u e n t i a l damages u n d e r t h e c o n t r a c t . The it was B o a r d a r g u e s t h a t , b a s e d on not performance have precluded from under contract the terminating s u b s t a n t i a l l y performed was entitled contract), i t continued simply its argues t h a t , even i f H a r b e r t had therefore the to terms of C o n t r a c t Harbert's because continued Harbert obligations. 16, The might Board s u b s t a n t i a l l y performed certain payments under to have ongoing o b l i g a t i o n s under 70 (and the the 1041091 contract, and including obligations to correct to perform year warranty. these the any work which I f Harbert obligations, the contract apply failed as and they to perform some o r do to defaults during note that specifications work, i.e., subsection required "punch-list" acceptance." specifications Also, Harbert items, subsection 5.09 to of correct We the of the agree. standard "unacceptable" discovered before 5.10 the of one- a l l of termination provisions s u b s t a n t i a l - p e r f o r m a n c e phase of the c o n t r a c t work. We items became n e c e s s a r y u n d e r t h e default just "punch-list" "final standard states: " A l l w o r k w h i c h has b e e n r e j e c t e d s h a l l be remedied o r e l s e r e m o v e d a n d r e p l a c e d i n an a c c e p t a b l e m a n n e r by [Harbert] at [ i t s ] own expense, and no compensation s h a l l be a l l o w e d h i m f o r s u c h removal or replacement. ... Upon f a i l u r e on t h e p a r t o f [ H a r b e r t ] t o i m m e d i a t e l y comply w i t h any o r d e r o f [BCM] made u n d e r t h e p r o v i s i o n o f t h i s S e c t i o n [ 5 ] , [the Board] s h a l l have a u t h o r i t y t o cause d e f e c t i v e w o r k t o be r e m e d i e d , o r r e m o v e d a n d r e p l a c e d ... a n d t o d e d u c t t h e c o s t f r o m a n y m o n i e s due o r t o become due [Harbert]. In case no such monies are available, the amount shall be charged against [Federal]." Likewise, subsection 8.13 of the standard specifications, which d i s c u s s e s H a r b e r t ' s s u b m i s s i o n of payment e s t i m a t e s f o r work i t had performed, states: 71 "To insure the proper 1041091 performance of percent the amount completion and acceptance Contract." (Emphasis of As n o t e d standard this Contract, each of [Board] estimate a l l Work will . .. retain until covered by final this i n t h e f a c t u a l background d i s c u s s i o n above, t h e FINAL further state: ACCEPTANCE: "After the Final I n s p e c t i o n i s made a s o u t l i n e d a b o v e , [ H a r b e r t ] s h a l l m a i n t a i n t h e W o r k f o r 30 d a y s i n t h e same m a n n e r a s s e t f o r t h u n d e r [ s u b s e c t i o n 4.08] ' M a i n t e n a n c e o f t h e W o r k D u r i n g C o n s t r u c t i o n . ' The W o r k w i l l b e f i n a l l y a c c e p t e d a t t h e e n d o f t h e 30 d a y m a i n t e n a n c e p e r i o d p r o v i d e d a l l w o r k h a s b e e n s a t i s f a c t o r i l y maintained. "[Harbert], immediately a f t e r receiving the l e t t e r of F i n a l Inspection, shall give notice of said completion o f Work b y an a d v e r t i s e m e n t i n some newspaper o f g e n e r a l c i r c u l a t i o n p u b l i s h e d w i t h i n t h e c i t y o r c o u n t y w h e r e i n t h e Work h a s b e e n done f o r a p e r i o d o f f o u r s u c c e s s i v e w e e k s . ... " I n n o i n s t a n c e s h a l l a f i n a l s e t t l e m e n t b e made upon [Harbert] until the expiration of the Maintenance Period and u n t i l the Contract i s completed and P r o j e c t accepted by t h e [Board]. "5.16 10 added.) specifications "5.15 of the MAINTENANCE GUARANTEE A F T E R ACCEPTANCE: " N e i t h e r t h e f i n a l c e r t i f i c a t e o f payment n o r any p r o v i s i o n s i n the Contract nor p a r t i a l or e n t i r e use or occupancy o f t h e p r e m i s e s by t h e [Board] shall constitute an acceptance o f work n o t done i n accordance with the Contract or r e l i e v e [Harbert] of l i a b i l i t y i n r e s p e c t t o any express w a r r a n t i e s o r 72 1041091 r e s p o n s i b i l i t y f o r f a u l t y m a t e r i a l s o r workmanship. [ H a r b e r t ] s h a l l remedy a n y d e f e c t s i n t h e Work a n d p a y f o r a n y damage t o o t h e r w o r k r e s u l t i n g t h e r e f r o m w h i c h s h a l l a p p e a r w i t h i n a p e r i o d o f one y e a r f r o m t h e d a t e o f f i n a l a c c e p t a n c e o f t h e Work u n l e s s a longer period i s specified. The [ B o a r d ] w i l l g i v e notice of observed defects with reasonable promptness and [Harbert] s h a l l r e p a i r t h e d e f e c t s immediately. [Harbert's] Performance or Contract Bond shall remain i n effect and cover this guarantee. After completion of t h e P r o j e c t and p r i o r t o f i n a l acceptance, [Harbert] s h a l l provide a s t a t e m e n t a d d r e s s e d t o t h e [Board] from [ F e d e r a l ] a c k n o w l e d g i n g t h a t t h e C o n t r a c t Bonds w i l l remain i n e f f e c t d u r i n g the one-year warranty p e r i o d . Final p a y m e n t u n d e r t h e C o n t r a c t w i l l n o t b e made u n t i l t h i s statement i s r e c e i v e d . " (Emphasis added.) Thus obligation t o complete and t o c o r r e c t period o f one y e a r conclusion pursuant we that to neglect, the have to found r e s t e d on be states, 8.11 whether arose done without under before the 8.12 Harbert's support of qualification, a for a Contract the alleged substantial contract. "within acceptance." to terminate and ongoing i n an a c c e p t a b l e contractual right an discovered of f i n a l no had items work the date the Board's or default" work clearly from deficient subsections specifications clearly the punch-list manner Further, Harbert standard "delay, completion Subsection that Harbert 16 of 8.11 w o u l d be i n p o t e n t i a l d e f a u l t i f i t " n e g l e c t [ e d ] o r r e f u s e [ d ] t o remove 73 1041091 materials or perform anew d e f e c t i v e and u n s u i t a b l e , Work, or from 8.12 authorized contract any and manner There manner." the i s no Board's "delay[s], Harbert Project Board to to the basis or rejected prosecution by f o r the Contract [Harbert] performed to and conclusion the was an that as t o w h e t h e r H a r b e r t acceptable w a r r a n t y work. most favorable No i s s u e of t e r m i n a t i o n the c o n t r a c t . 