MARKSBURY CORNETT ENGINEERING CORPORATION v. C & F ELECTRIC CORPORATION
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RENDERED: June 9, 2000; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-000569-MR
MARKSBURY CORNETT ENGINEERING CORPORATION
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE THOMAS KNOPF, JUDGE
ACTION NO. 97-CI-002223
v.
C & F ELECTRIC CORPORATION
APPELLEE
OPINION
AFFIRMING IN PART - REVERSING AND REMANDING IN PART
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BEFORE:
BARBER, DYCHE AND GUIDUGLI, JUDGES.
GUIDUGLI, JUDGE.
Marksbury Cornett Engineering Corporation (MCE)
appeals from a judgment entered October 13, 1998, by the
Jefferson County Circuit Court in favor of C&F Electric
Corporation (C&F).
We affirm in part and reverse and remand in
part.
This suit arose from the construction of the Newburg
Middle School (the project) which was owned by the Jefferson
County School Board (the JCSB).
On December 13, 1995, MCE, the
project’s general contractor, subcontracted the electrical
component of its contract with the JCSB to C&F.
It is undisputed
that C&F abandoned the project in April 1997 without completing
the work.
Between April 29, 1997, and May 14, 1997, C&F filed
three statements of lien with the Jefferson County Clerk’s office
on sums owed to MCE by the JCSB in the amount of $66,461,
$47,126.34, and $86,975.87 pursuant to KRS 376.210.
On April 25,
1997, C&F filed suit against MCE and the JCSB seeking, among
other grounds for relief, damages resulting from unreasonable
delay of the project by MCE and enforcement of public liens
pursuant to KRS 376.210 in the amount of $200,382.34.1
On June 19, 1997, MCE filed a counterclaim against C&F
seeking, among other relief, attorneys’ fees and costs incurred
by MCE when C&F allegedly filed liens on funds owed to MCE in an
amount over and above what was owed C&F pursuant to KRS
376.220(3).
The matter was ultimately tried before a jury.
C&F
called William Stratton (Stratton), an accountant, to testify in
regard to its claim of damages for delay.
Stratton testified
that he reviewed C&F’s job cost records and determined that C&F
accrued $35,497.99 in overtime on the project, and that the
amount accrued by C&F in overtime was the proper measure of delay
damages.
When asked why he used overtime to calculate delay
damages, Stratton stated:
1
In September 1997 MCE bonded off C&F’s three liens by
securing bonds through Great American Insurance Company (Great
American) pursuant to KRS 376.100. Once the liens were
extinguished following bonding, the JCSB released the funds owed
to MCE, the JCSB was dismissed, and Great American was added as a
party defendant.
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Well, in a perfect world if a contractor
knows that there are going to be delay
damages and that they are going to have to
litigate, they would start from the point in
time of delay and calculate all the
additional labor and materials that they
would incur on that particular job. In this
instance, we did not have that information.
We had two or tree items that gave us
comfort, I guess, and the $35,000 being a
reasonable number. We had a time line on the
construction job that showed the masonry to
be completed basically in eight months or so
and the actual on it ended up thirteen or
fourteen months. So, it did not correspond
with the time line and C&F had to keep people
on the job longer than they anticipated.
MCE objected to Stratton’s testimony on the ground that it was
“based on facts not ordinarily relied upon by experts in doing
calculations.”
MCE’s objection was overruled.
On cross-examination, Stratton testified that in
reaching his opinion, he reviewed job cost records, the
construction schedule, and the general and subcontract.
Stratton
stated that his figure of $35,497.99 in delay damages was “100%
of [C&F’s] overtime on the project,” and that his use of overtime
“was a reasonable method to determine what the damages were that
C&F incurred on the contract.”
Stratton agreed that there were
other methods that could have been used to calculate C&F’s delay
damages, but stated:
If you had the information, as I’ve talked
earlier, that you knew you were going to be
in the delay and you are [sic] actually
tracked that information, that would be the
most appropriate way to do that calculation,
yes.
Stratton acknowledged that “contractors stay overtime on projects
all the time,” and that some overtime occurs “in situations where
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there are no cases of delay caused by a general contractor.”
The
following line of questioning then ensued:
Q:
But in your opinion and what you
are trying to tell these people is
that all the overtime on this
project was a result of [MCE’s]
delays which you . . . attribute
the overtime.
A:
No. That’s not what I’m saying.
What I’m saying is that the
methodology was the only
methodology that I had available
and, in my opinion, the overtime
hours was [sic] a reasonable method
to calculate what the delay damages
were in this particular situation.
C&F also produced testimony from several of its executives and
employees to establish that its work was delayed on the project
due to problems between MCE and the masonry contractor.
At the conclusion of C&F’s case in chief, MCE moved for
a directed verdict, arguing that C&F had put on insufficient
proof of delay damages and had produced no proof regarding the
filing and perfection of its liens.
