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Reede Construction, Inc. v. South Dakota Department of Transportation

Supreme Court of South Dakota

November 1, 2017

REEDE CONSTRUCTION, INC., Plaintiff, Counterclaim Defendant and Appellee,
SOUTH DAKOTA DEPARTMENT OF TRANSPORTATION, Defendant, Counterclaimant and Appellant.



          RONALD G. SCHMIDT of Gunderson, Palmer, Nelson & Ashmore, LLP Rapid City, South Dakota Attorneys for plaintiff, counter claim defendant and appellee.

          JUSTIN T. CLARKE of Davenport, Evans, Hurwitz & Smith LLP Sioux Falls, South Dakota and EDWIN E. EVANS of Evans, Haigh & Hinton, LLP Sioux Falls, South Dakota Attorneys for defendant, counterclaimant and appellant.


         [¶1.] The South Dakota Department of Transportation (DOT) contracted with Reede Construction Inc. (Reede) to perform highway construction work in Sioux Falls. DOT refused to issue a letter of acceptance after requesting numerous repairs, many of which Reede never performed. Reede eventually left the job and demanded payment for the repairs it had completed. Reede sued, and DOT counterclaimed. At trial, the jury returned a verdict awarding no damages to either party. DOT filed a motion for a new trial, arguing insufficient evidence supported the jury's verdict. The circuit court denied the motion, and DOT appeals. We affirm.

         Facts and Procedural History

         [¶2.] In March 2006, DOT contracted with Reede to perform work on a portion of Interstate 29 and Highway 42 in Minnehaha County, South Dakota. DOT set June 29, 2007, as the completion date. On April 12, 2006, Reede sent a letter to DOT proposing a modified concrete mix design. DOT approved, appending a special provision to the contract allowing for a contractor-furnished mix design "sufficiently workable and finishable for all uses intended[.]" Use of the new mix design would "not relieve [Reede] from the responsibility for furnishing a concrete mix that meets specification and workability requirements."

         [¶3.] In late 2006 and early 2007, DOT identified various defects in the pavement and concrete. On February 1, 2007, DOT sent a preliminary punch list of items requiring repairs to Reede. The punch list identified numerous instances of cracking and joint spalling.[1] In late April 2007, DOT observed additional cracking and distress in the concrete. A DOT employee noted in an email that he "[had not] seen anything quite like this before in new pavement." Reede responded in early May that it would repair the cracks it had identified prior to the roads being opened to traffic. Further, Reede would do so at its own expense. However, Reede requested reimbursement for repairs resulting from "damage caused by unforeseeable events beyond the control of the contractor, " e.g., damage caused by traffic. DOT agreed to compensate Reede for some of these repairs. DOT claimed, though, that some of the damage stemmed from the concrete mix design and that Reede had contractually assumed responsibility for costs associated with pavement performance. Reede disagreed with DOT's interpretation of the contract, arguing that while it bore responsibility for the concrete mix design used in the pavement, it could not be held responsible for performance of the pavement itself.

         [¶4.] In June 2007, concerns arose regarding surface finish, transverse and longitudinal cracking, joint spalling, and other "spider web like cracking." In late June, DOT contacted Reede to again request repairs while denying that "acts of God or others contributed to the pavement failure." DOT also contacted Reede in July regarding the need to remove panels on I-29 "due to poor consolidation and unacceptable finish." DOT further requested Reede provide DOT "a written position on the cause of the above noted conditions and the course proposed to correct these issues."

         [¶5.] In November 2007, Reede sent DOT a letter containing the observations of James LaFrenz, a concrete expert Reede had hired, regarding the condition of the project. DOT reviewed LaFrenz's letter and determined it needed to conduct further analysis. DOT informed Reede that once it finished its examination, DOT would issue a work order detailing repairs that needed completing before Reede could receive final acceptance.

         [¶6.] On February 28, 2008, DOT sent Reede a letter listing issues still outstanding on the project, including the need for concrete pavement repairs. Reede responded it would make additional inspections of the concrete. In July 2008, DOT sent Reede a work order requesting pavement repairs. DOT received no response. In September, DOT requested a written statement detailing what Reede intended to do. On February 6, 2009, