Court Opinion

ID: 854226
Source: CourtListenerOpinion
Date Created: 2013-03-04 20:01:08.978073+00
Date Added: 2024-06-11T13:22:23.191768
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 12-1346

2300 PENNSYLVANIA AVENUE, LLC,

                Plaintiff - Appellee,

           v.

HARKINS BUILDERS, INC.,

                Defendant - Appellant.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.   Liam O’Grady, District
Judge. (1:10-cv-01321-LO-IDD)

Argued:   January 31, 2013                 Decided:   March 4, 2013

Before MOTZ, KING, and AGEE, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: William Rutherford Mauck, Jr., SPOTTS FAIN, PC,
Richmond, Virginia, for Appellant.  Patricia Ann Millett, AKIN,
GUMP, STRAUSS, HAUER & FELD, LLP, Washington, D.C., for
Appellee. ON BRIEF: Mark S. Dachille, HUDDLES JONES SORTEBERG &
DACHILLE, PC, Columbia, Maryland, for Appellant.   Hyland Hunt,
AKIN, GUMP, STRAUSS, HAUER & FELD, LLP, Washington, D.C., for
Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

               2300       Pennsylvania        Avenue,     LLC,    brought       this       action

against       Harkins      Builders,      Inc.,      alleging     breach       of     contract,

fraud,        and    negligence      arising        out    of     a    contract        for    the

construction         of    a   building       project     in    Washington,         D.C.      The

district court granted summary judgment to 2300 as to Harkins’

liability for liquidated damages.                     Following a bench trial, the

court     entered         judgment    for      2300,      in     the    total       amount     of

$3,922,189          in    damages.        Harkins         appeals,          raising     several

arguments.          We affirm.

                                               I.

               In    August     2008,     2300,      as   owner       and    developer,       and

Harkins, as general contractor, entered into a written contract

for     the     construction         of   a    mixed-use         apartment       and       retail

building project in Washington, D.C.                      The contract consisted of

several        documents,        including          AIA   Document          A101-1997,        the

“Standard Form of Agreement Between Owner and Contractor,” AIA

Document A201-1997, the “General Conditions of the Contract for

Construction,” and “Modifications issued after execution of” the

A101-1997, which include the various numbered Change Orders.

                                               A.

               Relevant to this appeal, the contract requires windows

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meeting the performance requirements of an “HC-70 window,” a

high-performance window.                In December 2009, Harkins discovered

some of the windows leaked.                   After initial remediation efforts

failed, Harkins learned that a manufacturing defect caused the

leaks.     Between December 2009 and October 2010, Harkins and its

subcontractors undertook at least five remediation efforts on

the    windows,    testing       after    each       remediation.          These   efforts

involved    drilling       holes,        injecting         foam    compound    and    seam

sealer,    applying       new     sealant         and      caulking,   and     installing

redesigned sashes.          On August 2, 2010, 2300 retained a testing

agency that tested 24 window openings.                       Two openings failed but

were remediated and tested with successful results that same

day.     At least as late as December 2010, the project architect

observed some window leaks.

            Also in December 2009, Harkins observed approximately

twenty    leaks    in     the    garage       walls.         The   leaks     appeared   at

approximately       the     same        height       and     in    “pretty    consistent

intervals.”        Harkins’        sub-contractor,            Prospect      Waterproofing

Co., said that “capillary action” caused the uniform leaks in

the    walls      and     denied        responsibility.             Harkins        accepted

responsibility for the leaks; Prospect conducted the repairs.

Despite    several      rounds     of     repairs,         which   included    injecting

cement and     chemical         grout    in    the      leaking    areas,    the   project

architect continued to observe leaks in late 2010 and spring

                                              3
2011.     The architect noted that the leak heights correlated to

the      approximate          horizontal        boundary     between             the         two

waterproofing systems.            In light of the “pattern created by the

water    penetration,”         the    architect    also    determined            that       “the

waterproofing in the garage was either damaged or not installed

properly,”      due      to     “poor      quality      waterproofing,                improper

installation, or postinstallation damage.”

              The contract requires Harkins to achieve “Substantial

Completion” of the entire building by April 25, 2010.                             Under the

contract, the architect’s “Certificate of Substantial Completion

shall establish the date of Substantial Completion.”

              The     architect’s       certification       must        be       made       “in

accordance with Section 9.8,” which provides that the architect

will determine that the building is substantially complete when

it “is sufficiently complete in accordance with the Contract

Documents so that [2300] can occupy or utilize the [building]

for     its   intended        use.”     Substantial        completion            is    to     be

determined building-wide, rather than on a unit-by-unit basis.

