MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any FILED court except for the purpose of establishing Aug 09 2017, 7:40 am
the defense of res judicata, collateral CLERK estoppel, or the law of the case. Indiana Supreme Court Court of Appeals and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE Rebecca J. Maas Kevin P. Podlaski Smith Fisher Maas Howard & Lloyd, Joshua A. Burkhardt P.C. Beers Mallers Backs & Salin, LLP Indianapolis, Indiana Fort Wayne, Indiana
IN THE COURT OF APPEALS OF INDIANA
Shambaugh & Son, LP, August 9, 2017 Appellant-Defendant/Counterclaimant, Court of Appeals Case No. 02A03-1701-PL-73 v. Appeal from the Allen Superior Court Allen County Public Library, The Honorable Craig J. Bobay, Appellee-Plaintiff/Counterdefendant Special Judge Trial Court Cause No. 02D01-1002-PL-26
Vaidik, Chief Judge.
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 1 of 8 Case Summary [1] Shambaugh & Son, L.P. (Shambaugh) appeals the trial court’s judgment in
favor of the Allen County Public Library (Library) on Shambaugh’s breach-of-
contract claim. Finding no error, we affirm.
Facts and Procedural History [2] This is the second appeal in this case. In our first opinion, we explained that, in
2004, the Library undertook a capital-improvement project to renovate and add
to its main library branch building in Fort Wayne. Allen Cty. Pub. Library v.
Shambaugh & Son, L.P., 997 N.E.2d 48, 49 (Ind. Ct. App. 2013), aff’d on reh’g, 2
N.E.3d 132 (Ind. Ct. App. 2014), overruled on other grounds by Bd. of Comm’rs of
Cty. of Jefferson v. Teton Corp., 30 N.E.3d 711 (Ind. 2015). We noted that the
Library hired W.A. Sheets & Sons, Inc. as the construction manager and
MSKTD & Associates, Inc. as the architect and that it contracted directly with
Shambaugh to perform mechanical, electrical, and fire-protection work and
with Hamilton Hunter Builders, Inc. to do concrete work. Id.
[3] The Library agreed to pay Shambaugh approximately $12.4 million for its work
on the project. The Library’s contract with Shambaugh, which consisted of a
main agreement and multiple attachments, required it to “set aside ten percent
(10%) of the funds as retainage and hold the retainage in escrow until the work
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 2 of 8 was fully performed.” Appellant’s App. Vol. II pp. 22-23.1 Article 6 of the main
agreement, captioned “FINAL PAYMENT,” provides that
[f]inal payment . . . shall be made by the Owner to the Contractor when (1) the Contract has been fully performed by the Contractor . . .; and (2) a final Project Certificate for Payment has been issued by the Construction Manager and Architect; such final payment shall be made by the Owner not more than 30 days after the issuance of the final Project Certificate for Payment[.]
[4] Appellant’s App. Vol. VI p. 19. And Paragraph 7.2 of the main agreement
states, “Payments due and unpaid under the Contract shall bear interest from
the date payment is due at the rate stated below, or in the absence thereof, at
the legal rate prevailing from time to time at the place where the Project is
located.” Id. at 20. No rate was specified in the contract, and Shambaugh tells
us that it should be 8%, in accordance with Indiana Code section 24-4.6-1-102.
[5] In July 2007, Shambaugh submitted an “Application for Payment” indicating
that it had completed 100% of its work on the project and requesting the release
of the remaining retainage: $691,267.20. In December 2008, the Library
released $300,000 of the retainage to Shambaugh. Then, in early 2010, with the
remaining $391,267.20 still unpaid, the Library filed a lawsuit against
1 Shambaugh’s appendix consists of eight volumes, but the table of contents is written as though the documents are organized in four volumes. This, of course, threw off the pagination, rendering the table of contents, and some of the citations in Shambaugh’s briefs, largely unhelpful. We urge counsel to exercise greater care in the future.
