King County Prevails on Appeal of $155M Jury Verdict Against Brightwater Tunneling Contractor
The Washington Court of Appeals recently upheld a massive $155,831,471.00 jury verdict in favor of King County against Vinci/Parsons/Frontier Kemper JV (“VPFK”) and its multiple sureties. VPFK was one of the joint venture contracting entities performing tunneling work on the Brightwater Wastewater Treatment System Expansion Project. The verdict was the end result of a nearly three-month jury trial that took place in the fall of 2012.[i] The verdict represents one of the largest awards, if not the largest award, in a construction dispute in this state.
While there were numerous issues involved in the appeal, the principal issues involved the trial court’s summary dismissal (prior to trial) of VPFK’s differing site conditions claim as to the frequency of transitions between soil types, as well as its defective specification claim relating to the County’s specification of a slurry tunnel boring machine (STBM) for the Project. The effect of the trial court’s early dismissal was that some of the VPFK’s largest claims were prevented from being considered by the jury.
VPFK’s differing site conditions claim at issue in the appeal was based on it encountering a greater frequency of transitions between soil conditions than what was indicated in the County’s bid documents and what VPFK anticipated. According to VPFK, the greater number of soil transitions caused a substantial slowing of progress because the STBM’s operators had to adjust the machine’s parameters and slurry composition more often than expected. The County’s position was that the bid documents (which provided data on soil samples every 300-400 feet along the tunnel route) did not make any representation about the number of transitions the bidders would encounter along the route or in between bore holes. The trial court agreed with the County, and VPFK’s “greater frequency” claim was dismissed prior to trial.
On appeal, the Court of Appeals held that the trial court’s dismissal of VPFK’s claim prior to trial was proper. The Court of Appeals found that the bidding documents provided “no baseline for the number of transitions between different kinds of soil conditions,” and that there were numerous admissions by VPFK experts and witnesses to this effect. The Court rejected VPFK’s argument that a differing site conditions claim can exist based on a contractor’s “reasonable interpretation” of the owner’s soils data.[ii] Since the contract documents in this case did not make any representation about the frequency of transitions, according to the Court, the documents were effectively silent on the issue and could not support a differing site conditions claim. The Court also held that VPFK did not rely on any particular estimate of the frequency of soil transitions and, therefore, could not show “reasonable reliance” on indications of frequency in the bid documents, which is an essential element of establishing a differing site conditions claim.
VPFK also claimed that the County’s specification requiring the use of a STBM was defective. VPFK submitted evidence that the County knew pre-bid that an STBM might encounter problems, that the County had also considered specifying a different type of boring machine, an earth pressure balance machine (EPBM), and, most importantly, that the replacement contractor, JDC, had used an EPBM for its work on a different tunnel section and used that same EPBM to complete VPFK’s section. This VPFK claim was also dismissed by the trial court prior to trial.
On appeal, the Court once again held the trial court’s summary dismissal to be proper. The Court of Appeals found that there was no evidence that the County’s specification of the STBM was defective. The Court cited to evidence that even though there was risk associated with using an STBM, the risks associated with using an EPBM were greater, that VPFK actually preferred using an STBM, and that JDC’s use of an EPBM was the “best and only option at the time.”
In the end, the Court of Appeals affirmed not only the two VPFK issues discussed above, but every judgment, ruling, or issue raised by either party in the appeal. Given the magnitude of the financial issues involved, it is highly likely that VPFK and its sureties will seek to have the Washington Supreme Court accept review of the case.
Comment: The VPFK issues discussed above were decided by the trial court on a summary judgment motion and were not allowed to be presented to the jury. In these situations, because the trial court judge is essentially rendering an early decision on an issue without an actual trial, a more stringent legal standard applies. The judge must be convinced that there are no material facts in dispute on the issue, and, when looking at the evidence in the light most favorable to the non-moving party (VPFK), a reasonable juror could reach only one conclusion. The Court of Appeals opinion in this case does not dwell significantly on this higher standard and its application to the issues.[i] The $155M verdict was for the County’s damages due to the default termination of the VPFK joint venture mid- project. The County used JayDee Coluccio, a different joint venture tunneling contractor who was already working on a different section of the Brightwater Project, to complete VPFK’s work. The jury awarded VPFK approximately $26M on VPFK’s claims that were allowed to be presented to the jury. The trial court also awarded the County $14M in legal costs as the prevailing party in the case. [ii] VPFK hired geotechnical consultants to assist in preparing its bid. The consultants attempted to extrapolate the expected soil conditions between bore holes at more frequent intervals than the bid documents and assumed a continuity of materials in between bore holes. Apparently the consultant’s assumptions did not prove to be correct and more frequent transitions were encountered.