Otis Elevator Company v. WG Yates & Sons Construction Company
MEMORANDUM OPINION. Signed by Senior Judge Inge P Johnson on 8/7/13. (ASL)
2013 Aug-07 PM 03:51
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
OTIS ELEVATOR COMPANY,
W.G. YATES & SONS
a/k/a Yates Construction,
Otis Elevator Company (“Otis”) filed this action for breach of contract alleging
that W. G. Yates & Sons Construction Company (“Yates”) has failed to pay Otis the
money owed Otis under the subcontract with Yates of December 7, 2010 (docs. 1, 7,
8 and 25). The court previously determined that if Otis complied with the contract,
Yates’ 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. See
Memorandum Opinion, April 3, 2013 (doc. 57).
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 (doc. 11).
The court conducted a bench trial on June 10-13, 2013, at which both parties
were present and represented by their respective counsel.
The subcontract in question arose out of the baggage claim expansion project
for Huntsville Madison County Airport Authority (the “Owner”). The architect for
the project was Chapman Sisson Architects (the “Architect”). See Subcontract, p. 1,
(submitted as Def.’s Exh. 9); OTIS Stipulated Facts #2.1 Yates was the general
contractor for the project. See OTIS Stipulated Facts #2. As part of the work, Yates
was required to install four escalators, two interior and two exterior. See Trimmer
Decl., ¶ 3 (submitted as Def.’s Exh. 41); OTIS Stipulated Facts #3. Yates solicited
and received bids from three escalator suppliers, plaintiff Otis, and non-parties
Thyssen Krupp and Schindler, for the supply and installation of the escalators. OTIS
Stipulated Facts #6. All three were asked to bid according to the plans and
specifications. Id. The plans and specifications were made available at a website for
viewing or downloading. Decl. of Trey Steber, ¶ 2 (submitted as Def.’s Exh. 33).
Escalators generally have 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 approximately 8 inches wider than step width. Standard step widths
are typically 24 inches, 32 inches, and 40 inches, and the corresponding rated widths
are approximately 32 inches, 40 inches, and 48 inches, respectively.2 See Steber
Proposed stipulations of facts were submitted as plaintiff ex. 73.
Evidence at trial did support a finding that these measurements are approximate and vary
between manufacturers by a half inch or so.
Decl., ¶ 3. Nowhere in the project specifications is either a rated width or a step width
specified. Id.; OTIS Stipulated Facts #4 & 5. One of the contract drawings, Drawing
A180, did depict certain escalator drawings. See Yates Stipulated Facts #3. Detail C6
of Drawing A180 addressed the two interior escalators and Detail A1 of A180
addressed the two exterior escalators. Steber Decl., ¶ 4; Yates Stipulated Facts #5.
Based on these plans and specifications, Otis and non-party Thyssen Krupp both
proposed to supply and install escalators with a 32 inch step width. See Trimmer
Decl., ¶10; OTIS Stipulated Facts #6 & 7. The only bidder who proposed installing
escalators on the project with a step width of 40 inches was non-party Schindler,
whose product was the undisclosed basis for the design.3 OTIS Stipulated Facts #8;
Pl.’s Exh. 75 p. 13 (Pinkston depo).4 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. Those drawings and product specification literature
clearly show that Otis’ proposal was for 32 inch step width escalators. OTIS
Stipulated Facts # 7, 10, & 11; Pl.’s Exh. 75, p. 10-12 (Pinkston Depo); Shop
Drawings (submitted as Def.’s Exh. 4 & 5). Yates also reviewed and approved Otis’
submissions and shop drawings. OTIS Stipulated Facts # 7, 10, & 11; Pl.’s Exh. 75,
p. 10-12 (Pinkston’s depo); Shop Drawings (submitted as Def. Exh 4 & 5). At no
The testimony at trial revealed that architects will often select a particular manufacturer
of a product and base drawings off that manufacturer’s product specifications.
When referring to plaintiff’s ex. 75, Pinkston’s deposition, the court is referring to the
pages on the bottom of the exhibit, and not to the page numbers of the excerpts of the deposition
time during the submittal and review process did either the Architect or Yates object
to the specified 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. Pl. Exh. 75 p. 11-12 (Pinkston depo.).