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 3 of 8 Shambaugh and the other companies involved in the project. In our first
opinion, we described the basis for the suit as follows:
One part of the library renovation and addition project required Shambaugh to permanently install an emergency diesel generator and two diesel fuel storage tanks—one 1,000 gallon tank and one fifty gallon “day” tank—in the library’s basement. Hamilton Hunter poured the concrete floor supporting the generator and tanks, and which also covered copper piping connecting the “day” tank and generator. Part of the concrete pouring process required Hamilton Hunter workers to create a wooden form for the concrete and drive steel stakes into the ground. In December 2007, the Library discovered that a hole in the copper piping had caused approximately 3,000 gallons of diesel fuel to leak into the ground underneath the library. The Library believes that the hole was caused by a Hamilton Hunter employee having driven a steel stake through the pipe. The Library undertook to investigate and clean up the leaked fuel.
Allen Cty. Pub. Library, 997 N.E.2d at 51 (footnote omitted). Shambaugh filed a
counterclaim against the Library, seeking release of the remainder of the
escrowed retainage and the escrow income, as well as an award of 8% interest
under the contract.
[6] In February 2016, after six years of litigation that included the first trip to this
Court, the trial court entered summary judgment in favor of the defendants on
the Library’s fuel-cleanup claims, citing subrogation waivers in the relevant
contract documents. Shambaugh then filed a motion seeking the payment of
the remainder of the escrowed retainage, approximately $99,000 for the income
earned on the retainage, and nearly $213,000 for interest pursuant to the parties’
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 4 of 8 contract, dating back to 2007. In its response, the Library “agree[d] that the
retainage and interest [i.e., the income] earned on the retainage should be paid
to Shambaugh,” noted that it had “been working with the Architect to obtain a
certification for the release of these funds,” and stated that it would “release the
remaining retainage upon receipt of a properly authenticated payment
application in conformance with the Contract.” Appellant’s App. Vol. VI pp.
5-6. However, the Library argued that because it had not yet received the
certificate from the architect, the final payment to Shambaugh had not yet come
due under the terms of the contract, and that therefore the Library should not
be required to pay additional interest.
[7] On October 14, 2016, two days after the Library filed its response, the architect
signed a Certificate for Payment stating that to the best of its “knowledge,
information and belief the Work has progressed as indicated, the quality of the
Work is in accordance with the Contract Documents, and the Contractor
[Shambaugh] is entitled to payment of [$391,267.20].” Appellant’s App. Vol.
VIII p. 17.
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MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any FILED court except for the purpose of establishing Aug 09 2017, 7:40 am
the defense of res judicata, collateral CLERK estoppel, or the law of the case. Indiana Supreme Court Court of Appeals and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE Rebecca J. Maas Kevin P. Podlaski Smith Fisher Maas Howard & Lloyd, Joshua A. Burkhardt P.C. Beers Mallers Backs & Salin, LLP Indianapolis, Indiana Fort Wayne, Indiana
IN THE COURT OF APPEALS OF INDIANA
Shambaugh & Son, LP, August 9, 2017 Appellant-Defendant/Counterclaimant, Court of Appeals Case No. 02A03-1701-PL-73 v. Appeal from the Allen Superior Court Allen County Public Library, The Honorable Craig J. Bobay, Appellee-Plaintiff/Counterdefendant Special Judge Trial Court Cause No. 02D01-1002-PL-26
Vaidik, Chief Judge.
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 1 of 8 Case Summary [1] Shambaugh & Son, L.P. (Shambaugh) appeals the trial court’s judgment in
favor of the Allen County Public Library (Library) on Shambaugh’s breach-of-
contract claim. Finding no error, we affirm.
Facts and Procedural History [2] This is the second appeal in this case. In our first opinion, we explained that, in
2004, the Library undertook a capital-improvement project to renovate and add
to its main library branch building in Fort Wayne. Allen Cty. Pub. Library v.
Shambaugh & Son, L.P., 997 N.E.2d 48, 49 (Ind. Ct. App. 2013), aff’d on reh’g, 2
N.E.3d 132 (Ind. Ct. App. 2014), overruled on other grounds by Bd. of Comm’rs of
Cty. of Jefferson v. Teton Corp., 30 N.E.3d 711 (Ind. 2015). We noted that the
Library hired W.A. Sheets & Sons, Inc. as the construction manager and
MSKTD & Associates, Inc. as the architect and that it contracted directly with
Shambaugh to perform mechanical, electrical, and fire-protection work and
with Hamilton Hunter Builders, Inc. to do concrete work. Id.
