Orders.
Further appellate review granted
ass Under § 9.4.2 of the General Conditions of the parties' Contract, the certifications constitute the Architect's representation, "based on the Architect's evaluation of the Work and the data comprising the Application for Payment, that the Work has progressed to the point indicated and that, to the best of the Architect's knowledge, information and belief, the quality of the Work is in accordance with the Contract documents." Thus, the Architect's certifications are evidence of the opinion held by the Architect — who was Al Jazeera's agent — of Winmar's progress on the Project.
These certifications were made close in time to the periods of work in dispute. In addition, the Architect acted as Al Jazeera's representative throughout the payment certification process. Thus, if there was any bias in the Architect's decision to certify the Payment Applications, it is reasonable to assume it would have been in Al Jazeera's favor. The evidence also showed that the Architect had inquired into Winmar's progress before certifying the Payment Applications, as discussed above.
The Court therefore accepts the certified Payment Applications as the most reliable evidence of the work completed by Winmar in the periods covered. See Jefferson Hotel Co. v. Brumbaugh, 168 F. 867 (4th Cir. 1909) (where construction contract made the architects the owner's supervising agents, but did not authorize the architects to issue a conclusive final certificate, an architect's certificate was prima facie evidence that the work had been performed according to the contract, placing the burden of proof on the owner to impeach the certificate). Al Jazeera bears the burden of rebutting the presumption of the certified Payment Applications' accuracy by presenting evidence that they were prepared incorrectly. However, Al Jazeera offered no evidence at trial showing how the Architect arrived at the decision to certify the Payment Applications. Instead, Al Jazeera simply argued that the Architect's rescission of its certification for the Payment Applications means they lack any evidentiary significance. That argument fails to rebut the presumption that the certified Payment Applications were prepared correctly.
The Court has never been able to understand why neither party ever called the Architect to testify.
The Architect's subsequent rescission of certification of Payment Application Nos. 1, 2, 2b, and 3 does not alter the Court's conclusion that they are reliable and accurate evidence of the work completed by Winmar. The rescission for lack of documentation was not authorized under the Contract, see § 5.3.5 of the Standard Form, and therefore has no legal validity. For the same reasons, the Architect's March 20, 2006 rescission of his prior approval of all of Winmar's certified Payment Applications and his conclusion that "Winmar has been over paid [sic] by the amount of $855,976" does not alter the Court's conclusion. JE 27 at 27-1. The Architect's rescission rested in large part on its conclusion "that Winmar is required to provide supporting information for all payment requests as a condition for receiving any payment." This conclusion is erroneous. Id. While the Architect might have required documentation from Winmar before certifying the Payment Applications, see § 5.1.4 of the General Conditions, there is no authority under the Contract to require such documentation after certifying the Payment Applications.
Finally, the fact that Winmar submitted two revised Payment Applications after Al Jazeera's termination for convenience does not alter the Court's conclusion. The two revised Payment Applications No. 3 were prepared by Villegas with the motive and intent of settling the parties' claims, and not as an accurate representation by Winmar of the work it believed was executed.
Although the Court concludes that the certified Payment Applications are, on the whole, the most reliable evidence of the work actually completed by Winmar up until December 7, 2005, the Court is mindful of certain discrepancies in Winmar's Payment Applications that contributed in part to the present dispute.
Next, Al Jazeera seeks to rebut the certified Payment Applications in two ways: first, by pointing to a much lower estimate of the work completed prepared by its own expert and, second, by pointing to alleged errors in the figures used by Winmar to calculate the amounts it claimed on the Payment Applications.
As to its first argument, Al Jazeera introduced testimony from Michael Etherton, Vice President of Mark G. Anderson Consultants, that in 2007, over a year after Winmar's termination, he prepared an evaluation of the work executed by Winmar on the Project. Etherton's evaluation estimated only 15-25% progress on several line items for which Winmar had claimed 70% progress on the Payment Applications. Etherton prepared his evaluation on the basis of his visits to the construction site shortly after Winmar's termination, the site logs kept by Winmar's site supervisor, photographs taken of the job site in late December 2005 by Francisco Tsai, the Architect's Project Manager, in the presence of Kris Collins of Mark G. Anderson Consultants, and additional photographs taken by Mark G. Anderson Consultants shortly after the January 11, 2006 termination for convenience.
Although Etherton had considerable experience as a professional estimator on construction projects, his testimony was impeached on cross examination on a number of issues. Winmar was able to show that several of his calculations were based on erroneous assumptions or miscategorizations of work under the Contract. In addition, Etherton's evaluation, which estimated that Winmar completed only 25.55% of the work under the base contract, see JE 30, stands in sharp contrast to the evaluation prepared shortly after Winmar's termination by Kris Collins, also of Mark G. Anderson Consultants. Collins estimated that Winmar had completed 50-60% of all work at the time of Al Jazeera's termination. Finally, over a year had passed between Winmar's termination from the Project and Etherton's evaluation, whereas Collins's evaluation was done shortly after the termination. For these reasons, the Court is not persuaded that Etherton's evaluation was more reliable regarding Winmar's progress than the Architect's contemporaneous certifications of completion.
For example, Etherton admitted on cross-examination that he erroneously concluded that Winmar was entitled to $0 in profits and fees on unexecuted work under § 14.4.3, that he based his estimate of Winmar's progress on the documented costs to Winmar, despite the fact that the Contract was a lump-sum contract, and that he misinterpreted the categories of work covered in Line Item Nos. 4 and 5, which led to potentially erroneous estimates.
As with the Architect, it is reasonable to assume that if there was any bias in Collins's estimate, it would have been in Al Jazeera's favor since he was working for Al Jazeera's consultant.
