Author Archives: CS Editor

New Lockers Bring Durability and Longevity to Cologne Academy

The Cologne Academy is a charter school in Cologne, Minnesota, with 460 students from kindergarten to eighth grade. Photos courtesy Scranton Products

The Cologne Academy is a charter school in Cologne, Minnesota, with 460 students from kindergarten to eighth grade. Photos courtesy Scranton Products

By David Casal

The halls of Cologne Academy, a charter school in Cologne, Minnesota, now boasts stylish, high-density polyethylene (HDPE) lockers in the school’s colors—blue and yellow.

An alternative to traditional public schools, Cologne Academy operates as an independent, publicly funded school district. It became Carver County’s first public charter school in 2008 with 127 students. After the opening, three additional buildings were constructed on the campus, and the school now houses more than 460 students from kindergarten to eighth grade.

This addition of lockers is the first of two middle-school wings for the Academy. When it came time to specify the corridor lockers, executive director Lynn Peterson, along with the facilities task force, wanted to explore the options available beyond traditional metal lockers.

After coming across high-density polyethylene lockers designed especially for a corridor, Peterson and the team found the modern aesthetic they were seeking. Additionally, students had expressed having the school colors in the corridors adds to school spirit and instills a sense of pride.

The specified HDPE lockers replaced metal lockers and are designed to meet the demands of a school environment and withstand harsh daily use. Engineered for strength and durability, and virtually maintenance-free, the material outperforms metal lockers at a comparable price point, providing long-term low maintenance. The material withstands dents and scratches and its non-porous surface resists odors, mildew, mold, and graffiti, making the locker easy to maintain.

“Durability and appearance were just two of the main attributes that led to our choice,” said Peterson. “In the five years since the Academy opened, the metal lockers we have in the other buildings on campus are starting to look worn. We wanted a locker that would outlast and continue to outperform the metal ones.”

These lockers are able to stand up to the everyday wear and tear of students.

These lockers are able to stand up to the everyday wear and tear of students.

The lockers were installed by a team of volunteers led by Matt Lein, a parent of two students at the Academy. Lein designed the new addition and was in favor of selecting the HDPE units. Like Peterson, he also wanted something different for the middle school.
“When we designed the middle school we wanted it to have a more dynamic look—something that was different than the lower grades,” he explained.

The solid HDPE lockers specified are fully fire-rated and compliant with National Fire Protection Association (NFPA) 286, Standard Methods of Fire Tests for Evaluating Contribution of Wall and Ceiling Interior Finish to Room Fire Growth. They are also GreenGuard Gold Certified, for improved indoor air quality (IAQ). The GreenGuard Gold Certification offers stricter certification criteria, considers safety factors to account for sensitive individuals (such as children), and ensures a product is acceptable for use in environments such as schools and healthcare facilities. It is referenced by the Collaborative for High-performance Schools (CHPS) and Leadership in Energy and Environmental Design (LEED).

Since the locker’s surface is non-porous, graffiti wipes off easily with most non-abrasive cleaners, and stickers and contact paper are also easily removed. The lockers can also be power-washed and steam-cleaned without worry of rust.

The Academy had 170 units installed in the corridors of the newest addition. According to Peterson, aside from durability, appearance, and low-maintenance, another advantage is they make less noise than the metal lockers when closed.

The same lockers will be specified for the next addition at the Academy—which includes the second half of the middle school wing and a new gymnasium.

The high-density polyethylene (HDPE) lockers in Cologne Academy (Cologne, Minnesota) are fire-rated for corridors, selected in the school colors of yellow and blue. Photos courtesy Scranton Products

The high-density polyethylene (HDPE) lockers in Cologne Academy (Cologne, Minnesota) are fire-rated for corridors, selected in the school colors of yellow and blue.

David CasalDavid Casal is the director of sales and marketing for Scranton Products. He leads an international team of sales and marketing professionals that work closely with the architectural and end user communities in selecting high-density polyethylene (HDPE) materials. Casal can be contacted by e-mail at dcasal@scrantonproducts.com.

Contract Termination for Material Breach

D. CazanJ. SpanglerLAW
Debbie Cazan and John I. Spangler III

 

Most construction projects do not end up in contention and acrimony, but when they do, the design professional is often asked to opine on whether the contractor should be terminated. This occurs as part of the design professional’s role as the ‘initial decision-maker,’ or as counselor and advisor to the owner.