2 0 added.) that occurred 2 0 the to before construction of 16. support the conclusion fact perform limited The e v i d e n t i a r y m a t e r i a l s p r e s e n t e d t o t h e t r i a l not the efficient (Emphasis 16 the Subsection terminate" i n a prompt as of the [did] not c a r r y default[s]" that substantially be "summarily [Board.]" terminate neglect[s], had to of f a i l u r e contractual right shall (Emphasis added.) [its] obligations satisfactory as cause whatsoever " [ i ] n the event a l l of work or discontinue[d] any o t h e r Work i n an a c c e p t a b l e such manner or there court do was no g e n u i n e i s s u e of completed the p u n c h - l i s t adequately performed any items i n necessary Viewing the p a r t i e s ' submissions i n the to the Board, and drawing light a l l reasonable i s p r e s e n t e d on a p p e a l as t o w h e t h e r t h e manner o f C o n t r a c t 16 was i n a c c o r d a n c e w i t h t e r m s o f 74 1041091 f a c t u a l i n f e r e n c e s i n favor of the Board, see C a p i t a l Alliance I n s u r a n c e , s u p r a , b a s e d on t h e e v i d e n t i a r y m a t e r i a l s s u b m i t t e d to the trial court h e r e i n a f t e r , we existed work, with both Our an i t t h a t genuine to alleged existed conclusion as is and those of discussed issues of m a t e r i a l deficiencies supported In a d d i t i o n , affidavit e l e c t r i c a l e n g i n e e r who in above May 24, in fact Harbert's 1996, and as performed. r e p o r t e d above. court conclude respect as subsequently discussed from by the Board Donald the correspondence submitted to the Lynn May, a registered h a d w o r k e d on P r o j e c t 16, t h a t states, part: " S u b s e q u e n t t o J u n e 14, 1 9 9 6 , I i n s p e c t e d t h e p h y s i c a l p l a n t and work c o m p r i s i n g the scope of C o n t r a c t 16. I c o m p a r e d t h e a c t u a l p r o g r e s s made b y H a r b e r t t o t h e c o n t r a c t d o c u m e n t s f o r C o n t r a c t 16, i n c l u d i n g the p l a n s and s p e c i f i c a t i o n s . Harbert's performance of the work of Contract 16 was unacceptable in that Harbert d i d not complete s u b s t a n t i a l p o r t i o n s of the work s p e c i f i e d by the contract. These p o r t i o n s i n c l u d e , but are not l i m i t e d to: incomplete wiring for instrument loops; instrument d e v i c e s m i s s i n g ; incomplete programming; f a i l u r e t o t a g and i d e n t i f y w i r e s ; absence o f any i n t e r l o c k s and m i s s i n g or i n a d e q u a t e d i s p l a y s of the p r o c e s s w i t h i n t h e c o n t r o l room. "In my o p i n i o n as an engineer involved in Contract 16, Harbert's performance was unsatisfactory. The work performed did not 75 trial 1041091 constitute acceptable compliance s p e c i f i e d by C o n t r a c t 16." Also, the Board submitted with the following the work testimony from Asarisi: "Q. A n d w h a t p r o b l e m w i t h t h e c e n t r i f u g e was r e p o r t e d t o H a r b e r t i n t h a t l e t t e r o f A p r i l 2, 1 9 9 7 ? "A. T h i s s t a t e s t h a t t h e r e q u i r e d a n a l o g o u t p u t t o c o n t r o l t h e s p e e d o f t h e d r i v e s , t h e f e e d pumps, a n d c o n t r o l o f t h e p o l y m e r pump i s n o t p r o v i d e d a n d , a l s o t h e r e a r e no a n a l o g i n p u t s t o a c c e p t sludge flow s i g n a l s o r tank l e v e l s and, a l s o t h e l i g h t n i n g protection system had n o t been installed and performance t e s t i n g h a d n o t been done. "Q. Were t h o s e i t e m s t h a t w e r e e s s e n t i a l p r o p e r f u l f i l l m e n t o f t h e C o n t r a c t 16? "[Harbert's "A. "Q. Contract of those Yes, (Emphasis Asarisi Object t o t h e form. s i r . In your judgment as e n g i n e e r , could 16 b e a c c e p t a b l y f u l f i l l e d i n t h e a b s e n c e items being p r o p e r l y accomplished? "[Harbert's "A. counsel]: to No, Object t o t h e form. s i r . " added.) further counsel]: As to the June 18, 1997, punch stated: "Q. What i t e m s d i d t h e e n g i n e e r d e t e r m i n e w e r e left out of the c o n t r a c t and not i n s t a l l e d by Harbert? "[Harbert's counsel]: 76 Object t o t h e form. list, 1041091 II "A. I r e m e m b e r t h e r e was a c o n t r o l p a n e l i s s u e , w h i c h was i n one o f t h e s e p r i o r e x h i b i t s t h a t we -¬ the c o n t r o l s , the c o n t r o l panel, s p e c i f i c c o n t r o l s were m i s s i n g from t h a t . T h a t was a m a j o r i t e m , s i r . "Q. When y o u s p e a k o f i t e m s b e i n g l e f t o u t , do y o u mean t h a t i f y o u l o o k e d i n t h e c o n t r o l p a n e l b o x , i t s i m p l y was n o t there? "A. (Emphasis That's added.) evidentiary correct, s i r . " We f u r t h e r note materials that indicating that the the Board two presented centrifuges H a r b e r t i n s t a l l e d u l t i m a t e l y p r o v e d so d e f i c i e n t as t o the to a d d i t i o n o f a new, the capacity B a s e d on t h i r d c e n t r i f u g e t o b r i n g P r o j e c t 16 r e q u i r e d under Contract the foregoing, e r r e d when i t e n t e r e d to i t s claims and of 16, Contract we trial against Harbert a l l e g i n g a breach of Contract 16 16 against Federal s u r e t y bond f o r s t a t e d ground t h a t the Board's in acts under the December 1997 or came The after 77 A termination Harbert p r o v i s i o n s of r i g h t to such a t e r m i n a t i o n omissions. the court as on t h e a summary j u d g m e n t a g a i n s t 16 g a v e t h e B o a r d t h e Harbert's 16. conclude t h a t the rendered s u b s t a n t i a l performance. by up Board as t o i t s c l a i m s Contract require genuine had Contract i f justified issue of fact 1041091 e x i s t s as t o w h e t h e r H a r b e r t ' s Board's termination C. The of acts or omissions Contract Board's Claims as subsection Board cure to of to 8.11 of to Contract before satisfy 15 judgment, standard with terms of applicable Contract the i t terminated the law; was the its Contract therefore trial court court concluded and required the opportunity to that the Board 8.11 the and the requirements Board's wrongful. claim 2 1 the that March its the Board from against The failed termination In concluded r e l a t e d bond c l a i m a g a i n s t F e d e r a l . an that 15; 15 p r e v e n t e d breach-of-contract Contract specifications notice that of 15 trial subsection and t e r m i n a t i o n of Contract on the Harbert provide the 16. of Breach I n i t s J a n u a r y 2004 o r d e r , justified of 2005 wrongful recovering Harbert and B o a r d does not the argue The Board devotes p a r t of i t s i n i t i a l b r i e f to this C o u r t t o an a r g u m e n t that Harbert f a i l e d to e s t a b l i s h the s e c o n d and t h i r d e l e m e n t s o f a b r e a c h - o f - c o n t r a c t c l a i m as i d e n t i f i e d i n Winkleblack v . M u r p h y , 811 So. 2 d 521 (Ala. 2001): 2 1 "'A p l a i n t i f f c a n e s t a b l i s h a b r e a c h - o f - c o n t r a c t c l a i m by s h o w i n g "(1) the existence of a valid c o n t r a c t b i n d i n g t h e p a r t i e s i n t h e a c t i o n , (2) h i s own performance under the contract, (3) the d e f e n d a n t ' s n o n p e r f o r m a n c e , a n d (4) d a m a g e s . " ' " 811 So. 2d at 529 (quoting State 78 Farm Fire & Cas. Co. v. 1041091 on appeal t h a t s u b s e c t i o n 8.12 of the standard a l l o w e d i t t o t e r m i n a t e C o n t r a c t 15 Instead, alleged the Board e r r o r by relies the 1. Harbert and Federal relieved of any if Harbert in fact 548 contract So. 2d following arguments as to court. do not obligation dispute to repudiated 1329, 1334 t h a t the comply w i t h Contract ( A l a . 