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Herion Co. v. Taney County

Court of Appeals of Missouri, Southern District, First Division

February 6, 2017

HERION COMPANY, Plaintiff-Respondent,
v.
TANEY COUNTY, MISSOURI, Defendant-Appellant.

         APPEAL FROM THE CIRCUIT COURT OF GREENE COUNTY Honorable Mark Orr, Circuit Judge[1]

         REVERSED AND REMANDED

          OPINION

          JEFFREY W. BATES, P.J.

         Following a jury trial, Taney County (the County) appeals from a judgment in favor of Herion Company (Herion), an excavating contractor. Herion sued the County for damages arising from an alleged breach of a road construction contract. Prior to trial, the trial court granted Herion's first motion for partial summary judgment. Via this ruling, the trial court decided there was a conflict between two key provisions of the contract governing the performance and payment for additional work.[2] According to the trial court, this conflict meant: (1) the provision specific to the work performed, Job Special Provision 2.2 (JSP 2.2), was controlling over the more general provision concerning payment for additional work, JSP 1.13; and (2) the County, therefore, could not enforce the JSP 1.13 payment provision.

         The County presents eight points in this appeal, but we need address only the first because it is dispositive.[3] In Point 1, the County contends the trial court erred by granting Herion's first motion for partial summary judgment. The County argues that: (1) the JSP 1.13 payment provision was not in conflict with the JSP 2.2 additional work provision; (2) the trial court's ruling was a misinterpretation of the contract and ignored applicable statutes governing payment for county road work; and (3) this erroneous ruling prevented the County from being able to defend itself at trial. We agree. Accordingly, the judgment is reversed, and the matter is remanded for further proceedings.

         Procedural and Factual Background

         The material facts relevant to the County's first point are undisputed. This case arose from the County's "Casey Road Improvements" project in 2008 that resulted in discovery of unsuitable subgrade, requiring extensive "subgrade stabilization using shot rock" (SSUSR). The bid form for SSUSR limited the quantity to 5 cubic yards, and Herion bid a unit price of $65 per cubic yard, totaling $325, for that line item of the bid.

         In January 2008, the parties entered into a written contract (Contract) in which the "County Commission" agreed to pay "the Contractor" Herion "$1, 873, 989.50 … as full compensation for the performance of work embraced in this contract, subject to adjustment as provided for changes in the quantities by means of approved change orders."[4] The Contract price included $325 for 5 cubic yards of SSUSR work.

         In late March 2008, Herion discovered unsuitable subgrade and began SSUSR work in early April. By April 22, 2008, Herion used over 4, 500 cubic yards of SSUSR, which amounted to $292, 510 of SSUSR work. At that point in time, the County first learned of the additional SSUSR work and materials. The County then directed its project engineers, Great River Engineering (GRE), to stop the SSUSR work on that phase of the project and schedule further discussion of the issue. It is undisputed that, prior to performing the SSUSR work, Herion did not: (1) obtain written permission from GRE authorizing Herion to proceed with the SSUSR work above the 5 cubic yards included in the bid form; or (2) seek written authorization from the County to perform the additional work or to use additional materials for SSUSR. On April 30th, the parties resolved the issue and agreed to "Addendum No. 2." Therein, Herion agreed to amend its unit price to $52 per cubic yard for all past and future SSUSR work on the project and was paid accordingly. Ultimately, Herion was paid $685, 000 for 13, 500 cubic yards of SSUSR work instead of $325 for 5 cubic yards bid in the original contract.

          In December 2009, Herion filed the underlying lawsuit seeking to set aside Addendum No. 2. Herion's first amended, two-count petition generally alleged, inter alia, that: (1) the County breached the Contract by paying the reduced price for SSUSR after agreeing to pay $65 per cubic yard; (2) the SSUSR work did not require a change order prior to completing the work; and (3) the County wrongly informed Herion that a prior change order was required and that Herion did not obtain proper authorization before performing the SSUSR work. Count I alleged that Addendum No. 2 was not binding "because it was signed by Herion under duress" and requested damages for the difference in price. Count II sought damages for the delay in work, and both counts requested prejudgment interest. As an affirmative defense in the County's answer, the County alleged, inter alia, that Herion breached the Contract by failing to obtain the required written approval prior to undertaking additional SSUSR work.

         Thereafter, Herion filed 12 motions for partial summary judgment. In December 2011, a master was appointed to rule on these motions pursuant to Rule 68.01.[5] In the master's first report, the master found in favor of Herion on its first motion for partial summary judgment. That motion was directed toward two key Contract provisions. In April 2013, the trial court adopted the master's first report in its entirety. Via that ruling, the trial court adopted the master's recommended ruling to grant Herion's first motion for partial summary judgment, which posited that there was a conflict between the JSP 1.13 payment provision and the JSP 2.2 additional work provision. The trial court decided that the provision specific to the work performed, JSP 2.2, controlled over the more general provision concerning payment for additional work, JSP 1.13, which required written authorization before proceeding with the additional work.[6] The trial court also granted Herion's other 11 motions for partial summary judgment, which further narrowed the issues to be tried.[7]

         In February 2014, the case was tried to a jury on the issues in Herion's two-count petition to set aside Addendum No. 2 due to duress and to assess Herion's alleged damages. Counsel for the County twice asked the trial court to reconsider its rulings on the motions for summary judgment - the first motion for partial summary judgment, in particular - but the court declined to do so. As a result, the County was prevented from arguing contract or statutory defenses to Herion's claim to set aside Addendum No. 2 based upon alleged duress.[8]

          Finding in Herion's favor, the jury awarded Herion $356, 058 damages under Counts I and II, plus $139, 498 prejudgment interest, for a total award of $495, 556. Thereafter, the County filed a motion for judgment notwithstanding the verdict or new trial, which included, inter alia, a claim that the trial court erred in granting Herion's first motion for partial summary judgment. This appeal followed. Additional facts will be included below as we address the County's first point of error.

         Standard of Review

         The issue raised by the County's first point is whether the trial court properly interpreted and applied the Contract. The proper interpretation of a contract is an issue of law, which we review de novo. Dry v. United Fire & Cas. Co., Inc., 420 S.W.3d 593, 594 (Mo. App. 2013); Strader v. Progressive Ins., 230 S.W.3d 621, 623 (Mo. App. 2007).

         Discussion and Decision

         In Point 1, the County contends the trial court erred by granting Herion's first motion for partial summary judgment because: (1) the court misinterpreted the Contract; and (2) the ruling violated applicable law. The following additional facts are relevant to this point.

         The two key Contract provisions at issue are as follows. The first is JSP 1.13, which governs claims for additional compensation. In relevant part, this provision states:

         1.13 CLAIMS ...


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