Otis Elevator Company v. WG Yates & Sons Construction Company

Filing 39

MEMORANDUM OPINION. Signed by Judge Inge P Johnson on 12/12/12. (ASL)

FILED
2012 Dec-12 PM 02:07
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION

OTIS ELEVATOR COMPANY
PLAINTIFF,
v.

Case No: CV 12-J-1708 NE

W.G.YATES & SONS CONSTRUCTION
COMPANY a/k/a YATES CONSTRUCTION,
DEFENDANT.

MEMORANDUM OPINION
Pending before the court is defendant, W. G. Yates & Sons Construction
Company’s (“Yates”) motion for partial summary judgment with evidentiary
submissions (doc. 20), its brief in support of said motion (doc. 21), plaintiff Otis
Elevator Company’s (“Otis”) response with evidentiary submissions (doc. 30), its
brief in opposition to Yates’ motion (doc. 31), Yates’ reply with evidentiary
submissions (doc. 35), and Otis’ sur-reply (doc. 38). Defendant Yates seeks a
judgment that declares that “Otis is liable to Yates for damages related to the
failure of escalators furnished and installed by Otis to comply with the subject
contract between Otis and Yates.....[and] that the escalators furnished and installed
by Otis had an incorrect step width of 32 inches instead of the required 39.5 inches

and that Otis is liable for the damages incurred by Yates as a result of this
nonconformity.” Motion at 1.
Plaintiff Otis filed this action for breach of contract alleging that Yates has
failed to pay Otis the money owed Otis under the subcontract with Yates of
December 7, 2010. Otis also alleges that said breach is remediable under the
Alabama Prompt Pay Act, Ala. Code § 8-29-1, et seq., which provides for interest
at 12% per annum plus attorney’s fee. Complaint, Count II (Doc. 1).
Yates filed a counterclaim alleging that Otis breached the subcontract at
issue by failing to install escalators with a step width of 40 inches and by failing to
call to the attention of Yates that Otis was deviating from the Contract Documents
by furnishing and installing escalators with a step width of 32 inches, resulting in
damages to Yates for the costs to remedy said alleged breach. Counterclaim, ¶ 15
(doc. 11).
FACTUAL BACKGROUND
The pertinent facts are as follows:
The subcontract in question arose out of a baggage claim expansion project
for Huntsville Madison County Airport Authority (the “Owner”). See Complaint
(doc. 1). The architect for the project was Chapman Sisson Architects (the
“Architect”). See Decl. of Dave Trimmer, ¶ 2, (submitted as Plaintiff’s Exh. A);

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Pinkston depo. at 39. Yates was the general contractor for the project. See
Trimmer Decl., ¶ 2. As part of the work, Yates was required to install four
escalators, two interior and two exterior. See Trimmer Decl., ¶ 3.
Yates solicited bids from three escalator suppliers, Otis, Thyssen Krupp and
Schindler, for the supply and installation of the escalators. Pinkston depo. at 36.
All three were asked to bid to plans and specifications. Id. at 36-37, 57; Master
Spec Full Length (submitted as Plaintiff’s Exh. D). The plans and specifications
were made available at a website for viewing or to be downloaded. Decl. of Trey
Steber, ¶ 2. Escalators have generally two dimensions for width, rated width
(“nominal width”) and step width (or “tread width”), being the width of the
escalator stair treads. Rated width is ordinarily approximately 8 inches wider than
step width. Step widths are typically 24 inches, 32 inches, or 40 inches, and the
corresponding rated widths are usually approximately 32 inches, 40 inches, and
48 inches, respectively. See Steber Decl., ¶ 3.
Nowhere in the project specifications is either a rated width or a step width
specified. Id.; Pinkston depo. at 57-58, 60, 95-96. One of the contract drawings,
Drawing A180, did depict certain escalator drawings. Detail C6 of Drawing A180
addressed the two interior escalators and Detail A1 of A180 addressed the two
exterior escalators. Steber Decl., ¶ 4. Based on these plans and specifications,
Otis and Thyssen Krupp both proposed to supply and install escalators with a 32
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inch step width. See Trimmer Decl., ¶10; Pinkston depo. at 52-53, 103-104, 136;
June 2010 Otis Proposal at 2 (submitted as Plaintiff’s Exh. F). The only bidder
who proposed installing escalators on the project with a step width of 40 inches
was Schindler, whose product was the undisclosed basis for the design. Pinkston
depo.at 122-23; March 28, 2012, Letter from Yates to the Owner (submitted as
Plaintiff’s Exh. G). Yates chose Otis as the lowest bidder, but did not issue the
subcontract in question until the Architect had approved Otis’ shop drawings and
product literature which showed that Otis was proposing to install 32 inch step
width escalators. Pinkston depo. at 53-54; Trimmer Decl., ¶¶ 11, 12; Steber Decl.,
¶ 8; Shop Drawings (submitted as Plaintiff’s Exh. H). Yates also reviewed and
approved Otis’ submissions and shop drawings. Pinkston depo. at 53-54; Trimmer
Decl., ¶ 11. At no time during the submittal and review process did either the
Architect or Yates object to the proposed step width of 32 inches, nor did either of
them ever express that escalators built to such specifications would not comply
with the project plans and specifications. Pinkston depo. at 52-53; Steber Decl., ¶
7.
After Yates’ and the Architect’s approval of the Otis shop drawings, the
issuance of a signed subcontract ensued and Otis ordered and delivered the 32