1989) 15. Board would subsection See 8.11 Shirley ("Once a p a r t y to v. a r e p u d i a t e s the agreement, the other p a r t y i s excused from f u r t h e r performance."). a the i n t h e manner t h a t i t d i d . A n t i c i p a t o r y Repudiation be Lin, trial on specifications genuine issue of material The Board argues t h a t there fact as to c o n d u c t " c o n s t i t u t e d an a n t i c i p a t o r y b r e a c h whether was Harbert's and r e p u d i a t i o n of Slade, 747 So. 2d 293, 303 ( A l a . 1999), q u o t i n g i n t u r n S o u t h e r n Med. H e a l t h S y s . , I n c . v . V a u g h n , 669 So. 2 d 98, 99 (Ala. 1995)) . T h i s a r g u m e n t g o e s t o H a r b e r t ' s a b i l i t y t o r e c o v e r on i t s b r e a c h - o f - c o n t r a c t claims a g a i n s t the Board. The t r i a l c o u r t did n o t e n t e r a summary j u d g m e n t i n f a v o r o f H a r b e r t as t o t h e s e c l a i m s . Nor d i d t h e t r i a l c o u r t d e t e r m i n e t h a t H a r b e r t h a d p e r f o r m e d i t s o b l i g a t i o n s u n d e r C o n t r a c t 15. I t may be that Harbert breached Contract 15 such that i t cannot e s t a b l i s h i t s own p r i m a f a c i e c a s e o f b r e a c h o f c o n t r a c t b y the Board. T h i s i s a s e p a r a t e i s s u e from the i s s u e upon w h i c h t h e t r i a l c o u r t has r u l e d , i . e . , w h e t h e r t h e B o a r d ' s c l a i m s a g a i n s t H a r b e r t a l l e g i n g b r e a c h o f C o n t r a c t 15 w e r e b a r r e d b y t h e B o a r d ' s own p r o c e d u r a l d e f a u l t u n d e r C o n t r a c t 1 5 . 79 1041091 Contract notice" the 15 and standard so an as to excuse opportunity the to cure specifications. Board under J u l y and As this August Court providing subsection Specifically, t h a t " H a r b e r t ' s a n t i c i p a t o r y b r e a c h and in from the 8.11 Board repudiation took in Shirley: "The following rules breach, or r e p u d i a t i o n [ , ] recognized i n Alabama: concerning anticipatory of a c o n t r a c t have been "'To amount t o a r e n u n c i a t i o n , ... the e v i d e n c e m u s t show w o r d s o r a c t s e v i n c i n g an i n t e n t i o n t o r e f u s e p e r f o r m a n c e w i t h i n the f u t u r e time a l l o w e d by the c o n t r a c t . "'... "Merely because a given act or course of conduct of one party to a c o n t r a c t i s i n c o n s i s t e n t w i t h the c o n t r a c t i s n o t s u f f i c i e n t ; i t m u s t be i n c o n s i s t e n t w i t h t h e i n t e n t i o n t o b e ... b o u n d b y it." "'"Repudiation, among o t h e r things, means r e j e c t i o n , d i s c l a i m e r , r e n u n c i a t i o n , or even abandonment." ... "'Some authorities state that the r e p u d i a t i o n b y one party "must a t l e a s t amount to an unqualified refusal, or d e c l a r a t i o n of i n a b i l i t y , s u b s t a n t i a l l y to perform according to the terms of his obligation."' 80 of argues 1997." stated ... place 1041091 "Draughon's B u s i n e s s C o l l e g e v . B a t t l e s , 35 A l a . App. 5 8 7 , 5 9 0 , 50 S o . 2 d 7 8 8 , 790 (1951) ... (citations omitted)." 548 So. 2 d a t 1334 (emphasis omitted.) This Court has also stated: "'A r e p u d i a t i o n i s a m a n i f e s t a t i o n b y o n e p a r t y t o the other t h a t the f i r s t cannot o r w i l l not perform at least some of his obligations under the contract.' E. A l l a n F a r n s w o r t h , C o n t r a c t s , § 8 . 2 1 , a t 633-34 ( 1 9 8 2 ) . I f a party 'wrongfully states t h a t he w i l l not perform unless the other party consents t o a m o d i f i c a t i o n of the contract, the statement i s a repudiation.' I d . a t 635, § 8.21. As a g e n e r a l rule, 'an a n t i c i p a t o r y r e p u d i a t i o n gives the i n j u r e d party an i m m e d i a t e claim to damages f o r t o t a l b r e a c h , i n a d d i t i o n t o d i s c h a r g i n g his remaining duties of performance.' I d . a t 630, § 8.2 0." Congress L i f e I n s . Co. v. B a r s t o w , 7 9 9 S o . 2 d 9 3 1 , 938 ( A l a . 2001). In support of i t s argument, attention to Harbert's August September 17, 1997, l e t t e r in this Harbert's 18, opinion, July 14, 1997, 1997, l e t t e r sent the purportedly a f t e r i t had repeatedly Combiflex system specifications. accordance The l e t t e r stated: 81 Board letter to Asarisi, to Asarisi. Harbert in the directs to and Asarisi, Harbert's As d i s c u s s e d July 14, attempted with our 1997, earlier letter to r e p a i r the the contract 1041091 " I t i s [Harbert's] position, at this point i n t i m e , t h a t we h a v e t h o r o u g h l y e x h a u s t e d a l l r e q u i r e d means a n d m e t h o d s i n p e r f o r m i n g t h i s r e p a i r w o r k i n a c c o r d a n c e t o t h e c o n t r a c t documents and as d i r e c t e d by ... BCM. A s o f J u l y 1 1 , 1 9 9 7 , we h a v e c e a s e d repair operations until further notice. We a r e hereby requesting that ... BCM now p r o v i d e an a l t e r n a t i v e r e p a i r method t h a t w i l l resolve this situation. I t i s imperative t h a t we r e c e i v e your r e s p o n s e a n d d i r e c t i o n no l a t e r t h a n J u l y 1 7 , 1 9 9 7 to prevent f u r t h e r delay t o the s t a r t - u p of Reactor No. 2 a n d t h e t i m e l y c o m p l e t i o n o f t h i s p r o j e c t . fl " I f you have any q u e s t i o n s o r r e q u i r e a d d i t i o n a l information regarding t h i s matter, please f e e l free to contract this office. We look forward to r e c e i v i n g your d i r e c t i o n i n completing these r e p a i r s to the mutual satisfaction of a l l parties concerned." (Emphasis that added.) Harbert reactor The e m p h a s i z e d remained basin BCM's p r e v i o u s willing #2 b u t t h a t language and able i tbelieved r e p a i r requests July indication that 14, 1997, l e t t e r Asarisi's August the t o make t o no a v a i l . Board had repairs We a l s o n o t e sent Harbert interpreted as a r e p u d i a t i o n 14, 1997, l e t t e r reflects i t had complied t h e A u g u s t 14, 1997, l e t t e r t h a t A s a r i s i no clearly stated, with that contains Harbert's of i t s obligations. i n part: "... Our d a i l y r e c o r d s i n d i c a t e d t h a t y o u r p r e s e n t work force consists of 1 superintendent and 3 laborers. We a r e a w a r e o f y o u r e f f o r t s t o s e a l R e a c t o r 2. However, t h e r e a r e s t i l l a number o f i t e m s t h a t w o u l d k e e p t h e p r o j e c t f r o m s t a r t i n g up 82 to 1041091 i f R e a c t o r 2 was ready today. We h a v e e n c l o s e d a partial list o f i t e m s t h a t h a v e t o be completed before R e a c t o r 2 i s put on l i n e . This i s not a complete l i s t and there may be other incomplete items that delay s t a r t up. "We are quite concerned about the slow rate of p r o g r e s s on t h e p r o j e c t a n d t h e i m p a c t t h a t delays h a v e on t h e [ B o a r d ] a n d t h e o p e r a t i o n o f t h e p l a n t . Therefore, i n accordance with [subsection] 8.11 of t h e C o n t r a c t S p e c i f i c a t i o n s you a r e h e r e b y n o t i f i e d t h a t y o u h a v e 10 d a y s t o s t a r t w o r k on e a c h o f t h e i t e m s on t h e e n c l o s e d l i s t , w i t h the e x c e p t i o n of items that are dependent on the completion of R e a c t o r 2. I f w o r k h a s n o t b e g u n on a l l n o t e d i t e m s w i t h i n 10 d a y s t h e [Board] w i l l notify [Federal] t h a t the p r o j e c t i s i n d e f a u l t . We t r u s t t h a t you w i l l p r o v i d e an a d e q u a t e w o r k f o r c e t o c o m p l e t e t h e w o r k w i t h i n t h e s p e c i f i e d t i m e and t o a v o i d f u r t h e r actions against you." (Emphasis added.) l e t t e r would not its B a s e d on to the an the J u l y 14, expert t h e A u g u s t 18, t h a t l e t t e r was opinion 1997, repudiated 15. B o a r d ' s r e l i a n c e on from Harbert to A s a r i s i , obtained foregoing, s u p p o r t a f i n d i n g t h a t H a r b e r t had o b l i g a t i o n s under Contract As had the as Combiflex system f o r reactor basin to the #2. 