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U.R.S. COMPANY, INC. d/b/a U.R.S. COMPANY P.A. v. GULFPORT-BILOXI REGIONAL AIRPORT AUTHORITY

MAY 03, 1989

U.R.S. COMPANY, INC. d/b/a U.R.S. COMPANY P.A.
v.
GULFPORT-BILOXI REGIONAL AIRPORT AUTHORITY, McDANIEL BROTHERS CONSTRUCTION COMPANY, INC. & INSURANCE COMPANY OF NORTH AMERICA



BEFORE ROY NOBLE LEE, PRATHER and ANDERSON

ROY NOBLE LEE, CHIEF JUSTICE, FOR THE COURT:

Gulfport-Biloxi Regional Airport Authority (Airport Authority) filed suit in the Chancery Court of the First Judicial District, Harrison County, Mississippi, against U.R.S. Company, Inc. (U.R.S.), McDaniel Bros. Construction Company, and Insurance Company of North America (INA), the surety on McDaniel's performance bond, for damages resulting from breach of contract in the building of an airport terminal building at the Gulfport-Biloxi Regional Airport. The lower court entered

judgment in favor of the airport authority against U.R.S. and, on the cross-claim of INA, held that U.R.S. was liable for indemnity to INA. U.R.S. has appealed from the judgment and assigns three (3) errors in the trial below.

 Facts

 On July 28, 1978, a contract was entered into between U.R.S. and Airport Authority. This contract provided that U.R.S. would provide architectural services, including design, preparing construction documents, assisting in obtaining bids, and administering the construction contract for a new airport terminal building. For additional compensation, U.R.S. was to provide a full-time resident inspector for administration of the construction contract. This resident inspector hired by U.R.S. was Edward Craig.

 The construction contract was subsequently let to McDaniel Bros. and was bonded by INA. Sometime during the fall of 1980, during the construction of the roof of the terminal, James Cooper, an expert in the roofing field, warned the Airport Authority Commissioner Ron Werby that the roof was not being put on in accordance with contract specifications. Werby instructed airport director Wayne Lindquist to check with Craig and U.R.S. regarding problems with the roof, and later personally requested Craig to make a special inspection of the roof. Craig agreed to do so and said not to worry, that the roof would be good and that Werby should not be concerned. In a later conversation, Cooper again advised Werby that nothing had changed as far as the roof construction was concerned. Again, Lindquist was directed to check with Craig and U.R.S. about this report. Again, they were told not to worry that the roof was fine. At the final inspection in August of 1981, before payment of a 10% retainage, Werby asked Cam McGill of U.R.S. whether the roof had been put on properly and whether it was a good roof. McGill responded, "You got a good roof. You don't have to worry about it."

 In September, 1981, U.R.S. certified the construction was sufficiently complete, in accordance with the contract documents, for occupation by the airport authority. The airport authority, relying on the representations of U.R.S., accepted the building on September 17, 1981. At that time, the airport authority still held $248,900.94 in retainage, which was released to McDaniel Bros. in three payments. In late 1981, or early 1982, the roof began to leak. The airport authority twice contacted McDaniel Bros. to advise of the leaks and demand corrections before it paid the final retainage. McDaniel's attempted repairs failed to resolve the problem, and the airport authority retained James Cooper in December of 1982 to determine the cause of the leaks and repairs needed.

 Cooper reported his findings to the airport authority on February 22, 1983. He testified the problems he found during his investigation were exactly the problems he had warned about in his first conversation with Werby in 1980 these being the same problems that he had first advised Edward Craig about. It was Cooper's testimony that the roof was not constructed in accordance with the plans, and that the deficiencies were obvious and should have been noted by the on-site inspector, Craig. Cooper further testified that many of the conditions he found should have been seen on inspection at the time the building was accepted. Cooper stated the problems could have been corrected for approximately $5,000 at that time, had his warning been heeded in 1980. Robert Carpenter, one witness, testified that Cam McGill of U.R.S. admitted to him, "Very frankly, we didn't do as good a job as we were capable of doing on that terminal building in either probably design or inspection."

 Subsequently, the airport authority was forced to contract with Michael Baker, Architect and Engineers, of Jackson, to correct the problems with the roof. It was necessary to completely replace the roof and do major repairs to stop the leakage problem.

 At the end of the trial, the chancellor awarded the following damages to the airport authority: $95,000 as the measure of damages for replacement of the roof; $7,000 in on-site inspection fees; and $26,638 as the cost of waterproofing the stucco halls for a total sum of $128,638. U.R.S. had also filed a counterclaim against the airport authority for withholding approximately $31,000. The chancellor ruled that these fees were unearned by U.R.S. and refused to enter a judgment in favor of U.R.S. on the counterclaim and found for INA on its cross-claim "for any funds INA pays on the judgment for the roof."

 I. - II.

 THE LOWER COURT ERRED IN FINDING U.R.S. COMPANY LIABLE TO THE AIRPORT AUTHORITY.

 THE LOWER COURT ERRED IN FINDING THAT INSURANCE COMPANY OF NORTH AMERICA WAS ENTITLED TO INDEMNITY.

 U.R.S. contends that the court erred in finding it liable to the airport authority for the reason that the construction contract entered into between them absolves U.R.S. of any liability because of poor workmanship on the part of McDaniel Bros. U.R.S. quotes and relies upon the following excerpts from the construction contract:

 The consultant shall make periodic visits to the project site to adequately familiarize himself generally with the progress and quality of work, and to determine in general if the work is proceeding in accordance with the contract documents as set forth in Paragraph 2.1.5 (a) of this agreement. On the basis of his on-site observations as a consultant, he shall endeavor to guard the owner against defects and deficiencies in the work of the contractor. The consultant shall not be required to make exhaustive or continuous on-site inspections to check the quality or quantity of the work as specified in the general conditions and/or special conditions, and any other provisions of the contract documents. The consultant shall not be responsible for construction means, methods, techniques, sequences or procedures, or for safety precautions and programs in connection with the work, and he shall not be responsible for the contractor's failure to carry out the work in accordance with the contract documents.

 Section 2.1.7 (e).

 The consultant shall not be responsible for the acts or omissions of the contractor, or any sub-contractors, or any of the contractors' or sub-contractors' agents or employees, or any other persons performing any work.

 Section 2.1.7 (1).

 Through the on-site observations by full-time project representatives (clerks of the works) of the work in progress, the consultant shall endeavor to provide further protection for the owner against defects in the work; but the furnishing of such project representation shall not make the consultant responsible for construction means, methods, techniques, sequences or procedures, or for safety precautions and ...


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