After Yates and the Architect approved Otis’ shop drawings, the issuance of
a signed subcontract ensued and Otis ordered and had delivered the 32 inch step
width escalators. Trimmer Decl., ¶ 12. Yates constructed the wellways, or directed
the construction by another subcontractor, that is the pits where the escalator motor
and equipment are installed, for the escalators. OTIS Stipulated Facts #13. Yates
constructed the wellways to accommodate 32 inch step width escalators. Trimmer
Decl., ¶ 12. At no time during this process did Yates or the Architect raise any issue
concerning the 32 inch step width escalators. Pl. Exh. 75, p. 11-12 (Pinkston depo.);
Trimmer Decl., ¶ 12; OTIS Stipulated Facts # 18.
As the escalator work was nearly finished in March of 2012, the Owner
objected to the 32 inch step width. OTIS Stipulated Facts # 18; Pl. Exh. 75 p. 16
(Pinkston depo.); Letter from the Owner of March 19, 2012, (submitted as Pl.’s Exh.
5). A meeting was held regarding this issue on March 26, 2012, with the Owner, the
Architect, Yates and Otis representatives all in attendance. OTIS Stipulated Facts #
19. Following that meeting, on March 28, 2012, Yates drafted a letter to the Owner.
Pl’s Exh. 12 & 13. 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 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.
Pl’s Exh. 13 (emphasis added). In that same letter, Yates pointed out that two of the
three bidders read the contract documents to require escalators with 32 inch step
Subsequent to this letter, the Owner, disagreeing with Yates’ position as stated
in that letter, started threatening Yates with liquidated damages of $5,000 per day and
tacitly threatened to never do business with Yates again. Yates Stipulated Facts # 19.
At this point Yates changed its opinion as to whether or not the installed escalators
were in conformance with the Contract Documents, concluding for the first time that
they were not. In the end, the dispute between Yates and the Owner resulted in a
Change Order (#75). See Letter from Yates to Otis dated May 7, 2012, (submitted as
Def.’s Exh. 27). 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
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. Pl. Exh. 75, p.
28-31(Pinkston depo.). However, the fact remains that the letter was from Yates (not Otis) to the
Owner. Id. Mr. Pinkston took the position at trial, contrary to his 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, the draft was revamped into what became the letter of March 29, 2012.
See Def.’s Exh. 18. 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
Change Order 75, but did so under reservation of rights. 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 performed, as well as what Otis performed, on the
project. OTIS Stipulated Facts # 23 & 25.
Nowhere do the Contract Documents made available to Otis and the other
bidders actually state the step width as 40 inches. Yates Stipulated Facts # 8; see also
Drawing A180, Detail A1 and Detail C6.
I. The Contract is Ambiguous
At the center of this dispute is a question of contract interpretation. Under
general Alabama rules of contract interpretation, the intent of the contracting parties
is discerned from the whole of the contract. See Loerch v. National Bank of
Commerce of Birmingham, 624 So. 2d 552, 553 (Ala. 1993). Where there is no
indication that the terms of the contract are used in a special or technical sense, they
will be given their ordinary, plain, and natural meaning. See Ex parte Dan Tucker
Auto Sales, Inc., 718 So. 2d 33, 36 (Ala. 1998). If the court determines that the terms
are unambiguous, then the court will presume that the parties intended what they
stated and will enforce the contract as written. See id. at 36; Voyager Life Ins. Co. v.
Whitson, 703 So. 2d 944, 948 (Ala. 1997). If the court determines that the terms are
ambiguous, then the court must use established rules of contract construction to
resolve the ambiguity. See Whitson, 703 So. 2d at 948. Under those established rules,
where there is a choice between a valid construction and an invalid construction the
court has a duty to accept the construction that will uphold, rather than destroy, the
contract and that will give effect and meaning to all of its terms. See id. at 948-49;
Sullivan, Long & Hagerty v. Southern Elec. Generating Co., 667 So. 2d 722, 725
(Ala. 1995). Additionally, “if there exists inconsistency between two clauses of a
contract which cannot be reconciled, the inconsistency must be resolved in favor of
the prior clause, unless an intention to thereafter qualify is plainly expressed.” City
of Fairhope v. Town of Daphne, 208 So. 2d 917, 924 (1968); see Whitson, 703 So.
