Court Opinion

ID: 4194504
Source: CourtListenerOpinion
Date Created: 2017-08-09 15:05:58.635567+00
Date Added: 2024-06-11T14:13:36.286509
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any                                   FILED
court except for the purpose of establishing                           Aug 09 2017, 7:40 am

the defense of res judicata, collateral                                     CLERK
estoppel, or the law of the case.                                       Indiana Supreme Court
                                                                           Court of Appeals
                                                                             and Tax Court

ATTORNEY FOR APPELLANT                                   ATTORNEYS FOR APPELLEE
Rebecca J. Maas                                          Kevin P. Podlaski
Smith Fisher Maas Howard & Lloyd,                        Joshua A. Burkhardt
P.C.                                                     Beers Mallers Backs & Salin, LLP
Indianapolis, Indiana                                    Fort Wayne, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Shambaugh & Son, LP,                                     August 9, 2017
Appellant-Defendant/Counterclaimant,                     Court of Appeals Case No.
                                                         02A03-1701-PL-73
        v.                                               Appeal from the Allen Superior
                                                         Court
Allen County Public Library,                             The Honorable Craig J. Bobay,
Appellee-Plaintiff/Counterdefendant                      Special Judge
                                                         Trial Court Cause No.
                                                         02D01-1002-PL-26

Vaidik, Chief Judge.

Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017             Page 1 of 8
                                          Case Summary
[1]   Shambaugh & Son, L.P. (Shambaugh) appeals the trial court’s judgment in

      favor of the Allen County Public Library (Library) on Shambaugh’s breach-of-

      contract claim. Finding no error, we affirm.

                            Facts and Procedural History
[2]   This is the second appeal in this case. In our first opinion, we explained that, in

      2004, the Library undertook a capital-improvement project to renovate and add

      to its main library branch building in Fort Wayne. Allen Cty. Pub. Library v.

      Shambaugh & Son, L.P., 997 N.E.2d 48, 49 (Ind. Ct. App. 2013), aff’d on reh’g, 2
N.E.3d 132 (Ind. Ct. App. 2014), overruled on other grounds by Bd. of Comm’rs of

      Cty. of Jefferson v. Teton Corp., 30 N.E.3d 711 (Ind. 2015). We noted that the

      Library hired W.A. Sheets & Sons, Inc. as the construction manager and

      MSKTD & Associates, Inc. as the architect and that it contracted directly with

      Shambaugh to perform mechanical, electrical, and fire-protection work and

      with Hamilton Hunter Builders, Inc. to do concrete work. Id.

[3]   The Library agreed to pay Shambaugh approximately $12.4 million for its work

      on the project. The Library’s contract with Shambaugh, which consisted of a

      main agreement and multiple attachments, required it to “set aside ten percent

      (10%) of the funds as retainage and hold the retainage in escrow until the work

      Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017   Page 2 of 8
      was fully performed.” Appellant’s App. Vol. II pp. 22-23.1 Article 6 of the main

      agreement, captioned “FINAL PAYMENT,” provides that

              [f]inal payment . . . shall be made by the Owner to the Contractor
              when (1) the Contract has been fully performed by the Contractor
              . . .; and (2) a final Project Certificate for Payment has been
              issued by the Construction Manager and Architect; such final
              payment shall be made by the Owner not more than 30 days after
              the issuance of the final Project Certificate for Payment[.]

[4]   Appellant’s App. Vol. VI p. 19. And Paragraph 7.2 of the main agreement

      states, “Payments due and unpaid under the Contract shall bear interest from

      the date payment is due at the rate stated below, or in the absence thereof, at

      the legal rate prevailing from time to time at the place where the Project is

      located.” Id. at 20. No rate was specified in the contract, and Shambaugh tells

      us that it should be 8%, in accordance with Indiana Code section 24-4.6-1-102.

