Tanger Grand Rapids, LLC v. Rockford Constr. Co.

CourtCourt of Appeals for the Sixth Circuit
DecidedMarch 11, 2024
Docket23-1349
StatusUnpublished

This text of Tanger Grand Rapids, LLC v. Rockford Constr. Co. (Tanger Grand Rapids, LLC v. Rockford Constr. Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tanger Grand Rapids, LLC v. Rockford Constr. Co., (6th Cir. 2024).

Opinion

NOT RECOMMENDED FOR PUBLICATION File Name: 24a0110n.06

Case No. 23-1349

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED ) Mar 11, 2024 TANGER GRAND RAPIDS, LLC, ) KELLY L. STEPHENS, Clerk Plaintiff - Appellant, ) ) ON APPEAL FROM THE ) UNITED STATES DISTRICT v. ) COURT FOR THE WESTERN ) DISTRICT OF MICHIGAN ROCKFORD CONSTRUCTION COMPANY, ) ) OPINION Defendant - Third Party Plaintiff - Appellee, ) ) ) TANGER DEVCO, LLC, ) Third Party Defendant - Appellant. ) )

Before: GIBBONS, WHITE, and THAPAR, Circuit Judges.

THAPAR, Circuit Judge. Minor mistakes can have major consequences, and this case

proves the point. When Tanger Grand Rapids needed a parking lot, it contracted with Rockford

Construction Company to build it. But the materials Tanger directed Rockford to use ruined both

the parking lot and the project team’s relationship. Tanger now seeks to hold Rockford responsible

for the parking lot’s failure. Rockford, however, held up its end of the bargain. Because the district

court concluded the same, we affirm. Case No. 23-1349, Tanger Grand Rapids, LLC v. Rockford Constr. Co.

I.

Tanger Grand Rapids, LLC (“Tanger”) is a North Carolina property developer.1 In 2014,

it set out to build a mall in Byron Township, Michigan. Tanger hired several Michigan contractors

for the job. Nederveld, Inc. (“Nederveld”) was the civil engineer, Materials Testing Consultants,

Inc. (“MTC”) provided geotechnical services, and Rockford Construction Company (“Rockford”)

was the general contractor. Put simply, Nederveld designed, MTC tested, and Rockford built.

The remaining facts arise from construction of the mall’s parking lot. Before work began,

MTC submitted a report recommending the materials Tanger should use. For the base layer—the

layer of soil sitting directly below the asphalt surface—MTC recommended either “MDOT 22A”

or “MDOT 21AA” soil. R. 464-1, Pg. ID 3551; R. 465-1, Pg. ID 3590. For the subbase layer—

which sits below the base layer and just above bedrock—MTC called for “MDOT Class II” soil

or an “approved equivalent.” R. 464-1, Pg. ID 3551. The report clarified that subbase soil

“visually classified as SP-SM or SP” would suffice. Id., Pg. ID 3542. (“SP-SM” is an abbreviation

for “poorly graded sand with silt,” and “SP” is an abbreviation for “poorly graded sand.” Id.) On

MTC’s recommendation, Tanger—in consultation with Nederveld—settled on 21AA for the base

layer and MDOT Class II for the subbase. They specified those choices on the job’s drawing.

Meanwhile, Rockford prepared for construction. Rockford’s contract with Tanger set the

ground rules for the job.2 The contract included a set of Contract Documents, labeled Exhibits A

1 Tanger Devco, LLC is the other appellant in this case. It is an LLC designated as the “manager” of Tanger Grand Rapids, LLC. R. 496-2, Pg. ID 5762; R. 496-3, Pg. ID 5788. For purposes of this appeal, the appellants’ legal interests are the same. So we refer to them collectively as “Tanger.” 2 In the district court, Rockford argued that Tanger Grand Rapids didn’t have standing to sue Rockford because Rockford’s contract was with Tanger Devco. Although Rockford doesn’t renew this jurisdictional argument on appeal, we have an independent obligation to address it. See Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 434 (2011). The Tanger-Rockford contract lists Tanger Grand Rapids as the signatory. But the actual signor was Thomas McDonough, who signed as “Tanger Devco, LLC, its manager.” R. 457-1, Pg. ID 3279. “Its” apparently refers to Tanger Grand Rapids; Tanger Grand Rapids’s Operating Agreement lists Tanger Devco as its “[m]anager.” R. 496-