2d at 949. Lastly, if all other rules of contract construction fail to resolve the
ambiguity, then, under the rule of contra proferentem, any ambiguity must be
construed against the drafter of the contract. See Lackey v. Central Bank of the South,
710 So. 2d 419, 422 (Ala. 1998).
The court must first determine whether the contract unambiguously calls for
a 40 inch step width escalator. The parties stipulated that “[t]he Project specifications
set forth certain performance requirements but had no dimensions for the escalators
to be installed.” OTIS Stipulated Facts # 4. It was further stipulated that “[t]he project
drawings showed some dimensions of the escalators, but did not use the phrase “step
width” or “tread width” on any of the drawings.” Id. # 5. Additionally, neither the
width of 32 inches nor of 40 inches appear anywhere on Drawing A180. Yates’
additional stipulation #8. These stipulations are an admission that the contract
documents do not specify the step width of the escalators in question.
At trial, Yates argued that a 32 inch step width cannot be supported by the tick
marks and dots on drawing A180, the dimension shown of 3'-3½” inches, and the
scale provided on the drawings. Although Yates attempted to demonstrate the scale
to the court, none of the dimensions shown to scale exactly equated to a 32 inch step
width or a 40 inch step width escalator’s finished dimensions. A 32 inch step width
escalator is approximately 40 inches installed and a 40 inch escalator is
approximately 48 inches installed. The 3'-3½” inch dimension could therefore equate
to an installed 32 inch step width escalator or the step width of a 40 inch step width
escalator. Because the specifications, drawings, and/or dimensions do not clearly
indicate the step width of the escalator, the contract is ambiguous as to the step width.
II. Architect’s Decision is Reviewable
Yates argues that even if the contract is ambiguous, Subcontract ¶ 1.1 of the
contract invests the Architect with binding decision-making authority. The pertinent
part of paragraph 1.1 states: “If there is any conflict, ambiguity, or inconsistency
within or between any such [contract documents] or a difference in interpretation, the
matter shall be referred to the appropriate design professional whose decision the
Subcontractor shall implement at no additional cost.” (emphasis added). Yates claims
that this binds Otis to the Architect’s decision that the plans called for a 40" step
width escalator.6 This contract clause, however, is ambiguous at best. “Appropriate
design professional” is not defined by the contract. This language could as easily refer
to a neutral arbitrator or an escalator consultant as to Chapman Sisson Architects.
Even if the court were to consider Chapman Sisson the “appropriate design
professional,” Chapman’s decision is reviewable in this case. “Alabama caselaw has
upheld the right of contracting parties to agree that the decision of an expert such as
an architect or engineer is final.” Finish Line v. J.F. Pate & Associates Contractors,
Inc., 90 So. 3d 749, 758 (Ala. Civ. App. 2012). That decision is reviewable, however,
when there is evidence of “fraud, or such gross mistakes as would imply bad faith or
a failure to exercise an honest judgment.” Id. at 759 (quoting Shriner v. Craft, 166
Ala. 146, 158 (1910).
Trial testimony established that Chapman had an intern draft the escalator
drawings. Christopher Waters, the Chapman Sisson architect who reviewed the
intern’s drafts, testified that the firm knew of the importance to the Owner for all new
equipment to match existing equipment. However, Chapman failed to make any such
statement on the drawings or specifications with respect to the width of the escalators.
Chapman reviewed two sets of shop drawings by Otis that both specified a 32 inch
step width. Although the first shop drawing was rejected, Chapman made no mention
Yates initially argued that the contract is unambiguous. Here, Yates takes the contrary
position, arguing that the contract is ambiguous and that the ambiguity invokes Subcontract ¶ 1.1.