The trial court took the
issue of delay damages under submission and indicated that it
would address issues surrounding C&F’s liens at a later date.
MCE renewed its motion at the conclusion of evidence, this time
including a motion for directed verdict on its counterclaim for
attorneys’ fees and costs.
The trial court denied MCE’s motion
as to the issue of delay damages, and the parties agreed to brief
issues regarding C&F’s liens and reserve them for a ruling
following the trial.
The jury found that MCE’s failure to properly direct
and supervise work on the project caused C&F to incur delay
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damages and awarded C&F $20,000.
The jury found in favor of MCE
as to the rest of C&F’s claims, including its claim to enforce
the three liens.
As to MCE’s counterclaim, the jury found in
MCE’s favor on its breach of contract claim, but awarded no
damages, apparently finding that the amount spent by MCE to
repair and/or complete C&F’s work did not exceed the balance owed
to C&F under the term of the contract.
Following the trial, MCE presented its motion for posttrial directed verdict on its counterclaim for attorneys’ fees
and costs under KRS 376.220.
On September 22,1998, the trial
court entered an order denying MCE’s motion, finding that because
the liens asserted by C&F were not greater than the amount owed
MCE under the terms of its contract with the JCSB, KRS 376.220
did not apply.
The trial court entered judgment in favor of C&F
in the amount of $20,000 and dismissed MCE’s counterclaim by
order entered October 13, 1998.
On October 23, 1998, MCE filed a motion for judgment
notwithstanding the verdict (JNOV), arguing that there was
insufficient evidence to support the verdict.
In an opinion and
order entered March 3, 1999, the trial court denied MCE’s motion.
This appeal followed.
MCE maintains that the trial court erred in refusing to
grant its motions for directed verdict and JNOV in regard to
C&F’s claim for delay damages.
In support of its argument, MCE
alleges that C&F’s evidence pertaining to delay damages was
insufficient to support a verdict, and that Stratton was not
qualified to give expert testimony on construction delay cause
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and effect.
The purpose of a motion for directed verdict and
motion for JNOV is the same, and as such the standard of review
is identical.
Lovins v. Napier, Ky., 814 S.W.2d 921, 922 (1991).
In ruling on either:
a trial court is under a duty to consider the
evidence in the strongest possible light in
favor of the party opposing the motion.
Furthermore, it is required to give the
opposing party the advantage of every fair
and reasonable inference which can be drawn
from the evidence. And, it is precluded from
entering either . . . unless there is a
complete absence of proof on a material issue
in the action, or if no disputed issue of
fact exists upon which reasonable men could
differ.
Taylor v. Kennedy, Ky. App., 700 S.W.2d 415, 416 (1985).
to consider the evidence in the same light on appeal.
814 S.W.2d at 922.
We are
Lovins,
Furthermore, “[o]nce the issue is squarely
presented to the trial judge, who heard and considered the
evidence, a reviewing court cannot substitute its judgement for
that of the trial court unless the trial judge is clearly
erroneous.”
Bierman v. Klapheke, Ky., 967 S.W.2d 16, 18 (1998).
Having reviewed the testimony presented on the issue of delay
damages, we believe that such an error has occurred in this case.
Although there is no reported Kentucky case law setting
forth the standard for measuring delay damages in a construction
case, federal case law provides that:
The measure of damages for delay in the
performance of a construction contract is the
actual loss sustained by reason thereof and
the burden rests on the contractor to show by
a fair preponderance of the evidence the
actual or proximate amount. If this cannot
be done with a reasonable degree of
certainty, damages cannot be recovered.
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Grand Trunk Western R. Co. v. H.W. Nelson Co., Inc., 116 F.2d
823, 837 (6th Cir. 1941).
In an extensive analysis of the level
of proof required to show delay damages, the United States Court
of Claims stated:
A claimant need not prove his damages with
absolute certainty or mathematical
exactitude. [citations omitted] It is
sufficient if he furnishes the court with a
reasonable basis for computation, even though
the result is only approximate. [citations
omitted] Yet this leniency as to the actual
mechanics of computation does not relieve the
contractor of his essential burden of
establishing the fundamental facts of
liability, causation, and resultant injury.
[citations omitted] It [is] plaintiffs’
obligation . . . to prove with reasonable
certainty the extent of unreasonable delay
which resulted from defendant’s actions and
to provide a basis for making a reasonably
correct approximation of the damages which
arose therefrom. [citations omitted] Broad
generalities and inferences to the effect
that defendant must have caused some delay
and damage because the contract took 318 days
longer to complete than anticipated are not
sufficient. [citations omitted]
Wunderlich Contracting Company v. United States, 351 F.2d 956,
968-969 (Cl. Ct. 1965).
This measure of damages was adopted by
the Sixth Circuit in Messmer Construction Co. v. Tennessee Valley
Authority, 769 F.2d 1114 (1985).
