Opinion
SUCV2013-0763-BLS1
05-16-2016
Tutor Perini Corporation et al., Joint Venture v. Montgomery Kone, Inc. et al No. 133751
Mitchell H. Kaplan, Justice
MEMORANDUM OF DECISION AND ORDER ON THE DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
Mitchell H. Kaplan, Justice
The plaintiff, Tutor Perini Corporation, Kiewit Construction Co., Inc., Jay Cashman, Inc. d/b/a Perini-Kiewit-Cashman, Joint Venture (PKC), was the general contractor on the Central Artery/Tunnel Project often colloquially referred to as the " Big Dig" (the Project). PKC entered into the prime contract with the Massachusetts Highway Department (MHD) for construction of the Project in 1995 (the Contract). (For ease of reference the court will refer to the counterparty to the Contract as the parties to this case have: either " CA/T, " which is an acronym for Central Artery/Tunnel, or, when appropriate, the " Owner"). The defendant, Montgomery Kone, Inc. (Kone), entered into a subcontract with PKC covering that part of the Project that required the installation of elevators and escalators associated with the construction and renovation of MBTA stations for the Silver Line and Red Lines in the area of South Station (the Subcontract). The defendant Federal Insurance Company (Federal) furnished a performance bond in favor of PKC covering Kone's work under the Subcontract (the Bond). In this action, PKC alleges that Kone breached the Subcontract and seeks to recover resulting damages from Kone (Count I) and to hold Federal liable to it under the Bond (Count II). The case is before the court on the defendants' motions for summary judgment.
Kone's motion relies principally on the defensive use of principles of collateral estoppel, more particularly issue preclusion. It argues that facts found in an arbitral proceeding to which PKC was a party establish a defense precluding recovery in this case. Federal's motion is based on its contention that the two-year statute of limitations set out in the Bond for filing a claim against the Bond expired before this action was filed. For the reasons that follow, Kone's motion is DENIED and Federal's motion is ALLOWED.
FACTS
The following relevant facts are taken from the summary judgment record and are either undisputed or viewed in the light most favorable to PKC, the non-moving party. The original Contract price was $377,933,000 and the Subcontract price was $3,400,000.
The Contract required completion of certain milestones by specific dates. Two of these milestones are relevant to this case: Milestone 7 called for the Owner to have access to the work associated with the South Station renovations by a date certain and Milestone 2 provided the date by which the Owner was to have access to the entire Project. The Contract also established liquidated damages of differing amounts to be awarded for each day PKC was late in meeting a particular milestone. The scheduled completion dates were revised by CA/T and PKC from time to time during the course of the project. The final " approved" schedule was adopted in May 1999; it was referred to as Schedule 76Bs. It called for Kone's work to be completed by September 2002. Kone's final elevator installation was not accepted by the CA/T until January 2004.
Beginning in October 2001 and continuing through 2003, PKC sent Kone a number of letters in which it advised Kone that it was missing scheduled dates for completion of its work under the Subcontract. The following sentence taken from an April 22, 2002 letter from PKC to Kone is typical of the concerns and admonitions expressed in the letters: " PKC wishes to inform you that should the completion of these units [elevators] run beyond the discussed time periods and result in schedule delays, PKC will begin to assess daily damage charges to KONE, totaling $14,000/day, equivalent to the amount assessed PKC by the Central Artery Project."
As everyone then living or working in downtown Boston during this period is aware, the Project was not completed within the time originally planned. It was also not completed by the dates set out in 76Bs. The extent to which any of the Project delays may be attributable to Kone's failure to perform according to the Subcontract is in substantial dispute and the subject of this litigation.
An additional, confounding issue is also relevant to this dispute. CA/T directed that Atlantic Avenue be opened to traffic in June 2002. This was later than the date required by 76Bs, but changed the sequence of planned events along the " Critical Path" to completion of the Project. Under the Contract, Atlantic Avenue was not to be fully reopened until substantial completion of all the work on the Project; this sequencing would provide easier access to contractors engaged in Project work along the Atlantic Avenue area. Following the opening of Atlantic Avenue, it appears that no formal changes to the 76Bs were agreed upon, but rather PKC and CA/T engaged in " partnering sessions" in which the work to be accomplished over the next few weeks was periodically discussed.