Etherton's demeanor during his testimony also raised strong doubts about his credibility.
As to its second argument, Al Jazeera also introduced evidence seeking to show that certain work that Winmar represented was completed at the end of each period covered in the Payment Applications was not, in fact, completed. However, as noted above, Al Jazeera produced no evidence at trial to show how the Architect decided to certify Winmar's Payment Applications. In the absence of any evidence from Al Jazeera that the Architect neglected its duties under the Contract in making the certification decisions, the certified Payment Applications are the most reliable evidence of the services performed by Winmar in the periods covered. Bearing this in mind, the Court will address each category of work in turn.
1. Line Item No. 1 — General Conditions.
Winmar claims 77% (or $62,986) of the total contract amount of $81,800 for Line Item No. 1 — General Conditions, which includes charges for administrative costs. The parties agree that the proper method of measuring the work completed under Line Item No. 1 is to take the number of days that Winmar spent working on the Project and divide it by the total number of days between the commencement of work and the termination for convenience on January 11, 2006. Using this methodology, Winmar calculates its claim by taking the number of days it spent on the Project, which is 98 (from the October 5, 2005 Letter of Intent to the January 11, 2006
Winmar counted 99 days from October 5, 2005 to January 11, 2006, which is consistent with its apparent approach of including March 1, 2006 as a day within the Contract period. Al Jazeera, in contrast, did not include March 1, 2006 in its count. Section 3.2 of the Standard Form states that "[t]he Contractor shall achieve Substantial Completion of the entire Work . . . as follows: Substantial Completion Date March 1, 2006." Because substantial completion means "the date on which all material elements of the work are sufficiently complete in conformance with the contract so that the owner can use the work for its intended purpose," the Court concludes that Al Jazeera's approach is correct, and that the work was to be completed by March 1, 2006 so that Al Jazeera could use it on that date. Bruner O'Connor on Construction Law § 15:15. Winmar's calculations have therefore been adjusted.
termination for convenience), and dividing that by 129, which is the total number of days between the commencement of work on October 16, 2005 and the termination for convenience on January 11, 2006. See Winmar's Supp. Post-Trial Brief, Ex. A.
As noted earlier, both parties have erroneously counted the number of days between October 16, 2005, the date on which Winmar began work, and March 1, 2006, the contractually agreed upon date for substantial completion, as 129. The total number of days between October 16, 2005 and March 1, 2006 is 136.
Even accounting for this error, it is not clear why Winmar would use 129 as the denominator in its calculation when it claims the period in which it incurred costs for General Conditions started on October 5, 2005. The period between October 5, 2005 and March 1, 2006 includes 147 days. The mathematically correct calculation, using Winmar's own method, is thus 98/147, which is rounded to 67%, or $54,806.
Al Jazeera claims that Winmar is due only 67%, not 77% as Winmar claims, for Line Item No. 1. Al Jazeera uses the same methodology that Winmar does, but includes only 87 days spent on the Project, beginning on October 16, 2005 — the actual date that Winmar began work — and ending on January 11, 2006, rather than Winmar's 98 days. Al Jazeera's calculation is based on the same flawed count of 129 days between October 16, 2005 and March 1, 2006. The proper calculation is therefore 87/136, which is rounded to 64%, or $52,352.
The Court concludes that Al Jazeera is correct in assuming that work started on October 16, 2005. There is no evidence in the record that Winmar executed any work between October 5, 2005 — when Al Jazeera approved its Letter of Intent — and October 16, 2005, which the parties agree was the date that Winmar's work actually began. See Jt. Pretrial Stmt. [Dkt. No. 57] at 22, 32. Thus, Winmar is entitled to $52,352 for Line Item No. 1 — General Conditions.
2. Line Item No. 2 — Demolition/Sitework.
The parties agree that Winmar is entitled to 100%, or $9,500, for Line Item No. 2.
3. Line Item No. 3 — Concrete.
Winmar claims 70% of the Contract Amount of $12,655 for Line Item No. 3 — Concrete, or $8,858. This claim is based on the Architect's certification of this amount in Payment Application Nos. 2 and 3. Al Jazeera claims that Winmar is entitled to $0, pointing to the fact that the parties agreed on this amount in their Joint Pretrial Statement. See Jt. Pretrial Stmt. at 10.
The Architect certified 10%, or $1,266, in Payment Application No. 2 and an additional 60%, or $7,593, in Payment No. 3.
"A party's failure to advance a theory of recovery in a pretrial statement issued following discovery conference constitutes waiver of that theory." Gregory v. Shelby County, Tenn., 220 F.3d 433, 442-43 (6th Cir. 2000); see also McCarthy v. Lerner Stores Corp., 9 F.R.D. 31 (D.D.C. 1949). The purpose of the pretrial statement is to narrow the issues and to put both the Court and the parties on notice of which issues of fact and law are in dispute. The Court, as well as the parties, are entitled to rely on the representations made in the pretrial statement in order to be fully prepared for trial.
Winmar failed to advance a theory of recovery in the Joint Pretrial Statement for Line Item No. 3 when it conceded it was not entitled to any recovery at all. In addition, Winmar raised no objection at trial to the Court's admission of paragraph 72 of Al Jazeera's proposed findings of fact, which states that "Winmar and Al Jazeera have agreed that Winmar is entitled to $0 for Line Item No. 3 of the Contract, Concrete." Jt. Pretrial Statement at 43. Thus, Winmar has waived its claim for monies owed under Line Item No. 3. The Court therefore concludes that Winmar is entitled to $0.