1997, letter written a f t e r Harbert unsuitability The letter of stated, part: " B a s e d on t h e r e s u l t s of the i n s p e c t i o n and Mr. Shutz's assessment t h e r e o f , i t i s the p o s i t i o n of ... H a r b e r t ... t h a t ... BCM w i l l now h a v e t o s e l e c t an a p p r o p r i a t e a l t e r n a t i v e method [to s e a l r e a c t o r basin #2]. 83 the in 1041091 "We trust that ... BCM will provide the a p p r o p r i a t e r e p a i r method a c c o r d i n g l y t o m i n i m i z e any f u r t h e r d e l a y s t h a t have o c c u r r e d t o t h e p r o j e c t as a r e s u l t o f t h i s m a t t e r . For the record, a l l w o r k on R e a c t o r No. 2 c e a s e d A u g u s t 1 3 , 1 9 9 7 . We look forward to r e c e i v i n g a p o s i t i v e response from ... BCM After no l a t e r Harbert than sent August 22, 1997." the August 18, 1997, l e t t e r , i t and A s a r i s i c o n t i n u e d t o d i s p u t e t h e a p p r o p r i a t e r e p a i r method f o r r e a c t o r b a s i n #2, a n d , a s r e f l e c t e d i n H a r b e r t ' s S e p t e m b e r 1 7 , 1997, l e t t e r t o A s a r i s i and Steeves, Harbert proposed method d i f f e r e n t and A s a r i s i . 2 2 from t h e r e p a i r method proposed Harbert a repair by the Board c l o s e d t h e September 17, 1997, l e t t e r I n i t s r e p l y b r i e f , the Board argues t h a t A s a r i s i ' s A u g u s t 27, 1997, l e t t e r t o t h e B o a r d " t o l d H a r b e r t t o s e a l R e a c t o r B a s i n 2 u s i n g t h e methods c a l l e d f o r i n C o n t r a c t 15." In support of t h i s statement, they r e f e r t h i s Court t o the page o f t h e a p p e l l a t e r e c o r d where a copy o f t h e A u g u s t 27, 1997, l e t t e r i s l o c a t e d a n d t o c e r t a i n d e p o s i t i o n t e s t i m o n y from A s a r i s i . Neither the l e t t e r nor A s a r i s i ' s deposition t e s t i m o n y r e f l e c t s t h a t BCM h a d d i r e c t e d H a r b e r t t o r e p a i r r e a c t o r b a s i n #2 u s i n g t h e C o m b i f l e x s y s t e m a f t e r H a r b e r t h a d a t t e m p t e d t h e i n i t i a l r e p a i r s i n t h e e a r l y summer o f 1 9 9 7 . A s t o t h o s e r e p a i r a t t e m p t s , we n o t e t h a t H a r b e r t ' s J u l y 1 4 , 1997, l e t t e r t o A s a r i s i s t a t e s t h a t H a r b e r t " f u l l y complied with [the contract s p e c i f i c a t i o n s ] i n implementing a repair p r o c e d u r e b a s e d on u s i n g t h e s t i p u l a t e d c o m b i f l e x p o l y u r e t h a n e sealant system manufactured and installed by the Sika Corporation" but that the "repairs have n o t y i e l d e d t h e expected and i n t e n d e d r e s u l t s t h a t everyone envisioned." H a r b e r t t h u s p r o p o s e d t h a t BCM a p p r o v e an a l t e r n a t i v e s e a l a n t system because Harbert had " t h o r o u g h l y exhausted a l l r e q u i r e d means a n d m e t h o d s i n p e r f o r m i n g t h i s r e p a i r w o r k i n a c c o r d a n c e t o t h e c o n t r a c t d o c u m e n t s a n d a s d i r e c t e d b y ... BCM." 2 2 84 1041091 by arguing an that the f a i l u r e "improperly a t i s s u e was s u i t e d p r o d u c t , " by due to the choice warning the Board attempt t o "cover-up the problem" by t u r n i n g a g a i n its p r o d u c t , and that we proposed this by stating: certainly cannot method approach and problem." " I t i s our and by to attempt proceeded the with cell" successful properly basin parties of in i t s proposed installer reinstall reactor the basin test reinstalled the with correspondence to allow the namely to Board have the Combiflex system and, have i f the the remaining and the in dealing system while test, #2, cell, in to to i n s i s t that the Board repair to position acquiesce [Board] i t s alternative sealant Sika-certified "test not not to Sika steadfast the Thereafter, r e f l e c t s that Harbert continued it will of system Combiflex portions a in a was system of reactor sharp dispute #2. The foregoing correspondence reflects b e t w e e n t h e p a r t i e s as t o t h e B o a r d ' s dealing with t h i s problem" attempt to confirm reactor basin throughout the #2 that and, reactor a "method and a p p r o a c h i n (emphasis added), i . e . ,the t h e C o m b i f l e x s y s t e m was i f so, basin. to The 85 reinstall Board's suitable for the correspondence system does not 1041091 reflect Board a or refusal by i t s agent, Harbert BCM, a particular The obey f o r Harbert u s i n g the Combiflex system, for to directive to perform from the letters did not e v i d e n c e t h a t H a r b e r t m a n i f e s t e d an the repairs or f o r Harbert to arrange s u b c o n t r a c t o r t o do foregoing a and pay so. constitute substantial i n t e n t n o t t o be b o u n d by C o n t r a c t 15, t h a t H a r b e r t a b a n d o n e d t h e w o r k on P r o j e c t 15, or that or Harbert declaration to an "an inability, substantially the terms of [ i t s ] o b l i g a t i o n " sealing of Likewise, that reactor basin the l e t t e r s Harbert perform the of exhibited #2. unqualified to perform Shirley, d i d not c o n s t i t u t e "'wrongfully state[d] Harbert 548 was making a mistake party to test-repair system rather repair than the So. that adopting method. basin Harbert's 86 evidence a modification insist using the proposed the 1334. [ i t ] [would] b y p r o c e e d i n g w i t h an reactor 2d substantial simply continued to Board according u n d e r C o n t r a c t 15 a s t o unless [the Board] consent[ed] to contract." refusal, that not of the independent Combiflex alternative 1041091 B a s e d o n t h e f o r e g o i n g , we cannot conclude t h a t the trial c o u r t e r r e d by r e j e c t i n g the Board's a n t i c i p a t o r y - r e p u d i a t i o n argument as t o C o n t r a c t 2. F a i l u r e t o C o m p l e t e C o n t r a c t 15 by the Deadline f o r Performance In a b r i e f discussion 15. argument i n s e r t e d i n t h e m i d s t o f t h e Board's of a n t i c i p a t o r y repudiation, the Board states: " A l s o , where t e r m i n a t i o n i s f o r f a i l u r e t o meet a performance deadline, the law e l i m i n a t e s the notice requirement. Abcon A s s o c . , I n c . v. U n i t e d States, 44 F e d . C l . 