As might be expected, a number of disputes arose between PKC and CA/T concerning who was responsible for the costs associated with project delays. The contract had a dispute resolution procedure that was amended from time-to-time. In 2006, PKC submitted a dispute to a third panel of a " Dispute Resolution Board, " referred to by the parties as " DRB3, " which PKC called " The Omnibus Time Impact Claim." In this claim, PKC requested payment for project delays for two periods: a period that PKC called the 76Bs period which PKC maintained ended on December 31, 2001; and the Partnering Period that ran from January 1, 2002 to the project end. The DRB3 issued a decision on that claim on March 23, 2009.
It appears that at one time there was some lack of agreement among the parties and the DRB3 concerning whether the DRB3's decision was in itself an " arbitral award" or only a recommendation to the Chief Engineer of the Massachusetts Turnpike Authority (the Chief Engineer), who the CA/T maintained was the person authorized by the Contract and G.L.c. 30 and c. 149 to render decisions on disputes between CA/T and PKC, subject to further review by appeal to either the MHD Board of Contract Appeals or the Superior Court. In any event, in this case the parties have agreed that the Chief Engineer's Decision (CE Decision), dated April 9, 2009, on the matters submitted to the DRB3, constituted the final arbitrator's judgment resolving this dispute, as it was not appealed. The CE Decision concluded that: (1) PKC was not entitled to a time extension for the Project to January 23, 2004; (2) PKC's claim for damages for delay during that period was denied; and (3) " [a]s a result of this decision, PKC shall be assessed Liquidated Damages for its delay in accordance with the Contract requirements." Some three and a half years later, on December 12, 2010, the MHD issued a contract modification which had the effect of assessing liquidated damages against PKC in the amount of $13,046,000; it included $6,190,000 for delays in meeting Milestone 2 and $3,764,000 in meeting Milestone 7. In this action PKC seeks to recover from Kone a portion of these liquidated damages, as well as certain additional overhead costs that it alleges it incurred because Kone's breach of the Subcontract caused delay in the completion of the Project and, in consequence, PKC incurred additional costs that would have been avoided if it had been able to remove its team and equipment from the Project at an earlier date.
Certain statements set out in the relatively brief CE Decision (which is substantially shorter than the DRB3 Decision) are central to Kone's arguments in this motion.
[The DRB3's] view of the abandonment of 76Bs Schedule, namely that 76Bs was " mutually abandoned" is in direct conflict with the contemporaneous project record and the parties' presentations . . . In fact, a major focus of the partnering schedule discussions involved PKC's efforts to provide appropriate manpower to support or recover the 76Bs planned schedule.
The DRB poses the following question: " what happens if there is no current accepted progress schedule . . ." The DRB misses the point. There was an accepted progress schedule in 76Bs. PKC abandoned it. Accordingly, PKC cannot benefit from its own breach of contract. The partnering sessions did not change the contractual schedule . . . PKC did not provide a schedule analysis contemporaneously or after-the-fact to support any of its allegations. In fact, the DRB has noted that PKC's so-called Revision C " Partnering Schedule" showed that the directives would not have caused any delays to the project completion date.
I concur with the DRB's conclusion that delays of PKC's elevator subcontractor Kone substantially impacted PKC's operations in the MBTA Station. I also concur with DRB's finding that these delays are not the responsibility of the CA/T, nor are they compensable or excusable under the Contract . . . The facts are that in addition to Kone's problems, PKC did many things wrong.
On January 11, 2002, the CA/T and PKC agreed in a partnering session to recover the date of the re-opening of Atlantic Avenue to the northbound arterial traffic. For months prior to this date PKC was not meeting the progress required by the 76Bs Schedule.
A further dispute concerning PKC's entitlement to additional compensation for Contract changes was decided by a DRB4 in a decision dated January 15, 2011. This again addressed issues relating to the opening of Atlantic Avenue before the Project was substantially completed. Here, DRB4 held that, although PKC breached the Contract because of its delay in achieving substantial completion, CA/T directed PKC to continue to work toward completion and " there was a mutual agreement in a spirit of partnering by which PKC would resequence its work in such a manner as to expedite the opening of Atlantic Avenue, an event which was neither on the critical path nor a milestone." The DRB4 held that PKC was " entitled to compensation for the mutually agreed resequencing of the work to prioritize completion of an element of the work that was not on the critical path and the completion of which could adversely affect ongoing work that was on the critical path."
