Gilbert Engineering Co. v. City of Asheville

328 S.E.2d 849 (1985)

GILBERT ENGINEERING COMPANY v. CITY OF ASHEVILLE, North Carolina, a municipal corporation, and O'Brien & Gere, Inc., a corporation.

No. 8428SC547.

Court of Appeals of North Carolina.

May 7, 1985.

*856 Raymer, Lewis, Eisele, Patterson and Ashburn by Douglas G. Eisele, Statesville, for plaintiff-appellant.

Bennett, Kelly and Cagle by Harold K. Bennett, and William F. Slawter, City Atty., Asheville, for defendant-appellee City of Asheville.

Kennedy, Covington, Lobdell and Hickman by Wayne Huckel, Charlotte, for defendant-appellee/cross appellant, O'Brien & Gere, Inc.

MARTIN, Judge.

The dispositive question presented by Gilbert's appeal is whether the trial court's findings of fact and conclusions of law are sufficient to support its judgment denying Gilbert recovery against City on its claims relating to repairs to the key wall. Because the trial court failed to address an essential issue raised by the pleadings and the evidence, we conclude that the judgment is deficient and remand the case to the trial court.

In its amendment to the complaint, Gilbert alleged that City, in presenting the plans and specifications for the key wall, impliedly warranted that if Gilbert constructed the key wall as required by the plans and specifications, that it would be fit for the purposes intended, i.e., the containment of water in the filter beds. Gilbert further alleged that it constructed the key wall as required and that, nevertheless, the key wall permitted the leakage of water. Thus, Gilbert alleged, the City breached its implied warranty causing Gilbert to incur expense in repairing the leaks and delaying its completion of the project. City denied the existence of any warranty and denied the allegations of breach.

*857 The general rule is that a construction contractor who has followed plans and specifications furnished by the owner, or his architect or engineer, will not be responsible for consequences of defects in those plans or specifications. Annot., 6 A.L.R.3d 1344 (1966). North Carolina has expressly adopted the general rule. Bd. of Education v. Construction Corp., 50 N.C. App. 238, 273 S.E.2d 504, aff'd, 304 N.C. 187, 282 S.E.2d 778 (1981). The basis for the rule is that, absent an agreement to the contrary, there is an implied warranty by the owner that the plans and specifications are suitable for the particular purpose, and that if they are complied with the completed work will be adequate to accomplish the intended purpose. See United States v. Spearin, 248 U.S. 132, 39 S. Ct. 59, 63 L. Ed. 166 (1918); Annot., 6 A.L.R.3d supra. In order to establish a breach of such an implied warranty, the burden of proof is on the contractor to prove that the plans and specifications were adhered to, that they were defective, and that the defects were the proximate cause of the deficiency in the completed work.

The evidence presented with respect to these facts was conflicting. Gilbert's evidence tended to show that it constructed the key wall in strict compliance with the plans and specifications, but that cracks developed at construction joints and around pipe sleeves, causing leakage. Gilbert also offered evidence that due to the design of the piping, the flanges on the filter building side of the key wall were located too near the wall to permit the conventional method of caulking provided for by the plans, so that an alternative, and more expensive, method of caulking had to be employed. A structural engineer testified for Gilbert that, in his opinion, the leakage was caused by differential settlement of the key wall due to its being founded partially in rock and partially on soil, and that the design did not include provisions for differential settlement or varying subsoil conditions. Gilbert's project manager testified that had the leakage problems not been encountered, Gilbert could have achieved substantial completion by 14 October 1977, 187 days earlier than it was actually achieved. Defendants O'Brien & Gere and City offered evidence tending to show that throughout the project, Gilbert's rate of progress fell progressively behind the contract schedule due to Gilbert's failure to assign sufficient men and equipment to the project, so that the problems experienced by Gilbert with the key wall leakage had no effect on the overall completion date. Defendants also offered evidence that Gilbert had not installed the piping according to the specifications, that the conventional method of caulking the pipes in the sleeves could have been accomplished, and that a number of the leaks were due to improper caulking. They also offered evidence that a concrete wall, such as this key wall, cannot be designed to avoid all leakage and that Gilbert knew or should have known, when it submitted its bid and entered the contract, that waterproofing would be necessary in order to comply with the contract requirement for a water tight structure. The engineer who designed the wall testified that he provided for settlement in design of the key wall. Both he and another engineer testified that, in their opinion, differential settlement had not occurred.

In cases where the trial judge sits as the trier of facts, he is required to (1) find the facts on all issues joined in the pleadings; (2) declare the conclusions of law arising on the facts found; and (3) enter judgment accordingly. Coggins v. City of Asheville, 278 N.C. 428, 180 S.E.2d 149 (1971); G.S. 1A-1, Rule 52(a). The facts required to be found are the ultimate facts established by the evidence which are determinative of the questions involved in the action and essential to support the conclusions of law reached. Quick v. Quick, 305 N.C. 446, 290 S.E.2d 653 (1982). The requirement is designed to "dispose of the issues raised by the pleadings" and to permit "a reviewing court to determine from the record whether the judgment and the legal conclusions which underlie itrepresent a correct application of the law." Coble v. Coble, 300 N.C. 708, 712, 268 S.E.2d 185, 189 (1980) (emphasis supplied). *858 The court's findings of fact are conclusive on appeal if supported by competent evidence, even though there may be evidence to the contrary. Williams v. Insurance Co., 288 N.C. 338, 218 S.E.2d 368 (1975).