The design professional and the owner should exercise caution before heading down the road to termination—the most draconian of remedies. A declaration of default and termination inevitably delays project completion, adds costs, and all but guarantees the filing of lawsuits or demands for arbitration.

It is essential to understand that not every contractual breach authorizes or entitles the non-breaching party to terminate the contract. Only a total or material breach justifies the remedy of termination.

What is a total or material breach?
The courts characterize a total or material breach as a substantial failure to perform, or a breach so substantial as to defeat the contract’s purpose or object.1 A material breach goes to the root2 or essence3 of the contract; a breach of such significance or materiality as to preclude adequate compensation in money damages.4 A material breach is a failure to do something so fundamental to the contract so as to defeat its essential purpose.5

The American Institute of Architects (AIA) contract forms use the term “substantial breach” without defining the term “substantial.”6 Courts have noted the absence of a definition makes the term ambiguous, and several courts have interpreted substantial to be the equivalent of material.7

Future performance and the adequacy of money damages for breach
The standard of materiality is necessarily imprecise and flexible. It is to be applied in light of the facts of each case, and in such a way as to further the purpose of securing for each party its expectation of performance. If the termination is challenged in court or in arbitration, a finder of fact will decide after the fact whether the breach was sufficiently material so as to justify termination.8

One significant factor is the likelihood the non-breaching party would have obtained substantial performance of the contract from the breaching party. An unexcused breach is material only when it reasonably compels a clear inference of unwillingness or inability by one party to substantially meet the contractual future performance expectations of the other party.9

Another significant factor is the adequacy of money damages as compensation for the breach. Any breach entitles the non-breaching party to recover damages, but a material or total breach is so significant even the recovery of money damages will fail to provide the non-breaching party the equivalent of full performance. In other words, if money damages can provide an equivalent to full performance, then the breach is not material and does not warrant or authorize termination.10

A termination decision should focus on the impact of the current breach on future contract performance. What is the likelihood of the breach being cured, and of the remaining contract obligations being performed? The adequacy of money damages as compensation for the breach should also be a focus. The more egregious the breach, the more unlikely future performance will occur, and thus the more inadequate money damages will be as compensation for the breach.

Failure of payment as a material breach
Payment obligations are important, and are certain to be viewed as an essential element or term of any construction contract. Withholding payment if authorized under the terms of the contract, or if the withholding does not substantially deprive a party of the benefits of the contract, will not justify termination and does not constitute a material breach. Non-payment that is at odds with the contract requirements, or substantially deprives a party of the benefits of a contract, can constitute a material breach and can justify contract termination.

For example, in Manganaro Corp. v. HITT Contracting, Inc, the court held the contractor’s failure to honor the payment provision in the subcontract constituted a material breach and justified the subcontractor’s cessation of performance.11 Similarly, in In re Stone & Webster, Inc., a bankruptcy court held a prime contractor’s failure to timely pay its subcontractors constituted a material breach of the prime contract and entitled the owner to terminate the prime contract.12

Refusing to make payment when a good faith basis exists to challenge the payment does not constitute a material breach. In Pack v. Case, the court held the owner’s refusal to pay disputed amounts claimed by the contractor did not constitute a breach of the contract and did not excuse the contractor from honoring its warranty obligations.13

Since the contractor had obtained substantially what it was entitled to receive under the contract, and would be adequately compensated by money damages, the owner’s non-payment was not a material breach and did not justify the contractor’s refusal to honor its warranty obligations.14

Failure to follow the design documents as a material breach
The failure to follow the design documents can deprive the owner of the benefit of the contract, constitute a material breach, and justify termination. For example, in Strouth v. Pools by Murphy & Sons, the court held the construction of a kidney-shaped pool was a substantial deviation from the peanut-shaped pool required by the contract and constituted a material breach of the pool construction contract. The pool contractor’s refusal to change the pool layout so as to comply with the contract made it unlikely the owner would ever obtain future performance in substantial compliance with the contract and thus justified termination.15

When termination occurs due to non-compliance with the design documents, the doctrine of substantial performance applies. The contractor is not required to be perfect, but it must substantially comply with the contract. The contractor has substantially performed if any deficiencies in its performance can be remedied, and the owner made whole, by an offsetting allowance against the contract price. The rule applies if the owner can use the property as intended even though relatively minor matters remain to be completed or corrected, and the owner has substantially obtained the benefit of the bargain. The rule does not apply when there are significant defects that are not readily repaired or the defects result in a complete frustration of the purpose of the contract.16

