2300 Pennsylvania Avenue, LLC v. Harkins Builders, Inc., No. 12-1346 (4th Cir. 2013)

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UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-1346 2300 PENNSYLVANIA AVENUE, LLC, Plaintiff - Appellee, v. HARKINS BUILDERS, INC., Defendant - Appellant. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Liam O Grady, District Judge. (1:10-cv-01321-LO-IDD) Argued: January 31, 2013 Decided: March 4, 2013 Before MOTZ, KING, and AGEE, Circuit Judges. Affirmed by unpublished per curiam opinion. ARGUED: William Rutherford Mauck, Jr., SPOTTS FAIN, PC, Richmond, Virginia, for Appellant. Patricia Ann Millett, AKIN, GUMP, STRAUSS, HAUER & FELD, LLP, Washington, D.C., for Appellee. ON BRIEF: Mark S. Dachille, HUDDLES JONES SORTEBERG & DACHILLE, PC, Columbia, Maryland, for Appellant. Hyland Hunt, AKIN, GUMP, STRAUSS, HAUER & FELD, LLP, Washington, D.C., for Appellee. Unpublished opinions are not binding precedent in this circuit. PER CURIAM: 2300 Harkins against fraud, Pennsylvania Builders, and negligence construction of a Avenue, Inc., brought alleging arising building LLC, out project of in breach a this of contract, contract Washington, action for D.C. the The district court granted summary judgment to 2300 as to Harkins liability for liquidated damages. court entered judgment $3,922,189 in arguments. for damages. Following a bench trial, the 2300, Harkins in the total appeals, amount raising of several We affirm. I. In August 2008, 2300, as owner and developer, and Harkins, as general contractor, entered into a written contract for the construction of a mixed-use apartment and retail building project in Washington, D.C. The contract consisted of several Document documents, including AIA A101-1997, the Standard Form of Agreement Between Owner and Contractor, AIA Document A201-1997, the General Conditions of the Contract for Construction, and Modifications issued after execution of the A101-1997, which include the various numbered Change Orders. A. Relevant to this appeal, the contract requires windows 2 meeting the performance requirements of an HC-70 window, a high-performance window. In December 2009, Harkins discovered some of the windows leaked. After initial remediation efforts failed, Harkins learned that a manufacturing defect caused the leaks. Between December 2009 and October 2010, Harkins and its subcontractors undertook at least five remediation efforts on the windows, involved sealer, testing drilling applying after holes, new redesigned sashes. each remediation. injecting sealant and foam These compound caulking, and efforts and seam installing On August 2, 2010, 2300 retained a testing agency that tested 24 window openings. Two openings failed but were remediated and tested with successful results that same day. At least as late as December 2010, the project architect observed some window leaks. Also in December 2009, Harkins observed approximately twenty leaks in the garage approximately the same intervals. Harkins walls. height The and in sub-contractor, leaks appeared pretty Prospect at consistent Waterproofing Co., said that capillary action caused the uniform leaks in the walls and denied responsibility. Harkins accepted responsibility for the leaks; Prospect conducted the repairs. Despite several cement and rounds chemical of grout repairs, in the which leaking included areas, injecting the project architect continued to observe leaks in late 2010 and spring 3 2011. The architect noted that the leak heights correlated to the approximate horizontal waterproofing systems. water penetration, boundary between the two In light of the pattern created by the the architect also determined that the waterproofing in the garage was either damaged or not installed properly, due to poor quality waterproofing, improper installation, or postinstallation damage. The contract requires Harkins to achieve Substantial Completion of the entire building by April 25, 2010. Under the contract, the architect s Certificate of Substantial Completion shall establish the date of Substantial Completion. The architect s certification must be made in accordance with Section 9.8, which provides that the architect will determine that the building is substantially complete when it is sufficiently complete in accordance with the Contract Documents so that [2300] can occupy or utilize the [building] for its intended use. Substantial completion is to be determined building-wide, rather than on a unit-by-unit basis. Under the contract, Harkins is liable for liquidated damages if it did not achieve substantial completion by April 25, 2010. The D.C. Department of Consumer and Regulatory Affairs issued a Certificate of Occupancy on February tenants began moving into units two days later. on March 30, Harkins requested 4 payment 25, 2010, and A month later, of a $150,000 Substantial Completion Incentive Bonus established by Change Order 9, which modified the provisions of the contract. liquidated damages and bonus In Change Order 91 dated April 23, 2010, the architect approved and 2300 agreed to pay Harkins a $150,000 bonus, which was called a Certificate of Occupancy Bonus. By letter dated July 13, 2010, Harkins requested that the architect issue the Certificate of Substantial Completion. On September 23, 2010, the architect issued the certificate, which set August 2, 2010 as the Date of Substantial Completion. The architect attached to the certificate a punch list of tasks that Harkins was to complete before final payment would issue. not On October 5, 2010, Harkins advised 2300 that it would execute the Certificate unless the Date of Substantial Completion was changed to April 25, 2010, and the punch list removed. 2300 did not do this but did execute the certificate on October 7, 2010. B. On November 19, 2010, 2300 filed a five-count complaint against Harkins in the United States District Court for the Eastern District of Virginia. alleged that Harkins breached its In its complaint, 2300 express and implied obligations to 2300 by furnishing deficient windows and damaged 5 garage waterproofing, and by failing to properly construct and install the roof, adhere to specified building dimensions required by federal law, timely complete the work, and submit required documentation to 2300. 