Tupelo Redevelopment Agency v. The Gray Corporation, Inc.

Mississippi Supreme Court·Decided January 12, 2006·No. 2006-CA-00218-SCT·Published

Opinion

` IN THE SUPREME COURT OF MISSISSIPPI NO. 2006-CA-00218-SCT

THE TUPELO REDEVELOPMENT AGENCY v. THE GRAY CORPORATION, INC. AND THE GRAY CORPORATION, INC. v.

RONALD J. RAGLAND, SR. d/b/a RAGLAND ENGINEERING AND RAGLAND CONSTRUCTION

AND

RONALD J. RAGLAND, SR. d/b/a RAGLAND ENGINEERING AND RAGLAND CONSTRUCTION

v. THE TUPELO REDEVELOPMENT AGENCY

DATE OF JUDGMENT: 01/12/2006 TRIAL JUDGE: HON. THOMAS J. GARDNER, III COURT FROM WHICH APPEALED: LEE COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANT: KEVIN B. SMITH GUY W. MITCHELL

WILLIAM DANIEL PRESTAGE

WILLIAM G. ARMISTEAD, SR.

ATTORNEYS FOR APPELLEES: B. SEAN AKINS THOMAS W. PREWITT

KENNETH MARTIN HEARD, III NATURE OF THE CASE: CIVIL - CONTRACT DISPOSITION: ON DIRECT APPEAL: AFFIRMED; ON CROSS-APPEALS: AFFIRMED - 10/18/2007 MOTION FOR REHEARING FILED:

MANDATE ISSUED:

BEFORE DIAZ, P.J., CARLSON AND RANDOLPH, JJ.

CARLSON, JUSTICE, FOR THE COURT:

¶1. After a jury trial, the Circuit Court of Lee County entered a judgment in favor of the Gray Corporation, Inc., and against the Tupelo Redevelopment Agency for $258,118; and likewise entered a judgment in favor of Ronald J. Ragland, Sr., d/b/a Ragland Engineering and Ragland Construction and against the Gray Corporation for $1,216,605.20. The Tupelo Redevelopment Agency appeals from the judgment entered against it, and the Gray Corporation, Inc., and Ronald J. Ragland, Sr., d/b/a Ragland Engineering and Ragland Construction, cross-appeal. After consideration of the record before us and the applicable law, we affirm on all issues raised both in the direct appeal and the cross-appeals.

FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶2. On October 20, 2000, the Tupelo Redevelopment Agency (TRA) entered into a contract with the Gray Corporation, Inc. (Gray) for the construction of the Tupelo Fairgrounds Redevelopment Project (the Project). Gray was bonded by the Hartford Fire and Insurance Company (Hartford). The original price contemplated by the contract was $1,725,347.08 and consisted of three components: Component A, water and sewer improvements; Component B, site work; and Component C, electrical, CATV, telephone and duct system. Allen & Hoshall provided the electrical plan and specifications to TRA for

Component C of the Project. Jesco, Inc. (Jesco)1 was hired to serve as Construction Manager, and Tupelo Water & Light (TWL) was hired to inspect and approve the Component C work. For the Component C work, Gray 2 entered into a oral subcontract with Ronald Ragland, Sr., d/b/a Ragland Engineering and Ragland Construction (Ragland),3 whereby Ragland agreed to perform some of the layout work contemplated by Gray’s contract with TRA, and to construct portions of the Project.

¶3. After beginning work on Component C, Ragland noticed there were problems with the plans given to it by Gray. After Allen & Hoshall spent nearly three months trying to correct the electrical plans and specifications with no solution, TRA, Jesco and Allen & Hoshall enlisted Ragland’s help to properly identify quantities of work and the scope of the Project requirements. Because these revisions required extra work on the part of Gray and Ragland, TRA, through its representative Jesco, promised Gray and Ragland a future change order. On February 15, 2001, Ragland presented Brister with a narrative explaining the need for a change order to the Project. On March 2, 2001, Gray obtained change order number

1 Jesco’s employee Steve Brister was the primary construction manager. As Jesco’s primary construction manager, Steve Brister’s scope of employment was to “manage the project, to be the owner’s liaison, eyes and ears on the project on a day-to-day basis.”