Timeliness of performance as a material breach
Timeliness of performance as a basis for termination is another frequently litigated topic. A delay in completing the work by the contractual completion is not a material default and does not justify termination unless the time of performance is specified in the contract to be of the essence or unless the circumstances under which the contract was negotiated demonstrate an intention by the parties to make the timeliness of performance an essential or material term.17

Waiver of a material breach
Another important concept is waiver, as the right to terminate for material breach can be waived if the party having the right to terminate elects not to and continues to receive the benefits of performance from the breaching party.18 In Madden Phillips, the site contractor breached the contract by suspending performance when a dispute over fill dirt arose. After suspending performance, the site contractor returned and re-commenced. The owner accepted the benefits of the site contractor’s renewed performance for nearly eight months before terminating the contract. By allowing the site contractor to return to the site and to complete 90 percent of the project without further objection, the owner waived its right to assert the site contractor’s suspension of the work was the first material breach of the parties’ contract.19

Consequences: Discharge of any further performance
In addition to authorizing the termination of a contract for default, the other significant consequence of a material breach is that it excuses the non-breaching party from any further performance under the contract, a right that can have significant consequences. A classic example of this is Mustang Pipeline Co. v. Driver Pipeline Co., where Mustang sued Driver for failing to complete the laying of a 160-km (100-mi) pipeline by the construction deadline stated in the contract.20 Fifty-eight days into the 98-day schedule, Driver had completed only 24 km (15 mi) of pipe, and suspended operations. Mustang declared a default and hired another firm to complete Driver’s work.

Each party sued the other, claiming breach of contract and raising the other party’s prior material breach as an affirmative defense. The trial court entered a judgment awarding Driver $2.3 million against Mustang for wrongful termination.

On appeal, the Texas Supreme Court found Driver had been the first party to materially breach the contract by failing to lay more than 24 km of pipe, notwithstanding the passage of over half of the contract time. Given the time requirements of the contract, the Supreme Court determined as a matter of law that Driver’s breach was material, and Driver’s material breach entitled Mustang to terminate the contract.

The Court also concluded Driver’s material breach discharged Mustang from any further duties under the contract, including any obligation to pay Driver for the work performed. Driver entered the Court with a $2.3 million judgment in its favor and left the Court owing Mustang $2.1 million, all because the Court concluded Driver had committed the first material breach.

Conclusion
Termination of a contract for default can have serious implications. Unfortunately, there is no bright line rule to follow in making this determination. The termination decision must be made based on the totality of the circumstances, focusing on factors such as whether money damages are adequate compensation for the breach and whether the breach can be cured and remaining obligations performed. These decisions are often challenged, so it is critical a party make a reasoned, educated determination as to whether the other contracting party has materially breached the contract such that termination for cause is appropriate.

Deborah Cazan is an experienced construction attorney and dedicated business counselor with Alston & Bird LLP. Her practice focuses on representing clients in litigation, arbitration, and mediation of construction, development, and real estate related disputes. On the transactional side, she has extensive experience drafting and negotiating general contractor and construction management agreements, design-build agreements, program management agreements, project management agreements, and architectural and engineering agreements. Cazan serves as a board member of the Construction Section of the Atlanta Bar Association. She can be reached via e-mail at debbie.cazan@alston.com.

John I. Spangler III is a former co-chair of Alston & Bird’s Construction & Government Contracts Group, and has more than 25 years of experience handling construction disputes and negotiating and drafting design and construction contracts. He is featured in Chambers USA’s America’s Leading Lawyers for Business, and has been listed in The Best Lawyers in America since 2004. John also has been recognized by Who’s Who Legal and Super Lawyers magazine since 2006. He can be contacted at john.spangler@alston.com.