2300 further alleged that Harkins failed to act in good faith and deal fairly with 2300, and breached contract. its express Finally, and 2300 implied alleged warranties that Harkins under the negligently breached its duty to exercise reasonable care and competence by performing substandard and defective work. Harkins counterclaim withheld for the answered breach $510,000 the of complaint contract, contract and alleging balance even asserted that 2300 though a had Harkins fully and properly fulfilled all of its obligations under the contract. In March 2011, after being granted leave to do so, 2300 filed an amended complaint, adding a fraud count, which Harkins answered. Shortly thereafter, upon the close of discovery, each party moved for partial summary judgment. The court granted summary on judgment to 2300 as to liability its liquidated damages claim, finding Harkins had failed to achieve substantial completion under the contract prior to August 2, 2010. court denied judgment. the parties remaining motions for The summary After a bench trial, the court issued a memorandum opinion and order for judgment to 2300, finding that Harkins had 6 breached the contract waterproofing. The with court respect further to found the that windows 2300 failed and to demonstrate by a preponderance of the evidence that the roof did not meet contract specifications, but in light of the parties agreement, found 2300 entitled to compensation to relocate the roof condenser. $3,922,189, $210,000 The court awarded 2300 damages in the amount of which for included $2,683,962 waterproofing repair and for window replacement, maintenance, $3,500 to relocate the roof condenser, $637,200 in liquidated damages, and $387,527 in associated fees and costs. As to 2300 s fraud and negligence claims, the court awarded judgment to Harkins. The court the rejected Harkins counterclaim for recovery of $510,000.00 contract balance and refused to credit the amount to Harkins. Harkins timely noted this appeal. II. After carefully considering the record, the briefs, and the applicable law, and having the benefit of oral argument from the parties, we affirm the judgment in favor of 2300 for the reasons opinion. issues: was well-stated in the district court's memorandum We engage in further discussion only to address two the district court s ruling on summary judgment, which entered orally from the bench; 7 and the calculation of damages, which Harkins asserts must be remanded to address mathematical errors. A. Under Change Order 9 of the contract, Harkins was liable for and shall pay to the Owner . . . Liquidated Damages . . . if substantial completion has not been reached as per the contract by a certain date. The parties cross-motions for summary judgment on liability for liquidated damages focused on the definition of substantial completion under the contract. We partial 2300. review summary See Wash. de novo the judgment Metro. district on Area court s liquidated Transit Auth. award of damages Potomac v. to Inv. Props., Inc., 476 F.3d 231, 234 (4th Cir. 2007). Because this appeal apply invokes our diversity jurisdiction, substantive law and federal procedural law. we state See Gaspirini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996). The parties agree that District governs the contract at issue in this case. summary judgment is unambiguous on its face. (D.C. 1983). appropriate where of Columbia law Under District law, a contract is Holland v. Hannan, 456 A.2d 807, 815 When interpreting a contract under District law, we must determine what a reasonable person in the position of the parties would have thought 8 the [contract] meant. 1010 Potomac Assocs. v. Grocery Mfrs. of Am., Inc., 485 A.2d 199, 205 (D.C. 1984). To do so, we interpret the contract as a whole, giving a reasonable, lawful, and effective meaning to all its terms, and ascertaining circumstances surrounding the meaning in light of all the the parties at the time [it] was Nest & Totah Venture, LLC v. Deutsch, 31 A.3d 1211, 1219 made. (D.C. 2011). Properly applying District law, the court determined that the contract unambiguously defines substantial completion. Pursuant to the contract, [w]hen the Work or designated portion thereof is substantially complete, the Architect will prepare a Certificate of Substantial Completion which shall establish the date of Substantial Completion. of certain achieving documents to substantial the Further, Harkins submission architect completion. If is the a prerequisite architect to notifies Harkins that an item is not sufficiently complete in accordance with the Contract Documents, Harkins completion or correction of that item is a prerequisite to issuance of the Certificate of Substantial Completion. As Harkins correctly notes, the contract does provide that at designated the time portion of substantial thereof is completion, sufficiently the Work complete or in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use. 9 However, the contract also expressly provides that substantial completion is not a prerequisite to occupancy or use. Harkins advances reads the Moreover, the argument requirement of the architect s certification out of the definition of substantial completion and, thus, fails to give effective meaning to all its terms as Nest & Totah Venture, 31 A.3d at 1219. District law requires. Given the clarity of the contract when viewed as a whole, the district court did not err in granting partial summary judgment to 2300, finding Harkins liable for liquidated damages. Id. B. The remaining issue we address here concerns the district court s calculation of damages following the eight-day bench trial. damages due Harkins argues that the court miscalculated total to mathematical errors. Specifically, Harkins claims that the district court miscalculated bond costs, permit fees, and the General Contractor fee. Under District law, the damages amount need be only a just and reasonable estimate based on relevant data, and need not be Elegance proven with Travel, Inc. (D.C. 2001). mathematical v. Worldspan, precision. L.P., 774 Affordable A.2d 320, 329 Moreover, we have recognized that [t]he trial court, as a fact-finder, possesses considerable discretion in 10 fixing damages, and its decision will be upheld absent clear error. Little Beaver Enters. v. Humphreys Rys., 719 F.2d 75, 79 (4th Cir. 1983). even if it nonetheless did was We find that the court s damages award, not just precisely and calculate reasonable. total Further, damages, we reject Harkins challenges to the district court s evidentiary rulings, finding no abuse of discretion in the court s admission of lay opinion testimony. See Fed. R. Evid. 701; Noel v. Artson, 641 F.3d 580, 591 (4th Cir. 2011). Finally, we note that, upon review of the record, we agree with 2300 that Harkins waived its claim that the court neglected related to roof repair. to remove $82,600 in costs Accordingly, we affirm the amount of the award. III. For these reasons, and for the reasons stated by the district court, judgment in favor of 2300 in the amount of $3,922,189 is AFFIRMED. 11