6 2 5 , 631 ([]1999). Harbert admittedly d i d n o t meet t h e December 29, 1996, contract completion date. I n f a c t , as o f t h e d a t e o f t e r m i n a t i o n , D e c e m b e r 8, 1 9 9 7 , H a r b e r t ' s t i m e f o r p e r f o r m a n c e o f C o n t r a c t 15 h a d e x p i r e d b y 346 d a y s . On J u l y 1 4 , 1 9 9 7 , H a r b e r t g a v e t h e B o a r d n o t i c e t h a t i t had 'ceased' o r d i s c o n t i n u e d R e a c t o r B a s i n 2 work on J u l y 1 1 , 1997. T h e n , j u s t s o t h e r e w o u l d be no d o u b t , on A u g u s t 18, 1997, H a r b e r t again stated ' F o r t h e r e c o r d , a l l w o r k o n R e a c t o r No. 2 c e a s e d A u g u s t 13, 1997.' By i t s words and a c t i o n s , H a r b e r t manifested a c l e a r i n t e n t not to complete Contract 15. I t a b a n d o n e d t h e w o r k a n d r e f u s e d demands t o finish." Harbert and Federal argument t h a t H a r b e r t ' s have failure not responded to under discussed States, 44 subsection the pertinence Fed. C l . 625 8.11, nor have Harbert of Abcon A s s o c i a t e s , (1999). 87 Board's to t i m e l y complete P r o j e c t e l i m i n a t e d any r e q u i r e m e n t t h a t t h e B o a r d p r o v i d e notice the However, Harbert and I n c . v. after 15 with Federal United reviewing 1041091 Abcon, we are conclusory not i s s u e we Claims contract at governing issue that i n order do not concluded, there contracts of the contract, Board's a present case, Contract 15, relieved i t of the Board including United of the complete the the federal States law cure of progress, n o t i c e under the 44 failure Fed. meet The to no part specifications, was p r o j e c t by to pertinent to comply w i t h contract terms 631. C l . at d i r e c t e d us standard the Service, t o make for the on scheduled the of that subsection based of regulation Postal i n Abcon i s not has the language for a failure i t s o b l i g a t i o n to termination reflects the termination regulation discussed and on such n o t i c e . " ephemeral, In Abcon, the Court pertinent a ten-day whereas r e q u i r e s no to a the federal failure decide. " [ t ] o terminate agency must p r o v i d e when the based and with an deadlines by argument, even i f Abcon c o r r e c t l y i n A l a b a m a , an Federal convinced 8.11 Harbert's completion date. It i s the "parts of the reversal. not have a p p e l l a n t ' s burden r e c o r d r e l i e d on" Rule the 28(a)(10), refer this i n support Ala. obligation to R. to 88 App. P. search Court to the of i t s argument f o r "This the Court does record for 1041091 substantiation appellant's s h o u l d be brief i n order reversed." (Ala. 2007). this Court address of unsupported Also, to do legal factual to Friedman determine party's arguments legal for a a p p e a r i n g i n an whether v. F r i e d m a n , as n o t e d above, a matter 971 (Ala. 31 " i t i s not the f u n c t i o n of party based or on D y k e s v . L a n e T r u c k i n g , I n c . , 652 1994); Based on argument t h a t see also the Rule Board's i t had a n no n o t i c e of d e f a u l t because 2 8 ( a ) ( 1 0 ) , A l a . R. failure to to obligation address that or 2d 248, 251 App. court's judgment based on P. develop i t s to provide Harbert Harbert d i d not complete the argument, that 89 nor w i l l argument. we and authority So. adequately make undelineated b y t h e s c h e d u l e d c o m p l e t i o n d a t e f o r C o n t r a c t 1 5 , we further judgment 2d 23, research So. g e n e r a l p r o p o s i t i o n s not s u p p o r t e d by s u f f i c i e n t argument." a with project will reverse the not trial 1041091 3. The Compliance with Board argues cure p r o v i s i o n of the contract, terminate the i t complied subsection unambiguous n o t i c e , by that timely Subsection 8.11. given, 17B with Generally, and i s e s s e n t i a l to the contract." 8.11 i n the exercise C.J.S. C o n t r a c t s 2 3 the notice "[a] form o f an § 446 clear and and prescribed option to (1999). 2 4 The Board argues f o r the f i r s t time i n i t s r e p l y b r i e f t h a t , b e c a u s e t h e p r o v i s i o n s o f t h e b o n d f o r C o n t r a c t 15 d i d not r e q u i r e t h a t i t p r o v i d e Harbert or F e d e r a l w i t h n o t i c e of d e f a u l t , i t c o u l d recover under the bond agreement, d e s p i t e a n y n o n c o m p l i a n c e w i t h s u b s e c t i o n 8.11. " [ T ] h i s C o u r t does not address issues r a i s e d f o r the first time i n a reply brief." B y r d v . L a m a r , 846 So. 2 d 3 3 4 , 341 (Ala. 2002). 2 3 A l s o , the B o a r d argues i n i t s a p p e l l a t e b r i e f t h a t i t had p a i d H a r b e r t a l l but a p p r o x i m a t e l y $248,288 o f the $11,106,963 c o n t r a c t p r i c e under Contract 15 and that, therefore, i t " [ c ] l e a r l y ... s u b s t a n t i a l l y c o m p l i e d w i t h i t s o b l i g a t i o n s a n d ... [the] second element [ i t s b r e a c h - o f - c o n t r a c t claim] was s a t i s f i e d ; i . e . , t h a t the Board prove i t s performance under the c o n t r a c t . " T h i s argument does not a d d r e s s the b a s i s f o r t h e t r i a l c o u r t ' s j u d g m e n t as t o t h e t e r m i n a t i o n o f Contract 15. The t r i a l c o u r t c o n c l u d e d t h a t t h e B o a r d h a d no r i g h t t o terminate Contract 15 w i t h o u t f i r s t s t r i c t l y c o m p l y i n g w i t h s u b s e c t i o n 8.11. The B o a r d ' s a r g u m e n t d o e s n o t e x p l a i n how s u b s t a n t i a l p e r f o r m a n c e of the payment terms of the contract ( a s s u m i n g t h e d o c t r i n e o f s u b s t a n t i a l p e r f o r m a n c e a p p l i e s as s u g g e s t e d by the Board) w o u l d e x c u s e the m a t e r i a l b r e a c h of subsection 8.11 for purposes of e s t a b l i s h i n g the second element of a b r e a c h - o f - c o n t r a c t claim. The B o a r d c i t e s no a u t h o r i t y t h a t supports such a c o n c l u s i o n . T h u s , we do not address the i s s u e . See D y k e s , s u p r a ; R u l e 2 8 ( a ) ( 1 0 ) , A l a . R. App. P. I n i t s J a n u a r y 2004 o r d e r g r a n t i n g H a r b e r t ' s m o t i o n f o r p a r t i a l summary j u d g m e n t , t h e t r i a l c o u r t c o n c l u d e d t h a t 2 4 a 90 1041091 E x c e p t as p r e v i o u s l y d i s c u s s e d of a n t i c i p a t o r y r e p u d i a t i o n , the did it not have to s t r i c t l y argue t h a t the n o t be r e j e c t i o n of i t s b r e a c h - o f - c o n t r a c t November 14, 1997, letter did letter, that addition to Harbert performance, [and] nor 8.11 cure 27, its 1997." does would claim. Instead, the not provide 8.11. Board Asarisi's clear Further, November the the and Board 14, 1997, many [ s u b s e c t i o n ] including notices August 8.11 15 t h a t w o u l d s u p p o r t Asarisi's the Board "sent Harbert demanding 1997; in issue argue t h a t i t c o u r t