[5]   In July 2007, Shambaugh submitted an “Application for Payment” indicating

      that it had completed 100% of its work on the project and requesting the release

      of the remaining retainage: $691,267.20. In December 2008, the Library

      released $300,000 of the retainage to Shambaugh. Then, in early 2010, with the

      remaining $391,267.20 still unpaid, the Library filed a lawsuit against

      1
       Shambaugh’s appendix consists of eight volumes, but the table of contents is written as though the
      documents are organized in four volumes. This, of course, threw off the pagination, rendering the table of
      contents, and some of the citations in Shambaugh’s briefs, largely unhelpful. We urge counsel to exercise
      greater care in the future.

      Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017               Page 3 of 8
      Shambaugh and the other companies involved in the project. In our first

      opinion, we described the basis for the suit as follows:

              One part of the library renovation and addition project required
              Shambaugh to permanently install an emergency diesel generator
              and two diesel fuel storage tanks—one 1,000 gallon tank and one
              fifty gallon “day” tank—in the library’s basement. Hamilton
              Hunter poured the concrete floor supporting the generator and
              tanks, and which also covered copper piping connecting the
              “day” tank and generator. Part of the concrete pouring process
              required Hamilton Hunter workers to create a wooden form for
              the concrete and drive steel stakes into the ground. In December
              2007, the Library discovered that a hole in the copper piping had
              caused approximately 3,000 gallons of diesel fuel to leak into the
              ground underneath the library. The Library believes that the hole
              was caused by a Hamilton Hunter employee having driven a steel
              stake through the pipe. The Library undertook to investigate and
              clean up the leaked fuel.

      Allen Cty. Pub. Library, 997 N.E.2d at 51 (footnote omitted). Shambaugh filed a

      counterclaim against the Library, seeking release of the remainder of the

      escrowed retainage and the escrow income, as well as an award of 8% interest

      under the contract.

[6]   In February 2016, after six years of litigation that included the first trip to this

      Court, the trial court entered summary judgment in favor of the defendants on

      the Library’s fuel-cleanup claims, citing subrogation waivers in the relevant

      contract documents. Shambaugh then filed a motion seeking the payment of

      the remainder of the escrowed retainage, approximately $99,000 for the income

      earned on the retainage, and nearly $213,000 for interest pursuant to the parties’

      Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017   Page 4 of 8
      contract, dating back to 2007. In its response, the Library “agree[d] that the

      retainage and interest [i.e., the income] earned on the retainage should be paid

      to Shambaugh,” noted that it had “been working with the Architect to obtain a

      certification for the release of these funds,” and stated that it would “release the

      remaining retainage upon receipt of a properly authenticated payment

      application in conformance with the Contract.” Appellant’s App. Vol. VI pp.

      5-6. However, the Library argued that because it had not yet received the

      certificate from the architect, the final payment to Shambaugh had not yet come

      due under the terms of the contract, and that therefore the Library should not

      be required to pay additional interest.

[7]   On October 14, 2016, two days after the Library filed its response, the architect

      signed a Certificate for Payment stating that to the best of its “knowledge,

      information and belief the Work has progressed as indicated, the quality of the

      Work is in accordance with the Contract Documents, and the Contractor

      [Shambaugh] is entitled to payment of [$391,267.20].” Appellant’s App. Vol.

      VIII p. 17. The Library’s attorney sent the certificate to the Library with

      instructions to “notify the Escrow Agent to release the funds.” Id. at 15. On

      November 2, shortly before the hearing on Shambaugh’s motion, the escrow

      agent issued a check for $490,272.35 (representing the retainage of $391,267.20

      and escrow income of $99,005.15) to Shambaugh. As such, the only issue that

      remained was whether the Library owed Shambaugh additional interest under

      the contract. The trial court agreed with the Library that the final payment to

      Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017   Page 5 of 8
       Shambaugh did not come due until the architect signed the certificate a few

       weeks earlier, and so it denied Shambaugh’s claim for interest.

[8]    Shambaugh now appeals.

