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Armada Concrete, LLC v. Jaynes Corp.

United States District Court, D. Nevada

August 17, 2017

ARMADA CONCRETE, LLC, Plaintiffs,
v.
JAYNES CORPORATION; WESTERN SURETY COMPANY, Defendants. JAYNES CORPORATION, Third-Party Plaintiff,
v.
LIBERTY MUTUAL INSURANCE COMPANY, Third-Party Defendant. JAYNES CORPORATION, Counter Claimant,
v.
ARMADA CONCRETE, LLC, Counter Defendant.

          FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER

          Gloria M. Navarro, United States District Court Chief-Judge

         Beginning on May 15, 2017, the Court conducted a ten-day bench trial relative to the dispute between Plaintiff Armada Concrete, LLC, and Third-Party Defendant Liberty Mutual Insurance Company (“Liberty Mutual”)[1] (collectively “Armada”) and Defendants Jaynes Corporation and Western Surety Company (“WSC”)[2] (collectively “Jaynes”).

         On December 22, 2014, Armada filed its Complaint, (ECF No. 1), asserting the following causes of action against Jaynes: (1) recovery on its Miller Act bond; (2) breach of contract; (3) breach of the implied covenant of good faith and fair dealing; and (4) quantum meruit/unjust enrichment. Shortly thereafter, on January 30, 2015, Jaynes filed a Third Party Complaint, (ECF No. 10), against Liberty Mutual for payment on its bond. That same day, Jaynes filed a Counter Claim, (ECF No. 11), against Armada, asserting the following claims: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; and (3) payment on the bond.

         Having reviewed each of the motions, related briefs, exhibits thereto, and having considered the oral argument of each of the parties, the Court hereby makes the following findings of fact and conclusions of law.

         I. FINDINGS OF FACT[3]

         1. On or about June 20, 2011, the United States Army Corps of Engineers issued a Solicitation, Offer and Award to Jaynes Corporation (the “Prime Contract”) as the design build contractor for construction of the Fire Crash Rescue Station at Creech Air Force Base (the “Project”). (See generally Ex. 61).

         2. The United States Army Corps of Engineers (the “Corps, ” “Government, ” or “Owner”) is the Owner of the Project. (Id.).

         3. On September 5, 2012, Armada submitted its Proposal to Jaynes to complete certain concrete installations for the Project. (See Exs. 304.10-13).

         4. On September 21, 2012, the parties met and held a pre-construction meeting. (See Ex. 304.2-.4).

         5. During that meeting, Jaynes' estimator completed his pre-construction notes which included a marked up copy of Armada's Proposal and Jaynes' Vendor Scope Checklist. (Id.). Both of these documents constitute Pre-Construction Meeting Notes. (See Trial Tr. Crampton 122:17-19, 135:18-23, ECF No. 124).

         6. The Proposal excludes all testing of Armada's work and provides that Armada was “[n]ot responsible for drainage problems on flatwork designed with 1% or less of fall.” (Ex. 304.12); (see also Ex. 304.7); (Trial Tr. Crampton 109:14, 111:9-15, ECF No. 124).

         7. Pursuant to the Vendor Scope Checklist, Armada agreed to cover cold weather costs associated with the Project. (Ex. 304.9); (see also Trial Tr. Crampton 15:21-24, ECF No. 126).

         8. On September 24, 2012, Jaynes and Armada entered into the Standard Subcontract Agreement for Use On Federal Government Construction Projects (the “Subcontract”). (See Ex. 501).

         9. Exhibit A to the Subcontract Agreement incorporates the parties' Pre-Construction Meeting Notes as part of the Subcontract Agreement. (See Ex. 510.033).

         10. Pursuant to the Subcontract, Armada agreed to install the slab-on-grade in Area A and Area B of the Project. (See Exs. 510.40-45; 36.2).

         11. Armada also agreed to complete the following work: provide sloped slabs as indicated on plans; provide layout and equipment as necessary to complete the saw-cutting of required control joints; and place Type II for the building slab upon following laying of underground utilities by other subcontractors. (See id.).

         12. Jaynes was the design-build general contractor for the Project, and as a design-build contractor was responsible for the design and engineering of the Project, including the design and engineering of the Area B slab-on-grade. (Trial Tr. Crampton 77:4-7, ECF No. 1).

         13. Jaynes retained Wright Engineers and Dekker Perich Sabatini Architects to prepare designs and plans for construction of the Project. (Trial Tr. Brooke 124:5-11, ECF No. 130).

         14. The Subcontract documents as defined by the Subcontract are: the Subcontract; the Prime Contract; change orders and written amendments; drawings, specifications, and addenda; general and other conditions; approved submittals; the prime contract; and Federal Acquisition Regulations (“FARs”) (collectively the “Contract Documents”). (Ex. 510.033); (see also Trial Tr. Crampton 15:17-20, ECF No. 126).

         15. The original amount of the Subcontract was $397, 413.00. (Ex. 510.014).

         16. During the Project, Jaynes issued three change orders to Armada for additional work which increased the Subcontract amount to $441, 255.26. (Exs. 116-18).