While Yates claims this provision applies, the provision itself only applies if there is any
“conflict” or “ambiguity.” At the same time, Yates argues there is not ambiguity in the contract
documents. These arguments by Yates are mutually exclusive.
of the step width as a reason for rejection. The second shop drawing clearly indicated
a 32 inch step width and was approved by Chapman. The second shop drawing was
stamped by Christopher Waters, AIA, on December 3, 2010, as “Concept conforms
with Design Concept.” Def.’s Exh. 4. The subcontract was executed on December 7,
2010, and Otis delivered escalators and began to install them on the project. OTIS
Stipulated Facts # 12 & 13. In March 2012, the escalator work was nearing
substantial completion. Id. at # 17. Not until approximately March 15, 2012, did any
question or issue arise concerning the step width. Id. at # 18. During the 16 month
period between approval of Otis’ shop drawings by the Architect and the first
question concerning step width, the Owner had inspectors on site on a daily basis,
Yates had superintendents on site on a daily basis, and the Architect made site visits
and periodic inspections of the project. Id. at # 14, 15, & 16.
As stated in Blount Bros. Const. Co. v. United States, 346 F.2d 962, 968,
971-973 (Fed.Cir. 1965), “Silent specifications coupled with imperfect drawings
create an ideal climate for confusion. A few simple words in the specifications, or the
correction [of the drawing] would have been a beacon to the plaintiff as to what was
wanted . . . and would have avoided this lawsuit.” Here, the specifications were silent
and the drawings imperfect. Nowhere on the drawings was a 40" step width
dimension depicted, and none of the dimensions on the drawings were labeled as to
what they designated. A few simple words would have clarified what was desired.
All the Architect had to do was exactly what he did in Change Order 75 - specify the
step width in the specifications and/or label the step width on the drawings.
Unfortunately, the Architect did neither in the original contract documents.
The Architect naturally denied at trial, in hindsight, that his own plans, created
by an intern, were faulty. The evidence showed that the escalator plans were latently
ambiguous because multiple contractors bid a 32 inch step width and no bidding
contractor questioned the step width. Knowledge of Otis’ intent to supply escalators
with a 32 inch step width is imputed to the Architect by its approval of Otis’
specifications and by allowing Otis to substantially complete installation of the
escalators before alleging that the same failed to comply with the contract documents.
The Architect’s rejection of the 32 inch step width constituted an arbitrary action and
a failure to exercise honest judgment. The court, therefore, finds that the Architect’s
decision is not binding on the parties in this case.
III. Otis Did Not Breach the Contract
In Blount, the contractor was awarded an equitable adjustment to his contract
because he had adopted a reasonable interpretation of the plans and specifications,
had performed based upon that interpretation, and then was required to perform in a
different manner. Blount, 346 F.2d at 963. In this case, Otis’ interpretation of the
plans and specifications is likewise reasonable. Two of the three escalator bidders the only two whose product was not the basis of design- proposed 32" step width
escalators. Yates did not object to the 32" in Otis’ proposal and approved the Otis
shop drawings showing 32" steps. Likewise, the Architect looked at the shop
drawings (which unambiguously showed 32" step width escalators) and approved the
submittals with no objection to the 32" steps.
Otis was consistent throughout, from its proposal to its shop drawings to what
it proposed to install, and did in fact install, on the job. If the imperfect drawings had
presented an “open and obvious” or “patent” ambiguity, at least one of the general
contractor bidders or one or more of their escalator subcontractors would have sought
clarification pre-bid.7 However, the Architect testified, and no one disputed, that
there were no pre-bid questions about the escalators’ dimensions. Where a bidder
reasonably interprets unclear plans and specifications, the bidder is protected if he is
later required to perform in a different manner. United States v. Spearin, 248 U.S. 132
(1918) (when a contractor follows plans and specifications according to his
reasonable interpretation of those contract documents, the contractor is entitled to
additional compensation if he is later required to perform in a different and more
expensive way); Blount Bros. Const. Co. v. United States, 346 F.2d 962 (Fed. Cir.
1965) (same); Mountain Home Contractors v. United States, 425 F.2d 1260, 1263-64
In fact, the court heard testimony from the Otis representative that Otis bid the project
with 32” step width escalators because that was the only product it had which would fit in the
openings depicted in the drawings.
(Fed. Cir. 1970) (where discrepancy is not glaring and obvious, a contractor is
protected where he is reasonably misled by inadequate contract documents). Under
these circumstances, the contractor is not under a duty to seek clarification. Id., at
The plans and specifications failed to clearly and unambiguously call for 40"
step width escalators. Thyssen Krupp and Otis, the only two escalator bidders who
submitted proposals strictly off the plans and specifications as written, both proposed
32" step width escalators. The specifications were silent as to step width. The
drawings did not label any of the escalator dimensions they contained. Otis is
therefore entitled to compensation for the installation of the 32 inch step width
escalators because Otis is not in breach of contract.