Additional Facts Relating to the Claim on the Bond
The Subcontract required Kone to obtain a performance bond, which it obtained from Federal. The form of the Bond was approved by PKC. It contained the following provision: " Any suit under this bond must be instituted before the expiration of two years from the date on which final payment under the contract falls due." The Subcontract provided that: " Final Payment shall be made to [Kone] after completion of the Subcontract Work and acceptance by [PKC] and [CA/T] and upon the conditions precedent that payment has been received by [PKC] . . . [and other conditions not relevant to this case]." Kone's last invoice to PKC called for payment on March 20, 2005; it was paid on May 12, 2005.
PKC's position is that the total Subcontract price, with change orders, was $3.6 million. It paid Kone $3,184,780, deducting from payments otherwise due $416,003, for what it terms retainage. These sums were never paid to Kone. PKC contends that it might have paid Kone some part of this retainage, if its claims for additional payments because of project delays had been upheld in arbitration.
DISCUSSION
Summary judgment is granted where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Mass.R.Civ.P. 56(c); Cassesso v. Commissioner of Corr., 390 Mass. 419, 422, 456 N.E.2d 1123 (1983). When reviewing a motion for summary judgment, the court considers the evidence presented in the light most favorable to the non-moving party. Flynn v. Boston, 59 Mass.App.Ct. 490, 491, 796 N.E.2d 881 (2003). The moving party bears the burden of affirmatively demonstrating the absence of a triable issue and that the summary judgment record entitles it to a judgment as a matter of law. Pederson v. Time, Inc., 404 Mass. 14, 16-17, 532 N.E.2d 1211 (1989). Importantly, " all evidentiary inferences must be resolved in favor of the [nonmoving party]." Boyd v. National R.R. Passenger Corp., 446 Mass. 540, 544, 845 N.E.2d 356 (2006).
The nonmoving party, however, cannot defeat a motion for summary judgment by merely asserting that facts are disputed. Mass.R.Civ.P. 56(e); LaLonde v. Eissner, 405 Mass. 207, 209, 539 N.E.2d 538 (1989). Rather, to defeat summary judgment, the nonmoving party must " go beyond the pleadings and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Kourouvacilis v. General Motors Corp., 410 Mass. 706, 714, 575 N.E.2d 734 (1991). " Conclusory statements, general denials, and factual allegations not based on personal knowledge [are] insufficient." Cullen Enters, Inc. v. Massachusetts Prop. Ins. Underwriting Ass'n, 399 Mass. 886, 890, 507 N.E.2d 717 (1987), quoting Madsen v. Erwin, 395 Mass. 715, 721, 481 N.E.2d 1160 (1985).
The court will first address Count II, the claim on the Bond, as it may easily be resolved, and then the Count I, the claim under the Subcontract against Kone.
Count II
PKC acknowledges that the Bond contains a contractually agreed upon two-year statute of limitations for any action seeking to enforce it. And, it is undisputed that Kone completed its work in 2004, PKC made its final payment to Kone in 2005, and this action was filed in 2013. PKC argues that, nonetheless, there are disputed issues of fact concerning when final payment fell due. PKC notes that while its disputes with CA/T on delay damages were pending, CA/T withheld money due it under the Contract, and it, in turn, withheld the $416,003 of retainage due Kone under the Subcontract. Based upon these facts, it argues as follows: " If PKC had prevailed in the dispute resolution process, CA/T would have been required to pay PKC amounts due, including the final retainage amount PKC was withholding from Kone. Therefore, Final Payment could not have become due to Kone under the terms of the Subcontract until December 10, 2012--the date that CA/T determined that its damages exceeded the amount of remaining to be paid on the Prime Contract."
The court previously addressed PKC's contention that the limitations period was superseded by statute in its decision denying a motion to dismiss.
Kone initially included a pass-through claim for $44,645 as part of PKC's Omnibus Time Impact Claim; however, it withdrew that claim in 2006. In consequence, that pass-through claim has no bearing on the question of whether the two-year period of limitations expired well before this action was filed in 2013.