Although there are no reported
Kentucky cases dealing specifically with this issue, case law is
clear that a “jury should not be allowed to engage in speculation
or guesswork as to the probable damages . . . where no evidence
is offered on the point. [citations omitted] Damages must be
shown with reasonable certainty.”
Com., Dept. Of Highways v.
Jent, Ky., 525 S.W.2d 121, 122 (1975).
Damages are required to
be shown with reasonable certainty, “both as to their nature and
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in respect to the cause from which they proceed.”
Louisville &
N.R. Co. v. Lankford, Ky., 200 S.W.2d 297, 298 (1947).
Stratton was the only witness who testified as to the
amount of delay damages incurred by C&F as a result of MCE’s
conduct.
In his opinion, $35,497.99, which he admitted was “100%
of [C&F’s] overtime on the project,” constituted the totality of
delay damages sustained by C&F.
The problem with Stratton’s
testimony, however, is that he was unable to testify that all of
the overtime incurred by C&F on the project was solely
attributable to MCE.
In fact, Stratton readily admitted that
contractors often incur overtime on construction projects, and
that overtime is not always caused by the general contractor.
Stratton also agreed that he was not testifying that all of the
overtime incurred by C&F was caused by MCE.
Due to the absence
of testimony that all of C&F’s overtime was caused by MCE, the
trial court erred in not granting a directed verdict in favor of
MCE on the issue of delay damages.
C&F’s argument that the testimony of its employees
supports the jury verdict does not change our opinion.
MCE
concedes on appeal that “evidence was introduced from which a
jury could find [MCE] delayed C&F.”
However, as MCE points out,
none of these witnesses established that MCE was the sole cause
of C&F’s incurrence of $35,000 in overtime on the project.
C&F
cannot prove the amount of delay damages owed by MCE by tossing
out $35,000 in total overtime and asking the jury to decide what
portion of that amount is attributable to MCE or relying on MCE
to show what part of that amount is not attributable to its
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conduct.
C&F bears the burden of approximating the delay damages
incurred as a result of MCE’s conduct, and as its proof on that
issue fell short the trial court erred in denying MCE’s motion
for directed verdict.
As we have ruled in favor of MCE as to its
argument regarding its motion for directed verdict, we need not
address its argument concerning the admissibility and propriety
of Stratton’s testimony.
MCE also maintains that the trial court erred in
holding that it could not recover its attorneys’ fees and costs
incurred in defending against C&F’s liens pursuant to KRS
376.220(3), which provides in part:
If any person files a statement asserting a
lien against any contractor or any fund due
the contractor, for an amount in excess of
the amount actually due, the person filing
the lien shall be liable to any person
damaged thereby to the extent of such damage,
including reasonable court costs and
attorneys’ fees incurred by the injured
parties.
MCE contends that “the amount actually due” language of
KRS 376.220(3) refers to the amount due to C&F, and argues in its
brief on appeal that “a claimant who liens public funds in an
amount that exceeds what is actually owed the claimant is liable
to the contractor to the extent the contractor is damaged by the
filing of the lien.”
As there is no case law construing KRS
376.220, MCE is correct that the general rules regarding
statutory construction control.
We are not to look past the
language used in the statute unless the intent of the legislature
cannot be discerned from the language used.
Princess
Manufacturing Company v. Jarrell, Ky., 465 S.W.2d 45, 48 (1971).
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Furthermore, a “statutory enactment should be liberally construed
in respect of the purpose for which it was enacted.”
Department
of Revenue v. Derringer, Ky., 399 S.W.2d 482, 484 (1966).
MCE is
not, however, correct in arguing that the trial court erred in
construing the statute in question.
We need look no further than the language of the
statute itself in upholding the trial court’s ruling on this
issue.
Under KRS 376.220(1):
The liens provided for in KRS 376.210 shall
not be for a greater amount in the aggregate
than the contract price of the original
contractor[.]
Based on this language, the trial court did not err in holding
that “the phrase ‘in excess of the amount actually due’ seems to
refer to the unpaid balance due the contractor (i.e., the maximum
limit recoverable per the lien).”
Having considered the parties’ argument on appeal, the
trial court’s order of March 3, 1999, is reversed and the matter
is remanded with instructions to enter an order granting a JNOV
in favor of MCE.
The trial court’s order of September 22, 1998,
is affirmed.
BARBER, JUDGE, CONCURS.
DYCHE, JUDGE, CONCURS IN PART, DISSENTS IN PART AND
FURNISHES SEPARATE OPINION.
DYCHE, JUDGE, CONCURRING IN PART AND DISSENTING IN
PART.
I would affirm the trial court in toto.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
John R. Shelton
Manley N. Feinberg
Louisville, KY
Laurence J. Zielke
Janice M. Theriot
Louisville, KY
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