Timothy J. Abeska | Barnes & Thornburg LLP | December 15, 2014
Construction contracts often incorporate multiple documents by reference. A recent Indiana case provides an example of a court enforcing contract provisions rather than markings on construction drawings that are inconsistent with contract requirements.
Goodrich Quality Theaters, Inc. v. Fostcorp Heating and Cooling, Inc., 16 N.E.3d 426 (Ind. Ct. App. 2014) arose from the construction of an IMAX movie theater. The general contractor hired Wilson Iron Works, Inc. to be responsible for structural steel and roof decking for the theater, including joists and joist girders. The contract documents included a Project Manual, Design Drawings prepared by the project architect and the Steel Joist Institute Manual (the “SJI”). Under the SJI, considered the industry standard, “SP” is used to mark any joist girder that is not standard. In this case, the architect intended to have HVAC pass through openings in the joist girders. Instead of using “SP” to designate the required non-standard openings required by the design, on two “top down” drawings the architect used a broken or dashed line in the shape of an hourglass on top of the joist girder with the word “opening” and a dimension to show where ductwork was to pass through the girders.
The hourglass mark had no meaning to Wilson Iron, which ignored the mark and submitted shop and erection drawings calling for only standard joist girders. These drawings were approved by both the general contractor and architect. A subcontractor to Wilson Iron fabricated the girders consistent with the approved drawings. When the first set of joists was delivered to the project site, the architect told Wilson Iron that the girders were supposed to have non-standard openings. Wilson Iron asked that the project be shut down until the situation was resolved, but both the general contractor and architect directed that the steel erection continue using the standard joist girders. The installation of the HVAC system by Fostcorp was delayed due to the joist girder problem. Not surprisingly, payment disputes followed and both Wilson Iron and Fostcorp recorded mechanic’s liens against the project.
In May 2007, Fostcorp sued to foreclose its lien. Numerous parties filed cross-claims and counterclaims. A bench trial was conducted over fourteen days from August 2009 to July 2010. In May 2012, the trial court issued a partial ruling to address the claims of Fostcorp and Wilson Iron. In July 2013, the trial court issued a ruling on claims asserted by a carpet installation subcontractor, and entered a final judgment addressing all issues including attorneys’ fees in August 2013. As to the joist girder confusion, the trial court determined that the hourglass mark on the Design Drawings was meaningless. The Court of Appeals agreed because 1) the hourglass symbol is not industry standard under the SJI, 2) the symbol was not described anywhere in the contract documents and 3) the symbol was not referenced in a legend on the drawings. Moreover, use of the hourglass symbol was not a defect in the Design Drawings of which Wilson Iron has a duty to notify the architect. Wilson Iron – a contractor and not a design professional – did not know, nor should it have known, the meaning of the hourglass mark.
In sum, the contract required standard joist girders to be used. The contract specified a way to express an intention to use non-standard girders, but that “SP” marking was not used. Wilson Iron complied with the contract requirements and was entitled to be paid. The Court of Appeals affirmed the trial court in virtually all respects, reversing only an award of attorneys’ fees against the general contractor because it was not the property owner to which the Indiana mechanic’s lien statute applies.
This case shows the importance of making sure all documents which comprise a construction contract are consistent with each other, as courts will enforce contracts negotiated by the parties. The case also demonstrates that litigation is not a quick process, as the Court of Appeals Opinion was issued more than seven years after the project was completed.