2 In accordance with Miss. Code. Ann. § 31-5-51 (Rev. 2005), Gray, as principal, and Hartford, as surety, executed a payment bond under which Gray and Hartford jointly and severally agreed to promptly pay all persons supplying labor and materials in the prosecution of the work required by the Project.

3 Mr. Ragland is a professional engineer, a registered land surveyor and a licensed contractor.

1, as required by the contract terms with TRA, for modifications to the electrical plan and specifications to Component C. Additionally, Gray requested and received two more change orders, number 2 and number 3. The three change orders brought about net additions of $283,209.20 to the original contract terms. Gray and Ragland proceeded with the contemplated work on the Project without receiving any additional change orders for any extra work or time delays associated with Component C.4

¶4. After Ragland completed the work and requested payment from Gray, which was never received, Ragland made a ore tenus motion to intervene in a suit which already had been filed in the Circuit Court of Lee County, styled “W.G. Construction, Inc. v. The Gray Corporation, Inc. and The Hartford Fire and Insurance Company,” civil cause number CV02- 133(G)L on the docket of that court.5 The motion to intervene was granted on August 12, 2002.

¶5. Thereafter, Ragland filed an intervention complaint against Gray and Hartford. In the complaint, Ragland alleged:

Ragland’s work at the project was made difficult, more costly, and time consuming by Gray and/or third parties for which Gray is responsible. In

4 However, Gray and Ragland contend that since the changes were ongoing and delays were mounting, TRA promised to issue a “final change order” to address all outstanding issues. Such final change order was never issued by TRA due to the disputes which arose at the end of the Project and Gray’s request for equitable adjustment.

5 On October 29, 2003, the circuit court entered an Agreed Order Dismissing with Prejudice the Claims of W.G. Construction, Inc. and the Derivative Third-Party Claims Asserted by the Gray Corporation, Inc. Against the Tupelo Redevelopment Agency Which are Premised on the Claims of W.G. Construction, Inc.

addition to the work that it initially contracted to perform, Ragland was required by Gray to perform and did perform additional and different work than the work originally contemplated by the parties. Further, Ragland was unable to perform its work in the manner originally contemplated and as scheduled. It was denied access to portions of the work; Ragland’s construction efforts were interfered with; and, Ragland encountered different conditions at the project than had been reasonably anticipated. Likewise, Gray improperly performed administrative tasks and aspects of the project were changed. As a consequence of all of the above, Ragland became entitled to additional compensation and although Ragland was entitled to additional contract time, Gray continued to insist that Ragland perform at an unreasonable rate.

Ragland periodically billed Gray for its work; however, although Gray made some payments, Gray refused and still refuses to pay Ragland $534,454.11 being the total amount due it and which has been due for many months.

Based on Ragland’s allegations, Ragland’s prayer for relief is as follows:

WHEREFORE, PREMISES CONSIDERED, Ronald J. Ragland, Sr. demands judgment against The Gray Corporation, Inc. and The Hartford Fire and Insurance Company in the amount of at least Five Hundred Thirty-Four Thousand, Four Hundred Fifty Four Dollars and 11/cents ($534,454.11), plus pre-judgment interest, the penalty and interest required by § 31-5-27 Miss.

Code Ann. (Supp. 2001), interest, costs and attorneys fees anticipated under § 31-5-57 Miss. Code Ann. (Supp. 2001).

Both Gray and Hartford filed Answers and Affirmative Defenses on September 23, 2002, denying any liability. Particularly, Gray and Hartford contended that Ragland:

engaged in a direct relationship with the owner [TRA] and architect for the Project, made agreements directly with the Owner and Architect and not as a subcontractor to Gray. As a result, Gray [and Hartford] ha[ve] no liability to Ragland for any claims Ragland asserts for delays, interference or extra work resulting from work performed on the Project.

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Tupelo Redevelopment Agency v. The Gray Corporation, Inc., (Mich. 2006).

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