819 F.3d 245
5th Cir.2016Background
- DFW and INET entered into Contract No. 9500377 (Aug. 2009) for rooftop air handling units at Terminal E, with INET required to install units using EG Water and provide control sequences to auto-defrost.
- INET inspected plans, agreed to comply with contract documents, and could not substitute approved designs without DFW authorization.
- INET raised concerns that EG Water at sub-freezing temperatures could ice-coat coils, prompting RFIs and discussions about modified control sequences or piping proposals.
- Contract contemplated written change orders for any price/time adjustments; both parties were to cooperate to address defects discovered in plans or specifications.
- DFW began liquidated damages after delays; DFW later executed a performance bond claim with Hartford; remaining work was completed by a substitute contractor in 2013.
- Dispute centered on whether defective plans/specifications and the contracting risk allocation meant DFW or INET breached by obstructing resolution; the district court granted partial summary judgment, leading to appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who bore the risk and responsibility for defective plans? | INET | DFW | Disputes of material fact remain; both parties share risk. |
| Did INET or DFW breach by failing to cooperate to resolve defects? | INET | DFW | Material facts remain; eligibility for summary judgment reversed. |
| Was Hartford’s suit time-barred by the Texas statute of limitations? | DFW | Hartford | Summary judgment on limitations reversed; termination/abandonment issues unresolved. |
| Did the Board resolution terminate the contract before August 2012? | DFW | Hartford | Resolution not self-executing; issue for fact-finder on termination timing. |
Key Cases Cited
- Interstate Contracting Corp. v. City of Dallas, 407 F.3d 708 (5th Cir. 2005) (contract interpretation under Texas law; assess intent and harmony of contract terms)
- Millgard Corp. v. McKee/Mays, 49 F.3d 1071 (5th Cir. 1995) (allocation of risk for defective plans may favor owner with clear language)
- Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257 (5th Cir. 1991) (intent and abandonment/termination issues often require credibility; not suited for summary judgment)
- Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006) (statutory interpretation of municipal ordinances and contracts)
- Transverse, L.L.C. v. Iowa Wireless Servs., L.C., 617 F. App’x 272 (5th Cir. 2015) (contract modification requires meeting of the minds; summary judgment caution)