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Build, Inc. v. Utah Department of Transportation

Supreme Court of Utah

July 17, 2018

Build, Inc., Appellant,
v.
Utah Department of Transportation, Clyde-Geneva Constructors, W.W. Clyde & Co., and Geneva Rock Products, Inc., Appellees.

          On Appeal of Interlocutory Order Third District, Salt Lake The Honorable Ryan M. Harris No. 090904101

          Attorneys: Michael D. Zimmerman, Troy L. Booher, Beth E. Kennedy, Clark B. Fetzer, Salt Lake City, Kim J. Trout, Boise, ID, for appellant

          Stanford P. Fitts, Stephen J. Trayner, S. Spencer Brown, Jessica J. Johnston, Salt Lake City, for appellee Utah Department of Transportation

          Robert F. Babcock, Brian J. Babcock, Cody W. Wilson, Salt Lake City, for appellees Clyde-Geneva Constructors, \N.\N. Clyde & Co., and Geneva Rock Products, Inc.

          Associate Chief Justice Lee authored the opinion of the Court, in which Chief Justice Durrant, Justice Himonas, Justice Pearce, and Justice Petersen joined.

          OPINION

          Lee Associate Chief Justice

         ¶1 Build, Inc. was hired by the Utah Department of Transportation (UDOT) to work on three different construction projects. Build encountered problems on all three projects, and it filed various claims against UDOT and three other contractors on the project.[1] UDOT moved for summary judgment on two sets of claims - claims for breach of contract on the "Arcadia" project and claims seeking consequential damages.[2] The original judge assigned to the case, Judge Kennedy, denied both motions.

         ¶2 After his retirement Judge Kennedy was replaced by Judge Harris. Judge Harris ultimately dismissed Build's claims for breach of contract and consequential damages. And Build challenges both dismissals on this interlocutory appeal.

         ¶3 Build challenges the dismissal of the Arcadia claim on two grounds. It contends (a) that Judge Harris violated a so-called coordinate judge rule, which in Build's view limits the discretion of a successor judge to revisit decisions of a predecessor; and (b) that Build presented sufficient evidence to defeat UDOT's motion on its merits. Build also challenges the dismissal of its claim for consequential damages. It asserts that Judge Harris erred in dismissing this claim without full briefing on a motion for summary judgment and that he incorrectly concluded that Build lacked proof of its consequential damages.

         ¶4 We affirm. Judge Harris had the authority to dismiss both claims, and he committed no reversible error by doing so. In so holding, we repudiate any language in our precedent that suggests that a successor judge on a case is bound by nonfinal decisions and rulings made by his predecessor. We clarify that different judges on the same case are considered a single judicial officer-and thus that a successor judge has the same power to review nonfinal decisions that a predecessor would have had.

         I. BACKGROUND

         ¶5 UDOT hired Build to work as a contractor on three different construction projects: the Legacy project, the Arcadia project, and the 1-215 project. Only the facts surrounding the Arcadia project are relevant to this appeal, however, so we discuss only that project here.

         ¶6 The Arcadia project involved the replacement of a bridge and reconstruction of the highway on either side of it. This required excavation, and the excavated soil was slated to be disposed as "fill" around the boundaries of the project. After excavation began, UDOT's engineer, Rex Harrison, discovered a complication that prevented this method of soil disposal. So Build disposed of the soil offsite, incurring $389, 000 of additional costs.

         ¶7 Build requested that UDOT compensate it for this additional work. UDOT refused. Build then experienced financial problems and went out of business. It filed suit against UDOT, asserting that UDOT had breached its contract by asking Build to complete work that fell outside of the contract and then refusing to compensate Build for that work. Build also alleged that UDOT's failure to appropriately compensate Build for this extra work led to lost capital and cash flow, lost bonding capacity, and eventually the demise of its business. Build sought damages for breach of contract. It also requested consequential damages associated with the loss of its business.

         ¶8 The agreement between these parties contains two provisions dealing with changes to the contract; the viability of Build's claim for breach depends on which of the two applies here. One provision, found in Part 1.6, deals with changes that the engineer recognizes as falling outside of the contract. It allows UDOT to make intentional changes to the project if it does so in writing. Build's breach of contract claim invoked this provision of the contract. It asserted that UDOT had recognized that the additional soil disposal was outside of the contract's parameters, and claimed that UDOT had breached Part 1.6 by failing to give notice in writing and to compensate Build for this change.

