Public Building Authority v. St. Paul Fire & Marine Insurance

80 So. 3d 171, 2010 Ala. LEXIS 198
CourtSupreme Court of Alabama
DecidedOctober 8, 2010
Docket1080733, 1080734, 1080735, 1080736, 1080737, 1080738, and 1081297
StatusPublished
Cited by22 cases

This text of 80 So. 3d 171 (Public Building Authority v. St. Paul Fire & Marine Insurance) 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
Public Building Authority v. St. Paul Fire & Marine Insurance, 80 So. 3d 171, 2010 Ala. LEXIS 198 (Ala. 2010).

Opinions

PER CURIAM.

These consolidated appeals all arise from the same factual scenario. The Public Building Authority of the City of Huntsville (“the PBA”) appeals from a summary judgment entered in favor of St. Paul Fire and Marine Insurance Company (“St. Paul”) (cases no. 1080733 and no. 1080734), and it appeals by permission, pursuant to Rule 5, Ala. RApp. P., from the denial of its motion to reconsider the trial court’s decision to grant Dawson Building Contractors, Inc. (“Dawson”), a partial summary judgment (cases no. 1080735 and no. 1080736). Dawson appeals by permission, pursuant to Rule 5, from an adverse portion of the trial court’s order granting Dawson a partial summary judgment (cases no. 1080737 and no. 1080738). Fibrebond Corporation (“Fibre-bond”); Raley & Associates and Frank J. Raley (“the Raley defendants”); Ruffin Enterprises, Inc.; Richard McKee Hall; Enhanced Technical Construction, Inc.; Bibler Masonry, Inc.; Nolan Maintenance Company, Inc.; and American Pan & Engineering Company, Inc. (hereinafter collectively referred to as “the subcontractors”), appeal by permission, pursuant to Rule 5, from the trial court’s order granting in part and denying in part their motion for a summary judgment (case no. 1081297). All seven cases have been consolidated for the purpose of writing one opinion.

Facts and Procedural History

On February 4, 2004, Dawson, a building contractor headquartered in Gadsden, entered into a contract with the PBA (“the contract”) pursuant to which Dawson agreed that it would act as the contractor for certain construction work on a project to build a modular jail and attendant facilities servicing the City of Huntsville and Madison County (“the project”). The contract was drafted by the PBA. Pursuant to the contract, Dawson was required to secure a penal bond in favor of the PBA (“the bond”). St. Paul issued the bond in the sum of $24,364,218, naming Dawson as the principal and the PBA as the owner and obligee.

[174]*174The PBA issued Dawson a notice to begin construction of the project on February 9, 2004. During construction, Dawson and various of the subcontractors informed the PBA of purported structural problems affecting the project. As a result, on October 11, 2005, the PBA suspended work on the project to investigate the situation and to identify the source of the structural problems. Construction proceeded sporadically until June 2006, when work on the project essentially halted at the PBA’s direction.

On February 2, 2006, Dawson informed the PBA that Dawson was incurring substantial damage as a result of the delay. On June 6, 2006, while the PBA investigation into the structural problems was still ongoing, Dawson informed the PBA that it intended to terminate the contract.

On June 20, 2006, the PBA notified Dawson in writing that it would terminate the contract for convenience, effective June 30, 2006; St. Paul was copied on the letter. The termination-for-convenience provision in the contract states, in pertinent part:

“12.2.1.1 The Owner [the PBA] may for any reason whatsoever terminate performance under this Contract by the Contractor [Dawson] for convenience. The Owner shall give written notice of such termination to the Contractor specifying when termination becomes effective.
“12.2.1.2 The Contractor shall incur no further obligations in connection with the Work and the Contractor shall stop Work when such termination becomes effective. The Contractor shall also terminate outstanding orders and subcontracts. The Contractor shall settle the liabilities and claims arising out of the termination of subcontracts and orders. The Owner may direct the Contractor to assign the Contractor’s right, title and interest under terminated orders of Subcontracts to the Owner or its designee.”

In its letter terminating the contract for convenience, the PBA stated that it was reserving its right to convert the termination for convenience into one for cause if the facts warranted. The PBA’s June 20, 2006, letter read, in pertinent part:

“Notwithstanding this termination by convenience, due to issues recently raised regarding the work and materials provided by Dawson, the PBA specifically reserves and does not waive any claims it currently has or may have against Dawson for defective and/or deficient work provided to the Project and/or for any latent defects arising from the work provided and/or performed by Dawson on the Project. Likewise, the PBA does not release Dawson from any of Dawson’s contractual or warranty obligations.
“The PBA reserves the right to convert this termination for convenience into a termination for cause, if warranted, after the PBA has had an opportunity to inspect the work in place and review of all relevant documentation. The PBA will also look to Dawson to correct and repair any defective and/or deficient work related to the work performed or provided by Dawson on the Project. Finally, as noted herein, the PBA expressly reserves all rights of actions, claims, demands or other rights accorded by law or by contract with respect to the construction project which is the subject of the contract referenced above.”

Following the PBA’s termination for convenience of the contract, the PBA continued its investigation into the potential design and construction defects. On September 14, 2006, without notifying St. Paul, the PBA entered into a contract with Lee Builders, Inc. (“Lee Builders”), to [175]*175complete the project (“the completion contract”). The completion contract explicitly stated that Lee Builders would carry the project to completion:

“The parties acknowledge and understand that this Project was initiated and partially constructed pursuant to an earlier contract between [the PBA] and [Dawson], That contract has now been terminated by [the PBA] effective June 30, 2006. This contract includes the completion of this Project from its current status, pursuant to recent design modifications and revisions to the project plans and specifications....”

Bruce Lee, vice president of Lee Builders, stated in his affidavit:

“From late August [of 2006] until January of 2007, Lee Builders’ work on the Project was limited to site clean-up, construction preparation, on-site office trailer set-up, dewatering of the building, the installation of temporary rails on the building, the installation of a silt fence on the site, the temporary stabilization or ‘shoring1 of identified areas of the building where life and safety concerns existed, and generally ‘closing-up’ the building to preserve the existing interior from outside weather conditions.
“5. Between February and December of 2007, Lee Builders performed remedial work for the Project, based upon remedial drawings generated by the City of Huntsville’s new structural engineer, Robinson and Associates, and/or pursuant to other directives from the City. At present, Lee Builders is working to achieve substantial completion of the Project.”

On September 25, 2006, the PBA sent Dawson notice that, based on the results of its investigation, the PBA intended to convert its termination for convenience into a termination for cause. The PBA also requested a meeting with Dawson and St. Paul to discuss completion of the project.

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Bluebook (online)
80 So. 3d 171, 2010 Ala. LEXIS 198, Counsel Stack Legal Research, https://law.counselstack.com/opinion/public-building-authority-v-st-paul-fire-marine-insurance-ala-2010.