IV. Otis is Entitled to Compensation for the Change Order 75 Work
Otis is entitled to compensation for the Change Order 75 work because these
additional costs to Otis resulted from silent specifications coupled with imperfect
drawings. In Blount, the contractor was awarded an equitable adjustment to his
contract because he had adopted a reasonable interpretation of the plans and
specifications, had performed based upon that interpretation, but then was required
to perform in a different manner. Blount, supra. “Where the parties to a special
contract deviate from the original plan agreed upon and the terms of the original
contract do not appear to be applicable to the new work, it being beyond what was
originally contemplated by the parties, it is undoubtedly to be regarded and treated
as a work wholly extra, outside the scope of the contract, and may be recovered for
as such. A contractor may recover the reasonable value of additional work
necessitated by a material change of specifications.” Allied Mills, Inc. v. St. John, 152
So. 2d 133, 136 (1963) (quoting 12 Am.Jur., Contracts, § 325).
As found by the court, Otis’ interpretation of the plans and specifications was
reasonable. Two of the three escalator bidders - and the only two who were not the
basis of the design- proposed 32" step width escalators. Yates did not object to the
32" step width in Otis’ proposal and approved the Otis shop drawings showing 32"
steps. Likewise, the Architect looked at the shop drawings (which unambiguously
showed 32" step width) and approved the submittals with no objection to the 32"
Change Order 75 required Otis to relocate the already in place interior
escalators and provide an additional 40” step width escalator. Otis’ interpretation of
the original contract was reasonable and acceptable to Yates, the Architect, and the
Owner until an objection was raised after substantial performance. Change Order 75,
therefore, constitutes “extra work”8 beyond the scope of the original contract and Otis
is due compensation as outlined by Change Order 75.
V. The Indemnity Provision is not Applicable to This Dispute
Yates asserts in its counterclaim that the subcontract imposed upon Otis
comprehensive duties to indemnify Yates from any loss, cost, or damages in any way
related to Otis’ work and regardless of Yates’ alleged negligence. See Yates’ Ex. 9,
Art. XI. Article XI of the subcontract states:
TO THE FULLEST EXTENT PERMITTED BY LAW, THE
SUBCONTRACTOR COVENANTS TO DEFEND, INDEMNIFY,
HOLD HARMLESS, PROTECT, AND EXONERATE BOTH THE
CONTRACTOR AND ITS AFFILIATES, AGENTS, EMPLOYEES,
REPRESENTATIVE, AND SURETIES AND THE OWNER
ARCHITECT, AND ENGINEERS, JOINTLY AND SEVERALLY,
FROM AND AGAINST ANY AND ALL LIABILITY, CLAIMS,
DAMAGES, LOSSES, SUITS, ACTIONS, DEMANDS, LIENS,
ARBITRATIONS, ADMINISTRATIVE PROCEEDINGS, AWARDS,
JUDGMENTS, EXPENSES, COSTS, AND ATTORNEY’S FEES
PERTAINING TO ECONOMIC LOSS OR DAMAGE, LABOR
DISPUTES, SAFETY REQUIREMENTS, PERFORMANCE OR NONPERFORMANCE OF OBLIGATIONS, CERTIFICATIONS,
PROPERTY RIGHTS OF THIRD PARTIES, PERSONAL INJURY,
BODILY INJURY, SICKNESS, DISEASE, DEATH, OR DAMAGE TO
OR DESTRUCTION OF PROPERTY (INCLUDING LOSS OF
BODILY INJURY, SICKNESS, DISEASE, DEATH, OR DAMAGE TO
OR DESTRUCTION OF PROPERTY (INCLUDING LOSS OF USE
THEREOF) WHICH (I) ARE CAUSED IN WHOLE OR IN PART BY
Extra work,” as used in connection with a building and construction contract, means
work of a character not contemplated by the parties and not controlled by the contract. Blair v.
United States, 66 F. Supp. 405, 408-09 (M.D. Ala. 1946) aff’d, 164 F.2d 115 (5th Cir. 1947)
(citing 17 C.J.S.,Contracts, § 371, page 851, n. 85).