-2- Case No. 23-1349, Tanger Grand Rapids, LLC v. Rockford Constr. Co.

through K. Exhibit D, entitled “Clarifications,” stated that the “[p]roject site” was “based on

utilizing all on site materials for cut/fill and subbase materials.” R. 459-1, Pg. ID 3347. The site’s

previous building—a year-round recreational facility called “Dome World”—had recently been

demolished, leaving behind a stockpile of base and subbase materials. Tanger wanted to use that

stockpile—rather than ship in new materials—to save money on the project.

MTC visually inspected the on-site subbase material and classified most of it as SP/SP-

SM. It also tested the on-site base material and found it met 22A, but not 21AA, specifications.

The on-site material thus looked appropriate for use; recall that MTC’s report concluded SP/SP-

SM and 22A were acceptable for the subbase and base, respectively. As far as Tanger knew, its

money-saving gambit had worked.

Rockford, on the other hand, had a dilemma. The construction drawing provided by Tanger

and Nederveld required 21AA for the base layer. But MTC’s testing showed the on-site materials

met only 22A specifications. So Rockford sought clarification from Nederveld. It asked whether

it could “use the 22A gravel in lieu of the required 21AA.” R. 463-2, Pg. ID 3509. Nederveld’s

lead engineer, R. Jack Barr, confirmed 22A was an “acceptable substitute” for 21AA. Id.

Assurance in hand, Rockford got to work, using only the on-site subbase and base materials.

Rockford completed the parking lot in July 2015. But only four months later, deformities

had snaked their way through the pavement. Disappointed, Tanger instructed Rockford to correct

any work inconsistent with the contract’s requirements. Rockford proposed to “perform correct

work” and “committed to help[] correct the work . . . as required by the terms of the Contract.”

2, Pg. ID 5762. Tanger Grand Rapids and Tanger Devco are separate legal entities. But under Michigan law, managers are agents, and an agent has the authority to enter contracts on behalf of its principal. See Mich. Comp. Laws § 450.4406. By signing the contract as Tanger Devco, McDonough bound the principal, Tanger Grand Rapids. Tanger Grand Rapids is thus a proper party to the contract and has standing to bring its claims.

-3- Case No. 23-1349, Tanger Grand Rapids, LLC v. Rockford Constr. Co.

R. 492-15, Pg. ID 5630. As a result, it coordinated some superficial repairs, but the cracking only

worsened. Meanwhile, Tanger hired several engineering firms to figure out what went wrong.

Soon enough, Tanger had its answer: the on-site materials weren’t what Tanger thought

they were. Relying on Nederveld and MTC’s certifications, Tanger thought it was using 22A for

the base and SP/SP-SM material for the subbase. But in reality, most of the on-site materials didn’t

meet those specifications.

That mistake proved disastrous. The specific problem was the on-site material’s excessive

amount of fine particles—called “fines.” When rain or snow falls on pavement, soils with high

fines concentrations don’t drain as efficiently as soils with lower concentrations. Moisture

draining from the surface thus remains trapped in the high-fines soil just beneath it. In a frigid

Michigan winter, that sub-surface moisture freezes into a thin layer of ice. Intermolecular forces

then draw water up from the warmer, lower layers of soil toward the ice layer. See Rorik A.

Peterson & William B. Krantz, A Mechanism for Differential Frost Heave and Its Implications for

Patterned-Ground Formation, 49 J. Glaciology 69, 70–71 (2003). In turn, that water freezes, and

the ice layer expands. Id. Eventually, it grows large enough to displace the soil above it. See

Frost Heave, Encyclopedia of Geology 867 (2d ed. 2021). Often, that soil has nowhere to go but

up, splitting the surface layer in the process. See id.

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