Notes
1 Brazell, v. Windsor, 682 S.E.2d 824, 826 (S.C. 2009); UHS-Qualicare, Inc. v. Gulf Coast Cmty. Hosp., Inc. 525 So. 2d 746, 756 (Miss. 1987); Wiljeff, LLC, v. United Realty Mgmt. Corp., 920 N.Y.S.2d 495, 497 (N.Y. App. Div. 4th Dep’t. 2011); Cent. Ark. Found. Homes, LLC v. Choate, 383 S.W.3d 418 (Ark. Ct. App. 2011). (back to article)
2 Vidalia Outdoor Prods., Inc. v. Higgins, 701 S.E.2d 217, 219 (Ga. Ct. App. 2010); Forsyth Cnty. v. Waterscape Servs., LLC, 694 S.E.2d 102, 110-112 (Ga. Ct. App. 2010). (back to article)
3 D’Andrea Bros. v. United States, No. 08-286C, 2013 WL 500346 (Fed. Cl. Feb. 8, 2013). (back to article)
4 Campbell v. Shaw, 947 S.W.2d 128, 131 (Mo. Ct. App. 1997) (quoting Curt Ogden Equip. Co. v. Murphy Leasing Co., 895 S.W.2d 604, 608–09 (Mo. Ct. App. 1995)). (back to article)
5 23 Williston on Contracts § 63:3 (4th ed. 2000). (back to article)
6 In AIA A201-2007, General Conditions of the Contract for Construction, Article 14.2 “Termination by the Owner for Cause,” provides that “The Owner may terminate the Contract if the Contractor otherwise is guilty of substantial breach of a provision of the Contract Documents” without defining “substantial.” (back to article)
7 Schott v. Medrea, No. 106007153, 2011 Conn. Super. LEXIS 2769, at *27-28 (Conn. Super. Ct. Nov.1, 2011) (in the absence of any other guidance, the court interprets the term “substantial breach” as the equivalent of a material breach, citing Brittle v. Shun, No. A08–0445, 2009 WL 1047082 (Minn. Ct. App. Apr. 21, 2009); Nisby v. Michael, No. 1707, 2007 Mass. App. Div. 103, 104 (Mass. App. Ct. June 26, 2007); Rogers v. Relyea, 601 P.2d 37, 41 (1979); Black’s Law Dictionary (7th ed. 1999); Merriam–Webster Dictionary (2005) (defining substantial as material); and In re DeRosa, 98 B.R. 644, 648 (Bankr. D. R.I.1989). (back to article)
8 Wiljeff, 920 N.Y.S.2d at 497; Madden Phillips Constr. Inc. v. GGAT Dev. Corp., 315 S.W.3d 800 (Tenn. Ct. App. 2009); Premier Golf Mo., LLC v. Staley Land Co., 282 S.W. 3d 866, 873 (Mo. Ct. App. 2009); Venture Props., Inc. v Parker, 195 P.3d 470, 489 (Or. Ct. App 2008); Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195 (Tex. 2004). (back to article)
9 5 Philip L. Bruner & Patrick J. O’Connor, Jr., Construction Law, §18:4. (back to article)
10 Vidalia, 701 S.E.2d at 219; Mayor of Douglasville v. Hildebrand, 333 S.E.2d 674 (Ga. Ct. App. 1985); Campbell, 947 S.W.2d at 131. (back to article)
11 193 F. Supp. 2d 88 (D.D.C. 2002). (back to article)
12 279 B.R. 748, 779-780 (Bankr. D. Del. 2002). (back to article)
13 30 P.3d 436 (Utah Ct. App. 2001). (back to article)
14 Id. (citing Restatement (Second) of Contracts § 237 (1981)). (back to article)
15 829 A.2d 102 (Conn. App. Ct. 2003). (back to article)
16 15 Williston on Contracts § 44:57 (4th ed.); Denver D. Darling, Inc. v. Controlled Env’ts Constr., Inc., 108 Cal. Rptr. 2d 213 (Cal. Ct. App. 2001) (under doctrine of substantial performance, substantial performance is sufficient, and justifies an action on the contract, although the other party is entitled to a reduction in the amount called for by the contract, to compensate for defects); Bentley Sys., Inc. v. Intergraph Corp., 922 So. 2d 61 (Ala. 2005) (substantial performance permits recovery for a breach-of-contract by a party that has not performed all of its obligations under a contract so long as its performance has been substantial); Dexter v. Brake, 269 P.3d 846 (Kan. Ct. App. 2012) (doctrine of substantial performance is intended to protect the right to compensation of those who have performed in all material and substantive particulars, so that their right to compensation is not forfeited by reason of mere technical, inadvertent, or unimportant omissions or defects). (back to article)
17 Madden Phillips, 315 S.W.3d at 817-20; Merritt v. Anderson, No. CA2008-04-010, 2009 WL 975749 (Ohio Ct. App. Apr. 13, 2009). (back to article)
18 23 Williston on Contracts § 63:9 (4th ed.) (back to article)
19 Id. at 816. (back to article)
20 134 S.W.3d 195 (Tex. 2004). (back to article)

CONSTRUCT Panel to Explore Conflicts in Sustainable Construction

A boxed-lunch session at Construct will feature four very different design/construction experts reflecting on the state of sustainability. Photo © BigStockPhoto/Pennyann

In the pages of The Construction Specifier, we’ve tried to present many different facets related to the continuing goal of sustainable, but practical, building design, construction, and operations. On Tuesday, September 9, as part of CONSTRUCT & the CSI Annual Convention in Baltimore, the discussion goes ‘live,’ as the magazine’s editor, Erik Missio, moderates a luncheon panel bringing together four industry experts with distinct opinions on sustainable building.