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inch step width escalators. Trimmer Decl., ¶ 12.1 Yates constructed the wellways,
that is the pits where the escalator motor and equipment are installed, for the
escalators. Yates’ wellways accommodated 32 inch step width escalators.
Trimmer Decl., ¶ 12. At no time during this process did Yates or the Architect
object to the 32 inch step width of the escalators. Pinkston depo. at 52-53;
Trimmer Decl., ¶ 12.
As the escalator work was nearly finished in March of 2012, the Owner
objected to the 32 inch step width escalators. Pinkston depo. at 61-62; Trimmer
Decl., ¶ 13; Letter from the Owner of March 19, 2012, (submitted as Plaintiff’s
Exh. I). A meeting was held regarding this issue on March 26, 2012, with the
Owner, the Architect, Yates and Otis representatives all in attendance. Pinkston
depo. at 89-90; Trimmer Decl., ¶ 13-14. Following that meeting, on March 28,
2012, Yates sent a letter to the Owner. Plaintiff’s Exh. G. In that letter Yates
stated among other things: “CSA [the Architect] had the opportunity to reject the
escalators during the submittal review process. Though not clearly identified in
the Contract Documents, the OTIS shop drawings identify clear tread width and
critical dimensions. [The Architect] reviewed the submittal and indicated that the

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The approval language actually states: “The submittal documents have been reviewed
for general compliance with the contract documents and for coordination purposes only.”
Pinkston testified: “They [Yates] reviewed it, but they don’t check—you know, as much as they
would like to, we don’t check every component of every submittal.” Pinkston depo. at 184.
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shop drawings complied with the design intent. Based upon the information
provided in the Contract Documents and compliance of shop drawings with the
intent design the escalators comply with the Contract Requirements.”
(emphasis added). Id. In that same letter Yates pointed out that two of the three
bidders read the contract documents to require installation of escalators with 32
inch step width. Id.2
Subsequent to this letter, the Owner, disagreeing with Yates’ position as
stated in that letter, started threatening Yates with liquidated damages to the tune
of $5,000 per day and tacitly threatening to never do business with Yates again.
Pinkston depo. at 144-146, 151-153. At this point Yates changed its opinion as to
whether or not the installed escalators were in conformance with the Contract
Documents. Yates concluded they were not. Pinkston depo. at 181-182.
In the end, weighing its options, the dispute between Yates and the Owner
resulted in a Change Order (#75). See Letter from Yates to Otis dated May 7,

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The letter was approved not only by Pinkston but also by Jeff Cross, Yates’ senior vice
president. Yates later took the position that they were acting as advocates for Otis. Pinkston
depo. at 97. However, the fact remains that the letter was from Yates (not Otis) to the Owner.
Id. In a declaration by William Marsh IV, Yates’ project manager, Yates now takes the position
contrary to Mr. Pinkston’s deposition testimony, that the letter from Yates to the Owner of March
28, 2012, was only a draft and was not transmitted outside of Yates. Instead, Marsh states “the
draft was revamped into what became my letter of March 29, 2012.” Marsh Decl., ¶ 13,
(submitted as def. Exh. 1 to reply) and Exh. 5 thereto. This letter appears to be a proposal for a
resolution of the dispute between Yates and the Owner as it states: “The proposed amounts are
not an admission of guilt or liability by Yates or OTIS and are only an effort to bring timely
resolution to support the Project schedule.” Id.
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2012, (submitted as Plaintiff’s Exh. M). In agreeing to perform the work under
Change Order 75, Yates did not reserve its rights against the owner. Otis,
however, agreed to do the work under Change Order 75, but did so under
reservation of rights. Pinkston depo.at 157. Yates has not paid Otis for any work
done by Otis on the project since January 2012, even though Yates has been fully
compensated for the work it has performed, as well as what Otis has performed on
the project. Pinkston depo. at 240, 245, 248.
Nowhere do the Contract Documents made available to Otis and the other
bidders actually state the width as 40 inches. See Drawing A180, Detail A1 and
Detail C6 (submitted as Plaintiff’s exh. E). See also defendant’s brief at 6-7.
STANDARD OF REVIEW
A moving party is entitled to summary judgment if there is no genuine issue
of material fact, leaving final judgment to be decided as a matter of law. See
Federal Rule of Civil Procedure 56; Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1355-56 (1986). The facts, and any
reasonable inferences therefrom, are to be viewed in the light most favorable to the
non-moving party, with any doubt resolved in the non-movant’s favor. See Adickes
v. S.H. Kress & Co., 398 U.S. 144, 158, 90 S.Ct. 1598, 1609 (1970). All
“reasonable doubts” about the facts and all justifiable inferences are resolved in