There are a number of problems with this argument. First, the period of limitations under the Bond begins to run when final payment under the Subcontract " falls due." The Subcontract states: " Final Payment shall be made to [Kone] after [1] completion of the Subcontract Work, and [2] acceptance by [PKC] and [CA/T] and upon the condition[] precedent that [3] payment has been received by [PKC] . . ." There can be no question but that elements one and two were met in or before 2005. The fact that PKC retained money due Kone is not material to when Kone was due to receive final payment. If CA/T had specifically withheld from PKC money that PKC owed Kone, that might have delayed the day Final Payment to Kone fell due. However, there is no evidence of that in the summary judgment record. The fact that CA/T had generally withheld money allegedly due PKC because of disputes between PKC and CA/T is insufficient. The Contract price was approximately $400 million; the Subcontract price was less than 1% of that amount. PKC cannot indefinitely delay the day final payment to Kone falls due by unilaterally attributing CA/T's withholding to the Kone Subcontract. Furthermore, the CE Decision was issued on April 9, 2009; it was not appealed. While the total amount of liquidated damages that was going to be assessed against PKC was not then known, it was clear that CA/T would not be making any further payments to PKC on account of delays. To the extent that PKC was waiting for the CE Decision to decide if it would make an additional payment to Kone, the issuance of the CE Decision removed any doubt. At the very latest, the statute of limitations began running at that time.
Federal's performance Bond provided that claims against it must be brought within two years of the date Final Payment fell due, not when the last payment to Kone was actually made (in this case 2005) nor when PKC decided that it would not make another payment to Kone. That language, approved by PKC when it accepted the form of the Bond, was clearly intended to provide an adequate but constrained time in which claims could be asserted against Federal, who was an indemnitor for Kone. Clearly, Federal was not bargaining for a period of liability that might extend years after the Kone subcontract was completed because of other Project work or other disputes between the owner and the general contractor. The period of limitations under the Bond expired years before this action was filed.
Count III
The Subcontract contained the following provision:
If the Subcontractor fails to substantially complete the work in accordance with the approved project schedule and insofar as the Owner would assess liquidated damages at the established rates as indicated below, and that such assessment is an outgrowth of work schedule slippages by the Subcontractor, the Subcontractor shall be proportionately liable for those damages pursuant to the terms and conditions under the owner's contract, provided that the delays are proven proportionately to be the responsibility of the Subcontractor.
While Kone certainly does not concede that it failed to complete its work in accordance with the project schedule, it does not base its motion for summary judgment on a contention that it can establish its own adequate Subcontract performance as a matter of law. Rather, Kone argues as follows. PKC's claim to recover from Kone part of the liquidated damages that it was assessed by CA/T " sounds in indemnity." It then quotes the following sentence from CSX Transp., Inc. v. Mass. Bay Transp. Auth., 697 F.Supp.2d 213, 220 (D.Mass. 2010): " It is well established that any act on the part of an indemnitee which materially increases the risk, or prejudices the rights of the indemnitor, will discharge the indemnitor under a contract of indemnification." Kone then asserts that the CE Decision contains " detailed findings . . . that PKC alone abandoned 76Bs and failed to comply with contractual requirements for modifying or replacing the schedule of record." Therefore, PKC is collaterally estopped from relitigating the fact that it unilaterally abandoned the schedule. As this act of unilateral abandonment of 76Bs materially increased Kone's risks as an indemnitor, it is relieved of any possible liability to PKC. The court finds a number of flaws in Kone's reasoning.
First, Kone cites no law in support of its contention that the Subcontract clause quoted above " sounds in indemnity." The parties have not directed the court to any case that defines what an " indemnity clause" is and the court has found none. However, all of the cases that the court has reviewed involve clauses such as the one at issue in CSX Transportation in which one party expressly agrees to " indemnify and hold harmless" and frequently " defend" another party from any loss. See, e.g., the Supreme Judicial Court's recent decision, Coghlin Electrical Contractors, Inc. v. Gilbane Building Company; Division of Capital Asset Management and Maintenance, 472 Mass. 549, 563, 36 N.E.3d 505 (2015) (where the indemnification clause in a general contract required the contractor to indemnify, defend and hold harmless the owner from losses arising out of the performance of the work). Black's Law Dictionary, 2nd Ed., defines an indemnity clause as: " A contractual provision in which one party agrees to answer for any specified or unspecified liability or harm that the other party might incur." It appears that an essential feature of those clauses is that the indemnitor agrees to indemnify the indemnitee upon the happening of a specified event. All that must proven is that the event occurred.
