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Hildreth Consulting Engineers, P.C. v. Larry E. Knight

June 27, 2002

HILDRETH CONSULTING ENGINEERS, P.C., & COLONIA INSURANCE COMPANY, APPELLANTS,
v.
LARRY E. KNIGHT, INC., APPELLEE.



Appeal from the Superior Court of the District of Columbia (CA-3484-98) (Hon. William M. Jackson, Trial Judge)

Before Terry, Farrell, and Reid, Associate Judges.

The opinion of the court was delivered by: Farrell, Associate Judge

Argued April 24, 2002

Hildreth Consulting Engineers, P.C. ("HCE") and Colonia Insurance Company ("Colonia"), defendants below, seek review of a non-jury trial award of $49,692.99 to appellee Larry E. Knight, Inc. ("Knight") covering the remaining balance due on a series of agreements for the manufacture and delivery of concrete planks used in connection with the construction of a parking garage for the Edgeworth Terrace Preservation Corporation ("Edgeworth"). *fn1 Appellants' counterclaim, premised on remedial efforts taken by HCE to repair the alleged non-conforming goods, was denied in its entirety. On appeal, appellants principally argue that the trial judge erred in not granting a set-off based on their counterclaim. Appellants also assert that the judge erred in awarding interest, pursuant to D.C. Code § 15-108 (2001), upon the overdue delivery fees when the agreement respecting delivery, unlike the original manufacture contract, failed to include a provision charging interest on a delinquent account. We hold that the trial judge properly concluded that appellants failed to prove their damages sufficiently, and did not err in applying the interest provision from the original agreement after finding that the second agreement was only a modification of the first. Accordingly, we affirm. *fn2

Background

The dispute arises out of two agreements - or, as the trial judge found, an agreement and a later modification - made between HCE and its subcontractor, Knight. In August 1997, Knight and HCE entered into a written agreement by facsimile in which Knight promised to supply the concrete planks "F.O.B. Plant [in Baltimore]" for $132,975.00. The terms of this contract required HCE to pay ninety percent of the contract price upon delivery of the goods at Knight's place of business in Baltimore, the outstanding balance to be paid the following month. The agreement included a monthly 1.5% interest charge to be assessed on unpaid balances. In September of the same year, HCE's President, John Hildreth, telephoned Knight and requested that it deliver five loads of the planks so HCE could begin its work on the garage. Knight responded with a fax confirming it would deliver the loads. Later the same day, Mr. Hildreth telephoned Knight asking the company to ship the rest of the materials. Knight sent a fax confirming this request, promising to deliver the full "55 loads [at] $310.00 for the sum of $17,050.00." The confirmatory faxes did not reference terms of the original August contract or provide for an interest rate on late accounts. Sometime after transmittal of the faxes, Mr. Hildreth sent Knight a letter (Exhibit 39) stating in part that "we will pay you in full [for the delivery costs] with no retainage for trucking the same day we receive the check from [Clark]." *fn3 The parties exchanged no further correspondence about the terms of delivery. Knight's invoice billing HCE for the delivery fees totaled $18,790.00.

The planks were constructed and delivery was made in full by the beginning of October, 1997. At that time, HCE paid Knight $119,677.50 as required by the August agreement, leaving a balance of $13,297.50. HCE paid none of the transportation costs at this time.

After demolition of the original garage and substantial erection of the new structure, several dimensional surveys were conducted at the site. Their main purpose was to identify the reason why a distance gap had resulted between the existing bearing wall and the new garage. During these surveys, several members of the various contracting groups discovered that many of Knight's planks had begun to show signs of spalling *fn4 and honeycombing *fn5 of the concrete. According to Mr. Hildreth's testimony, although some of these conditions were seen prior to the erection, the increased load placed on the planks following their placement greatly increased the severity of the conditions, and some planks sustained cracking under their own weight. As a result of these defects, HCE conducted chipping tests on the planks, which consisted of tapping the edge and top of the planks to inspect the strength of the concrete. This resulted in the breakage of one to three inches of concrete off some planks, increasing the distance gap. The ease with which the cracks formed led Mr. Hildreth to believe there existed a weakness in the bearing capacity of the planks, which could eventually lead to the structure's collapse.

Concerned about the planks' bearing capacity, HCE and the other contractors agreed to install continuous, galvanized support angles throughout the garage to distribute the weight placed on the planks toward more structurally sound portions of the concrete. This solution was chosen, according to Mr. Hildreth, because the "sheer cost of removing all of [the] plank[s] and then replacing [them] with newly formed plank[s] was significantly greater than . . . installing the angle[s]." Installing these angles also prevented significant delays in the project's completion, which would have caused substantial costs. The cost of the support angles was $19,950.00, but the prime contractor, Clark, agreed to reimburse HCE for that cost. Although HCE claimed to have incurred $15,000.00 in related labor costs, at trial it submitted no itemized list or other documentary evidence detailing the number of workers and manhours necessary to complete the installation of the angles.

HCE claimed additional costs from the plank defects. It was charged for the grout used to fill the gap in the beams and reinforce the spalling concrete (approximately $52,000.00), and Clark backcharged HCE for the installation of expansion joints ($4,800.00) and garage offsets *fn6 within the concrete ($8,985.00), as well as costs associated with cleanup of the garage ($635.00) and the grinding of the garage beams ($4,247.00), necessary to remove excess grout that had accumulated down the side of the planks. Finally, Mr. Hildreth placed in evidence a letter indicating that HCE had spent over ninety manhours, at a billing rate of $60.00/manhour, in completing the original dimensional survey. Although Clark agreed to reimburse HCE for $29,985.00 in fees related to the grout (as well as $19,950.00 in fees related to the installation of the support angles), HCE received no repayment for the remaining funds it expended. As a result, HCE withheld payment on the remainder of its balance to Knight.

The non-jury trial spanned three days, concluding January 5, 2000, at which point the trial judge made oral findings. He found that Knight was entitled to the balance remaining for the manufacturing of the planks, as well as the full amount for transportation, because Knight had fully performed under the contract. He also granted monthly interest of 1.5% pursuant to D.C. Code § 15-108 on the amount remaining under the contract. In granting the interest, the judge reasoned, "I'm going to take the same rate of interest that the parties agreed to with respect to the overall contract, which is [1.5%]."

The judge then focused on appellants' counterclaim. Although finding that some of the planks were defective, *fn7 he expressed great difficulty in identifying the damages related to appellee's breach, stating:

I believe that with respect to any number of different costs that have been identified as damages, there's been a failure of proof. I believe that [appellants have] failed to prove by a preponderance of the evidence to the fact finder's satisfaction the extent . . . of damages on a number of items. With respect to labor costs, I have no documents to support that. Although they obviously did, I can't speculate . . . . Even if they're internally borne, there presumably are records indicating that there was so many manhours done . . . .

He also found insufficient support for damages related to the application of grout and the ...


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