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favor of the non-movant. Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th
Cir.1993). However, all “doubts” need not be so resolved. Barnes v. Southwest
Forest Industries, Inc., 814 F.2d 607, 609 (11th Cir.1987). Once met by the
moving party, however, the burden shifts to the non-moving party to come forward
with evidence to establish each element essential to that party's case sufficient to
sustain a jury verdict. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct.
2548, 2552 (1986); Earley v. Champion Int’l Corp., 907 F.2d 1077, 1080 (11th
Cir.1990).
A party opposing a properly submitted motion for summary judgment may
not rest upon mere allegations or denials of his pleadings, but must set forth
specific facts showing that there is a genuine issue for trial. Eberhardt v. Waters,
901 F.2d 1578, 1580 (11th Cir.1990). In addition, the non-moving party's
evidence on rebuttal must be significantly probative and not based on mere
assertion or be merely colorable. See Rule 56(e); Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249-50, 106 S.Ct. 2505, 2511 (1986). Speculation does not create a
genuine issue of fact. Cordoba v. Dillard’s, Inc., 419 F.3d 1169, 1181 (11th
Cir.2005). “The mere existence of some factual dispute will not defeat summary
judgment unless that factual dispute is material to an issue affecting the outcome
of the case .... A genuine issue of material fact does not exist unless there is
sufficient evidence favoring the nonmoving party for a reasonable jury to return a
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verdict in its favor.” Chapman v. AI Transport, 229 F.3d 1012, 1023 (11th
Cir.2000), quoting Haves v. City of Miami, 52 F.3d 918, 921 (11th Cir. 1995). A
factual dispute regarding a non-material issue will not preclude the defendant from
succeeding on a motion for summary judgment. Brown v. American Honda Motor
Co., 939 F.2d 946, 953 (11th Cir.1991).
LEGAL ANALYSIS
Defendant Yates is entitled to summary judgment on its breach of contract
claim if plaintiff Otis has breached its subcontract with Yates by installing
nonconforming escalators with a step width of 32 inches instead of 40 inches.
Yates can establish a breach of contract claim by showing “(A) the existence of a
valid contract binding the parties in the action; (B) its own performance under the
contract; (C) the plaintiff’s nonperformance; and (D) damages.” Southern Medical
Health Sys., Inc. v. Vaughn, 669 So.2d 98, 99 (Ala. 1995) (citations omitted). A
valid contract exists if defendant can demonstrate “an offer and acceptance,
consideration and mutual assent to the terms essential to the formation of a
contract.” Ex parte Grant, 711 So.2d 464, 465 (Ala. 1997) (citations omitted).
In support of its motion Yates argues that there is no ambiguity in the
contract terms and drawings “because the drawings are susceptible to only one
reasonable interpretation: the escalator steps were required to be 39.5 inches

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wide.” Defendant’s brief at 7. This bold assertion certainly is contradicted by the
evidence that at least two independent bidders read these same drawings to require
the escalator steps to be 32 inches wide. Additionally, that argument is
contradicted by Pinkston’s testimony that at least until the Owner complained that
the step width of the installed escalators was incorrect in March of 2012, and up
through Yates’ letter of March 28, 2012, Yates believed that the escalators as
installed with a step width of 32 inches complied with the Contract Documents
and drawings. Putting aside that the Contract Documents and drawings supplied
by Yates to Otis and the other bidders never called for 40 inch step widths, they
also never used the terms “step width,” “tread width,” “rated width,” or “nominal
width.” See Pinkston depo. at 307-308. Defendant’s argument that the subject
drawings are unambiguous is also contradicted by Pinkston’s testimony that the
drawings could have been clearer. Id. Yates approved the shop drawings and bid
submitted by Otis as did the Architect. Only after those approvals had been made
did Yates sign the subcontract with Otis. Yates itself constructed the wellways for
escalators having a step width of 32 inches, and both Yates and the Owner had
superintendents, inspectors and architects on the project construction site where
they had ample opportunity to question the width of the escalator steps had they
found them to be in noncompliance with the contract documents and drawings.

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Yates argues that the fact that Yates built the escalator wellways to accommodate
the 32 inch step width escalators is not evidence of Yates’ agreement with Otis’
interpretation, but rather just Yates customizing the wellways to what the installer
needed. Reply at 9. However, it was not until Yates was under pressure that it
changed its mind about the step width of 32 inches being nonconforming. It did
so without looking at any additional drawings or documents, but rather by asking
people in its office what they thought. Pinkston depo. 181-182. Finally, as the
Architect wanted to make very clear what Change Order 75 called for, the specific
step width was specified in that Change Order. Id. at 198.
Viewing these facts and all reasonable inferences therefrom in the light
most favorable to the non-moving party, the court finds that genuine issues of
material fact exist. See Blount Bros. Const. Co. v. United States, 346 F.2d 962,
972-973 (Fed. Cir. 1965). This court therefore finds that Yates’ motion for partial
summary judgment is due to be DENIED, which the court shall do by Separate
Order.
DONE and ORDERED this 12th day of December 2012.

INGE PRYTZ JOHNSON
U.S. DISTRICT JUDGE

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