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Contractor for a wastewater treatment plant sued the municipal owner and its project engineer for breach of contract for interfering with its work by failing to obtain easements in time for the contractor’s construction work to proceed. Although the contract was, on its face, only between the contractor and owner, the contractor argued that the engineer was also a party to the contract because its seal was affixed to the contracts cover and the engineer was designated as the project’s engineer in the contract’s terms, and the engineer acted as the agent and representative of the owner and was designated in the contract as having decision making power for matters affecting the contractor.

The trial court granted summary judgment for the engineer, which was sustained on appeal, with the court holding there was no express or implied contract with the contractor, and no implied-in-fact duty for the engineer to obtain easements for the contractor. In addition, by signing and cashing the project owner’s check that contained the words “Final Payment,” the contractor waived any claim against the owner and engineer because this constituted an accord and satisfaction, regardless of a contemporaneous letter from contractor’s letter stating an intent to preserve its claim.   Triangle Construction Company, Inc. v. Fouche and Associates, Inc., 218 So. 3d 1180 (Mississippi 2017).

The contractor pointed to Section 3.01 of the Contract, which provides that the project engineer (“Fouche”) “is to act as [Onwner’s] representative, assume all duties and responsibilities, and have the rights and authority assigned to [Engineer] in the Contract Documents in connection with the completion of the Work in accordance with the Contract Documents.” Triangle maintained that, as Owner’s representative, the engineer was liable for failing to obtain the easements in a timely manner, pursuant to Section 4.01 of the Contract that required Owner—as the project-owner—to “obtain in a timely manner and pay” for easements necessary for completing the project. Triangle also referenced Section 12.03 of the Contract, which provides:

If [Owner], [Engineer], or other contractors or utility owners performing other work for [Owner] as contemplated by Article 7, or anyone for whom [Owner] is responsible, delays, disrupts, or interferes with the performance or progress of the Work, then Contractor shall be entitled to an equitable adjustment in the Contract Price or the Contract Times, or both.

The court explained that the engineer disagrees and argues that it is not a party to the Contract. First, the engineer referenced Section 9.09(A) of the Contract, which provided:

Neither [engineer’s] authority or responsibility under this Article 9 or under any other provision of the Contract Documents nor any decision made by [Engineer] in good faith either to exercise or not exercise such authority or responsibility or the undertaking, exercise, or performance of any authority or responsibility by [Engineer] shall create, impose, or give rise to any duty in contract, tort, or otherwise owed by [Engineer] to [Triangle] ….

With regard to the language of the contract that the contractor asserted made the engineer an agent of the owner, the court said,

Triangle overlooks the critical language limiting Fouche’s role only to that specified by the Contract. Section 4.01 provides that [Owner] is responsible for obtaining the easements; Section 9.09(A) of the Contract provides that no provision of the Contract or behavior by Fouche will “create, impose, or give rise to any duty in contract, tort, or otherwise owed by [Fouche] to [Triangle].” These provisions explicitly limit Fouche’s duties and do not include the responsibility of obtaining easements. Triangle acquiesced to this language when it signed the contract. Thus, we find no merit to this argument.

Accord and Satisfaction

The contractor was given a check by the owner marked, “Final Payment.” He signed the contract and simultaneously provided a letter from his attorney to the Owner stating that the amount was insufficient payment “for all the work that Triangle performed on this job,” and that “Triangle does not waive, in any way, its contractual claims to additional funds under the terms of the bid contract.”

None of this language was effective, said the court, to change the fact that the contractor signed the final payment check, which under state law constituted accord and satisfaction. The court stated,

Mississippi law is clear that, despite whatever contentions a party may make to the contrary, cashing a check marked “final payment” constitutes an accord-and-satisfaction agreement, which precludes that party from bringing future claims for additional payment.

Although this accord and satisfaction would naturally apply to a claim by the contractor against the Owner, the court also found that it applied to bar the claim against the engineer. Ironically, it was the contractor’s insistence that the engineer was the owner’s agent and representative and was in a quasi contract relationship that tripped up the contractor here. As explained by the court,

Triangle argues repeatedly on appeal that Fouche acted as EMWA’s representative or agent, and that Fouche directly controlled the management of the construction project on behalf of EMWA. Further, the very letter written by Triangle asserting that it would continue to seek payment, despite cashing the “final payment” check, was written to Fouche, not EMWA. Triangle has centered much of its argument upon the contention that Fouche acted as EMWA’s agent. However, with respect to its argument regarding accord and satisfaction, it argues that EMWA and Fouche are separate entities. We refuse to allow Triangle to have it both ways. It cannot now argue that Fouche and EMWA are separate entities solely for the sake of its accord-and-satisfaction argument. Thus, we hold that Triangle’s claims against Fouche are barred pursuant to the doctrine of accord and satisfaction.

Comment:   An important lesson from this decision concerns the importance of a contractor not accepting a check that states it is “final payment” if the contractor intends to pursue a claim for additional amounts. Here, the contractor, and its attorney, thought a claim had been adequately preserved by the contractor’s attorney letter specifically stating that the check amount was not sufficient to pay all that was owed to the contractor and that the contractor was preserving its rights to additional amounts that the contractor believed were due. That language did not change the legal affect of the wording on the contract. This may vary depending upon state law, but the law of Mississippi was clear in this regard.

About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 20, No. 3 (Mar 2018).

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