Opinion ID: 2319344
Heading Depth: 1
Heading Rank: 8

Heading: Substantial Completion

Text: We conclude that the trial court did not err in determining that substantial completion of the Unit required that all of the Build-Out Work be complete, regardless of who was responsible for the work. Although NTV is correct that the scope of work included under the definition of Build-Out Work never changed, it construes Build-Out Work in a much narrower manner than what the contract permitted from its inception. A review of the relevant provisions of the contract demonstrates that broadly interpreting Build-Out Work to encompass the work that Dr. Deutsch undertook is warranted, as the contract repeatedly references the Unit. Under the contract, Build-Out Work was defined as the finishing of the Unit beyond Shell Completion according to the Build-Out Plans, regardless of whether the work was conducted by the Base Building Contractor or the Designated Contractor. (emphasis added). The Build-Out Plans were defined as [t]he Architectural Drawings and Specifications and the Engineering Plans and Specifications, as approved by the seller. Under the contract, Substantially Complete meant completed, in the reasonable written opinion of the applicable architect . . . except for `punch-list' and other items that do not materially interfere with the use of the Unit, in accordance with the Plans and Specifications for Shell Completion and, to the extent the Seller Build Option applies under Section 7.8 . . . in accordance with the Build-Out Plans. (Emphasis added.) The testimony presented at trial supports the trial court's findings and conclusions as they relate to substantial completion. WCD offered Mr. Luce as an expert witness in commercial construction and substantial completion of construction projects. Mr. Luce's testimony was consistent with the contractual definition of substantial completion. He testified that the generally accepted construction industry definition of substantial completion is the point in time or the date upon which work is sufficiently complete so that the premises or the building can be occupied and utilized for its intended purpose; that upon substantial completion of a construction site, only minor punch list work should remain undone; and that the generally accepted definition of a punch list in the construction industry was work that doesn't interfere with the use and occupancy of the building or the premises. He listed some examples of punch list items a ding on the wall where somebody may have hit it, a missing screw here and there, some caulking that maybe wasn't finished or was done in a messy way, nail holes that aren't finished, [or] paint holidays. Mr. Luce reviewed both the contract between NTV and WCD, along with the contract between NTV and Kfoury, and stated that the definition of substantial completion in each contract was materially the same as the generally accepted definition. He reviewed each contract as a part of his job to inspect the Unit. Mr. Luce was asked to take the Build-Out Plans and compare the plans to the conditions that [he] observed in the space and. . . render an opinion as to whether or not the premises were substantially complete. He used a digital camera and digital recorder, as well as the Build-Out Plans, to record his comments when he inspected the Unit on February 10, 2007. He took over one hundred photos of the Unit to determine whether the Unit was Substantially Complete. Mr. Luce inspected the Unit for three and-a-half to four hours; he recorded unfinished work that [he] felt should be complete using a standard definition for substantial completion. In the main area of the space he observed some cabinets that were installed but by and large . . . didn't see any finished cabinets. Moreover, the fixtures were . . . either not connected or those that were connected had no water . . ., which the superintendent of the building later explained was due to the lack of water to the suite itself; a non[] functional hot water heater that did not have the proper piping completed; and out of sixteen treatment bays, a handful of sinks [were] installed and the rest were not. The space was not completely painted and ran the gamut from unfinished drywall to finished walls. [M]ost of the baseboard strip . . . was missing, and the space was not clean, as there was plywood sticking up all over the place, and the construction office was a mess. When he entered the bathrooms, he did not see a toilet, but instead saw a water closet flange on the floor, and the supply coming out of the wall with a shut off valve and the supply tube just sticking up. Additionally, [a]bove the vanity was a light valance with three open junction boxes and wires hanging out of the junction box. In short, Mr. Luce concluded that the space had some distance to go before [he] would consider it to be substantially complete. Mr. Joch did not consider the space Substantially Complete either, because there was a fair number of things all still missing and not installed yet and . . . [he] wasn't aware of any inspections. He noted that the space looked like a raw space cleaned up . . . [without] finishes being completed or floors. There was no dental equipment, there was no cabinetry. Furthermore, all of the items on the accessory schedules, appliance schedules, and some ceiling tiles were missing. In addition, the bathroom in the Unit near the waiting room looked like just a room . . . . just a space [with] drywall, without plumbing fixtures, tile work, toilet, or a sink. None of the sixteen operatories (treatment bays) had sinks or faucets installed when Mr. Joch inspected the Unit, although they had rough end plumbing. In his opinion, the lack of these things substantially interfere[d] with [WCD's] ability to use the space for its intended purpose. With respect to whether the Kfoury work was Substantially Complete, he wasn't distinguishing the work during his inspection, but noted that it was not complete. Ms. Powell's testimony also was consistent with the contractual definition of Substantially Complete. She distinguished between substantial completion of a portion of the project and the entire project, as substantial completion is a very loosely used term in construction indicating that a contractor or subcontractor has completed his part of the work by a key date on the construction schedule, but there's a legal description for substantial[] complet[ion] [of] the project, which embodied completion of the various contracts that require people to do specific scopes of work in a specific time frame. . . . Specifically, substantial completion under the contracting rules of the American Institute of Architects (AIA) meant that the space is ready for use by the tenant for the purpose in which it was intended. Generally, the substantial completion date is related to the date upon which final inspections are given. At a minimum, substantial completion is a prerequisite to tenant occupancy, and thus could occur before the tenant occupancy date. However, the substantial completion date can be the same as the tenant occupancy date. Valentine created a construction schedule (Valentine Schedule) that ended with tenant occupancy on February 28, 2007, taking account of the work Dr. Deutsch undertook. In sum, the testimony of Mr. Luce, Mr. Joch, and Ms. Powell, supports the trial court's conclusion that substantial completion of the Unit required all Build-Out Work to be complete, regardless of who was responsible for that work.