Under the contract, Harkins is liable for liquidated damages if

it did not achieve substantial completion by April 25, 2010.

              The D.C. Department of Consumer and Regulatory Affairs

issued    a   Certificate       of    Occupancy    on   February    25,          2010,      and

tenants began moving into units two days later.                     A month later,

on    March     30,     Harkins       requested      payment       of        a        $150,000

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“Substantial Completion Incentive Bonus” established by Change

Order     9,    which       modified    the        liquidated    damages        and    bonus

provisions of the contract.               In Change Order 91 dated April 23,

2010, the architect approved and 2300 agreed to pay Harkins a

$150,000 bonus, which was called a “Certificate of Occupancy

Bonus.”

               By letter dated July 13, 2010, Harkins requested that

the architect issue the Certificate of Substantial Completion.

On September 23, 2010, the architect issued the certificate,

which set August 2, 2010 as the Date of Substantial Completion.

The   architect        attached   to    the       certificate    a     “punch      list”   of

tasks that Harkins was to complete before final payment would

issue.     On October 5, 2010, Harkins advised 2300 that it would

not   execute         the   Certificate       unless    the     Date    of    Substantial

Completion was changed to April 25, 2010, and the punch list

removed.       2300 did not do this but did execute the certificate

on October 7, 2010.

                                              B.

               On     November    19,     2010,        2300     filed    a      five-count

complaint against Harkins in the United States District Court

for the Eastern District of Virginia.                         In its complaint, 2300

alleged        that     Harkins    breached           its     express        and      implied

obligations to 2300 by furnishing deficient windows and damaged

                                              5
garage waterproofing, and by failing to properly construct and

install     the     roof,      adhere     to       specified     building       dimensions

required by federal law, timely complete the work, and submit

required    documentation          to    2300.         2300    further     alleged      that

Harkins failed to act in good faith and deal fairly with 2300,

and   breached      its     express      and        implied    warranties       under     the

contract.          Finally,      2300     alleged       that     Harkins       negligently

“breached its duty to exercise reasonable care and competence by

performing substandard and defective work.”

            Harkins         answered         the     complaint     and         asserted     a

counterclaim       for    breach    of    contract,        alleging      that    2300     had

withheld     the    $510,000       contract          balance    even   though      Harkins

“fully and properly fulfilled all of its obligations under the

contract.”        In March 2011, after being granted leave to do so,

2300 filed an amended complaint, adding a fraud count, which

Harkins answered.

            Shortly thereafter, upon the close of discovery, each

party moved for partial summary judgment.                          The court granted

summary    judgment       to    2300    as     to    liability    on     its    liquidated

damages claim, finding Harkins had failed to achieve substantial

completion under the contract prior to August 2, 2010.                                    The

court     denied     the       parties’        remaining       motions     for     summary

judgment.     After a bench trial, the court issued a memorandum

opinion and order for judgment to 2300, finding that Harkins had

                                               6
breached     the     contract      with     respect       to     the     windows     and

waterproofing.        The   court    further      found      that    2300   failed    to

demonstrate by a preponderance of the evidence that the roof did

not meet contract specifications, but in light of the parties’

agreement, found 2300 entitled to compensation to relocate the

roof condenser.       The court awarded 2300 damages in the amount of

$3,922,189,     which   included        $2,683,962     for     window     replacement,

$210,000    for    waterproofing        repair   and    maintenance,        $3,500    to

relocate the roof condenser, $637,200 in liquidated damages, and

$387,527 in associated fees and costs.                  As to 2300’s fraud and

negligence claims, the court awarded judgment to Harkins.                            The

court     rejected    Harkins’      counterclaim         for     recovery       of   the

$510,000.00 contract balance and refused to credit the amount to

Harkins.

            Harkins timely noted this appeal.

                                          II.

            After    carefully      considering        the     record,    the   briefs,

and the applicable law, and having the benefit of oral argument

from the parties, we affirm the judgment in favor of 2300 for

the   reasons      well-stated     in     the    district       court's     memorandum

opinion.     We engage in further discussion only to address two

issues:     the district court’s ruling on summary judgment, which

was   entered      orally   from    the    bench;      and     the     calculation    of

                                           7
damages,    which      Harkins      asserts       must     be    remanded       to    address

mathematical errors.

                                             A.

            Under      Change      Order   9      of    the     contract,     Harkins     was

“liable for and shall pay to the Owner . . . Liquidated Damages

. . . if substantial completion has not been reached as per” the

contract by       a   certain      date.       The      parties’      cross-motions      for

summary judgment on liability for liquidated damages focused on

the definition of “substantial completion” under the contract.