         17. To date, Jaynes has paid Armada $316, 075.41. (See Trial Tr. Gundrum 213:20- 21, 213:25-214:4, ECF No. 214).

         18. Armada began its work on a 4-day workweek, which later changed to a 5-day workweek. (Trial Tr. Crampton 111:2-6, 151:20-25, ECF No. 124; Trial Tr. Brooke 72:20-21, ECF No. 130); (see also 444.1-.13).

         19. In accordance with Jaynes' September 12, 2012 Project Baseline Schedule, which Armada based it price for the work upon, Armada was to commence its work on October 8, 2012, and was to complete its work on approximately March 21, 2013. (Ex. 510.63-.83); (Trial Tr. Crampton 130:1-3, ECF No. 124; Trial Tr. Gundrum 102:21-25, ECF No. 142; Trial Tr. Eiman 36:1-3, ECF No. 133). According to the Project Baseline Schedule, therefore, Armada's total project duration was 144 days. (See Ex. 510.63-.83).

         20. Armada was not able to begin its work until November 5, 2012, due to delays Jaynes suffered on the project totally unrelated to Armada's performance. (Trial Tr. Crampton 136:7-17, ECF No. 124; Trial Tr. Gundrum 132:20-133:1, ECF No. 126; Trial Tr. Brooke 52:2-17, ECF No. 131).

         21. Jaynes' project supervisor acknowledged that Armada had not delayed the schedule, “if anything Armada [did] a lot to help with the schedule.” (Ex. 60.210); (Trial Tr. Crampton 72:6-8, ECF No. 125).

         22. The Project schedule was updated and revised to reflect the delays. (Trial Tr. Brooke 159:17-20, ECF No. 130); (see Ex. 302).

         23. The initial delay Jaynes experienced on the project prior to Armada's commencement of work not anticipated by the parties when they entered into the Subcontract agreement. (Trail Tr. Crampton 104:11-24, ECF No. 124). The cold weather caused Armada to incur cold weather costs it would not have incurred but for the delay and caused Armada's crew to work less efficiently. (Trial Tr. Crampton 32:20-25, ECF No. 125).

         24. Since Armada's work was delayed into the colder months, Jaynes directed Armada to provide it with a “cold weather plan” for placing the concrete in such inclement weather. (Exs. 38; 60.168-.169); (Trial Tr. Crampton 139:8-16, ECF No. 124).

         25. Armada's cold weather plan detailed three levels of responses depending on the degree of cold weather. (Ex. 60.168-.169). Armada anticipated a Level I response, requiring application of minimum insulation to the slab like hay. (Trial Tr. Crampton 142:17-20, 147:18-20, ECF No. 124).

         26. Jaynes also directed Armada to provide a lighting plan to permit work during the shorter day-lengths. (Ex. 6.2); (Trial Tr. Crampton 154:8-14, ECF No. 124). Armada did not anticipate these costs as the baseline schedule called for its work to be completed during these months. (Trial Tr. Crampton 154:20-155:10, ECF No. 124).

         27. On November 29, 2012, Armada notified Jaynes in accordance with Subcontract § 5.3 that it was suffering delays for which it would seek compensation and an extension of time. (Id. 156:17-25); (Ex. 2). The Notice identified delays caused by other subcontractors, “caus[ing] extended cold weathering procedures on [Armada's] concrete operations that were not anticipated in the schedule that was included as part of the contract.” (Ex. 2). The Notice further provided that Armada would substantiate the costs it was experiencing as a consequence of the delay once such costs were determined. (Id.).

         28. As an ongoing delay, it would have been impossible for Armada to provide substantiation of its delay claim until such costs were fully known. (Trial Tr. Brooke 148:1-7, ECF No. 130; Trial Tr. Crampton 161:5-9, ECF No. 124).

         29. To substantiate its claim for delay and impact damages, Armada retained SDC & Associates Inc. (“SDC”), a construction claims firm, to compile and substantiate Armada's claim for Jaynes and the COE. (See generally Ex. 60); (Trial Tr. Crampton 147:24-148:1). Armada later retained SDC & Associates to compile a claim related to the Area B slab. (See Ex. 60).

         30. Armada submitted its claim for equitable adjustment to Jaynes on June 12, 2014. (Trial Tr. Crampton 17:11-21, ECF No. 127).

         31. Armada acknowledged that the schedule delays were “not an increase in the scope of work” because Armada was “still building the same project.” (Tr. Transcript Crampton 124:25-125:12, ECF No. 125); (see also Id. 127:18-20).

         32. On January 18, 2013, Jaynes issued a revised project schedule which showed the project delayed by 44 days. (Ex. 60.180).

         33. As a consequence of the initial delay suffered by Jaynes, Armada was ordered by Jaynes to complete its work out of the planned sequence of work and in an accelerated manner which increased the costs incurred by Armada to complete its work. (See id.).

         34. On January 29, 2013, Armada again notified Jaynes in writing that it was suffering delay and disruption costs from Jaynes' subcontractors working out of the project scheduled sequence. (Ex. 60.184). Armada through this notification advised Jaynes that it would submit its ...


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