The court finds that the Subcontract clause here at issue is not an indemnity clause. Rather, it appears to be a contract provision that clarifies the parties' agreement regarding a certain type of damages. If CA/T assesses liquidated damages against PKC, and PKC can prove that Kone did not substantially complete its work according to the " approved project schedule" and some portion of the liquidated damages may be attributed to Kone's " work slippages, " Kone will be liable to PKC for those liquidated damages, to the extent PKC proves Kone's proportional share. Kone has not promised PKC that it will indemnify it for any loss attributed to an award of liquidated damages regardless of Kone's fault. To the contrary, it has agreed that it will be liable for a portion of liquidated damages if PKC can prove that they are proportionally the result of work slippages caused by Kone. If for example delays in Project completion were caused by opening Atlantic Avenue out of sequence, or any other act for which Kone was not responsible, PKC will not be able to recover a proportionate share of liquidated damages assessed against it. The clause quoted above does not create a contract of indemnity or a guarantee. This case is not one in which an indemnitor ought to be released of any responsibility to indemnify, because the indemnitee has itself increased the risk of loss because of actions for which the indemnitor had no responsibility and over which the indemnitor had no control. PKC can only recover that portion, if any, of the liquidated damages assessed against it to the extent that the delays were caused by Kone.
Kone cites CSX Transportation for the principle that any act by an indemnitor that increases the risk of loss has the effect of voiding an indemnification clause. The facts of that case, which involved a personal injury action and allegations that the indemnitee destroyed evidence increasing the risk of an adverse judgment in the underlying action, bear no resemblance to the facts of the instant case. The statement itself is also dicta, as the Court found no spoliation. Moreover, the U.S. District Court relied only on another Federal District Court decision as authority for that statement of law, Unisys Corp v. Legal Counsel, Inc., 768 F.Supp. 6, 8 (D.C.C. 1991). The court is not at all certain that this pronouncement is black letter law in Massachusetts; at least outside of circumstances in which one party has acted as a guarantor against another's loss and should not be liable for damages for anything more than it guaranteed. In any event, the court need not struggle with that question of law to decide this case.
The court also finds that collateral estoppel, in this case more specifically issue preclusion, does not apply. In the CE Decision, the Chief Engineer reversed the DRB3's decision that both the CA/T and PKC " mutually abandoned" the 76Bs schedule. He concluded that the 76Bs schedule was, after its adoption, the controlling schedule for the remainder of the Project. Indeed, he also found that the focus of the partnering sessions concerned how PKC was going to recover the 76Bs schedule. However, he also noted " that PKC's so-called Revision C " Partnering Schedule" showed that the directives would not have caused any delays to the project completion date; . . . [and] delays of PKC's elevator subcontractor Kone substantially impacted PKC's operations in the MBTA Station. I also concur with DRB's finding that these delays are not the responsibility of the CA/T, nor are they compensable or excusable under the Contract."
Kone latches on to the following statement in the CE Decision as the predicate for its claim that it is entitled to summary judgment: " The DRB poses the following question: 'what happens if there is no current accepted progress schedule . . .' The DRB misses the point. There was an accepted progress schedule in 76Bs. PKC abandoned it. Accordingly, PKC cannot benefit from its own breach of contract." Kone asserts that the finding that PKC abandoned 76Bs establishes that PKC's actions increased Kone's risk. The court understands Kone to be arguing that PKC could have followed the proper processes to change the Contract schedule, which allegedly could have resulted in a later scheduled date for substantial completion, thereby avoiding liquidated damages being assessed against PKC, and, in consequence, avoided the risk to Kone that it would be held liable for some part of those delay damages. Kone reads far too much into the CE's remark.
In context, the court concludes that the import of the CE's comments was that the Project delays were attributable to PKC and nothing that CA/T said in the Partnering Sessions was intended to relieve PKC of its responsibility for delays in completion of the Project, rather those sessions were focused on schedule recovery. Here, it is important to note that PKC was contractually responsible for any delays that its subcontractors caused, and the CE also specifically found that PKC was delayed, in part, because of Kone's insufficient Subcontract performance. While the CE criticized PKC for arguing that the Partnering Sessions served to amend the approved schedule and failing to follow the contractually specified procedures for seeking contract schedule modifications, the clear implication of his statements was that even if PKC had followed those procedures, that would not have resulted in an extension of the date for Substantial Completion because the " directives" that came from those Sessions were not the cause of the Project delay.
