Underwater Engineering Services v. Utility Board of the City of Key West
194 So. 3d 437
| Fla. Dist. Ct. App. | 2016Background
- Underwater Engineering Services contracted with the Utility Board (unit-price contract) to repair and coat 57 over-water transmission poles; final contract price based on unit bids was $767,585.50.
- Contract required a pre-construction inspection and 24-hour notice to the resident engineering representative after surface preparation and before any coating application.
- Underwater applied 5,006 sq ft of coating (vs. the 200 sq ft estimate) without submitting a change order or providing the contract-required 24-hour notice for post-preparation, pre-coating inspection.
- The Utility Board inspected after coating and found widespread inadequate surface preparation and coating applied over peeling material; it refused payment and later alleged additional defects in eight poured concrete collars.
- Trial court entered judgment for the Utility Board on both Underwater’s breach-of-contract claim (refusing payment) and the Utility Board’s counterclaim (damages for defective collars). On appeal, the court affirmed on Underwater’s claim but reversed the counterclaim judgment because Underwater was not given contractually required notice/opportunity to cure the collars.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Underwater breached the contract by failing to give 24-hour notice after surface preparation and before coating | Underwater: a 3-week schedule and on-site conduct satisfied notice; unit-price nature meant no change order was required for increased quantity | Utility Board: contract required 24-hour notice; absence prevented inspection and obscured massive increase in coated area and price | Court held Underwater breached the explicit notice provision; substantial evidence supported refusal to pay under contract and implied covenant of good faith |
| Whether Utility Board owed payment for the coating work performed | Underwater: performed work and is owed ≈$697,000; unit-pricing permits payment based on actual quantities | Utility Board: noncompliance with notice/inspection and improper surface prep excused payment | Court affirmed denial of Underwater’s recovery because Underwater avoided the required inspection and acted in bad faith regarding scope increase |
| Whether Underwater breached by constructing defective concrete collars | Utility Board: eight collars showed premature deterioration due to poor workmanship; damages incurred to assess/repair | Underwater: collars are not proven defective or Utility Board failed to provide contractual notice/opportunity to cure; alternative Spearin/design-defect defense | Court reversed judgment for Utility Board on counterclaim because the contract’s Defect Assessment required owner to allow contractor to replace/cure before owner hired repairs; Underwater entitled to judgment on counterclaim |
| Whether trial court’s factual findings should be disturbed on appeal | Underwater: challenges findings as erroneous and inconsistent with contract interpretation | Utility Board: findings supported by record and witness testimony | Appellate court applied substantial-evidence standard and affirmed factual findings supporting breach on notice; reversed as to counterclaim remedy due to lack of cure opportunity |
Key Cases Cited
- Emaminejad v. Ocwen Loan Servicing, LLC, 156 So. 3d 534 (Fla. 3d DCA 2015) (bench-trial factual findings reviewed for clear error/substantial evidence)
- Verneret v. Foreclosure Advisors, LLC, 45 So. 3d 889 (Fla. 3d DCA 2010) (appellate review standard for bench-trial findings)
- Firestone v. Firestone, 263 So. 2d 223 (Fla. 1972) (affirmance permitted if record discloses any reasonable basis for judgment)
- Fernandez v. Homestar at Miller Cove, Inc., 935 So. 2d 547 (Fla. 3d DCA 2006) (contract interpretation reviewed de novo; courts may not rewrite contracts)
- QBE Ins. Corp. v. Chalfonte Condo. Apt. Ass’n, Inc., 94 So. 3d 541 (Fla. 2012) (recognition and purpose of implied covenant of good faith and fair dealing)
- Rick’s Mushroom Serv., Inc. v. U.S., 521 F.3d 1338 (Fed. Cir. 2008) (contractor bears burden to prove design/specification defect was proximate cause under Spearin doctrine)
- Spearin v. United States, 248 U.S. 132 (1918) (implied warranty regarding adequacy of plans/specifications)