City of Shively v. Hyde

438 S.W.2d 512, 1969 Ky. LEXIS 409
CourtCourt of Appeals of Kentucky
DecidedMarch 7, 1969
StatusPublished
Cited by2 cases

This text of 438 S.W.2d 512 (City of Shively v. Hyde) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Shively v. Hyde, 438 S.W.2d 512, 1969 Ky. LEXIS 409 (Ky. Ct. App. 1969).

Opinion

CULLEN, Commissioner.

R. W. Hyde, Jr., and R. B. Tyler Company, engaging in a joint venture under the name Hy-Ty Company, entered into a $2.7 million contract with the City of Shively for construction of a sewer system, calling for installation of some 60 miles of sewer pipe and the construction of various pumping and lift stations. When the project ended the parties were in a state of controversy. The city claimed that the work had been done defectively; it withheld the last progress payment of $32,649 and the final completion retainage of $150,000; it asked over $3.5 million by way [514]*514of damages for defective construction; and it claimed $93,900 as liquidated damages for delay in performance. The contractors not only claimed the progress and retain-age payments but asserted a claim of damages of some $450,000 for delays caused by the city and a claim of some $85,000 for extra work.

The contractors brought suit against the city asking in Count One of their complaint for an arbitration as alleged to have been provided for in the contract, and in Count Two for a declaration of rights and a judgment against the city for such amounts as the court should find were due the contractors. The city moved to dismiss the complaint for failure to state a claim on which relief could be granted. The motion was sustained as to Count One only. Thereupon the city filed an answer, and a counterclaim asking damages of some $3.6 million.

The case was tried on depositions. The judgment awarded the contractors $150,000 for retainage, $32,649 for last progress payment, $48,643.04 for sheeting called for by the contract, and $14,180.08 for extras. It allowed the city, as an offset, liquidated damages for delay in the amount of $93,900 and damages for defects in the amount of $1,765, making a net recovery for the contractors of $149,807.12. On this amount the judgment awarded interest from the date the project ended, November 30, 1962.

The city has appealed and the contractors have cross-appealed.

The city’s first contention is that the trial court erred in refusing to dismiss Count Two of the complaint for failure to state a claim upon which relief could be granted. The contention rests on the proposition that under the terms of the contract there were three conditions precedent to the right of the contractors to receive final payment and that the complaint was fatally defective because it failed to allege compliance with any of those conditions. The alleged conditions were: (1) The issuance of a final certificate of satisfactory completion, by the supervising engineer; (2) the signing of a release of claims by the contractors; and (3) the making of a final clean-up satisfactory to the supervising engineer.

We think the contention is not sustainable, for two reasons. First, although the city moved at the outset of the action to dismiss the entire complaint, it is clear from the record that their motion was addressed solely to Count One. In the brief they submitted to the circuit court in support of their motion they not only confined their argument to the plea for arbitration set forth in Count One, but they specifically urged that Count Two be transferred to the Common Pleas Branch for a jury trial. At no time during the taking of proof was any suggestion made that Count Two was defective for failure to allege compliance with conditions precedent. Only after the trial court had made its findings and conclusions was the point raised. We think the objection came too late. In the second place, we think the complaint may fairly be interpreted as alleging that the city had made a blanket refusal to pay the sums due the contractors, without regard to the engineer’s certificate or other conditions of payment. The complaint alleged that the contractors had completed-the work but that the city refused to accept the system or to pay the amounts due. It further alleged that the supervising engineers had certified that the work was substantially completed. It is reasonably plain from the complaint that the city was refusing to honor the contract, such as by refusing to make progress payments certified by the supervising engineers to be due, wherefore strict compliance with the requirements of the contract for obtaining final payment would have been to no avail. It is to be noted that a major portion of the contractors’ claims did not relate to the right to be paid the retainage, which was the only thing to which the alleged conditions precedent were applicable. So we think there was no fatal defect in Count Two of the complaint. See 17A C.J.S. Contracts § 499 (6), pp. 756, 757.

[515]*515The city’s second claim of error is addressed to the trial court’s denial of the city’s motion to transfer the action to the common pleas branch of the court for trial by jury. The action involved a great detail of facts and complicated issues, and this condition was intensified by the fact that a suit by the supervising engineers against the city had been consolidated with this action for trial. We think the trial court properly determined that it would be impracticable for a jury intelligently to try the case. CR 39.01; Hoaglin v. Carr’s Adm’x, Ky., 294 S.W.2d 935; McGuire v. Hammond, Ky., 405 S.W.2d 191; Akers v. Stamper, Ky., 410 S.W.2d 710.

This brings us to the city’s main argument on the merits, which is that the evidence established conclusively that the sewer system was so defectively constructed that the city not only should have been relieved of the final payments under the contract but should have been awarded substantial damages measured by the cost of placing the system in proper condition. The major problem with the system is one of “surcharging,” which simply means that during periods of heavy rainfall the system becomes flooded with water to such an extent that the processing plant must be bypassed and the flow of the system is turned directly into the Ohio River. The proof for the city was to the effect that there were numerous defective connections and breaks in the mains, the result of defective workmanship and materials. A substantial amount of this proof was by representatives of an engineering firm employed by the city to make tests and inspections of the system. There also was evidence by other witnesses, including the manager of the system and two engineers employed by the Louisville and Jefferson County Board of Health.

For the contractors, there was evidence by a firm of engineers employed by them to make tests and inspections, that the major causes of the surcharging were defective pipes and joints in private sewer lines connected with the system, the connection of downspouts and foundation drainage pipes with the private sewer lines running into the system, and faulty design and location of a large number of manholes in low areas; that none of these causes was chargeable to the contractors; and that there were only minor defects in the system attributable to defective workmanship. The supervising engineers whose duty it was under the construction contract to supervise the construction work testified that the work was done in accordance with the plans and specifications and in a good workmanlike fashion; that their inspection disclosed only a few minor breaks; and that an investigation made by them indicated that the surcharging came from defective house service lines and connections installed by the individual property owners.

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Bluebook (online)
438 S.W.2d 512, 1969 Ky. LEXIS 409, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-shively-v-hyde-kyctapp-1969.