[3] The Library agreed to pay Shambaugh approximately $12.4 million for its work
on the project. The Library’s contract with Shambaugh, which consisted of a
main agreement and multiple attachments, required it to “set aside ten percent
(10%) of the funds as retainage and hold the retainage in escrow until the work
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 2 of 8 was fully performed.” Appellant’s App. Vol. II pp. 22-23.1 Article 6 of the main
agreement, captioned “FINAL PAYMENT,” provides that
[f]inal payment . . . shall be made by the Owner to the Contractor when (1) the Contract has been fully performed by the Contractor . . .; and (2) a final Project Certificate for Payment has been issued by the Construction Manager and Architect; such final payment shall be made by the Owner not more than 30 days after the issuance of the final Project Certificate for Payment[.]
[4] Appellant’s App. Vol. VI p. 19. And Paragraph 7.2 of the main agreement
states, “Payments due and unpaid under the Contract shall bear interest from
the date payment is due at the rate stated below, or in the absence thereof, at
the legal rate prevailing from time to time at the place where the Project is
located.” Id. at 20. No rate was specified in the contract, and Shambaugh tells
us that it should be 8%, in accordance with Indiana Code section 24-4.6-1-102.
[5] In July 2007, Shambaugh submitted an “Application for Payment” indicating
that it had completed 100% of its work on the project and requesting the release
of the remaining retainage: $691,267.20. In December 2008, the Library
released $300,000 of the retainage to Shambaugh. Then, in early 2010, with the
remaining $391,267.20 still unpaid, the Library filed a lawsuit against
1 Shambaugh’s appendix consists of eight volumes, but the table of contents is written as though the documents are organized in four volumes. This, of course, threw off the pagination, rendering the table of contents, and some of the citations in Shambaugh’s briefs, largely unhelpful. We urge counsel to exercise greater care in the future.
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 3 of 8 Shambaugh and the other companies involved in the project. In our first
opinion, we described the basis for the suit as follows:
One part of the library renovation and addition project required Shambaugh to permanently install an emergency diesel generator and two diesel fuel storage tanks—one 1,000 gallon tank and one fifty gallon “day” tank—in the library’s basement. Hamilton Hunter poured the concrete floor supporting the generator and tanks, and which also covered copper piping connecting the “day” tank and generator. Part of the concrete pouring process required Hamilton Hunter workers to create a wooden form for the concrete and drive steel stakes into the ground. In December 2007, the Library discovered that a hole in the copper piping had caused approximately 3,000 gallons of diesel fuel to leak into the ground underneath the library. The Library believes that the hole was caused by a Hamilton Hunter employee having driven a steel stake through the pipe. The Library undertook to investigate and clean up the leaked fuel.
Allen Cty. Pub. Library, 997 N.E.2d at 51 (footnote omitted). Shambaugh filed a
counterclaim against the Library, seeking release of the remainder of the
escrowed retainage and the escrow income, as well as an award of 8% interest
under the contract.
[6] In February 2016, after six years of litigation that included the first trip to this
Court, the trial court entered summary judgment in favor of the defendants on
the Library’s fuel-cleanup claims, citing subrogation waivers in the relevant
contract documents. Shambaugh then filed a motion seeking the payment of
the remainder of the escrowed retainage, approximately $99,000 for the income
earned on the retainage, and nearly $213,000 for interest pursuant to the parties’
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 4 of 8 contract, dating back to 2007. In its response, the Library “agree[d] that the
retainage and interest [i.e., the income] earned on the retainage should be paid
to Shambaugh,” noted that it had “been working with the Architect to obtain a
certification for the release of these funds,” and stated that it would “release the
remaining retainage upon receipt of a properly authenticated payment
application in conformance with the Contract.” Appellant’s App. Vol. VI pp.
5-6. However, the Library argued that because it had not yet received the
certificate from the architect, the final payment to Shambaugh had not yet come
due under the terms of the contract, and that therefore the Library should not
be required to pay additional interest.
[7] On October 14, 2016, two days after the Library filed its response, the architect
signed a Certificate for Payment stating that to the best of its “knowledge,
information and belief the Work has progressed as indicated, the quality of the
Work is in accordance with the Contract Documents, and the Contractor
[Shambaugh] is entitled to payment of [$391,267.20].” Appellant’s App. Vol.