4. Line Item No. 4 — Rough Finish Carpentry.
Winmar claims 49% of the Contract Amount of $36,525 for Line Item No. 4 — Rough Finish Carpentry, or $17,897. This claim is based on the Architect's certification of 25% due in Payment Application No. 2, as well as testimony from Condon that additional work had been executed in the period from December 7, 2005 to January 11, 2006, which was not included in the Architect's certifications.
Al Jazeera claims that Winmar is entitled to 15% of Line Item No. 4, or $5,749, based upon its presentation of evidence at trial, including the photographs in Joint Exhibits 2 and 3. The Court did not find this evidence convincing.
The Architect's certification of 25% work completed for Line Item No. 4 is the most reliable evidence of the work done between October 16, 2005 and December 7, 2005. The Court therefore concludes that Winmar is entitled to 25% of Line Item No. 4 — Rough Finish Carpentry for this period, which is $9,153. Whether Winmar is entitled to additional damages for work completed from December 7, 2005 through January 11, 2006 will be discussed below in Section A.26.
5. Line Item No. 5 — Doors, Frames Misc.
Winmar claims that it is entitled to payment for 70% of the Contract Amount of $115,623 for Line Item No. 5 — Doors, Frames Misc., or $80,936. This claim is based on the Architect's certification for payment of 70% of the Contract Amount in Payment Application Nos. 2 and 3 and on the evidence introduced at trial.
The Architect certified 10%, or $11,562, in Payment Application No. 2 and an additional 60%, or $69,374, in Payment No. 3.
Al Jazeera claims that Winmar is entitled to $0, pointing to the fact that the parties agreed on this amount in their Joint Pretrial Statement. See Jt. Pretrial Stmt. at 11. As discussed above, Winmar waived any claims for recovery not raised in the Joint Pretrial Statement. In addition, Winmar raised no objection at trial to the Court's admission of paragraph 74 of Al Jazeera's proposed findings of fact, which states that "Winmar and Al Jazeera have agreed that Winmar is entitled to $0 for Line Item No. 5 of the Contract, Doors, Frames Misc." Jt. Pretrial Statement at 44. Because Winmar failed to advance a claim under Line Item No. 5 in the Joint Pretrial Statement or at trial, the Court concludes that Winmar is entitled to $0.
6. Line Item No. 6 — Drywall, Partitions Framing.
Winmar claims that it is entitled to 75% of the Contract Amount of $156,215 for Line Item No. 6 — Drywall Partitions Framing, or $117,161. This claim is based on the Architect's certification of payment for 70% of the Contract Amount in Payment Application Nos. 2 and 3, and on the evidence introduced at trial of work completed on the Project from December 7, 2005 through January 11, 2006, which was not included in the Architect's certifications.
Al Jazeera claims that Winmar is entitled to 25%, which is $39,054, for Line Item No. 4, based upon its presentation of evidence at trial, including the photographs in Joint Exhibits 2 and 3. The Court did not find this evidence convincing.
The Architect's certification of 70% work completed for Line Item No. 6 is the most reliable evidence of what work was done between October 16, 2005 and December 7, 2005. The Court therefore concludes that Winmar is entitled to 70% of Line Item No. 6 — Drywall Partitions Framing for this period, which is $109,351. Whether Winmar is entitled to additional damages for work completed from December 7, 2005 through January 11, 2006 will be discussed below in Section A.26.
7. Line Item No. 7 — Carpet.
Winmar claims that it is entitled to payment for 10% of the Contract Amount of $43,915 for Line Item No. 7 — Carpet, or $4,392. This claim is based on the Architect's certification for payment of 10% of the Contract Amount in Payment Application No. 2 and on the evidence introduced at trial that the carpet had been ordered prior to December 7, 2005.
Al Jazeera claims that Winmar is entitled to $0, pointing to the fact that the parties agreed on this amount in their Joint Pretrial Statement. See Jt. Pretrial Stmt. at 11. As discussed above, Winmar waived any claims for recovery not raised in the Joint Pretrial Statement. In addition, Winmar raised no objection at trial to the Court's admission of paragraph 76 of Al Jazeera's proposed findings of fact, which states that "Winmar and Al Jazeera have agreed that Winmar is entitled to $0 for Line Item No. 7 of the Contract, Carpet." Jt. Pretrial Statement at 44. Because Winmar failed to advance a claim under Line Item No. 7 in the Joint Pretrial Statement or at trial, the Court concludes that Winmar is entitled to $0. 8. Line Item No. 8 — Painting.
Winmar claims that it is entitled to payment for 70% of the Contract Amount of $10,115 for Line Item No. 8 — Painting, or $7,081. This claim is based on the Architect's certification for payment of 70% of the Contract Amount in Payment Application Nos. 2 and 3 and on the evidence introduced at trial.
The Architect certified 10%, or $1,012, in Payment Application No. 2 and an additional 60%, or $6,069, in Payment No. 3.
Al Jazeera claims that Winmar is entitled to $0, pointing to the fact that the parties agreed on this amount in their Joint Pretrial Statement. See Jt. Pretrial Stmt. at 11. As discussed above, Winmar waived any claims for recovery not raised in the Joint Pretrial Statement. In addition, Winmar raised no objection at trial to the Court's admission of paragraph 77 of Al Jazeera's proposed finding of fact, which states that "Winmar and Al Jazeera have agreed that Winmar is entitled to $0 for Line Item No. 8 of the Contract, Painting." Jt. Pretrial Statement at 44. Because Winmar failed to advance a claim under Line Item No. 8 in the Joint Pretrial Statement or at trial, the Court concludes that Winmar is entitled to $0.
9. Line Item No. 9 — Equipment.
Winmar makes no claim for Line Item No. 9.
10. Line Item No. 10 — Third Party Inspections.
Winmar makes no claim for Line Item No. 10.