         ¶9 UDOT denied that Part 1.6 applied and claimed instead that Part 1.5 of the contract controlled. That provision governs if Build believes there has been a change in the contract that UDOT does not recognize. In that case, Build must give UDOT notice of the "alleged change" in writing within five days of the date a change is noted.

         ¶10 The contract also provides that "[f]ailure to provide the required notice constitutes a waiver of any and all claims that may arise as a result of the alleged breach." It is undisputed that Build failed to provide the notice required by Part 1.5. And UDOT asserted that Build had waived its claim to additional compensation by failing to provide this notice. It moved for summary judgment on that basis.

         ¶11 UDOT also moved for summary judgment on the consequential damages issue. It argued that Build had "failed to provide any evidence as to the value of [its] business before and after UDOT's alleged conduct." UDOT acknowledged that Build had designated an expert (Joan Whitacre). But it noted that Ms. Whitacre had failed to specify an amount of consequential damages or to identify a methodology for calculating such damages.

         ¶12 The summary judgment motion on the breach of contract claim was submitted to Judge Kennedy for decision. He denied the motion on all counts. In denying the motion Judge Kennedy ruled that Build's claims were "subject to questions of fact, including whether UDOT breached its contract with [Build], whether UDOT waived the notice provision and whether [Build's] claims satisfy the requirement of the Changed Conditions Clause of the contract specifications."

         ¶13 Judge Kennedy also upheld the viability of Build's consequential damages claim. He concluded that Build had "presented evidence-most notably in the form of Joan Whitacre's expert opinion-that supports its consequential damages claim."

         ¶14 Judge Kennedy retired soon after issuing his decision denying UDOT's motions. He was replaced in this case by Judge Harris. By that time the dispositive motion deadline had long since passed. Yet UDOT filed two new motions. The first, styled as a motion for clarification, related to the Arcadia claim. In that motion, UDOT claimed that Judge Kennedy should have applied Meadow Valley Contractors, Inc. v. State Department of Transportation - a decision addressing contract provisions virtually identical to Parts 1.5 and 1.6 of the contract between Build and UDOT. 2011 UT 35, 266 P.3d 671, abrogated on other grounds by Mounteer Enters., Inc. v. Homeowners Ass]nfor the Colony at White Pine Canyon, 2018 UT 23, P.3d . The Meadow Valley court determined that contractual language mirroring Part 1.6 applied only where the engineer "knowingly and deliberately" made changes to the contract. Id. ¶ 31. And in the absence of a showing of knowledge or deliberate action, it held that any alteration to the contract would have to be considered an "alleged change" - triggering the language in the contract mirroring Part 1.5, with its requirement that the contractor provide notice of the alleged change or else forfeit its right to compensation. Id. ¶ 33.

          ¶15 Judge Harris agreed with UDOT that Meadow Valley controlled. He held that Build had failed to provide any evidence that the change was "knowing and deliberate" on Harrison's part, and that Part 1.5 accordingly applied. And because Build had failed to comply with the notification requirements of that Part, Judge Harris concluded that Build had waived its claim for additional compensation. He accordingly entered summary judgment against Build on the Arcadia claim.

         ¶16 UDOT"s second motion was styled as a motion in limine. This motion asked the court to exclude the testimony of Joan Whitacre and Build's president Freddie Stromness on the amount of Build's consequential damages. In so moving UDOT pointed out that Build had never provided a calculation of its consequential damages. And it asserted that Whitacre and Stromness should be prohibited from testifying as to that amount on that basis.

         ¶17 At the hearing on the motion Judge Harris noted that a decision granting UDOT's motion in limine would "fatally wound" the business devastation basis of the consequential damages claim. And he ultimately granted the motion. In so doing he also entered an order dismissing the consequential damages claim outright, concluding that the claim "fails for lack of proof" because Whitacre and Stromness were barred from testifying on the issue.

         ¶18 Build petitioned for leave to file this interlocutory appeal. We granted the petition, and review the dismissal of Build's claims de novo, affording no deference to the district court's analysis. We do so because the district court's decision amounted to a summary dismissal of Build's claims, [3] and summary judgment is subject to de novo review. See Dillon v. S. Mgmt. Corp. Ret. Tr., 2014 UT 14, ¶ 21, 326 P.3d 656.

         ¶19 We consider Build's challenges to the dismissal of the Arcadia claim first, in Part II below. Then we address Build's arguments regarding the consequential damages claim, in Part III. We affirm on all counts, and in so doing reinforce the authority of a successor judge (here, Judge ...


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