VIII p. 17. The Library’s attorney sent the certificate to the Library with
instructions to “notify the Escrow Agent to release the funds.” Id. at 15. On
November 2, shortly before the hearing on Shambaugh’s motion, the escrow
agent issued a check for $490,272.35 (representing the retainage of $391,267.20
and escrow income of $99,005.15) to Shambaugh. As such, the only issue that
remained was whether the Library owed Shambaugh additional interest under
the contract. The trial court agreed with the Library that the final payment to
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 5 of 8 Shambaugh did not come due until the architect signed the certificate a few
weeks earlier, and so it denied Shambaugh’s claim for interest.
[8] Shambaugh now appeals.
Discussion and Decision [9] Shambaugh contends that the final payment was late, that it is therefore entitled
to interest under its contract with the Library, and that the trial court’s decision
to the contrary is based on a misinterpretation of the contract. Interpretation of
a contract is a question of law that we review de novo. Pohl v. Pohl, 15 N.E.3d
1006, 1009 (Ind. 2014).
[10] We are troubled by Shambaugh’s approach to this appeal. Even though the
trial court very clearly based its decision on Article 6 of the main agreement
between the parties, Shambaugh makes no mention, in either its opening brief
or its reply brief, of that provision or its plain language. Again, Article 6 of the
main agreement provides, in part, that
[f]inal payment . . . shall be made by the Owner to the Contractor when (1) the Contract has been fully performed by the Contractor . . .; and (2) a final Project Certificate for Payment has been issued by the Construction Manager and Architect; such final payment shall be made by the Owner not more than 30 days after the issuance of the final Project Certificate for Payment[.]
Appellant’s App. Vol. VI p. 19. This language obviously hurts Shambaugh’s
cause, but Shambaugh has a duty to address relevant contract language, helpful
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 6 of 8 or not. It is undisputed that no Certificate of Payment was issued before
October 14, 2016, and it is undisputed that final payment was issued to
Shambaugh less than thirty days later (on November 2, 2016). As such, final
payment was never past due under this provision.
[11] Even though Shambaugh never directly addresses Article 6, it does generally
allude to it at certain points in its briefs. In its opening brief, Shambaugh
suggests that the Library’s payment of $300,000 in December 2008 without
having received a Certificate for Payment “establishes a waiver of the architect
approval” by the Library. Appellant’s Br. p. 20. Then, in its reply brief,
Shambaugh asserts that allowing the Library to rely on the lack of such a
certificate is improper because the Library “has ultimate authority and control
over the retainage, including when the Architect would sign/approve the Final
Application, and when the funds would be released” and that “[o]btaining the
Certification from the Architect was obviously under the control of [the
Library].” Appellant’s Reply Br. pp. 5-6. Shambaugh does not cite anything in
the record that supports either of these arguments, such as evidence of the
circumstances surrounding the 2008 payment or of the architect’s reason(s) for
executing the Certificate for Payment in October 2016. Therefore,
Shambaugh’s arguments are waived. See Ind. Appellate Rule 46(A)(8)(a)
(“Each contention must be supported by citations to the authorities, statutes,
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 7 of 8 and the Appendix or parts of the Record on Appeal relied on[.]”); City of
Indianapolis v. Buschman, 988 N.E.2d 791, 795 (Ind. 2013).2
[12] The trial court did not err by ruling that Shambaugh is not entitled to interest
[13] Affirmed.
Crone, J., and Altice, J., concur.
2 Shambaugh’s claim for interest relies primarily on a provision in one of the attachments to the main agreement—the “Supplementary Conditions”—that provides: “Final payment, constituting the unpaid balance of the contract sum, shall be paid to the Contractor in full, including retainage of escrowed principal and escrowed income by the escrow agent, no less than 60 days following the date of Substantial Completion.” Appellant’s App. Vol. IV p. 54 (§ 9.10.3). Shambaugh argues that under this language it was entitled to final payment “within sixty (60) days” of submitting its July 2007 “Application for Payment.” Appellant’s Br. p. 8. But that is not what the provision says; it says that final payment must be paid “no less than 60 days” after substantial completion—a phrase that does not establish a deadline for payment. It may be that the parties intended for this provision to say “no more than 60 days,” but even if that were the language, we would still conclude that the final payment was timely under Article 6 of the main agreement, given the date of the Certificate for Payment from the architect.
Court of Appeals of Indiana | Memorandum Decision 02A03-1701-PL-73 | August 9, 2017 Page 8 of 8