THE SUBCONTRACTOR . . . , (II) ARISE FROM OR OCCUR IN
CONNECTION WITH WORK UNDERTAKEN OR TO BE
PERFORMED BY THE SUBCONTRACTOR, REGARDLESS OF
WHETHER THE SAME IS WITHIN OR BEYOND THE SCOPE OF
WORK, OR (III) ARISE FROM OR ARE CONNECTED WITH ANY
OTHER ACT OR OMISSION RELATING TO THE
SUBCONTRACTOR, THIS SUBCONTRACT, OR THE
SUBCONTRACT WORK. IT IS THE SPECIFIC AND EXPRESS
INTENT OF THIS SUBCONTRACT FOR THE FOREGOING
COVENANTS AND INDEMITY OBLIGATIONS TO APPLY TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
REGARDLESS OF WHETHER THE LIABILITY IS CAUSED IN
PART BY A PARTY INDEMNIFIED HEREUNDER INCLUDING,
WITHOUT LIMITATION, WHETHER OR NOT THE SAME BE
CAUSE BY, OR ARISE OUT OF, THE JOINT, CONCURRENT, OR
CONTRIBUTORY NEGLIGENCE OF A PARTY INDEMNIFIED
Id. (emphasis in original). Yates claims that Otis refused to indemnify Yates from all
liability as required by this clause. Yates asserts that Otis cannot now contest
responsibility to Yates for the additional costs Yates incurred due to Change Order
75, and further asserts that Otis must indemnify Yates for these costs and expenses.
The court need not decide if the above provision requires Otis to indemnify
Yates because another clause in the contract conflicts with the above indemnity
provision and changes the provision. Under Alabama Law “if there exists
inconsistency between two clauses of a contract which cannot be reconciled, the
inconsistency must be resolved in favor of the prior clause, unless an intention to
thereafter qualify is plainly expressed.” City of Fairhope v. Town of Daphne, 208
So.2d 917, 924 (1968).
Exhibit “C” to the contract is a contract rider. See
Subcontract, Def. Exh. 9 at D009-054 - 055. At trial, testimony by James Pinkston
and Dave Trimmer established that the rider is a standard addition to all contracts
between Yates and Otis. It was also established that the rider was intended to change
Yates’ standard contract.9 Paragraph 8 of the rider impacts Article XI of the
subcontract as follows:
Article XI - Otis agrees to indemnify Yates for losses due to personal
injury or property damage to the extent caused by the negligent acts or
omissions of Otis, its employees, agents, and subcontractors during the
performance of the work, but not to the extent caused by others.
Any claim involving negligence of more than one party shall be handled
so each party is responsible and liable for its share of the damages in
proportion to its share of negligence. In the event of a lawsuit, Otis
agrees to reimburse Yates for its defense cost to the extent of Otis’
Subcontract at bates D009-055 (emphasis in original). This language limits Otis’
indemnity obligation to damages caused by Otis’ own negligence. The court has
found that Otis was not in breach of its contract with Yates and therefore was not
negligent in its performance. Thus Otis is not contractually required to indemnify
This is also established by the parties conduct. Paragraph 11 of the rider changes the
forum selection clause of Yates standard Article XIV from Mississippi to Alabama. See
Subcontract pg 16 & bates D009-055. If the rider was not controlling, the parties would not have
submitted to jurisdiction in the Northern District of Alabama.
Based on the court’s consideration of the foregoing, the court shall enter
judgment in favor of plaintiff Otis Elevator Company on its breach of contract claim,
and against defendant W.G. Yates & Sons Construction Company on its
counterclaim. The court shall Order that plaintiff Otis is entitled to recover from
Yates the sum of $260,013.70, which is the unpaid subcontract balance, plus the sum
of 12% per annum statutory interest from January 2012, and further entitled to
recover the sum of $123,659.97 for the cost of performance of Change Order 75, from
defendant Yates. The court shall further Order that plaintiff Otis is entitled to
reasonable attorney’s fees, with leave to prove the same.
DONE and ORDERED this 7th day of August, 2013.
INGE PRYTZ JOHNSON
SENIOR U.S. DISTRICT JUDGE
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