11. Line Item No. 11 — Fire protection.
Winmar claims that it is entitled to payment of 70% of the Contract Amount of $53,515 for Line Item No. 11 — Fire Protection, or $37,461. This claim is based on the Architect's certification for payment of 70% of the Contract Amount in Payment Application Nos. 2 and 3 and on the evidence introduced at trial.
The Architect certified 33%, or $17,477, in Payment Application No. 2 and an additional 37%, or $19,984, in Payment Application No. 3.
Al Jazeera claims that Winmar is entitled to $17,927, pointing to the fact that the parties agreed on this amount in their Joint Pretrial Statement. See Jt. Pretrial Stmt. at 11. As discussed above, Winmar waived any claims for recovery not raised in the Joint Pretrial Statement. In addition, Winmar raised no objection at trial to the Court's admission of paragraph 80 of Al Jazeera's proposed finding of fact, which states that "Winmar and Al Jazeera have agreed that Winmar is entitled to $17,927 for Line Item No. 11 of the Contract, Fire Protection." Jt. Pretrial Statement at 44. Because Winmar represented in the Joint Pretrial Statement and at trial that it would not dispute that it is owed $17,927 for work completed under Line Item No. 11, its current claim for $37,461 is rejected. The Court therefore concludes that Winmar is entitled to $17,927. 12. Line Item Nos. 12 and 13 — Plumbing and HVAC.
In its Supplemental Post-Trial Brief, Winmar combined Line Item Nos. 12 — Plumbing and 13 — HVAC into one category of work, for which it claims 70% of the total Contract Amount.
Winmar claims that it is entitled to payment of 70% of the combined Contract Amount of $708,257 for Line Item No. 12 — Plumbing and Line Item No. 13 — HVAC, or $480,418. This claim is based on the Architect's certification for payment of 100% of the Contract Amount of $21,945 for Plumbing and 70% of the Contract Amount of $686,312 for HVAC in Payment Application Nos. 2, 2b, and 3 and on the evidence introduced at trial.
The Architect certified 100%, or $21,946, for Line Item No. 12 and 32%, or $222,631, for Line Item No. 13 in Payment Application No. 2. The Architect also certified an additional 8%, or $57,936, for Line Item No. 13 in Payment Application No. 2b and an additional 29%, or $199,851, in Payment Application No. 3. Thus, the Architect certified total payment due of $502,364 for Line Item Nos. 12 and 13. Winmar has not explained why it seeks a lesser amount here.
Al Jazeera claims that Winmar is entitled to $0 for Line Item No. 12 — Plumbing on the theory that title must pass to Al Jazeera for work to be considered "executed" under § 14.4.3 and, alternatively, based on the testimony of Bradlee Bolino from John J. Kirlin, Inc. that no plumbing work was done.
Al Jazeera relies on § 9.3.3 of the General Conditions, which states that "[t]he Contractor warrants that title to all Work covered by an Application for Payment will pass to the Owner no later than the time of payment." Al Jazeera interprets this provision to mean that passage of title is a precondition to payment. In other words, Al Jazeera argues that Winmar must pass title to Al Jazeera in order to receive payment. However, Section 9.3.3 simply states that, upon payment for Winmar's work, title shall pass to Al Jazeera. It does not make passage of title a precondition to payment. See Bruner O'Connor on Construction Law § 5:169.
In addition, Article 5 of the Standard Form makes clear that Winmar's Payment Applications were to be based on its estimate of the amounts needed for the coming month. Section 5.1.2.2 states that the "Owner agrees to deposit each Monthly Estimated Draw with an escrow agent selected by the Contractor ("Escrow Agent") on or before the last day of the month prior to month [sic] the Monthly Estimated Draw is actually incurred by the Contractor." The Contract also clearly states that "[a]ny inconsistency in the Contract Documents shall be resolved by giving precedence to" the Standard Form over the General Conditions. Thus, even if Al Jazeera's interpretation of § 9.3.3 were accepted, it would conflict with Article 5 of the Standard Form, which takes precedence.
In any event, there is nothing in the parties' Contract to suggest that payment for "Work executed" under § 14.4.3 is to be calculated by reference to Article 9, which sets forth the procedures for making payment applications to the Architect for "operations completed." More significantly, the provision has no application at all to Winmar's restitution claim, which is based on the value of the services performed.
Finally, to the extent that Al Jazeera makes this argument in order to rebut the presumption of accuracy and reliability given to the certified Payment Applications by suggesting that they were prepared incorrectly, it is rejected. As discussed above, there is reason to doubt whether § 9.3.3 applies because it appears to conflict with Article 5 of the Standard Form. More importantly, there is no evidence in the record as to how the Architect justified its decision to certify the Payment Applications. In the absence of such evidence, the presumption of accuracy and reliability given to the certified Payment Applications is not rebutted.
Furthermore, the Court is not persuaded by Bolino's testimony that no plumbing work was done in light of the Architect's certification and the extensive credible testimony from Chris Condon of Winmar, based on his review of the photographs in Joint Exhibits 2 and 3, that the labor-intensive portions of the HVAC and plumbing work were, in fact, completed. Thus, as Winmar claims a lesser amount than that certified by the Architect, the Court concludes it is entitled to its claim for $480,418.
13. Line Item No. 14 — Electrical Fire Alarm.
Winmar claims that it is entitled to 70% of the Contract Amount of $865,955 for Line Item No. 14 — Electrical Fire Alarm, or $606,169. This claim is based on the Architect's certification of payment for 70% of the Contract Amount in Payment Application Nos. 2, 2b, and 3 and on the other evidence introduced at trial.