e r r e d when i t f o u n d t h a t unambiguous n o t i c e under s u b s e c t i o n contends subsection to the to comply w i t h s u b s e c t i o n a m a t e r i a l breach of C o n t r a c t argues t h a t the t r i a l respect B o a r d does not comply w i t h failure with 8.11 notices mal-performance and under- of May 7, 1997; August 14, 2 5 w h e r e " a c o n t r a c t e x p l i c i t l y s t a t e s how n o t i c e of d e f a u l t s h o u l d be g i v e n , t h e o w n e r m u s t s t r i c t l y comply w i t h the c o n t r a c t r e q u i r e m e n t s " and t h a t " [ n ] o t i c e t o t e r m i n a t e m u s t be c l e a r and unambiguous, r e a s o n a b l e , and i n a c c o r d a n c e w i t h the terms of the c o n t r a c t . " In support of these c o n c l u s i o n s , the t r i a l c o u r t c i t e d c e r t a i n s e c t i o n s o f C o r p u s J u r i s Secundum and Bank o f B r e w t o n , I n c . v. I n t e r n a t i o n a l F i d e l i t y I n s u r a n c e Co., 827 So. 2 d 7 4 7 , 754 (Ala. 2002), which d i s c u s s e s n o t i c e r e q u i r e m e n t s a s t o an a c t i o n a g a i n s t a s u r e t y . The B o a r d d o e s not argue t h a t the l e g a l s t a n d a r d a p p l i e d by the t r i a l court was incorrect. 2 5 trial I n i t s a p p e l l a t e b r i e f , the B o a r d does not d i s p u t e court's conclusion that the notice requirement 91 the of 1041091 We again note specifications that subsection 8.11 of the standard states: "If t h e C o n t r a c t o r .. . f a i l s t o p e r f o r m the work w i t h s u f f i c i e n t workmen, e q u i p m e n t or m a t e r i a l s t o i n s u r e i t s p r o m p t c o m p l e t i o n , o r p e r f o r m s t h e Work unsuitably, or neglects or refuses to remove m a t e r i a l s or perform anew s u c h w o r k as s h a l l be rejected as defective and unsuitable, or d i s c o n t i n u e s p r o s e c u t i o n o f t h e Work, o r f r o m any o t h e r c a u s e w h a t s o e v e r d o e s n o t c a r r y t h e W o r k i n an acceptable manner, ... the [Board] or [its] representative may give notice in writing by r e g i s t e r e d m a i l t o t h e C o n t r a c t o r and t h e S u r e t y o f such d e l a y , n e g l e c t , or d e f a u l t . I f w i t h i n 10 d a y s a f t e r such n o t i c e the C o n t r a c t o r does not p r o c e e d t o remedy to the s a t i s f a c t i o n of the [Board] the f a u l t s p e c i f i e d i n s a i d n o t i c e , or the S u r e t y does not p r o c e e d t o t a k e o v e r t h e Work f o r c o m p l e t i o n , the [Board] s h a l l have f u l l power and a u t h o r i t y , w i t h o u t i m p a i r i n g the o b l i g a t i o n of the C o n t r a c t or the C o n t r a c t Bonds, to take over the c o m p l e t i o n of the W o r k ; ... t o e n t e r i n t o a g r e e m e n t s w i t h o t h e r s f o r the completion of the C o n t r a c t a c c o r d i n g to the t e r m s and p r o v i s i o n s t h e r e o f ; o r t o use s u c h o t h e r m e t h o d s as i n i t s o p i n i o n may be r e q u i r e d f o r t h e c o m p l e t i o n of the C o n t r a c t . The C o n t r a c t o r a n d h i s S u r e t y s h a l l be l i a b l e f o r a l l c o s t s a n d expenses i n c u r r e d by t h e [Board] i n c o m p l e t i n g t h e Work, and a l s o f o r t h e l i q u i d a t e d damages i n c o n f o r m i t y w i t h the terms of the C o n t r a c t . " As that the t r i a l the Board court construed provide Harbert " d e l a y , n e g l e c t , or d e f a u l t " i t , s u b s e c t i o n 8.11 with written required notice i n i t s p e r f o r m a n c e , a n d we of any adhere s u b s e c t i o n 8.11 was not s a t i s f i e d by the Board's undated r e s o l u t i o n t e r m i n a t i n g C o n t r a c t 15 o r b y A s a r i s i ' s l e t t e r o f D e c e m b e r 9, 1997. 92 1041091 to that Board. conclusion, As 2 6 simply satisfaction remedy contract Likewise, of i t does any fault when would Harbert the not at subsection have provide issue 10 8.11 to i t does not wait whether see the that would by the note that subsection 8.11 days the presented "to fault preclude had remedy to specified Harbert's mere in been of "proceed to take over that Federal cured the the t h a t upon i t s r e c e i p t o r d e f a u l t " from the Harbert to deficient. neglect, provide said attempt termination already warns F e d e r a l "delay, days we 10 [Board] completion"; to arguments with i t s performance of n o t i c e of such it the a p r e l i m i n a r y matter, provided notice"; given had "delay, the the Board Work right neglect, for to or As n o t e d , the B o a r d does not argue i n i t s i n i t i a l a p p e l l a t e b r i e f t h a t s u b s e c t i o n 8.12 p r o v i d e d a n a l t e r n a t i v e m e a n s f o r t e r m i n a t i n g C o n t r a c t 15 t h a t c o u l d be u s e d i n l i e u o f s u b s e c t i o n 8.11. Given the p a r t i e s ' d i s p u t e before the t r i a l c o u r t c o n c e r n i n g t h e a p p l i c a t i o n o f s u b s e c t i o n 8.12, the number o f l e g a l p r i n c i p l e s t h i s C o u r t w o u l d have t o c o n s i d e r i n d e t e r m i n i n g t h e r e l a t i o n s h i p b e t w e e n s u b s e c t i o n 8.11 and 8.12, and the f a c t t h a t H a r b e r t and F e d e r a l have not had an o p p o r t u n i t y t o a d d r e s s any a r g u m e n t as t o t h e p e r t i n e n c e of s u b s e c t i o n 8.12 b e c a u s e t h e B o a r d r a i s e d t h a t a r g u m e n t f o r t h e f i r s t t i m e i n i t s r e p l y b r i e f , we decline to address the Board's argument concerning the a p p l i c a t i o n of subsection 8.12. See Byrd v. Lamar, 846 So. 2d 334, 341 (Ala. 2 0 0 2 ) ( s t a t i n g the w e l l - s e t t l e d g e n e r a l p r i n c i p l e t h a t this Court w i l l not address i s s u e s r a i s e d f o r the f i r s t time i n a reply brief). 2 6 93 1041091 default" i n i t s performance. undated 1997, resolution We reporting f u r t h e r note that the Board's i t s a c t i o n s t a k e n on December 8, c o n s t i t u t e s s u b s t a n t i a l , though not c o n c l u s i v e , evidence t h a t t h e B o a r d t e r m i n a t e d C o n t r a c t 15, n o t o n l y b e c a u s e of the d e f i c i e n c i e s d i s c u s s e d i n A s a r i s i ' s N o v e m b e r 14, letter to Harbert, but a l s o because in excess remedy the multiple these the of ten matters Board 7, 1997, within Work we turn the our of by the p a r t i e s satisfied 14, argues default various notice attention and to letters and to the p r o j e c t . " notice that Asarisi's August 1997, i . e . , that "delay, date allowed Harbert to cure the With letters provision of 8.11. The 8.11, the documented between i n mind, argues subsection November from deficiencies meetings Board May days "the Board ha[d] 1997, neglect, 14, 1997, satisfied the each letter or default" letters August to Harbert 27, requirements 1997, of Harbert and subsection provided Harbert with that dated failed notice to of cure 10 d a y s a n d a s t o w h i c h F e d e r a l f a i l e d t o t a k e o v e r t h e within chronological Harbert 