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HCBeck, Ltd v. PCCP CS Forum Portales Phase II, LLC

Court of Appeals of Arizona, First Division, Department D

June 13, 2013

HCBECK, LTD a Texas limited partnership, Plaintiff/Appellant/ Cross-Appellee,
v.
PCCP CS FORUM PORTALES PHASE II, LLC, a Delaware limited liability company, Defendant/Appellee/ Cross-Appellant.

Not for Publication – Rule 28, Arizona Rules of Civil Appellate Procedure

Appeal from the Superior Court in Maricopa County Cause No. CV2007-023228 The Honorable John Christian Rea, Judge

Ryan Rapp and Underwood PLC By David W. Kash Polly S. Rapp Attorneys for Plaintiff/Appellant/Cross-Appellee

Lewis and Roca LLP By Robert F. Roos Frances J. Haynes Milton A. Wagner Kimberly A. Demarchi Attorneys for Defendant/Appellee/Cross-Appellant

MEMORANDUM DECISION

ANDREW W. GOULD, Presiding Judge

¶1 HCBeck Ltd. ("Beck") appeals the judgment and award of attorneys' fees in favor of PCCP CS Forum Portales Phase II, L.L.C. ("Forum Portales") after a bench trial. Forum Portales cross-appeals the denial of its motion for partial summary judgment regarding the start date of the contract period and the post-judgment order reducing the statutory interest rate. We affirm the judgment, except for the amount of liquidated damages. We reverse the summary judgment ruling regarding the contract period start date and remand to allow the superior court to consider evidence on that factual issue.

FACTUAL AND PROCEDURAL HISTORY

¶2 In July 2005, Beck and Forum Portales entered into a contract under which Beck agreed to construct the shell structure of an office building and underground parking garage for $24, 791, 784.00. In March 2007, Beck sought final payment. Forum Portales withheld $630, 500 from the final payment to replace and repair defective work, including flooring, a trench drain, and garage gutters, and for liquidated damages.

¶3 The contract required Beck to "achieve Substantial Completion of the entire Work not later than 57 weeks from issuance of building permit, subject to adjustments of this Contract Time as provided in the Contract Documents." The contract included a liquidated damages provision that applied if Beck failed to complete the work "within sixty-one (61) weeks from issuance of building permit plus any authorized extensions of time[.]"

¶4 It is undisputed that there was one authorized 31-day extension. However, the parties disputed which building permit triggered the contract period and when substantial completion occurred. They filed cross-motions for summary judgment on the liquidated damages issue. The superior court ruled that it was undisputed that the shell building permit started the contract period on November 8, 2005, but found disputed questions of fact existed regarding the date substantial completion occurred.

¶5 Beck claims Forum Portales breached the contract by withholding part of the final payment and also sought to foreclose its mechanic's lien. Forum Portales argued that Beck breached the contract by failing to repair defective flooring and a faulty HVAC system, trench drain, and the gutter system in the parking garage. Forum Portales claimed it was entitled to withhold the costs for replacing and repairing the defective work and sought liquidated damages for Beck's failure to achieve substantial completion within the contract period.

¶6 The superior court found that Beck did not achieve substantial completion until May 1, 2007, when the architect certified substantial completion. The superior court awarded Beck $16, 303.98 on its contract claim, but found Forum Portales was entitled to withhold $290, 196.02 in remediation damages and $324, 000 in liquidated damages. The court denied Beck's mechanic's lien claim. The court also awarded Forum Portales $576, 682.62 in attorneys' fees as the prevailing party. After denying Beck's motion for a new trial, the court awarded Forum Portales an additional $54, 527.69 in attorneys' fees.

¶7 Beck filed a timely notice of appeal and then a motion for relief from judgment, asking the court to apply the current statutory interest rate of 4.25% instead of 10%. This court suspended the appeal to allow the superior court to address this issue. The superior court granted relief and entered an amended judgment with the lower interest rate. Forum Portales filed a timely cross-appeal from the pre-trial summary judgment ruling on the contract period start date and the order amending the post-judgment interest rate.

¶8 We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(A)(1), (5)(a) (Supp. 2012).

DISCUSSION

I. Liquidated Damages

¶9 The parties filed cross-motions for summary judgment regarding Forum Portales' claim for liquidated damages. Beck's position was that the contract term began when the shell building permit was issued on November 8, 2005, and that substantial completion occurred on January 31, 2007, when the City issued the certificate of shell building. According to Beck's dates, substantial completion occurred within the 61-week contract period; thus the liquidated damages provision was not triggered. See Contract § 4.3.

¶10 Forum Portales argued that the contract period began when the at risk foundation building permit was issued on September 19, 2005. Forum Portales contends that substantial completion occurred when the architect issued the certificate of substantial completion on May 1, 2007.

¶11 As noted above, the superior court found it was undisputed that the start date began when the shell building permit was issued rather than the earlier date when the at risk foundation permit was issued. However, the court found disputed issues of fact necessitated a trial on the date of substantial completion.

A. Contract Period Start Date

¶12 On cross-appeal, Forum Portales argues the superior court erred in finding that the contract period began when the shell building permit was issued instead of the earlier at risk foundation permit. Forum Portales contends this was a disputed factual issue that should have been decided at trial. Summary judgment is not appropriate if there are factual disputes or where the court must "choose among competing inferences." Taser Int'l, Inc. v. Ward, 224 Ariz. 389, 393, 12, 231 P.3d 921, 925 (App. 2010) . We review the grant of summary judgment de novo. L.F. v. Donahue, 186 Ariz. 409, 411, 923 P.2d 875, 877 (App. 1996).

¶13 Forum Portales argues that its interpretation of the contract language regarding the start period was reasonable, so interpretation of the contract terms was a factual question that should have gone to trial. "Whether contract language is reasonably susceptible to more than one interpretation so that extrinsic evidence is admissible is a question of law for the court." Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 158-59, 854 P.2d 1134, 1144-45 (1993) . If the language is susceptible to more than one interpretation, the matter should be submitted to the jury. Id. at 159, 854 P.2d at 1145.

¶14 The contract states that Beck shall "achieve Substantial Completion of the entire Work not later than 57 weeks from issuance of building permit, subject to adjustments .. . ." (Emphasis added.) The liquidated damages provision of the contract applies "if the Project fails to reach Substantial Completion within sixty-one (61) weeks from issuance of buildingpermit plus any authorized extension of time . . . ." ...


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