The Architect certified 52%, or $451,056, in Payment Application Nos. 2 and 2b and an additional 18%, or $155,113, in Payment No. 3.
Al Jazeera claims Winmar is entitled to 25%, which is $216,489, for Line Item No. 14 based upon its presentation of evidence at trial, including the photographs in Joint Exhibits 2 and 3.
The Architect's certification of 70% of work completed for Line Item No. 14 is the most reliable evidence of what work was done on the Project. The Court therefore concludes that Winmar is entitled to 70% of Line Item No. 14 — Electric and Fire Alarm, which is $606,169.
14. Line Item No. 15 — General Conditions Overhead and Fee
Winmar claims that it is entitled to 100% of the Contract Amount of $250,740 for Line Item No. 15 — General Conditions Overhead and Fee. This claim is based on the Architect's certification of payment for 70% of the Contract Amount in Payment Application Nos. 2 and 3 and Winmar's interpretation of "reasonable overhead and profit" in § 14.4.3.
Line Item No. 15 — General Conditions Overhead and Fee does not cover work that was to be completed on the Project, but is rather a separate allotment in the base contract for profits and fees. Al Jazeera concedes that Winmar is entitled to a portion of Line Item 15, to be calculated by taking the percent of work completed on Line Items 1-14 and multiplying it by the Contract Amount of $250,740 for overhead and fee. Supp. Brief of Al Jazeera at 16.
As discussed, the Court concludes that Winmar is entitled to a total payment of $1,284,870 for work completed under Line Item Nos. 1-14, which is 61% of the total base contract amount of $2,100,875 for Line Item Nos. 1-14. The Court therefore concludes that Winmar is entitled to 61% of Line Item No. 15, or $153,350, for work completed. The remainder of Winmar's claims for overhead and fee on work not executed are considered separately as claims for "reasonable overhead and profit" under § 14.4.3.
15. Change Order #1 — Trane Multistack Chiller
Winmar claims that it is entitled to payment of 100% of the $157,000 Contract Amount for Change Order No. 1 — Trane Multistack Chiller, or $157,000. Change Order No. 1 was issued to furnish and install a Trane Multistack Chiller, which is a large air conditioning unit for the building's central cooling system. JE 5 at 5-1. The Architect certified that 100% of this amount was due in Payment Application No. 2 for work ending October 31, 2005.
Al Jazeera relies on § 9.3.2 of the General Conditions, which states that "[u]nless otherwise provided in the Contract Documents, payments shall be made on account of materials and equipment delivered and suitably stored at the site for subsequent incorporation in the Work." Al Jazeera argues, based on this provision, that Winmar is entitled to $0 because the Trane Multistack Chiller was not delivered to the job site while Winmar was on the Project.
First, as noted above, Article 5 of the Standard Form, which sets forth the procedures for progress payments, takes precedence over conflicting provisions of the General Conditions. Second, nothing in the Contract indicates that payment for "Work executed" under § 14.4.3 is to be calculated by reference to Article 9. Third, regardless of the application of § 9.3.2, Winmar is still entitled to the value of services performed for its restitution claim.
Finally, Al Jazeera's argument fails to adequately rebut the presumption of accuracy and reliability given to the certified Payment Applications. While § 9.3.2 provides that payment shall generally be made upon delivery and/or storage of equipment at the work site, it also makes clear that there are exceptions to that rule: for example, if "otherwise provided in the Contract Documents" or if advance approval is given by Al Jazeera. Al Jazeera has offered no evidence of the Architect's reasons for certifying the Payment Applications, including why the Architect chose to certify payment when equipment was allegedly not delivered or stored on site. In the absence of such evidence, Al Jazeera's
efforts to discredit the certified Payment Applications must be rejected.
It should be noted that Condon testified credibly that the Trane Multistack Chiller was ordered by Winmar, and that Winmar paid a $120,000 deposit required by John J. Kirlin. Condon also stated that, although Payment Application No. 2 was sent on October 20, 2005, by the time it was certified on December 7, 2005 all materials referenced in it were either on site or had been ordered through vendors. Al Jazeera offered no conflicting evidence on this point.
The Architect's certification of 100% of work completed for Change Order No. 1 is the most reliable evidence of what work was done on the Project. The Court therefore concludes that Winmar is entitled to $157,000.
16. Change Order No. 2 — Premium Time
Winmar claims it is entitled to payment of 100% of the $365,135 Contract Amount for Change Order No. 2 — Premium Time. This claim is based on the Architect's certification for payment of 100% of the Contract Amount in Payment Application Nos. 2 and 3 and on the other evidence at trial.
The Architect certified 62%, or $225,000, in Payment Application No. 2 and an additional 38%, or $140,135, in Payment No. 3.
Al Jazeera argues that Winmar is limited to $225,000 in premium time because the October 11, 2005 Change Order, which predates the Contract and also predates Change Order No. 2, was limited to that amount, see JE 5 at 5-2. This argument fails because the Monthly Cash Flow Projection Sheet, which was incorporated into the Contract, specifically states that the Total Contract Amount is the base contract amount of $2,351,615, plus $522,135 for change orders #1 and #2. Because Change Order No. 1 — Trane Multistack Chiller is for $157,000, Change Order No. 2 — Premium Time is, as a matter of logic, $522,135 minus $157,000, which is $365,135.
This Change Order pre-dated the signing of the Contract, and therefore has no number.
Next, Al Jazeera argues that Winmar is limited to only $17,000 because that is all that Kirlin invoiced, see Al Jazeera's Exhibit 18. However, the evidence established that Winmar's claim for 100% of Change Order No. 2 was based on overtime performed by multiple sub-contractors, as well as by Winmar employees. The Architect's certification of payment for 100% of the agreed-upon amount for overtime work is the most reliable evidence of the overtime worked, especially given the credible testimony that Winmar was under substantial time pressure because of Al Jazeera's multiple design changes. Thus, the Court concludes that Winmar is entitled to payment of 100% of the Contract Amount for Change Order No. 2 — Premium Time, or $365,135.