PKC offers extensive evidence that the Partnering Sessions were all directed at issues that arose because of the out-of-sequence demand by CA/T that Atlantic Avenue be opened before Substantial Completion, and that none of those sessions or PKC's claims for delay damages brought before the DRB3 were based on events occurring at the South Station part of the project. PKC argues that there is evidence from which a jury could find that its position with respect to Kone's work was always that it had to be completed according to the 76Bs schedule.
In the present case, although Kone is the defendant, it might be said that Kone is essentially employing collateral estoppel offensively: its position is that its obligations under the Subcontract have been discharged because the CE found that PKC " abandoned" the project schedule and this argument has the feel of an affirmative defense. In any event, the Supreme Judicial Court's decision in Pierce v. Morrison Mahoney LLP, 452 Mass. 718, 897 N.E.2d 562 (2008) is instructive concerning the use of collateral estoppel, or issue preclusion, under these circumstances. The SJC explained:
" '[T]he offensive use of collateral estoppel is a generally accepted practice in American courts, ' . . . and occurs when a plaintiff seeks to prevent a defendant from litigating issues which the defendant has previously litigated unsuccessfully in an action against another party." Bar Counsel v. Board of Bar Overseers, 420 Mass. 6, 9, 647 N.E.2d 1182 (1995), quoting Aetna Cas. & Sur. Co. v. Niziolek, 395 Mass. 737, 744, 481 N.E.2d 1356 (1985). Thus offensive collateral estoppel " does not require mutuality of parties, so long as there is an identity of issues, a finding adverse to the party against whom it is being asserted, and a judgment by a court or tribunal of competent jurisdiction." Miles v. Aetna Cas. & Sur. Co., 412 Mass. 424, 427, 589 N.E.2d 314 (1992) (Miles ). " The central inquiry then becomes whether the issue on which preclusion is sought has been 'the product of full litigation and careful decision.'" Id., quoting Home Owners Fed. Sav. & Loan Ass'n v. Northwestern Fire & Marine Ins. Co., 354 Mass. 448, 455, 238 N.E.2d 55 (1968). " A defendant must also have [had] a 'full and fair opportunity to litigate the issue in the first action.'" Matter of Goldstone, 445 Mass. 551, 559, 839 N.E.2d 825 (2005), quoting Matter of Cohen, 435 Mass. 7, 15, 753 N.E.2d 799 (2001). See also Restatement (Second) of Judgments § 29 (1982) (listing eight circumstances for judge to consider when determining propriety of applying offensive collateral estoppel). Ultimately, " [f]airness is the 'decisive consideration' in determining whether to apply offensive issue preclusion." Matter of Goldstone, supra, quoting Matter of Cohen, supra at 16, 753 N.E.2d 799. Accordingly, we afford the trial judge " wide discretion in determining whether" applying offensive collateral estoppel " would be fair to the defendant." Bar Counsel v. Board of Bar Overseers, supra at 11, 647 N.E.2d 1182, citing Whitehall Co. v. Barletta, 404 Mass. 497, 502, 536 N.E.2d 333 (1989).
We have held that it is appropriate to give issue-preclusive effect to arbitration awards where the " arbitration affords opportunity for presentation of evidence and argument substantially similar in form and scope to judicial proceedings, " Miles, supra at 427, 589 N.E.2d 314, quoting Bailey v. Metropolitan Prop. & Liab. Ins. Co., 24 Mass.App.Ct. 34, 36-37, 505 N.E.2d 908 (1987). Nevertheless, a judge must carefully consider the exceptions and qualifications to the use of the collateral estoppel doctrine before applying it to an arbitration award. See Restatement (Second) of Judgments § 84 comment f (1982) (exceptions and qualifications in § § 28 and 29 are " particularly pertinent in considering the preclusive effect of an arbitration award").
Miles was a case that involved the defensive use of an arbitration award. See Miles, supra at 425, 589 N.E.2d 314. Assuming without deciding that we would give issue-preclusive effect to arbitration awards used offensively, we agree with the Superior Court judge that doing so would be inappropriate in the circumstances of this case. As we have explained, a judge enjoys wide latitude in determining whether it is fair to apply offensive collateral estoppel to a defendant in a particular case.
