Hardy Corp. v. Rayco Industrial, Inc.

143 So. 3d 172, 2013 WL 6516391, 2013 Ala. LEXIS 178
CourtSupreme Court of Alabama
DecidedDecember 13, 2013
Docket1090988 and 1091041
StatusPublished
Cited by3 cases

This text of 143 So. 3d 172 (Hardy Corp. v. Rayco Industrial, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hardy Corp. v. Rayco Industrial, Inc., 143 So. 3d 172, 2013 WL 6516391, 2013 Ala. LEXIS 178 (Ala. 2013).

Opinion

STUART,Justice.1

Gambro Renal Products, Inc. (“Gam-bro”), hired The Facility Group, Inc. (“TFG”), as the general contractor for the construction of a facility designed to produce kidney dialysis filters in Opelika (“the project”). TFG contracted with the Hardy Corporation (“Hardy”) for specialized piping work on the project. Absolute Welding Services, Inc. (“AWS”), is a subsidiary of Rayco Industrial, Inc. (“Rayco”), a sub-subcontractor hired by Hardy. Although the negotiations on the subcontract at issue in these appeals were between AWS and Hardy, the subcontract was executed by Rayco and Hardy.

Facts

On December 18, 2006, AWS submitted an offer to Hardy for a certain scope of welding work that specifically excluded passivation and the installation of pure-steam return (“PSR”) piping.2 Hardy required a performance bond; however, AWS was not approved for a performance bond. Therefore, on January 17, 2007, Rayco, which was preapproved for a performance bond, submitted an offer to Hardy on its letterhead with identical terms and exclusions as those set forth by AWS in its offer, with the exception of a minor price increase as a result of the required bond. On January 19, 2007, Hardy presented a subcontract to Rayco that provided that Hardy would pay Rayco $813,561 and Rayco would install sanitary pharmaceutical piping that would meet the requirements of specification 15202, which contains the high-purity piping and welding requirements for projects that undergo inspection by the United States Food and Drug Administration; specification 15202 requires passivation and the installation of PSR piping. Rayco and Hardy executed the subcontract, and, as Rayco neared the end of its scope of work under its understanding of the subcontract, an issue developed as to whether Rayco would provide the passivation and install the PSR piping as required by specification 15202.

The dispute centered upon whether the exclusion of passivation and the installation of PSR piping in Rayco’s January 17, 2007, offer was incorporated into the January 19, 2007, subcontract. Rayco admitted that after the dispute arose, “in the interest of assisting Hardy,” it obtained a quote from a “third-party vendor” for passivation, which Hardy refused to pay, and, according to Rayco, “[ajfter the passivation disagreement arose, Hardy refused to pay any of Rayco’s outstanding invoices for work performed on and goods purchased for the Project.”

On March 12, 2008, Rayco filed a complaint in the Lee Circuit Court against [175]*175Hardy, Gambro,3 and 15 fictitiously named parties, seeking an accounting, a declaratory judgment, a reformation of the contract, and perfection of a lien. Rayco asserted claims for damages for breach of contract, unjust enrichment/quantum meruit, and “work and labor done.” On April 7, 2008, Hardy moved the Lee Circuit Court to dismiss the action against Hardy without prejudice or, alternatively, to sever and to transfer the action to the Jefferson Circuit Court based on the forum-selection clause of the subcontract specifying that all legal proceedings would be filed in the Jefferson Circuit Court. Hardy asserted that, although Rayco’s claims against Gambro were properly filed in the Lee Circuit Court, Hardy was not a necessary party in that litigation and the action in which it was a party, if not dismissed,- should be severed and transferred to the Jefferson Circuit Court. On May 20, 2008, the Lee Circuit Court granted the motion to transfer the action to the Jefferson Circuit Court.

On June 30, 2008, Hardy answered Rayco’s complaint, admitting and denying certain claims and asserting various affirmative defenses; Hardy also filed a counterclaim alleging that Rayco had breached the subcontract by failing to complete its obligations under the subcontract. Hardy further sought to add Rayco’s surety, Fidelity and Deposit Company of Maryland (“Fidelity”), as a counterclaim defendant and asserted that Fidelity had breached the subcontract performance bond. Hardy requested damages and costs and attorney fees. The trial court granted Hardy’s motion to add Fidelity as a counterclaim defendant. Fidelity answered Hardy’s counterclaim, admitting that it had entered into a subcontract performance bond with Rayco, denying that Rayco had defaulted or that it was obligated to take any action under the performance bond, and asserting various defenses.

On September 9, 2008, Rayco amended its complaint to name Travelers Casualty and Surety Company of America (“Travelers”) as a defendant. Rayco answered Hardy’s counterclaim, denying Hardy’s counterclaims and asserting various affirmative defenses. Travelers answered Rayco’s amended complaint admitting that it had issued a payment bond in favor of TFG and asserting various defenses.

On November 20, 2009, Rayco and Fidelity moved to strike Hardy’s claim for an award of attorney fees because, they said, Hardy had failed to provide certain requested discovery regarding the requested attorney fees and to identify the expert witness to testify regarding the reasonableness of the requested attorney fees for the trial.

On November 25, 2009, the trial court conducted a trial, at which ore tenus evidence was presented, and, on December 11, 2009, the trial court entered its judgment. The trial court found that on January 19, 2007, Rayco entered into a subcontract that included within its scope that all procedures, including passivation and the installation of PSR piping, necessary to a complete installation of piping to satisfy specification 15202 would be performed by Rayco; that Rayco had breached the subcontract; that Rayco owed Hardy for additional funds incurred with regard to passi-vation and the installation of PSR piping; that Hardy owed Rayco for change-order request numbers 2, 7, 8, 20, and 21 because those changes were performed at Hardy’s request or because of modifications in the plans that changed the scope [176]*176of the plan; and that Hardy’s other five claims for additional funds incurred in its counterclaim were disallowed because either the work was outside Rayco’s scope of work or Hardy had failed to comply with the notice requirements of the subcontract. Specifically, the trial court held that Rayco had breached the subcontract by not performing the passivation and installing the PSR piping; that Hardy owed Rayco $108,498.78 in damages; that Rayco has a duty to give Hardy all close-out documents on the project that it produced or had produced during the performance of the subcontract; that, in light of its determination that Rayco had breached the subcontract but was awarded damages for certain additional funds incurred, Rayco was not entitled to an award under the theories of unjust enrichment/quantum meruit or for work and labor done; that Rayco was not entitled to have the subcontract reformed; and that Hardy was entitled to certain additional funds incurred that were authorized by the subcontract against the amount otherwise found to be due Rayco.4 The trial court painstakingly recounted the evidence upon which it relied. That recounting and its findings are as follows:

“1. [Hardy] invited an offer from [Ray-co] to perform the specification 15202 high purity piping work for the Gambro Plant in Opelika, Alabama, in either November or December 2006.
“2.

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143 So. 3d 172, 2013 WL 6516391, 2013 Ala. LEXIS 178, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hardy-corp-v-rayco-industrial-inc-ala-2013.