17. Change Order No. 3 — Buckhoist
Winmar claims it is entitled to payment of 77% of the $48,415 Contract Amount for Change Order No. 3 — Buckhoist, or $37,280. Change Order No. 3 was issued for a buckhoist, which is a temporary elevator attached to the outside of the building used to lift heavy materials. Winmar bases its claim on the Architect's certification for payment of 50% of the Contract Amount in Payment Application No. 1 and on Condon's testimony that the buckhoist was provided for three of the four months of work under the Contract.
Al Jazeera claims Winmar is entitled to 50%, which is $24,207.50, for Change Order No. 3 based upon its presentation of evidence at trial which shows that Winmar provided the buckhoist for only two months (November 11, 2005 — January 13, 2006). See Al Jazeera Exhibits 16, 23, 35, 36 and 37.
The Architect's certification of payment for 50% of the agreed-upon amount is the most reliable evidence of the work completed under Change Order No. 3 by December 7, 2005. The invoices from Millstone Enterprises, Inc., the sub-contractor who provided the buckhoist, and the checks made out to Millstone by Winmar, see Al Jazeera Exhibits 16, 23, 35, 36, and 37, lend support to the finding that the buckhoist was provided by Winmar for two months, not three. Thus, the Court concludes that Winmar is entitled to payment of 50% of the Contract Amount for Change Order No. 3, or $24,207.50.
18. Change Order No. 4 — UPS Changed Spec
Winmar claims that it is entitled to payment of 80% of the $48,355 Contract Amount for Change Order No. 4 — UPS Changed Spec, or $38,684. Change Order No. 4 was issued to furnish and install a Liebert Uninterrupted Power Source, which is an electrical apparatus that provides an emergency power source. The Architect certified that 80% of the Contract Amount was due in Payment Application No. 1.
The Contract Amounts Winmar lists for Change Order Nos. 4, 5, 6A, 6B, 6C, 7, 8, and 10 in Exhibit A to its Supplemental Post-Trial Brief are not equal to the "scheduled value" listed in the certified Payment Application No. 1 or in the Contract because Winmar has separated the overhead and fee portion of the scheduled value, for which it claims 100% is due under § 14.4.3. Because the Court addresses Winmar's § 14.4.3 claims for reasonable overhead and profit on work not executed separately from its claims for payment for work completed, it relies on the scheduled values in the Contract in its discussion of the amount due for work completed for these change orders.
Al Jazeera argues that Winmar is entitled to $0 under Change Order No. 4 because the equipment was neither installed nor delivered to the construction site. As discussed above, this argument fails to rebut the presumption that the certified Payment Applications constitute reliable and accurate evidence of the work performed. Because the Architect's certification of Payment Application No. 1 is the most reliable evidence of the work performed, the Court concludes that Winmar is entitled to $38,684.
19. Change Order No. 5 — Generator
Winmar claims that it is entitled to payment of 70% of the $93,447 Contract Amount for Change Order No. 5 — Generator, or $65,413. This claim is based on the Architect's certification for payment of 70% of this amount in Payment Application No. 1.
Al Jazeera argues that Winmar is entitled to $0 under Change Order No. 5 because the equipment was neither installed nor delivered to the construction site. For the reasons given above in the discussion of Change Order No. 1, this argument fails to rebut the presumption that the certified Payment Applications constitute reliable and accurate evidence of the work performed. Because the Architect's certification of Payment Application No. 1 is the most reliable evidence of the work performed, the Court concludes that Winmar is entitled to $65,413.
20. Change Order No. 6A — Steel Dunnage
Winmar claims that it is entitled to payment of 60% of the $152,515 Contract Amount for Change Order No. 6 — Steel Dunnage, or $91,509. Change Order No. 6A was issued to furnish and install steel dunnage, which is a structural support platform, on the building's roof in preparation for installation of the HVAC system. Winmar's claim is based on the Architect's certification for payment of 60% of the Contract Amount in Payment Application No. 1.
Al Jazeera argues that Winmar is entitled to $0 under Change Order No. 6A because the equipment was neither installed nor delivered to the construction site. For the reasons given above in the discussion of Change Order No. 1, this argument fails to rebut the presumption that the certified Payment Applications constitute reliable and accurate evidence of the work performed. Because the Architect's certification of Payment Application No. 1 is the most reliable evidence of the work performed, the Court concludes that Winmar is entitled to $91,509.
In addition, Condon testified credibly that, although the equipment was never delivered or installed, the amount claimed is attributable to payments made to a sub-contractor of John J. Kirlin, Inc. for shot drawings and equipment.
21. Change Order No. 6B — Fuel Tank and Equipment and Additional Piping
Winmar claims that it is entitled to payment of 55% of the $81,625 Contract Amount for Change Order No. 6B — Fuel Tank, or $44,894. Winmar's claim is based on Condon's testimony at trial that this was the number agreed upon at the January 11, 2006 meeting.
As has already been discussed, there was no agreement reached at the January 11, 2006 meeting. In addition, Condon testified that Winmar never ordered the equipment because Change Order No. 6B was never signed, as is required under § 7.2.1 of the General Conditions, and that no work was performed apart from "due diligence". Thus, the Court concludes that Winmar has failed to prove that it is entitled to $44,894 for Change Order No. 6B, and therefore is entitled to $0.