10 days. order. The We will May 7, states: 94 address 1997, letter the letters from A s a r i s i in to 1041091 " R e a c t o r Number 2 was p r e s s u r e t e s t e d on May 1, 1997. The p r e s s u r e t e s t f a i l e d . The i n t e r i o r s e a l system i s designed to withstand design pressures. The e x t e r i o r s e a l i s n o t a p r e s s u r e system and i s i n t e n d e d t o k e e p w a t e r a n d o t h e r c o n t a m i n a t e s away from the i n t e r i o r s e a l . Therefore, leak repairs m u s t b e made on t h e i n t e r i o r o f t h e r e a c t o r a n d n o t the e x t e r i o r . We t r u s t t h a t t h e s e r e p a i r s w i l l b e made i m m e d i a t e l y t o a v o i d further delays on t h e project. "Please (Emphasis letter, l e t u s know i f y o u h a v e added.) and The Board particularly any argues the questions." that portion t h e May 7, emphasized 1997 , above, constituted s u b s t a n t i a l evidence of "written notice to Harbert that i t s w o r k was r e j e c t e d specifically allowed by identified to correct within the one o f t h r e e [subsection] argues that there as ' d e f e c t i v e and u n s u i t a b l e ' and reasons 8.11, i . e . , ' d e l a y . ' " f o r termination The B o a r d was s u b s t a n t i a l e v i d e n c e t h a t H a r b e r t i t s allegedly "cure period" defective work established on r e a c t o r by then failed basin t h e May 7, #2 1997, "notice." Aside notify from the f a c t that Harbert of t h e need t h e May 7, 1 9 9 7 , l e t t e r d i dnot t o make repairs the necessary w i t h i n t h e 10-day p e r i o d c o n t e m p l a t e d by s u b s e c t i o n letter to was n o t s e n t Federal. Thus, "by r e g i s t e r e d m a i l , " we cannot conclude 95 8.11, t h a t a n d i t was n o t s e n t that the t r i a l court 1041091 erred by given pursuant The not treating August the May to s u b s e c t i o n 14, 1997, 7, 1997, letter from as Asarisi a notice 8.11. letter to Harbert states: "As y o u a r e a w a r e , [ H a r b e r t ] i n f o r m e d t h e [Board] a n d BCM i n N o v e m b e r 1 996 t h a t t h e new R e a c t o r a n d C l a r i f i e r s w o u l d be on l i n e b y D e c e m b e r 2 6 , 1996 a n d t h e p r o j e c t w o u l d be c o m p l e t e b y M a r c h 1 9 9 7 . To d a t e , none o f t h i s has h a p p e n e d . Our d a i l y r e c o r d s i n d i c a t e t h a t your p r e s e n t work f o r c e c o n s i s t s of 1 s u p e r i n t e n d e n t and 3 l a b o r e r s . We a r e a w a r e o f y o u r e f f o r t s t o s e a l R e a c t o r 2. However, t h e r e are s t i l l a number o f i t e m s t h a t w o u l d keep t h e p r o j e c t f r o m s t a r t i n g up i f R e a c t o r 2 was r e a d y t o d a y . We h a v e e n c l o s e d a p a r t i a l l i s t o f i t e m s t h a t h a v e t o be c o m p l e t e d b e f o r e R e a c t o r 2 i s p u t on l i n e . This i s not a complete list and there may be other i n c o m p l e t e i t e m s t h a t d e l a y s t a r t up. "We are quite concerned about the slow rate of p r o g r e s s on t h e p r o j e c t a n d t h e i m p a c t t h a t d e l a y s h a v e on t h e [ B o a r d ] a n d t h e o p e r a t i o n o f t h e p l a n t . T h e r e f o r e , i n a c c o r d a n c e w i t h [ s u b s e c t i o n ] 8.11 of the [Standard] Specifications you are hereby n o t i f i e d t h a t y o u h a v e 10 d a y s t o s t a r t w o r k on e a c h of the items on the enclosed list, with the exception of items that are dependent on the c o m p l e t i o n o f R e a c t o r 2. I f w o r k h a s n o t b e g u n on all noted items w i t h i n 10 d a y s t h e [Board] will n o t i f y [Federal] that the p r o j e c t i s i n d e f a u l t . We t r u s t t h a t y o u w i l l p r o v i d e an a d e q u a t e w o r k f o r c e t o c o m p l e t e t h e work w i t h i n t h e s p e c i f i e d t i m e and to a v o i d f u r t h e r a c t i o n s a g a i n s t you. "Should you have any questions, please call." The B o a r d a r g u e s t h a t H a r b e r t ' s " u n c o r r e c t e d i n s u f f i c i e n t work force was yet another ground 96 per [ s u b s e c t i o n ] 8.11 for 1041091 the Board's takeover court's] Harbert of the ... Contrary to the findings, this letter clearly referenced with a [subsection] cure i t s d e f i c i e n c i e s i n the that the Federal Work. August by 14, 1997, certified mail. of i t s a l l e g e d "delay, specified the response 8.11 work of letter Also, neglect, the notice and 15." sent i t clearly to required 2 7 The of We Harbert notified or d e f a u l t . " Board provided opportunity Contract was and [trial to note and Harbert letter Harbert; then that T h e B o a r d a t t e m p t s t o c h a r a c t e r i z e H a r b e r t ' s A u g u s t 18, 1997, l e t t e r t o A s a r i s i as a r e f u s a l t o c o r r e c t t h e 19 items d e s c r i b e d i n A s a r i s i ' A u g u s t 14, 1 9 9 7 , l e t t e r . As p r e v i o u s l y d i s c u s s e d , t h e A u g u s t 18, 1 9 9 7 , l e t t e r f r o m H a r b e r t t o A s a r i s i states: 2 7 " B a s e d on t h e r e s u l t s o f t h e i n s p e c t i o n and Mr. Shutz's assessment t h e r e o f , i t i s the p o s i t i o n of ... H a r b e r t ... t h a t ... BCM w i l l now h a v e t o s e l e c t an a p p r o p r i a t e a l t e r n a t i v e m e t h o d [ t o s e a l r e a c t o r basin #2]. "We trust that ... BCM will provide the a p p r o p r i a t e r e p a i r method a c c o r d i n g l y to m i n i m i z e any f u r t h e r d e l a y s t h a t h a v e o c c u r r e d t o t h e p r o j e c t as a r e s u l t o f t h i s m a t t e r . For the r e c o r d , a l l w o r k on R e a c t o r No. 2 c e a s e d A u g u s t 13, 1997. We look forward to r e c e i v i n g a p o s i t i v e response from ... BCM no l a t e r t h a n A u g u s t 2 2 , 1 9 9 7 . " B a s e d on t h e language used i n Harbert's A u g u s t 18, 1997, l e t t e r and s u b s e q u e n t c o r r e s p o n d e n c e f r o m H a r b e r t , i t i s c l e a r that that l e t t e r i s r e f e r r i n g t o a w o r k s t o p p a g e on any a t t e m p t t o s e a l r e a c t o r b a s i n #2 p e n d i n g t h e r e s o l u t i o n o f t h e d i s p u t e r e g a r d i n g the p r o p e r r e p a i r method, not to the 19 i t e m s d e s c r i b e d i n A s a r i s i ' s A u g u s t 14, 1 9 9 7 , letter. 97 1041091 r e s p o n s e was n o t t h a t H a r b e r t p e r f o r m a l l t h e u n p e r f o r m e d within on 10 d a y s , but that the enclosed list, i t "start with work on e a c h the exception of of the items d e p e n d e n t on t h e c o m p l e t i o n o f R e a c t o r 2" w i t h i n letter continued: within 10 project days " I f work has not begun the [Board] i s in default." will items that 10 d a y s . The on a l l n o t e d notify [Federal] that the required o n l y t h a t H a r b e r t b e g i n w o r k on a l l t h e n o t e d items, not i t complete work on hereafter substantial the letter Federal begun specified that [work] informed on evidence T h u s , we not t r e a t i n g was within 10 cannot the that failed days, that Board 10 would 14, notify had "not The days." Board F e d e r a l such the t r i a l 14, 1997, l e t t e r as i t did that the August i t sent that to begin though, i f Harbert within conclude the August 27, items indicating to subsection August that The B o a r d d i d indicating " i n default" a l l noted notice. The that Harbert L i k e w i s e , we n o t e Federal Harbert no pursuant items the items. produced by evidence 10 d a y s . discussed, there i s evidence not complete 1997, the work, w i t h i n 14, items letter not produce the August are 1997, that Thus, work a court erred as a n o t i c e given 8.11. 