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Excel Construction, Inc. v. HKM Engineering

March 23, 2010

EXCEL CONSTRUCTION, INC., A WYOMING CORPORATION, APPELLANT (PLAINTIFF),
v.
HKM ENGINEERING, INC., A MONTANA CORPORATION, APPELLEE (DEFENDANT).



Appeal from the District Court of Big Horn County, The Honorable Steven Cranfill, Judge.

The opinion of the court was delivered by: Davis, District Judge.

Before GOLDEN, HILL, KITE, and BURKE, JJ., and DAVIS, D.J.

[¶1] This is an appeal from a summary judgment granted to Appellee HKM Engineering by the district court for Big Horn County. For the reasons set forth below, we affirm the district court.

ISSUES

[¶2] 1. Should this Court modify its ruling in Rissler & McMurry Co. v. Sheridan Area Water Supply Joint Powers Bd., 929 P.2d 1228 (Wyo. 1996), to permit negligence claims by general contractors against project engineers or design professionals?

2. May Excel Construction maintain a claim against HKM for tortious interference with the contract between Excel Construction and the Town of Lovell when HKM was acting as Lovell's agent?

3. May Excel Construction maintain a claim of misrepresentation on the basis asserted in the trial court under the Rissler decision?

4. Does ¶9.10(A) of the agreement between the Town of Lovell and HKM impose a duty of good faith and fair dealing on HKM, creating an issue which must be tried?

FACTS

[¶3]This case involves a dispute between general contractor Excel Construction, Inc. ("Excel") and project engineer HKM Engineering, Inc. ("HKM") related to a contract for the replacement and improvement of water and sewer lines in the Town of Lovell, Wyoming. The record before the Court is sparse, with only portions of the contract documents supplementing the pleadings below. The following can be gleaned from the record, the briefing, and the arguments of counsel.

[¶4] The Town of Lovell entered into an agreement with HKM Engineering, Inc. for engineering services on the project, including both design of the new water and sewer system and project management. In the terms pertinent to this appeal, the agreement provided that HKM would be the Town of Lovell's representative during construction. HKM was to make periodic site visits, and to assure that work progressed in accordance with project plans and specifications. If the parties agreed, HKM was to provide a project representative to provide more extensive observation of the work. The record does not reflect whether this occurred or not.

[¶5] HKM was empowered to issue written clarifications of the contract documents, to authorize minor variations in the work, and to reject defective work by the contractor. HKM was also authorized by the agreement with the Town of Lovell to determine compliance of completed work with the contract requirements, and to act as an impartial interpreter and judge in so doing.

[¶6] The contract between the Town of Lovell and HKM also provided as follows in ¶9.10(A):

Neither ENGINEER's authority or responsibility under this Article 9 or under any other provision of the Contract Documents nor any decision made by ENGINEER in good faith either to exercise or not exercise such authority or responsibility or the undertaking, exercise, or performance of any authority or responsibility by ENGINEER shall create, impose, or give rise to any duty in contract, tort, or otherwise owed by ENGINEER to CONTRACTOR, and Subcontractor, any Supplier, any other individual or entity, or to any surety for or employee or agent of any of them.

[¶7] The Town of Lovell entered into a separate agreement with Excel to serve as general contractor on the project. Only a small portion of the contract between the town and Excel are in the record. In any event, Excel and HKM each contracted separately with the Town of Lovell, and there is no contract between HKM and Excel. The provisions of ¶9.10 of the Town of Lovell-HKM contract are incorporated in the Town of Lovell-Excel contract by §9.01(A)(4).

[¶8] The record does not reflect any detailed information as to the nature of the dispute which arose between HKM and Excel. At oral argument, counsel for Excel gave as examples of Excel's claims that HKM's specifications called for insufficient backfill in certain locations, and that Excel was told by HKM representatives to simply purchase the required backfill and bill all of the charges for it at the end of the month, rather than submitting an immediate request for a change order or payment. Excel claims that HKM engaged in misrepresentation and other tortious conduct in making that representation, and that it was not paid for the cost of the additional backfill after it relied on HKM's direction. Counsel also claimed that HKM released Excel from the worksite with the understanding that it would return to complete some minor work, and then attempted to assess liquidated delay damages for the time during which Excel was not working after being released. It also claims that HKM improperly denied certification of substantial completion. Until substantial completion is certified, Excel cannot obtain the funds held as retainage to insure completion of the project.

