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Keith Capps Landscaping & Excavation, Inc. v. Van Horn Construction, Inc.

Court of Appeals of Arkansas, Division II

November 12, 2014



Lightle, Raney, Streit & Streit, LLP, by: Donald P. Raney, for appellant.

Williams & Anderson PLC, by: David M. Powell and Alec Gaines, for appellee.



Page 208


This is a breach-of-contract case filed by appellee, Van Horn Construction, Inc., a general contractor, against appellant, Keith Capps Landscaping & Excavation, Inc., a subcontractor. After a bench trial, the circuit court found tat Capps had breached the parties' subcontract by failing to perform the work in accordance with the contract's plans and specifications and ultimately by refusing to complete the contract. The court awarded Van Horn $245,632 in damages, plus costs and attorneys' fees. On appeal, Capps argues that the trial court erred in finding that it breached the subcontract and in awarding an amount in damages that is in excess of the actual " reasonable damages." We find no error and affirm the judgment of the circuit court.

In September 2010, Van Horn was awarded the bid as general contractor for the expansion of the Searcy water-treatment plant. In connection with that project, Van Horn sought subcontractor bids for the demolition and earthwork from various firms, including Capps. Capps submitted two bids, which Van Horn rejected because it determined that the amount of fill was overestimated in one bid and underestimated in the other. Van Horn accepted Capps's third proposal, and the parties executed a subcontract on January 3, 2011, in which Capps agreed to " [f]urnish all required labor, equipment, and materials to complete the dirtwork for the Searcy Water Treatment Plant Expansion per plans, specifications, and addenda by Garver Engineers." The contract included, among other tasks, excavation and fill for the sedimentation basin. In exchange for this work, Van Horn agreed to pay Capps $131,700.

There was some confusion in the beginning of the project about the type of fill material Capps could use for the sedimentation basin.[1] In this project, the basin was to be set on fill material that was placed in layers, or lifts. Each lift was designed to be six to eight inches high and had to be compacted and tested for proper compaction and moisture content before another lift was placed on top of it. The specifications required that " class 7" material be used, but Keith Capps, the owner of Capps, testified that he understood from Van Horn when he submitted bid proposals that he could use shale, which is not a class 7 material and which is a considerably cheaper material. Van Horn eventually convinced Wendell Williams, who was the project-construction observer for the project engineer, and the geotechnical engineering firm, Grubbs Engineering, to allow Capps to use material that it submitted for testing from its " borrow pit," which was originally brought to the site for this purpose. The borrow pit included shale.

However, when Capps began work on the sedimentation basin, numerous tests of its lifts failed--generally due either to the moisture content being too high or the shale not being sufficiently broken up, or processed--and Capps was required to constantly rework the lifts and reprocess the material, causing considerably more

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work and expense than it had anticipated. The project manager for Van Horn, Mark Hurley, testified that when shale is " dug out," it comes out in large chunks. The specifications called for the material to be processed to a certain gradation to be properly compacted. Thus, Capps was required to process the material before placing it to meet the moisture and compaction requirements. In addition, Mr. Hurley testified that Capps was attempting to place the fill in layers that were too thick rather than placing it in six-to-nine-inch layers as the specifications required.

Although Mr. Hurley testified that the plans and specifications were always available for Capps's review on the company website and indeed had been brought to a meeting with Capps before Capps submitted his third proposal, Keith Capps testified that he did not see the plans and specifications for the project until the day Van Horn picked up Keith's copy of the signed subcontract. Keith signed the contract, which included specifications regarding the lifts and fill material, without reviewing the specifications. He testified that he was instructed by Van Horn before the contract was signed to use shale for the fill material because it was cheaper than other fill material. Keith also testified that it was his understanding that he would be allowed to stockpile material next to the fill site but that after the project began, he was required to stockpile material 250 yards away and use a loader and dump truck to move it. He said that he had not anticipated this extra work and expense. He said that he told Van Horn that it was impossible to accomplish the lifts with the material he was using, but he was unable to get the matter resolved. He attempted to get Van Horn to agree to a change order to help with the processing or use a different material, but according to Keith, Van Horn refused. Mr. Hurley testified that Van Horn did offer to split the cost of " B stone" that did not require as much processing to use as fill, but Capps declined the offer and quit the project.

Van Horn notified Capps pursuant to Article 10 of the subcontract that Capps had forty-eight hours to return to the job or Van Horn would terminate the contract. ...

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