In the case before us, the issue of implied warranty of the plans and specifications and the issue of breach of such warranty were clearly raised by the amended pleadings and by conflicting evidence in the record. Specifically, then, the trial court was required to determine whether such a warranty existed (in view of City's assertion that the contract disclaimed warranties), and, if so, whether it had been breached by City. The court's findings and conclusions do not address these issues.

The court found that the key wall was constructed as provided by the plans and specifications, and that by reason of the placement of the pipes, and distances of the flanges from the wall, it was necessary for Gilbert to employ an alternative method of caulking the sleeves. The court also found that random cracks appeared in various areas of the key wall, resulting in leaks, and that there were leaks from the area between the pipes and the sleeves which had been caulked. These evidentiary findings support Gilbert's contention that the leakage was due to no fault of its own. On the other hand, the court found that Gilbert knew that concrete walls designed in the manner in which the key wall was designed could be expected to develop cracks and to leak. The court also found that no differential settlement "was measured along the key wall." These evidentiary findings support City's contention that the plans and specifications were sufficient for the intended purpose, that leakage could be expected and that Gilbert's obligations under the contract to build a water tight structure contemplated the necessity for waterproofing after the wall was constructed. Thus, though there were evidentiary findings made which could have supported either contention, the court failed to resolve the issue; the judgment contains no specific ultimate finding whether, if an implied warranty did exist in this case, there was a breach of it. The absence of these findings precluded the trial court from determining their legal effect in its conclusions of law as is evident by its failure to include in the judgment any conclusion of law addressing the issue of warranty. In the absence of such findings and conclusion, this court has no means of determining whether the trial court's judgment denying Gilbert's claims against City, based on breach of implied warranty, was correct.

Appellees argue that the trial court's Finding of Fact No. 37, to the effect that O'Brien & Gere's design work was done in accordance with accepted standards, and Conclusion of Law No. 2, that neither O'Brien & Gere nor City were negligent in designing the facility, are sufficient to negate the issue of breach of implied warranty and to support the trial court's judgment. We disagree. The cited finding of fact and conclusion of law address the wholly separate issue of negligence, which was raised in the pleadings and decided in favor of appellees. Gilbert has abandoned its exception to the court's resolution of that issue. However, the court's ruling on the issue of negligence in design does not resolve the issue of implied warranty. Although the existence or non-existence of negligence may be pertinent to the issue of breach of implied warranty, it is not conclusive. Damages for breach of implied warranty may be recovered without proof of negligence.

We must, therefore, remand the case to the trial court for a determination of the issues relating to implied warranty. Should the trial court determine that such a warranty existed, and that it was breached by City, resulting in leakage in the key wall, Gilbert would be entitled to recover damages, upon proper proof, for its work performed in order to correct the leaks. Since the repairs would have been necessitated by a breach of implied warranty of the plans, they could not be considered items of extra work or a change in the plans. The trial court's Findings of Fact Nos. 27 and 28, and Conclusion of Law No. *859 4, relating to Gilbert's failure to comply with contract requirements for payment for extra work, would not bar Gilbert's recovery. On the other hand, should the trial court find that the leakage did not result from any deficiency in the plans and specifications, and that the waterproofing was required as a part of Gilbert's obligations under the contract to construct a water tight structure, Gilbert's failure to comply with the provisions of the contract pertaining to compensation for extra work, as found by the trial court and supported by competent evidence, bars its recovery for additional expenses incurred in waterproofing the key wall.

Our holding, however, does not entitle Gilbert to recover the liquidated damages and engineering fees withheld by City, or to recover for extended overhead expenses. The recovery of these amounts is sought by Gilbert upon its claim that at least a portion of the delay in completing the project was due to the repair of the key wall. That issue has been properly resolved against Gilbert by the trial court. The court's Conclusion of Law No. 3, excepted to by Gilbert, finds that the cause for delay in completion of the contract resulted from the acts and omissions of Gilbert. Although denominated a conclusion of law, it is, in reality, an ultimate finding of fact by the court in that it was "reached by processes of logical reasoning from the evidentiary facts" and not by application of fixed rules of law. Quick, supra, 305 N.C. at 451, 290 S.E.2d at 657-58, quoting Woodard v. Mordecai, 234 N.C. 463, 472, 67 S.E.2d 639, 645 (1951). Although the evidence on this point was conflicting, the finding is supported by competent evidence. Don Griffin, project manager for O'Brien & Gere, testified at length about the various delays by Gilbert in completion of the project due to causes not associated with the problems encountered with the key wall, and rendered his opinion that the key wall problems did not delay the overall completion of the project. The finding is therefore conclusive and Gilbert's exception is overruled. Williams v. Insurance Co., supra. We affirm the holding of the trial court denying Gilbert's recovery in these claims.

O'Brien & Gere appeal from the trial court's judgment awarding Gilbert recovery of $284.70 for relocating an electric line and $7,073.00 for repairs to chemical feedlines and valves, made necessary by fault in design. O'Brien & Gere contends that there was no evidence to support the court's Conclusion of Law No. 8, that the electric line was relocated at O'Brien & Gere's request, or Conclusion of Law No. 9, that the repairs to the chemical line and valves was done at Gere's request and were occasioned by fault in design. At oral argument, Gilbert conceded that O'Brien & Gere was entitled to prevail on these points. We have examined the record and agree that neither of these conclusions are supported by the findings of fact or by evidence in the record.

As to Gilbert's appeal, the judgment of the trial court is:

Affirmed in part and remanded for further proceedings consistent with this opinion.

As to O'Brien & Gere's appeal, the judgment of the trial court is:

Reversed.

BECTON and JOHNSON, JJ., concur.