22. Change Order No. 6C — Revised MEP Plans #1
Winmar claims that it is entitled to payment of 90% of the $37,385 Contract Amount for Change Order No. 6C — Revised MEP Plans #1, or $33,647. Change Order No. 6C was issued for "[s]heet metal and insualtion [sic], per new plans Re-dsign [sic] time for new lay-out and configuration." JE 5 at 5-11. Winmar's claim is based on the Architect's certification for payment of 90% of the Contract Amount in Payment Application No. 1 and on other evidence at trial.
Al Jazeera argues that Winmar is entitled to $0 under Change Order No. 6A because the work was neither installed nor delivered to the construction site. For the reasons given above in the discussion of Change Order No. 1, this argument fails to rebut the presumption that the certified Payment Applications constitute reliable and accurate evidence of the work performed. In addition, Condon testified credibly that the work required under Change Order No. 6C was installed.
In light of this testimony, and because the Architect's certification of payment for 90% of the Contract Amount is the most reliable evidence of the value of the work done by Winmar under Change Order No. 6C, the Court concludes that Winmar is entitled to $33,647.
23. Change Order No. 7 — Sprinklers
Winmar claims that it is entitled to payment of 50% of the $33,523 Contract Amount for Change Order No. 7 — Sprinklers, or $16,762. Winmar's claim is based on the Architect's certification for payment of 50% of the Contract Amount in Payment Application No. 1.
Al Jazeera argues that Winmar is entitled to $0 under Change Order No. 7 because the equipment was neither installed nor delivered to the construction site. For the reasons given above in the discussion of Change Order No. 1, this argument fails to rebut the presumption that the certified Payment Applications constitute reliable and accurate evidence of the work performed. Because the Architect's certification of Payment Application No. 1 is the most reliable evidence of the work performed, the Court concludes that Winmar is entitled to $16,762.
24. Change Order No. 8 — Glass
Winmar claims that it is entitled to payment of 24% of the $20,467 Contract Amount for Change Order No. 8 — Glass, or $5,000. Winmar's claim is based on the Architect's certification for payment of 24% of the Contract Amount in Payment Application No. 1.
Al Jazeera argues that Winmar is entitled to $0 under Change Order No. 7 because the equipment was neither installed nor delivered to the construction site. For the reasons given above in the discussion of Change Order No. 1, this argument fails to rebut the presumption that the certified Payment Applications constitute reliable and accurate evidence of the work performed. Because the Architect's certification of Payment Application No. 1 is the most reliable evidence of the work performed, the Court concludes that Winmar is entitled to $5,000. 25. Change Order No. 10 — Electrical Revisions
Winmar claims that it is entitled to payment of 65% of the $302,238 Contract Amount for Change Order No. 10 — Electrical Revisions, or $196,455. Winmar's claim is based on the Architect's certification for payment of 65% of the Contract Amount in Payment Application No. 1.
Al Jazeera argues that Winmar is entitled to $0 under Change Order No. 7 because the equipment was neither installed nor delivered to the construction site. For the reasons given above in the discussion of Change Order No. 1, this argument fails to rebut the presumption that the certified Payment Applications constitute reliable and accurate evidence of the work performed. Because the Architect's certification of Payment Application No. 1 is the most reliable evidence of the work performed, the Court concludes that Winmar is entitled to $196,455.
26. Payment for Work Completed Between December 7, 2005 and January 11, 2006
The Architect's certifications offer no evidence of what work was executed by Winmar on Line Item Nos. 4 (Rough Finish Carpentry) and 6 (Drywall Partitions Framing) between December 7, 2005 — the end of the period covered in the Payment Applications — and January 11, 2006, when Winmar was terminated for convenience. By the Court's own calculation, Winmar claims $16,554 for the work completed in that period.
The Court based its calculation on the spreadsheet attached as Exhibit A to Winmar's Supplemental Post-Trial Brief. Specifically, Winmar claims an additional 24% of work completed beyond the 25% previously certified for the earlier period by the Architect, or $8,744, for Line Item No. 4 — Rough Finish Carpentry and an additional 5% of work completed beyond the 70% previously certified for the earlier period by the Architect, or $7,810, for Line Item No. 6 — Drywall Partitions Framing. See Ex. A to Winmar's Supp. Post-Trial Brief.
Winmar relies on the testimony of Chris Condon that it had completed approximately 80% of Line Item No. 4 on the seventh floor, 15% of Line Item No. 4 on the fourth floor, and 5% of Line Item No. 4 on the first floor by January 11, 2006. Condon also testified that Winmar had completed 75% of Line Item No. 6 by January 11, 2006. Condon based his testimony on his considerable knowledge of the work done on the construction site, as well as careful explanations of the photographs contained in Joint Exhibits 2 and 3. The Court finds his testimony credible, and concludes that Winmar has proven that it is entitled to an additional amount of $16,554 for work completed on Line Item Nos. 4 and 6 for the period from December 7, 2005 to January 11, 2006.
Thus, Winmar has met its burden to prove, with reasonable certainty, that a total of $2,448,586.50 is due for the value of the work performed on the Project at the point of termination: Line Item No. Amount Owed Under Section 14.4.3 1 $52,352.00 2 $9,500.00 3 $0.00 4 $9,153.00 5 $0.00 6 $109,351.00 7 $0.00 8 $0.00 9 $0.00 10 $0.00 11 $17,927.00 12 13 $480,418.00 14 $606,169.00 15 $153,350.00 Change Order No. 1 $157,000.00 2 $365,135.00 3 $24,207.50 4 $38,684.00 5 $65,413.00 6A $91,509.00 6B $0.00 6C $33,647.00 7 $16,762.00 8 $5,000.00 10 $196,455.00 Period from 12/7/05 — 1/11/06 $16,554.00 TOTAL: $2,448,586.50 B. Reasonable Overhead and Profit on Work Not Executed
The parties also dispute the amount of overhead and profit on the unexecuted work to which Winmar is entitled under § 14.4.3. Winmar claims that it is owed approximately $125,000, which is the sum of the remaining amount in Line Item No. 15 — General Conditions Overhead Fee of the Contract and any remaining portions of the overhead and fee components broken out by Winmar in Change Order Nos. 4, 5, 6A, 6B, 6C, 7, 8, and 10.
