D2 Excavating, Incorporated v. Thompson Thrift Con

973 F.3d 430
CourtCourt of Appeals for the Fifth Circuit
DecidedSeptember 2, 2020
Docket19-40745
StatusPublished
Cited by6 cases

This text of 973 F.3d 430 (D2 Excavating, Incorporated v. Thompson Thrift Con) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
D2 Excavating, Incorporated v. Thompson Thrift Con, 973 F.3d 430 (5th Cir. 2020).

Opinion

Case: 19-40745 Document: 00515550522 Page: 1 Date Filed: 09/02/2020

United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

FILED September 2, 2020 No. 19-40745 Lyle W. Cayce Clerk

D2 Excavating, Incorporated, Plaintiff—Appellee,

versus

Thompson Thrift Construction, Incorporated; Fidelity and Deposit Company of Maryland,

Defendants—Appellants.

Appeal from the United States District Court for the Southern District of Texas USDC No. 2:16-CV-538

Before Stewart, Clement, and Costa, Circuit Judges. Gregg Costa, Circuit Judge: Contracts do not always turn out the way a party expects. Sometimes it takes less time or money to perform than anticipated; other times it takes more. This case is of the latter variety. A subcontractor doing excavation work ended up having to remove a lot more dirt from the construction site than the parties anticipated. The resulting lawsuit over this “excess dirt” led to a judgment for the subcontractor exceeding half a million dollars. The principal issue on appeal is whether the subcontractor was entitled to Case: 19-40745 Document: 00515550522 Page: 2 Date Filed: 09/02/2020

No. 19-40745

additional money for the “excess dirt” removal or whether it was stuck with the price the parties agreed to. I. Thompson Thrift Construction, Inc. was the general contractor for a new apartment complex in Corpus Christi. 1 It solicited a bid from D2 Excavating, Inc. for site grading and excavation work. Thompson sent D2 documents which included proposed contract terms, a topographical survey of the site, and the planned final elevations. The proposed terms included the following language: Execution of this Agreement by the Subcontractor is a representation that the Subcontractor has visited the Project site, become familiar with local conditions under which the Work is to be performed and correlated personal observations with requirements of the Contract Documents. The Subcontractor shall evaluate and satisfy itself as to the conditions and limitations under which the Work is to be performed, including without limitation: (1) the location, condition, layout, and nature of the Project site and surrounding areas; (2) generally prevailing climactic conditions; (3) anticipated labor supply and costs; (4) availability and cost of materials, tools, and equipment; and (5) other similar issues. Accordingly, Subcontractor shall not be entitled to an adjustment in the Contract Price or an extension of time resulting from Subcontractor’s failure to fully comply with this paragraph.

1 These facts come from the findings the district court entered after the bench trial.

2 Case: 19-40745 Document: 00515550522 Page: 3 Date Filed: 09/02/2020

... This is a balanced site. It shall be this subcontractor’s responsibility to balance site. Change orders for import/export will not be accepted. Consider all spoils from other trades, and create berms where necessary. A site is “balanced” if the work will not require importing or exporting dirt to achieve the planned elevations. In that case, the dirt need only be transferred within the site. Despite its representation, Thompson did not actually determine whether the site was balanced. The proposed terms were its standard template for all excavation projects. D2 also declined to investigate the site— two months of heavy rain limited its ability to physically examine the site, and Thompson was eager to begin construction as soon as the rain ceased. Instead, D2 used a software program to determine the site was balanced, after accounting for dirt that other contractors would produce. The inputs for this analysis came from the topographical survey Thompson provided. After performing its simulations, D2 agreed to do the excavation. Under the final contract, Thompson was to pay D2 $630,000. The parties included the proposed terms that Thompson originally provided to D2 in the contract as an exhibit with slight modifications. The final agreement also anticipated the possibility of modifying the scope of the work and included unit pricing for additional tasks that would be executed as written change orders. About one month after D2 began excavating, it became clear that the site was not balanced. Excavation was producing a lot more dirt than expected and some would need to be removed from the site. D2 and Thompson disagreed about whose fault the excess dirt was. Thompson argued that the imbalance was due to D2’s inaccurate computer analysis,

3 Case: 19-40745 Document: 00515550522 Page: 4 Date Filed: 09/02/2020

D2’s excess import of fill, or D2’s overexcavation of the site; D2 countered that the topographical survey was flawed. Regardless of who was responsible for the misestimate, D2 promptly notified Thompson that there was unanticipated dirt that needed to be removed. The parties negotiated and decided that Thompson would cover D2’s costs for the additional work. Thompson told D2 it would issue a written change order for the additional work once it was finished so that it would be easier to calculate what it owed. With Thompson’s promise to pay for unanticipated exporting work in hand, D2 continued excavating. In addition to the unexpected exporting of excess dirt, Thompson repeatedly asked D2 to re-excavate and regrade areas that other subcontractors’ activity had disturbed. In one case, Thompson’s mismanagement of other subcontractors required D2 to excavate the same area six times. D2 became concerned that Thompson would not actually pay for this work. It began sending fewer employees to the site, which prompted negotiations with Thompson about D2’s compensation. Those negotiations were ultimately unfruitful, and Thompson never provided a change order. When it became clear that Thompson was not going to pay additional amounts for the removal of dirt, D2 stopped working. At that point, 98.6% of the excavation was complete. D2 then sued for breach of contract, quantum meruit, violations of the Texas prompt pay statute, and to foreclose on a statutory and constitutional lien. 2 Thompson, in turn, argued that D2 breached the contract. Thompson filed an unsuccessful motion for summary judgment, which argued that D2 bore the risk that the site might be unbalanced. At the conclusion of a bench

2 D2 sued both Thompson and Fidelity and Deposit Company of Maryland, which had issued an indemnity bond. Fidelity’s damages are limited to its bond of $581,605.50.

4 Case: 19-40745 Document: 00515550522 Page: 5 Date Filed: 09/02/2020

trial, the district court held in D2’s favor on all claims. It ordered Thompson to pay D2 $81,068.00 for unpaid work under the contract and $257,588.53 for “excess” excavating work. Interest of 1.5%/month was added to those awards starting in May 2016, when payment became due under the Texas prompt payment law. The biggest award of all was for attorneys’ fees: $356,080.91. II. We review the district court’s findings of fact for clear error, but this appeal largely turns on legal issues of contract interpretation, which we review de novo. Lyda Swinerton Builders, Inc. v. Okla. Sur. Co., 903 F.3d 435, 450 (5th Cir. 2018). One of those questions of law is the focus of the appeal: whether D2 could recover beyond the contract price for “excavation of unanticipated excess soil.” 3 The district court concluded D2 could recover under either a contract or quantum meruit theory. A. Thompson challenges the contract ruling on the ground that D2 bore the risk that the site might be unbalanced and thus cannot recover beyond the contract price for any “excess” excavation work. A party to a Texas

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973 F.3d 430, Counsel Stack Legal Research, https://law.counselstack.com/opinion/d2-excavating-incorporated-v-thompson-thrift-con-ca5-2020.