                                  Discussion and Decision
[9]    Shambaugh contends that the final payment was late, that it is therefore entitled

       to interest under its contract with the Library, and that the trial court’s decision

       to the contrary is based on a misinterpretation of the contract. Interpretation of

       a contract is a question of law that we review de novo. Pohl v. Pohl, 15 N.E.3d
1006, 1009 (Ind. 2014).

[10]   We are troubled by Shambaugh’s approach to this appeal. Even though the

       trial court very clearly based its decision on Article 6 of the main agreement

       between the parties, Shambaugh makes no mention, in either its opening brief

       or its reply brief, of that provision or its plain language. Again, Article 6 of the

       main agreement provides, in part, that

               [f]inal payment . . . shall be made by the Owner to the Contractor
               when (1) the Contract has been fully performed by the Contractor
               . . .; and (2) a final Project Certificate for Payment has been
               issued by the Construction Manager and Architect; such final
               payment shall be made by the Owner not more than 30 days after
               the issuance of the final Project Certificate for Payment[.]

       Appellant’s App. Vol. VI p. 19. This language obviously hurts Shambaugh’s

       cause, but Shambaugh has a duty to address relevant contract language, helpful

       Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017   Page 6 of 8
       or not. It is undisputed that no Certificate of Payment was issued before

       October 14, 2016, and it is undisputed that final payment was issued to

       Shambaugh less than thirty days later (on November 2, 2016). As such, final

       payment was never past due under this provision.

[11]   Even though Shambaugh never directly addresses Article 6, it does generally

       allude to it at certain points in its briefs. In its opening brief, Shambaugh

       suggests that the Library’s payment of $300,000 in December 2008 without

       having received a Certificate for Payment “establishes a waiver of the architect

       approval” by the Library. Appellant’s Br. p. 20. Then, in its reply brief,

       Shambaugh asserts that allowing the Library to rely on the lack of such a

       certificate is improper because the Library “has ultimate authority and control

       over the retainage, including when the Architect would sign/approve the Final

       Application, and when the funds would be released” and that “[o]btaining the

       Certification from the Architect was obviously under the control of [the

       Library].” Appellant’s Reply Br. pp. 5-6. Shambaugh does not cite anything in

       the record that supports either of these arguments, such as evidence of the

       circumstances surrounding the 2008 payment or of the architect’s reason(s) for

       executing the Certificate for Payment in October 2016. Therefore,

       Shambaugh’s arguments are waived. See Ind. Appellate Rule 46(A)(8)(a)

       (“Each contention must be supported by citations to the authorities, statutes,

       Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017   Page 7 of 8
       and the Appendix or parts of the Record on Appeal relied on[.]”); City of

       Indianapolis v. Buschman, 988 N.E.2d 791, 795 (Ind. 2013).2

[12]   The trial court did not err by ruling that Shambaugh is not entitled to interest

       under the contract.

[13]   Affirmed.

       Crone, J., and Altice, J., concur.

       2
         Shambaugh’s claim for interest relies primarily on a provision in one of the attachments to the main
       agreement—the “Supplementary Conditions”—that provides: “Final payment, constituting the unpaid
       balance of the contract sum, shall be paid to the Contractor in full, including retainage of escrowed principal
       and escrowed income by the escrow agent, no less than 60 days following the date of Substantial
       Completion.” Appellant’s App. Vol. IV p. 54 (§ 9.10.3). Shambaugh argues that under this language it was
       entitled to final payment “within sixty (60) days” of submitting its July 2007 “Application for Payment.”
       Appellant’s Br. p. 8. But that is not what the provision says; it says that final payment must be paid “no less
       than 60 days” after substantial completion—a phrase that does not establish a deadline for payment. It may
       be that the parties intended for this provision to say “no more than 60 days,” but even if that were the
       language, we would still conclude that the final payment was timely under Article 6 of the main agreement,
       given the date of the Certificate for Payment from the architect.

       Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017                  Page 8 of 8