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Connelly Construction Corp. v. Travelers Casualty and Surety Company of America

United States District Court, E.D. Pennsylvania

May 2, 2018

CONNELLY CONSTRUCTION CORPORATION, Plaintiff,
v.
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA et al., Defendants.

          MEMORANDUM

          GENE E.K. PRATTER UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         Walsh Heery Joint Venture (“WHJV”) was a general contractor retained for construction work on a new prison facility in Montgomery County. WHJV hired subcontractor Connelly Construction Corp. (“CCC”) to perform masonry work on the facility.

         Over the course of the construction project, CCC executed a series of contracts, styled as releases and change orders, that purported to waive claims against WHJV. Subsequently, CCC sued WHJV, claiming that it lost money on the project due to WHJV's mismanagement.

         In July 2017, the Court held a three-day bench trial on a subset of CCC's claims. In January 2018, the Court issued findings of fact and reached two conclusions of law:

1. Subcontractor CCC waived any potential claims against general contractor WHJV by signing the periodic releases and change orders; and
2. Statements and action by WHJV's employees did not waive WHJV's ability to rely on the releases and change orders.

         Now, subcontractor CCC brings this motion for reconsideration or, in the alternative, for an interlocutory appeal. For the reasons outlined in this Memorandum, the Court denies the motion.

         BACKGROUND

         The Court's January 2, 2018 Memorandum containing Findings of Fact and Conclusions of Law provides a thorough summary of the facts. See Mem., Doc. No. 77, at 2-14. For purposes of this Memorandum, the Court will briefly highlight the facts most favorable to each side.

         I. Facts Favorable to CCC

         CCC's preferred legal conclusions are that the release language does not bar its claims against WHJV and that WHJV waived the ability to rely on the release language. The two factual circumstances that CCC believes should lead to these legal conclusions are (1) statements and (2) conduct by WHJV employees.

         A. WHJV's Statements. CCC submitted evidence that, over the course of the construction project, WHJV employees generally made assurances to Rita Connelly, the President of CCC, about the state of the project. The gist of the alleged assurances was that Ms. Connelly should “trust” WHJV, that WHJV would not “hurt” CCC, and that the parties would “work out” their differences. See, e.g., Mem., Doc. No. 77, at 4, 8, 13, 17 n.4.

         B. WHJV's Conduct. CCC submitted evidence that, over the course of the construction project, WHJV did not consistently enforce the release language against CCC and other subcontractors. E.g., Mem., Doc. No. 77, at 12-14. Instead, WHJV sometimes sought to accommodate the needs of its subcontractors rather than hold their feet to the fire.

         II. Fact Favorable to WHJV

         WHJV's preferred legal conclusion, with which the Court agrees, is that the release language, negotiated at arms' length by sophisticated and experienced parties, straightforwardly operates to bar CCC's claims. Two primary circumstances lead to this conclusion: (1) CCC's general experience and sophistication and (2) the plain language of the releases and change orders.

         A. CCC's Sophistication. Ms. Connelly had decades of experience in the construction industry. She negotiated the change orders and releases at arm's length. She understood the legal effect of the release language. In fact, she refused to sign one change order precisely because she knew that CCC was about to bring a claim against WHJV. See Mem., Doc. No. 77, at 10.

         B. Contract Language. The specific terms of the releases, change orders, and notice provision are reproduced in the analysis section on this Memorandum. In brief, even CCC seems to agree that the plain language of these contractual terms precludes its claims. CCC's entire case, in other words, rests on identifying factual circumstances and legal rules to help CCC escape the plain meaning of the contractual terms.

         ANALYSIS OF MOTION FOR RECONSIDERATION

         “A judgment may be altered or amended if the party seeking reconsideration shows at least one of the following grounds: (1) an intervening change in the controlling law; (2) the availability of new evidence that was not available previously; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice.” Tomasso v. Boeing Co., No. 03-CV-4220, 2007 WL 2458557, at *1 (E.D. Pa. Aug. 24, 2007) (citing Max's Seafood Cafe ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999)).

         Here, only the third ground for reconsideration - a clear error of law - is at issue. CCC has identified five conclusions by the Court that it argues were clear errors of law:

1. Contract Meaning: The plain meaning of the releases and change orders operates to waive CCC's claims.
2. Contract Formation: CCC waived its claims by knowingly and voluntarily agreeing to the release language.
3. Waiver: Statements and actions by WHJV employees did not relinquish WHJV's right to rely on the releases and change orders.
4. Notice: CCC's requests for extensions of deadlines during the project did not amount to notices that CCC was asserting a claim against WHJV.
5. Hearsay and Parol Evidence: Testimony about statements by WHJV employee Patrick Delaney to CCC is inadmissible as hearsay and parol evidence.

         Each conclusion is analyzed in turn. For the reasons that follow, the Court rejects CCC's arguments and denies the motion for reconsideration.

         One criticism permeates CCC's motion and bears addressing at the outset: CCC insists that the Court overlooked certain evidence, presented at trial, concerning the parties' conduct.

         But the bare fact that the Court's prior Memorandum did not mention a given piece of evidence or testimony should not be taken to mean that the Court, as factfinder, did not consider it.

         I. Contract Meaning: The plain meaning of the releases and change orders operates to waive CCC's claims.

         In its prior Memorandum, the Court concluded that CCC “clearly and unambiguously waived its claims against WHJV by signing the releases and change orders” because the terms of those documents were “clear and unambiguous.” Mem., Doc. No. 77, at 17. CCC argues that the Court erred in reaching this conclusion without considering the effect of WHJV's conduct on the clarity of the terms in the releases and change orders.

         Each release expressly stated that CCC was “waiving and releasing” WHJV, its sureties, and others:

from any and all suits, debts, demands, torts, charges, causes of action, and claims for payment including claims under the laws of the municipality, state or federal government relating to payment bonds . . . on account of, arising out of or relating in any way to the labor, services, material, fixtures, equipment, apparatus or machinery furnished by [CCC] on the above described Project from the beginning of time until the date [on which the document was signed] including extras.

         DX-13-19; DX-21; DX-23-24; DX-26; DX-28; DX-30-31 (emphasis added). Each of Change Orders 3, 4, 5 and 6 ...


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