Aspirations vs. Reality: Conflicts in Sustainable Construction” intends to cover several issues related to how sustainability can be improved in the built environment, including:
● concerns about the realistic pace of change in pursuing aspirational goals;
● use of rating systems like Leadership in Energy and Environmental Design (LEED), and the impact on sustainable practices adoption;
● growing focus on evaluation of actual building performance rather than pre-construction ratings;
● employing chemicals of concern/red lists in improving sustainable outcomes;
● roles and responsibilities of project team members to the owner and third parties; and
● obligation of professionals to limit their practice to areas of training and expertise.

This is, of course, a lot of ground to cover over the course of an hour-and-a-half lunch, so we’ll be looking to magazine readers and show attendees to help steer the conversation. What are the issues most important to you? What would you like to see addressed? E-mail Erik at emissio@constructionspecifier.com or tweet your thoughts to @SpecifierMagCSI (with hashtags #CONSTRUCT #T13B).

The panelists for the event are:
● Paul Bertram, FCSI, CDT, LEED AP, GGP—a CSI past-president, and the director of environment and sustainability/government affairs for Kingspan Insulated Panels where he participates in development of Product Category Rules (PCRs), Environmental Product Declarations (EPDs), and Health Product Declarations (HPDs);
● Brendan Owens, PE—USGBC’s vice president of LEED Technical Development, for which he collaborates with volunteer technical committees to advance the technical content of the green building rating system;
● Stephen Hess—attorney at Sherman & Howard LLC, an adjunct professor in construction law at the University of Denver, editor of The Construction Lawyer, and co-author of the two-part “Assessing Liability for Green Building Failures;” and
● Doug Pierce, AIA, LEED AP—senior associate at Perkins+Will (Minneapolis) with more than 25 years of experience in sustainable design and planning, including work as an international speaker, author, and instructor, along with more than a decade of experience with sustainable materials and lifecycle analysis (LCA).

Aspirations vs. Reality: Conflicts in Sustainable Construction,” will be held in Room 307 of the Baltimore Convention Center from 11:45 a.m. to 1:15 p.m. on Tuesday, September 9. Available to all who purchased a full education package, the panel also yields 1.5 American Institute of Architects/Continuing Education System (AIA/CES) Learning Units/Health, Safety, Welfare (HSW) credits and 1.5 Green Building Certification Institute (GBCI) Continuing Education (CE) credits.

Performance-based design guide available

A new online resource, The National Performance-based Design Guide (NPBDG) has been released by the National Institute of Building Sciences. Made available through the Whole Building Design Guide, it is based on the recently updated U.S. General Services Administration P-100: Facilities Standards for the Public Buildings Service. NIBS revised the standard from a prescriptive guide to a performance-based system, making the information applicable to any public or private-sector building. Four levels of building performance—Baseline, Tier 1, Tier 2, and Tier 3—allows building owners to choose design levels and work with construction teams to meet requirements. The free guide can be accessed at npbdg.wbdg.org.

Steel-framing guide updated

The newest addition of the American Iron and Steel Institute’s (AISI’s) Brick Veneer Cold-formed Steel Framing Design Guide is now available. This guide updates 2003’s Steel Stud Brick Veneer Design Guide. The resource will be especially useful for structural engineers and architects when using brick veneer anchored to a backing of cold-formed steel framing in their designs. Included in the updated edition are general guidelines, a review of building principles, and design examples of various system elements. The information is focused on commercial and high-rise residential projects. The guide is endorsed by Association of the Wall and Ceiling Industry (AWCI), Canadian Sheet Steel Building Institute (CSSBI), North American Steel Framing Alliance (NASFA), Steel Framing Industry Association (SFIA), and Steel Stud Manufacturers Association (SSMA). For more information, visit www.steel.org.