Holber v. Suffolk Construction Co. (In re Red Rock Services Co.)

522 B.R. 551, 90 Fed. R. Serv. 3d 207, 2014 U.S. Dist. LEXIS 169257
CourtDistrict Court, E.D. Pennsylvania
DecidedDecember 8, 2014
DocketCivil Action No. 13-784
StatusPublished
Cited by2 cases

This text of 522 B.R. 551 (Holber v. Suffolk Construction Co. (In re Red Rock Services Co.)) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Holber v. Suffolk Construction Co. (In re Red Rock Services Co.), 522 B.R. 551, 90 Fed. R. Serv. 3d 207, 2014 U.S. Dist. LEXIS 169257 (E.D. Pa. 2014).

Opinion

MEMORANDUM

EDUARDO C. ROBRENO, District Judge.

Table of Contents

I. INTRODUCTION.557

II. BACKGROUND.557

A. Facts.557

1. Silo Point Project.557
2. McCormack Project .558

B. Procedural History.558

III. STANDARDS OF REVIEW.559

IV. DISCUSSION. cn 05 O

A. Bankruptcy Court’s Authority To Issue Final Judgment. cu Oi O

B. Silo Point Subcontract. en 05 05

1. Silo Point Subcontract Balance. en Q

a. Denial of General’s Motion for Directed Verdict for Lack of Evidence of Damages. cn C5 ^

b. Award to Subcontractor Based on Its Substantial Completion of the Silo Point Subcontract. on 05

2. Change Order No. 3. oi 05

a. The Bankruptcy Court’s Holding of Equitable Estoppel. m 05

(1) Voluntary Conduct or Representation. 01 05

(2) Reliance and Detriment. on 05

(3) Equitable Considerations. oí

b. General’s Additional Challenges to the Silo Point Award Oí

(1) Waiver of Notice Defense . en

(2) Proof of Differing Site Condition. üi

(3) Change Order No. 3 Damages Calculation .. 01

c. Award of Insurance Proceeds. 01

C. McCormack Subcontract. oí

1. James McKay Expert Testimony. oí

a. Admissibility of Expert Testimony on Rebuttal. cr

b. Daubert Challenge to Expert Testimony. on

(1) McKay’s Expert Qualification. oi

(2) Reliability of McKay’s Testimony. cn

2. Factual Finding Regarding Reasonable Cost of Completion . cn

D. Attorneys’ Fees. üi

E. Additional Procedural Challenges. oí

1. Limitation on Use of Exhibits During Cross-Examination .. en

2. Grant of Motion for Protective Order . en

3. Additional Damages Conditioned on $50,000 Payment. en

V. CONCLUSION 579

[557]*557I. INTRODUCTION

This is a dispute between a general contractor and a subcontractor concerning the subcontractor’s performance at two separate construction projects. Because during the course of the dispute — which has generated myriad factual and legal issues — the subcontractor filed for bankruptcy, the matter was tried before the Bankruptcy Court.

Before the Court is the general contractor’s appeal from the final judgment of the Bankruptcy Court. For the reasons set forth below, the Court will affirm the Bankruptcy Court’s decision in favor of the subcontractor.

II. BACKGROUND

A. Facts1

Prior to its bankruptcy filing in September 2007, Red Rock Services Co., LLC (“Red Rock” or “Subcontractor”) was a demolitions subcontractor. Suffolk Construction Co., Inc. (“Suffolk” or “General”) is a construction general contractor. In 2006, Red Rock entered into two subcontracts with Suffolk; these related to two separate projects for which Suffolk was the general contractor. Holber v. Suffolk Constr. Co. (In re Red Rock Servs. Co.), 480 B.R. 576, 585 (Bankr.E.D.Pa.2012).

1. Silo Point Project

On July 24, 2006, Subcontractor and General entered into a subcontract (“Silo Point subcontract”) under which Subcontractor would perform demolition work on a construction project located in Baltimore, Maryland (“Silo Point project”). The project entailed converting an old grain silo into condominiums Id. Suffolk, as general contractor, was under contract with the site’s owner, Silo Point II, LLC (“Silo Point” or “Owner”).

On or about November 6, 2006, while Subcontractor was engaged in demolishing certain of the silo’s vertical storage bins, one bin detached and fell to a floor below, damaging a portion of the building. Subcontractor stopped work to take stock of the damage and assess how it would proceed. It ultimately modified the demolition method it was using, resulting in significantly increased costs. Id. at 586. Subcontractor initially told General that it would submit a claim to its own insurance carrier to cover these additional costs. Id. However, on December 14, 2006, Subcontractor notified General of its intention to submit a change order related to the unforeseen condition (also called a differing site condition). Id. The Silo Point subcontract required notice of intent to submit a change order within ten business days of the event triggering the claim. Silo Point Subcontract, Ex. J-2, art. 812. Under the Silo Point general contract, Owner would be responsible for any increased costs due to a valid differing site condition claim. Gen. Conditions of Silo Point Contract, Ex. J-l, art. 4.3.4.

On December 20, 2006, Subcontractor submitted to General its formal notification of a pending change order based on the differing site condition. On January 10, 2007, Subcontractor submitted an invoice related to the pending change order, on which General requested additional documentation and support. On February 15, 2007, Subcontractor submitted Change Order No. 1, which more thoroughly documented its request. General denied it as insufficiently supported. In re Red Rock, [558]*558480 B.R. at 586. On April 16, 2007, Subcontractor submitted Change Order No. 2, which supplemented the first change order and related to additional work performed. Id. General did not acknowledge this submission. Id. In April 2007, the parties executed a Memorandum of Understanding, wherein Subcontractor agreed to accept new staffing requirements, completion dates, and delayed payment, and to retain a consultant to report on the differing site condition. Mem. Understanding, Ex. J-30, ¶¶ 4-11. General agreed to provide reasonable cooperation with Subcontractor’s differing site condition claim and to make several advance payments on behalf of Subcontractor, which Subcontractor was obliged to make to its own subcontractors, vendors, and suppliers. Id. ¶¶ 6,11.

On July 27, 2007, Subcontractor submitted Change Order No. 3, encompassing and superseding the previous two change orders and requesting a contract price increase. In re Red Rock, 480 B.R. at 587. Change Order No. 3 was supported by a report from Subcontractor’s consultant Hill International, which concluded that the bin collapse had been caused by an unforeseeable differing site condition and calculated the resulting cost increases borne by Subcontractor. Id. General forwarded Change Order No. 3 on to Owner, who rejected it for its untimeliness and for other reasons. Id.

On September 6, 2007, General notified Subcontractor that it was in default under the subcontract. Id. When Subcontractor failed to remedy the default within the required time, General hired Terra Drilling to complete Subcontractor’s work. Id. at 588. On September 13, 2007, Subcontractor filed for bankruptcy in the Eastern District of Pennsylvania.

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522 B.R. 551, 90 Fed. R. Serv. 3d 207, 2014 U.S. Dist. LEXIS 169257, Counsel Stack Legal Research, https://law.counselstack.com/opinion/holber-v-suffolk-construction-co-in-re-red-rock-services-co-paed-2014.