            We    review      de    novo     the       district       court’s    award    of

partial      summary          judgment         on        liquidated          damages      to

2300.      See    Wash.   Metro.      Area       Transit      Auth.    v.    Potomac     Inv.

Props., Inc., 476 F.3d 231, 234 (4th Cir. 2007).                              Because this

appeal     invokes      our     diversity         jurisdiction,        we     apply     state

substantive law and federal procedural law.                            See Gaspirini v.

Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996).

            The       parties      agree   that         District      of     Columbia    law

governs the contract at issue in this case.                        Under District law,

“summary     judgment         is     appropriate           where       a     contract     is

unambiguous” on its face.             Holland v. Hannan, 456 A.2d 807, 815

(D.C. 1983).          When interpreting a contract under District law,

we must determine “what a reasonable person in the position of

the   parties     would   have      thought       the    [contract]         meant.”      1010

                                             8
Potomac Assocs. v. Grocery Mfrs. of Am., Inc., 485 A.2d 199, 205

(D.C. 1984).        To do so, we interpret the contract “as a whole,

giving a reasonable, lawful, and effective meaning to all its

terms,      and    ascertaining       the   meaning     in    light    of    all    the

circumstances       surrounding       the   parties     at    the    time    [it]   was

made.”      Nest & Totah Venture, LLC v. Deutsch, 31 A.3d 1211, 1219

(D.C. 2011).

             Properly applying District law, the court determined

that the contract unambiguously defines substantial completion.

Pursuant to the contract, “[w]hen the Work or designated portion

thereof is substantially complete, the Architect will prepare a

Certificate of Substantial Completion which shall establish the

date of Substantial Completion.”                 Further, Harkins’ submission

of   certain      documents      to   the   architect    is    a    prerequisite    to

achieving     substantial        completion.      If    the   architect      notifies

Harkins that an item “is not sufficiently complete in accordance

with the Contract Documents,” Harkins’ completion or correction

of that item is a prerequisite to issuance of the Certificate of

Substantial Completion.

             As Harkins correctly notes, the contract does provide

that   at    the    time    of    substantial     completion,         “the   Work   or

designated        portion     thereof       is    sufficiently         complete     in

accordance with the Contract Documents so that the Owner can

occupy or utilize the Work for its intended use.”                      However, the

                                            9
contract also expressly provides that substantial completion is

not a prerequisite to occupancy or use.                       Moreover, the argument

Harkins     advances     reads       the     requirement        of   the     architect’s

certification out of the definition of substantial completion

and, thus, fails to give “effective meaning to all its terms” as

District law requires.          Nest & Totah Venture, 31 A.3d at 1219.

             Given the clarity of the contract when viewed as a

whole,     the    district     court       did    not   err     in   granting     partial

summary judgment to 2300, finding Harkins liable for liquidated

damages.     Id.

                                            B.

             The    remaining     issue          we   address    here      concerns    the

district court’s calculation of damages following the eight-day

bench trial.       Harkins argues that the court miscalculated total

damages     due    to   mathematical         errors.          Specifically,       Harkins

claims that the district court miscalculated bond costs, permit

fees, and the General Contractor fee.

             Under District law, the damages amount need be only a

“just and reasonable estimate based on relevant data,” and need

not   be    “proven     with     mathematical           precision.”            Affordable

Elegance    Travel,     Inc.    v.    Worldspan,        L.P.,    774 A.2d 320,   329

(D.C. 2001).        Moreover, we have recognized that “[t]he trial

court, as a fact-finder, possesses considerable discretion in

                                            10
fixing damages, and its decision will be upheld absent clear

error.”      Little Beaver Enters. v. Humphreys Rys., 719 F.2d 75,

79 (4th Cir. 1983).           We find that the court’s damages award,

even    if     it   did   not    precisely          calculate         total    damages,

nonetheless     was   “just     and    reasonable.”             Further,      we   reject

Harkins’ challenges to the district court’s evidentiary rulings,

finding no abuse of discretion in the court’s admission of lay

opinion testimony.        See Fed. R. Evid. 701; Noel v. Artson, 641
F.3d 580, 591 (4th Cir. 2011).                  Finally, we note that, upon

review of the record, we agree with 2300 that Harkins waived its

claim   that    the   court     neglected      to    remove      $82,600      in    costs

related to roof repair.           Accordingly, we affirm the amount of

the award.

                                        III.

             For these reasons, and for the reasons stated by the

district     court,   judgment    in    favor       of   2300    in    the    amount   of

$3,922,189 is

                                                                              AFFIRMED.

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