In this case, the court concludes that it is inappropriate to apply issue preclusive effect to the CE Decision. First, the court is not at all sure exactly what the Chief Engineer was deciding when he commented that PKC " abandoned" the 76Bs schedule. It is clear that the date for " Substantial Completion" of the Project had already passed when many of the Partnering Sessions took place, and the CE Decision adopts the DRB3 findings that the reasons that the Project was delayed were attributable to PKC, and at least partially the result of Kone's failure to perform its Subcontract. There is also nothing in the CE Decision that suggests that PKC would have been granted an extension to the date for Substantial Completion, if it had followed the contractually provided processes to request that CA/T amend the schedule. Indeed, the fair inferences to be drawn from the CE's comments are contrary to that. Additionally, the DRB4 found that CA/T's directive instructing PKC to open Atlantic Avenue before Substantial Completion was not authorized under the Contract and PKC was entitled to recover additional costs attributable to that directive. This at least calls into question whether some of the CE's findings regarding the parties' obligations under the Contract were understood by them to be final. Under these circumstances, basic fairness calls for the question of whether Kone's conduct was responsible for any project delays that led to liquidated damages being assessed against PKC to be litigated in this case.
Of course, since Kone was not a party to that arbitration, the finding that Kone failed to perform has no preclusive effect in this case.
Moreover, the Subcontract clause here at issue effectively requires PKC to prove that delays in reaching Milestone's 2 and 7 were caused by Kone's failure to perform according to the Subcontract and the 76Bs schedule, before it can recover from Kone a proportional share of liquidated damages assessed against it. To the extent that PKC fails to prove that, for example because its own performance of its Contract obligations caused the delay or any act of CA/T caused delay (for which an extension would have theoretically been granted if PKC had properly requested it), PKC will be unable to recover from Kone. There are substantial evidentiary issues to be considered in connection with these questions of fact that were not addressed in the CE Decision.
Kone also argues that the summary judgment record is inadequate to support two elements of damage. It asserts that there is no proof that anything attributable to it caused PKC to fail to meet the date to give CA/T access to the entire Project. Under 76Bs, that date was November 2, 2002. Furthermore, DRB3 held that it was not until August 23, 2003 that only work having less than 1% of the adjusted Contract price remained to be completed. Kone notes that PKC had offered no evidence that it was Kone's incomplete work that prevented 99% of invoiced work to have been completed by some earlier date.
PKC points out that the Contract provides two methods to measure whether Milestone 2 has been achieved:
Substantial Completion . . . shall mean either that [1] the Work required by the Contract has been completed except for work having a Contract Price of less than one percent of then adjusted total Contract Price, or [2] substantially all of the Work has been completed and opened to public use except for minor incomplete or unsatisfactory Work items that do not materially impair the usefulness of the Work required by the Contract. (emphasis and numbers supplied)PKC does not contest Kone's assertion that there is insufficient evidence in the summary judgment record to create a question of fact as to whether Kone was responsible for PKC's inability to meet the 1% test. Rather, PKC argues that there is evidence from which a finder of fact could conclude that everything was substantially completed and open for public use well before August 23, 2003, except that part of the South Station work that was attributable to Kone's Subcontract. The court agrees that, applying all inferences in favor of PKC, a question of fact exists in this regard, but notes that PKC will not be permitted to change theories and offer evidence of Substantial Completion at trial based on the 1% test.
Finally Kone argues that as to days of delay that PKC's expert has opined Kone and PKC are concurrently responsible, PKC has wrongfully allocated delay damages equally to Kone and PKC. It argues that PKC's expert does not opine with respect to proportionality and, in consequence, it is entitled to summary judgment on any damage as to which PKC's expert has determined that both PKC and Kone were concurrently the cause of delay. The court finds that in as much as record evidence exists that Kone was a cause of these delay days, whether a 50/50 split of resulting damage or some other allocation is appropriate are questions that a finder of fact can generally determine without expert testimony. For example, juries are frequently asked to apportion fault under the comparative negligence statute and to do this based on common sense and reasonable inferences without expert testimony. Summary judgment based on the absence of expert testimony on apportionment is denied.
ORDER
For the foregoing reasons, Kone's motion for summary judgment is DENIED and Federal's motion for summary judgment is ALLOWED.