[¶9] Excel initially filed suit against the Town of Lovell on February 5, 2008. It claimed breach of contract, breach of an implied covenant of good faith and fair dealing, account stated, unjust enrichment, and entitlement to a declaratory judgment for amounts due under the agreement between the parties. The town counterclaimed for damages based on alleged breaches of contract by Excel. Excel amended its complaint to join HKM as a party-defendant on June 13, 2008, claiming that HKM had engaged in the tort of misrepresentation, breached a duty of good faith and fair dealing, intentionally interfered with Excel's contract with the Town of Lovell, and acted negligently. In its complaint, Excel accused HKM of unreasonably refusing to certify substantial completion of the work, and of hindering and delaying Excel's work by refusing to meet, approve change orders after altering the scope and duration of the work, refusing to provide accurate and buildable drawings for the work, and generally of interfering with Excel's performance of its contract.

[¶10] Defendant HKM filed a motion to dismiss on August 8, 2008. In that motion, it contended that the complaint must be dismissed under Rissler & McMurry Co. v. Sheridan Area Water Supply Joint Powers Bd., 929 P.2d 1228 (Wyo. 1996), which determined that a contractor's claims against a project engineer were barred by the economic loss rule. Excel responded to the motion, and included in its response copies of portions of the contract between it and the Town of Lovell, as well as copies of portions of the contract between the town and HKM.

[¶11] At a hearing held on February 13, 2009, the district court converted HKM's motion to dismiss to a Rule 56 motion for summary judgment as permitted by Wyoming Rule of Civil Procedure 12(b)(6), based upon the inclusion of matters beyond the pleadings. The record does not reflect a request from either party for additional time to conduct discovery or to supplement the record to include any additional information which might properly have been considered on a motion for summary judgment.

[¶12] The district court granted HKM's motion. In its decision letter, the Court held that the economic loss rule articulated in Rissler did in fact bar recovery in this case, which it found to involve similar claims. Proceedings in the case against the Town of Lovell were stayed pending resolution of this appeal. We will affirm the district court's ruling, although we do so as to certain claims for different reasons.

STANDARD OF REVIEW

[¶13]As noted above, HKM initially filed a motion to dismiss. This motion was converted to a motion for summary judgment after Excel attached portions of the contract to its response to the motion. Although the materials outside the pleadings which were considered by the district court were limited to a few pages of the contracts between the parties, and although the record contains no affidavits or depositions which might create a specific factual record, this Court will apply the standard applicable to motions for summary judgment under W.R.C.P. 56:

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." W.R.C.P. 56(c). A genuine issue of material fact exists when a disputed fact, if proven, would establish or refute an essential element of a cause of action or a defense that a party has asserted. Metz Beverage Co. v. Wyoming Beverages, Inc., 2002 WY 21, ¶ 9, 39 P.3d 1051, [1055](Wyo. 2002).

We evaluate the propriety of a summary judgment by employing the same standards and by examining the same material as the district court. Id. We examine de novo the record, in the light most favorable to the party opposing the motion, affording to that party the benefit of all favorable inferences that may be drawn from the record. Roussalis v. Wyoming Medical Center, Inc., 4 P.3d 209, 229 (Wyo. 2000). If upon review of the record, doubt exists about the presence of issues of material fact, that doubt must be resolved against the party seeking summary judgment. Id. We accord no deference to the district court's decisions on issues of law. Metz, ¶ 9.

Linton v. E.C. Cates Agency, Inc., 2005 WY 63, ¶¶ 6-7, 113 P.3d 26, 28 (Wyo. 2005). We "may affirm the summary judgment on any legal grounds appearing in the record." Wyo. Cmty. Coll. Comm'n v. Casper Cmty. Coll. ...


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