1997, letter states: 98 from Asarisi to Harbert 1041091 "As y o u know, we s e n t a l e t t e r on A u g u s t 2 1 , 1997, t o Mr. E n r i c o T i s s i , t h e P r e s i d e n t o f [ S i k a ] , w h i c h i n c l u d e d a c o p y o f y o u r c o n s u l t a n t s r e p o r t on the C o m b i f l e x s y s t e m i n s i d e R e a c t o r 2. We w e r e n o t i f i e d y e s t e r d a y t h a t B u d d y B o n i n e , f r o m [ S i k a ] , w i l l be a t t h e [ t r e a t m e n t p l a n t ] on T u e s d a y , S e p t e m b e r 2, 1997, to inspect the installation and provide their opinion. As Malcolm [Steeves] has previously i n d i c a t e d , we w i l l p r o v i d e [ H a r b e r t ] an a l t e r n a t i v e system to s e a l the Reactor i f [Sika] agrees t h a t the Combiflex system is not suitable for the application. "We welcome and e n c o u r a g e you t o [ S i k a ' s ] v i s i t on S e p t e m b e r 2. "If The you Board have any argues that Reactor basin 2" w o r k as called f o r by September 17, questions, and this please letter that be present l e t us know." " d i r e c t e d Harbert "Harbert again refused [ B C M ] " when i t r e s p o n d e d b y 1997, letter during to Asarisi and to to seal do the sending the the Board, v i g o r o u s l y o b j e c t i n g to the Board's proposed r e a p p l i c a t i o n of the Combiflex Harbert's The seal system Liquid-Boot A u g u s t 27, reactor basin ("Anticipatory reflect directed by parties the at a test 1997, #2. letter As we Harbert's Board. that cell, rather than approval of proposal. Repudiation"), does not the to does not discussed the point in 99 in Part September refusal Instead, request the the above 1997, letter r e p a i r work correspondence dispute Harbert IV.C.1. 17, to perform that as between concerning the 1041091 sealing of reactor attempting to appropriate Harbert's for attempted repair standard was not was not not by given sent pursuant letter "by we to the conclude A u g u s t 27, letter was system was in the face they that addition, subsection 1997, #2 had properly Combiflex appropriate cannot Board Combiflex that 1997, letter the to use 27, i t was the in that and August and of system product the registered mail," continues the specifications the In t r e a t i n g the Board 14, basin. Thus, erred November to that basin assertions the reactor the reactor system the The reflects with Federal. that sealing Spiderman's Combiflex to #2 whether and accordance letter verify and/or applied seal basin 1997, not trial as a to sent court notice 8.11. its argument from Asarisi by to discussing Harbert. Again, states: " I t a p p e a r s t h a t a number o f i t e m s r e m a i n i n c o m p l e t e t h a t w i l l k e e p t h e new s y s t e m f r o m g o i n g on line when R e a c t o r 2 i s s a t i s f a c t o r i l y s e a l e d and t e s t e d . Most i f not a l l of the items are e l e c t r i c a l ( i . e . load shedding, e t c . ) . In order to a v o i d further d e l a y s on t h i s p r o j e c t we r e q u e s t t h a t y o u provide an updated schedule which includes a l l work associated with starting the new system. This schedule should be i n our office no later than N o v e m b e r 24, 19 97. F a i l u r e to provide a schedule within ten days will be grounds for finding [Harbert] i n d e f a u l t of the Contract i n accordance w i t h [ s u b s e c t i o n ] 8.11 of the S p e c i f i c a t i o n s . " 100 the 1041091 The November Harbert and The the 14, to argues that 14, 1997, November included in sent by certified however, prior delays were Rather, unequivocally days w i l l letter are August Contract in [Standard] does not grounds the that be mail to items r e f e r r e d to i n 27, the 14, to November declare under 1997, which that letter with [Harbert] the states in default [subsection] 14, subsection to provide a schedule w i t h i n for finding accordance letter, The proceeding November "[f]ailure grounds purport for "deficiencies 1997, a d d r e s s i n g the l o a d - s h e d d i n g work. letter, 8.11 of of ten the the Specifications." Before no was the incomplete Asarisi's 1997, 8.11. letter Federal. Board identified" 1997, specific the November contractual schedule of work specific 14, 1997, required by first the s u p e r v i s i n g engineer 1997, Appropriately, that imposed on f o r the p r o j e c t , to requested the schedule under Instead, Harbert as i n t h e November 14, the by that BCM, therefore, o b l i g a t i o n and then merely was the p a r t i c u l a r letter. Harbert of t h i s provide Harbert o b l i g a t i o n to produce o b l i g a t i o n was letter. letter, letter informs states that failure "within ten days will grounds f o r f i n d i n g [Harbert] i n d e f a u l t of the Contract." 101 be It 1041091 appears that requested neither schedule thereafter Harbert within notify 10 Harbert i t d i d not cure the cannot that default before conclude the under B a s e d on on Contract the 14, trial against the Board's the alleging and 2005 on the did i t was not actually 8.11, a Contract erred letter by 15. not satisfied Thus, to we concluding the Board's 8.11. cannot conclude t h a t the summary claims of judgment breach for of trial Harbert contract and as to breach other Conclusion foregoing, B o a r d and reversed Board's court f o r e g o i n g , we entering that Board a d e f a u l t under subsection 1997, by the the 15. Based be Federal i t terminated V. to but provided days a f t e r such n o t i c e i n which subsection the erred Federal that November obligation court g i v e t h e m 10 Federal days, and d e c l a r i n g t h e i r f a i l u r e t o be and nor i n favor insofar of as contract claims, the as March of i t as 2005 Harbert denied to described summary and the Contract i n the Federal i s due to 102 be 16. March affirmed. is Board's 2002 This due claims As r e s t a t e d c o u n t e r c l a i m and t h i r d - p a r t y c o m p l a i n t , summary j u d g m e n t judgment to the amended the March cause is 1041091 h e r e b y remanded t o t h e t r i a l with this court JJ., consistent opinion. A F F I R M E D I N PART; R E V E R S E D Lyons, f o rproceedings Woodall, Stuart, I N PART; AND Smith, Bolin, REMANDED. Parker, a n d Shaw, concur. Cobb, C . J . , c o n c u r s Murdock, J . , concurs i n the result. i n part 103 and dissents i n part. 1041091 MURDOCK, J u s t i c e I Part concur IV.A., as in (concurring the to which main i n part opinion and d i s s e n t i n g i n p a r t ) . with the I respectfully dissent. 104 exception of

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