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East Coast Paving & Sealcoating, Inc. v. North Allegheny School District

Commonwealth Court of Pennsylvania

March 6, 2015

East Coast Paving & Sealcoating, Inc.
v.
North Allegheny School District, Appellant

Argued November 13, 2014.

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[Copyrighted Material Omitted]

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Appealed from No. GD 12-001681. Common Pleas Court of the County of Allegheny. Lutty, Jr., J.

David Raves, Pittsburgh, for appellant.

BEFORE: HONORABLE DAN PELLEGRINI, President Judge, HONORABLE RENÉ E COHN JUBELIRER, Judge, HONORABLE MARY HANNAH LEAVITT, Judge. OPINION BY JUDGE LEAVITT.

OPINION

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MARY HANNAH LEAVITT, Judge

North Allegheny School District (School District) appeals an order of the Allegheny County Court of Common Pleas (trial court) entering a judgment in favor of East Coast Paving & Sealcoating, Inc. (East Coast) for paving work it did for the School District. The trial court awarded East Coast $356,694.38 in damages, interest and attorney's fees. The School District contends that because it paid East Coast all that was owed under the parties' contract, the trial court erred. We affirm in part and reverse and remand in part.

Background

East Coast was the successful bidder on the School District's paving project at two schools. East Coast's bid of $437,041.46 did not include soft spot repair work.[1] However, its bid stated that it would do this work at the price of $135 per cubic yard. On April 29, 2009, the School District accepted East Coast's bid, but rejected the offer to do soft spot repair work as unnecessary.

East Coast began the paving project on July 15, 2009. The following day, Mark Murphy, an inspector for Jeff Zell Consultants, which had been hired by the School District to oversee the project, identified soft spots in the area designated for paving. Murphy notified the School District's Director of Facilities, Robert Gaertner, and the project's architect, Chambers Design Associates, of the need for soft spot repairs. Gaertner directed East Coast to repair 1,681.37 cubic yards of soft spots, and it began the soft spot repair work on July 27, 2009.

East Coast sent two invoices to the School District for the soft spot repair work: one on July 31, 2009, and another on August 10, 2009. See Exhibits H, I; Reproduced Record at 367a-369a (R.R. ). Together, the invoices totaled $80,716.90. On August 24, 2009, Barry Miles, East Coast's controller, and Todd Chambers, on behalf of the architect, signed a change order for $87,282.64. The change order, which was prepared by Chambers, covered three items:

PV-01 -- Remove and replace approximately 1900 sf. of unacceptable sub-grade material ... $80856.90
PV-02 -- Provide a 32' x 20' x 8' concrete pad at Marshall Elementary School...$4925.74
PV-03 -- Curb repair at Bradford Woods...$1500.00

R.R. 370a.[2] The parties agree that the PV-01 item related to East Coast's July

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31, 2009, and August 10, 2009, invoices for the soft spot repair work.[3]

On August 25, 2009, East Coast submitted an application for payment to Chambers, stating that East Coast had earned $466,477.11 for the work performed up to that point. Chambers, on behalf of the School District, authorized payment to East Coast of $450,558.62, thereby reducing East Coast's payment application.

On August 26, 2009, East Coast submitted an invoice for $226,984.95 to cover the soft spot repair work authorized by the School District. East Coast arrived at $226,984.95 by multiplying $135 per cubic yard times 1,681.37 yards of soft spots it repaired. This was East Coast's original bid price to do the soft spot repair work. The invoice of $226,984.95 included the $80,856.90 already agreed to in the change order of August 24, 2009.[4]

On August 27, 2009, the School District paid East Coast $450,558.62 on the August 25, 2009, application for payment, which left a balance of $72,065. The School District withheld $72,065 because it was not satisfied with the quality of East Coast's work. The School District also refused to pay the August 26, 2009, invoice on the remaining soft spot repair work. The School District's stated reason for its refusal was that the August 24, 2009, change order charge of $80,856.90 for " PV-01" covered the entire soft spot repair work.

On August 3, 2010, the School District sent East Coast a letter explaining in what ways it was dissatisfied with East Coast's performance:

The [School] District still has in retention $72,065 of the outstanding contract balance for this project. In the previous correspondence from Mr. Chambers he reviewed our concerns with regards to deficiencies in the thickness of the paving that East Coast Paving provided at these facilities. As you are aware from the testing that was done at Bradford Woods Elementary School and Marshall Middle School, the paving that was installed was not in compliance with the specifications for this contract. In addition, at this time you still have not provided the necessary bonds for the project, you have not addressed the replacement of the funnel ball that was damaged during the course of your work at Marshall Elementary School and you have not provided reimbursement to the [School] District for the restriping of the bus parking lot area at Marshall Middle School.

R.R. 180a. The School District agreed to pay $35,376.68 of the total owed, leaving a balance of $36,688.32. The correspondence further stated:

Finally, the [School] District also still has unresolved notifications from your suppliers and sub-contractors of outstanding payments for this project, which include Donegal Construction ($19,031.22), Hanson Aggregates ($71,680.70) and American Bulk Commodities ($21,435.45). Because you failed to provide the required bonds, if the [School] District does not receive notification from these entities that payment have [sic] been resolved with East Coast Paving, no further payments will be made.

R.R. 181a.

On January 25, 2012, East Coast filed a complaint against the School District seeking

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damages in the amount of $219,896.47, as well as interest and attorney's fees under the Contractor and Subcontractor Payment Act (CASPA).[5] Attached to the complaint was the written contract between East Coast and the School District. In its answer, the School District raised a new matter, i.e., East Coast's incomplete and defective work. A non-jury trial was held on January 16 and 21, 2014, at which both parties presented evidence.

During trial, East Coast moved to amend its complaint to add claims under the Prompt Pay Act[6] as an alternative to the complaint's CASPA claims. The School District opposed the motion on the grounds that it was barred by the statute of limitations. The trial court denied East Coast's motion to amend.

At the conclusion of the trial, the trial court directed the parties to file proposed findings of fact and conclusions of law. The trial court adopted East Coast's proposed findings and conclusions and rejected those of the School District. In doing so, the trial court found that East Coast's July 31, 2009, and August 10, 2009, invoices were for a portion of the soft spot repair work and not the total. The trial court relied on three pieces of evidence to support this finding. First, neither invoice contained charges for 2A limestone and AASHTO #1 stone, which East Coast purchased to do the soft spot repairs. Second, Richard Rylott, a civil engineer and expert witness for East Coast, testified that, based on his review of East Coast's weigh slips,[7] East Coast ordered 3,354 tons of 2A limestone beyond what was required under the original terms of the contract. Third, Barry Miles, controller for East Coast, testified that the " PV" in " PV-01" stands for " partial value." R.R. 507a.

On March 12, 2014, the trial court entered a verdict in favor of East Coast and awarded it $365,694.38. The trial court reached this number by adding $116,545.12 in statutory interest and $20,252.79 in attorney's fees to the outstanding balance of $219,896.47, as authorized by CASPA. The trial court entered judgment on April 14, 2014, and the School District appealed.

On appeal,[8] the School District raises several assignments of error by the trial court. First, the School District argues that the trial court erred in concluding that the School District breached its contract with East Coast. Second, the School District asserts that the trial court erred in holding that East Coast's performance of the soft spot repair work did not require separate approval by the School Board. Third, the School District argues that the trial court erred in holding that CASPA applies to a contractor's contract claim against a school district. Fourth, the School District contends that

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the trial court abused its discretion by awarding speculative damages. Finally, the School District asserts that the trial court abused its discretion by adopting all of East Coast's proposed findings of fact and conclusions of law instead of ...


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