Winmar claims that "[t]otal overhead and fee on this Project, left unpaid at the time of termination is $211,483." Winmar's Post-Trial Supp. Brief at 2. The Court has already determined that portions of this total overhead and fee amount are owed for work which has been executed, supra Section I.A.14. The "reasonable overhead and profit" to which Winmar is entitled under § 14.4.3, however, is for unexecuted work.
Al Jazeera contends that those "overhead and fee" provisions do not constitute "reasonable overhead and profit" under § 14.4.3 because the former includes a general fee not recoverable under the latter provision. Specifically, Al Jazeera argues that:
Winmar's Overhead and Fee Claims [] fail as a matter of law because the amount of its `overhead' is never separately broken out from its `fee' and because `profit' within the meaning of Section 14.4.3 is not synonymous with `fee.' A fee is simply an amount charged, whereas lost profits are the difference between gross income and the costs or expenses that had to be expended to produce that income.
Supp. Brief of Al Jazeera at 4-5. Winmar has made no response to this legal argument, which Al Jazeera raised at trial.
In fact, Winmar's only argument offered to prove "reasonable overhead and profit" is that "the overhead and fee amounts were agreed to by the parties as part of the base contract and on the approved change orders." Winmar's Supp. Post-Trial Brief at 2. Winmar's burden to prove its damages under § 14.4.3 requires more than this. Winmar has not offered any persuasive legal arguments explaining why the "reasonable overhead and profit" it is entitled to under § 14.4.3 should be interpreted as the agreed-upon Contract Amount for "Overhead and Fee." See, e.g.,Vector Realty Grp., Inc. v. 711 Fourteenth Street, Inc., 659 A.2d 230, 234 (D.C. 1994) (evidence offered in support of damages must form an adequate basis for a reasoned judgment) (citation omitted). The Court therefore concludes that Winmar has not carried its burden with respect to proving the reasonable overhead and profit it is due under § 14.4.3.
While it is not necessary to decide this issue, it may well be that § 14.4.3 requires Winmar to prove, to a reasonable certainty, the amount of profit it would have actually realized through performance of the Contract. For example, under a similar termination for convenience provision used in government contracts, the Federal Acquisition Regulations require a far more complicated calculation of the actual profit a contractor would have made had performance of the contract been completed. See Bruner O'Connor on Construction Law § 5:270.
C. Pre-Judgment and Post-Judgment Interest
Finally, Winmar claims both pre-judgment and post-judgment interest on its damages. Section 7.2 of the Standard Form provides: "[p]ayments due and unpaid under the Contract shall bear interest from the date payment is due at [12% simple interest]. . . ."
Al Jazeera does not deny that § 7.2 of the Standard Form applies to Winmar's damages claims, but instead argues that D.C. Code § 15-108 governs the Contract. Supp. Brief of Al Jazeera at 6-7 [Dkt. No. 65]. Section 15-108 establishes a statutory mandate for prejudgment interest in actions to recover a liquidated debt:
In an action in the United States District Court for the District of Columbia . . . to recover a liquidated debt on which interest is payable by contract or by law or usage the judgment for the plaintiff shall include interest on the principal debt from the time when it was due and payable, at the rate fixed by the contract, if any, until paid.
Under District of Columbia law, "a debt is liquidated if, at the time it arose, it was an easily ascertainable sum certain." Elzeneiny v. District of Columbia, 699 F.Supp.2d 31, 34-35 (D.D.C. 2010). As this Opinion demonstrates, Winmar's damages under § 14.4.3 of the General Conditions were not easily ascertainable when Al Jazeera terminated for convenience. Thus, Al Jazeera is correct that D.C. Code § 15-108 does not mandate pre-judgment interest for Winmar's unliquidated debts.
However, Al Jazeera has cited no authority to support its conclusion that, as a result, Winmar is precluded from enforcing an independent contractual right to pre- and/or post-judgment interest. There is nothing in the language of § 15-109 to suggest that it precludes the enforcement of a contractual provision granting a party the right to collect interest on payments due at a given rate. The Court therefore concludes that Winmar is entitled to pre- and post-judgment interest under § 7.2 of the Standard Form. See, e.g., Klayman v. Judicial Watch, Inc., 628 F.Supp.2d 112, 159-60 (D.D.C. 2009) (asking whether contract provided for pre-judgment interest on breach of contract claim before turning to D.C. Code).
In addition, D.C. Code § 15-109 gives the Court broad discretion to award pre-judgment interest on unliquidated breach of contract claims "if necessary to fully compensate the plaintiff." D.C. Code § 15-109 (2010).
CONCLUSION
For the foregoing reasons, the Court concludes that Winmar is entitled to $2,448,586.50 in compensation for work completed on the Project and $24,500 in suspension fees, for a total of $2,473,086.50. Winmar is entitled to no payment for reasonable overhead and profit on work not executed under § 14.4.3. The amount of $2,448,586.50 shall be increased by the $119,380 refund Winmar paid to Al Jazeera and reduced by the $1,119,841 in payments made to Winmar by Al Jazeera, which results in a final amount owed of $1,472,625.50, to which pre-judgment and post-judgment interest applies.
September 29, 2010