Town of Homer, Inc. v. General Design, Inc.

960 So. 2d 310, 2007 WL 1544497
CourtLouisiana Court of Appeal
DecidedMay 30, 2007
Docket42,027-CW
StatusPublished
Cited by6 cases

This text of 960 So. 2d 310 (Town of Homer, Inc. v. General Design, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Town of Homer, Inc. v. General Design, Inc., 960 So. 2d 310, 2007 WL 1544497 (La. Ct. App. 2007).

Opinion

960 So.2d 310 (2007)

The TOWN OF HOMER, INC. d/b/a Homer Memorial Hospital, Plaintiff-Applicant,
v.
GENERAL DESIGN, INC. and Storer HVAC Management Corporation, Defendants-Respondents.

No. 42,027-CW.

Court of Appeal of Louisiana, Second Circuit.

May 30, 2007.
Rehearing Denied August 9, 2007.

*311 Colvin, Weaver & Cerniglia by James H. Colvin, Pamela N. Breedlove, Shreveport, for Applicant.

The Smitherman Law Firm by W. James Hill, III, Donald Lee Brice, Jr., Shreveport, for Respondents, General Design and Continental Casualty Company.

Robert Kennedy, Jr., Shreveport, for Third Party Respondent, Pro-Build Construction, Inc.

Before WILLIAMS, CARAWAY and LOLLEY, JJ.

CARAWAY, J.

Appellant sued the architectural firm it hired in 1984 for a major hospital renovation. The initial construction project costing over three million dollars was substantially completed in 1988. A few years later, appellant addressed the need for a parking lot and an addition for medical records storage for which the defendant performed additional architectural services. When defects developed regarding the medical records storage addition, appellant sued defendant for negligence and breach of contract. Defendant argued that the terms of the parties' earlier AIA contracts, executed in 1984 and 1985, required arbitration. After a hearing in which the trial court ruled in favor of arbitration, and a second hearing denying appellant's motion for a new trial, appellant sought this supervisory review. For *312 the following reasons, we reverse and remand for further proceedings.

Facts

Homer Memorial Hospital is owned by the Town of Homer (hereinafter collectively "HMH"). Allen W. Johnson ("Johnson") is an architect employed by defendant General Design, Inc. ("G.D.Inc."). Between the early 1980's and the mid-1990's, HMH and G.D. Inc., through Johnson, contracted for architectural services pertaining to various renovation work projects for the hospital. This dispute involves their contractual agreement or agreements applicable to the time period in question as related to a work project that occurred in 1992 (hereinafter the "Pro-Build Job"). Identification of the parties' contractual agreement pertaining to the Pro-Build Job, which allegedly involved architectural defects, will answer the issue of arbitration for this dispute.

In 1983, HMH decided to modernize and upgrade the hospital facilities to enhance care and attract more medical practitioners to its rural community. It hired G.D. Inc., and in particular, Johnson, to conduct a study covering "programming, consultant services, financial search and architectural services," for which services HMH was to pay G.D. Inc. $11,550. To effect their agreement, the parties executed a "Standard Form of Agreement Between Owner and Architect," AIA[1] Document B141-1977, effective May 8, 1984 (hereinafter the "1984 Consulting Agreement").

After Johnson's work and guidance, the major initial renovation project was advertised and let out for bids. As a result, HMH and McGinnis Brothers Construction, Inc., the low bidder, entered into a Standard Form of Agreement Between Owner and Contractor (AIA Document A101-1977) in September, 1986. The major renovation (hereinafter the "McGinnis Job") was for $3,391,089 and was substantially completed about two years later, on November 30, 1988. The McGinnis contract named G.D. Inc. the architect for the project.

G.D. Inc.'s basis for its present claim for arbitration arises from a second Standard Form of Agreement Between Owner and Architect (AIA Document B141-1977) (hereinafter the "1985 AIA Contract"). This second contract was executed in August 1985, yet was dated May 8, 1984, the same date HMH initially authorized G.D. Inc. to conduct its work on the preliminary feasibility study pursuant to the 1984 Consulting Agreement. Similar to the listing for the "Project" description contained in the original 1984 Consulting Agreement, the 1985 AIA Contract simply described "a remodeled facility for Homer Memorial Hospital" as its focus. The 1985 AIA Contract, like the initial contract, included a provision for arbitration in Article 9.1 of the printed AIA form providing that "[a]ll claims, disputes, and other matters in question between the parties to this Agreement, arising out of or relating to this Agreement or the breach thereof, shall be decided by arbitration. . . ."

Although the 1984 Consulting Agreement and the 1985 AIA Contract had the same date and were virtually identical on the same printed AIA form, there were certain changes made in the 1985 AIA Contract for compensation for services, in contrast to the 1984 Consulting Agreement's specific listing of the $11,550 consideration for the initial services. Additionally, the 1985 AIA Contract included a supplement dealing with the authority of G.D. Inc.'s architect, Johnson, as the "full-time project representative" for HMH and *313 special supplements to satisfy Farmers Home Administration ("FmHA") regulations.

At completion of the McGinnis Job, Johnson dealt with post-construction issues. On December 1, 1988, Johnson notified the State Fire Marshal that the Initial Renovation was complete. G.D. Inc.'s concluding billing statement submitted to HMH in February, 1989, calculated its fee for services on the McGinnis Job in accordance with the 1985 AIA Contract, as follows:

  Basic Fee through Bid Award:
  $3,391,089.00 (contract amount incl.
    change orders) × (7% × 80%) =               $ 189,900.98
  Contract Administration:
   $3,391,089.00 × (7% × 20%) =                    47,475.25
  Amount Earned to Date:
   Basic Fee Contract Drawings & Bid=                       $ 189,900.98
    Contract Administration ($47,475.25 ×
    100% Complete) =                                        +  47,475.25
                                                            ____________
  Total Earned to Date:                                       237,376.23
  Total Paid to Date:                                       - 236,948.95
                                                            ____________
  DUE AT THIS TIME:                                         $     427.28

In 1991, the HMH board of directors took steps for construction of a parking lot. In July 1991, Johnson transmitted two designs for a proposed parking lot addition. The preliminary plans called for low retaining walls and sloped earth embankments to improve drainage. After G.D. Inc. billed HMH $150 for the preliminary designs in August, Johnson followed up with a letter estimating construction costs at $38,100 excluding the earthwork. The hospital ultimately selected the Town of Homer's architect and engineering personnel to complete the parking lot in April or May, 1992.

In September 1991, planning began on a project for a building for medical supplies. In early 1992, G.D. Inc. prepared construction drawings for a proposed medical records storage facility. In July 1992, after an initial bid process resulting in a $240,000 bid, Pro-Build Construction, Inc. ("Pro-Build") was invited to bid on the proposed addition. Ultimately, after certain revisions to the project, Pro-Build's bid of $184,417 was accepted. The Standard Form of Agreement Between Owner and Contractor (AIA Document A101-1987) between Pro-Build and HMH was executed in which G.D. Inc. was listed as the architect.

As a result of the Pro-Build Job for the medical records building, problems arose and the present lawsuit ensued. The petition contains the following allegations of the problem:

IX.

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Bluebook (online)
960 So. 2d 310, 2007 WL 1544497, Counsel Stack Legal Research, https://law.counselstack.com/opinion/town-of-homer-inc-v-general-design-inc-lactapp-2007.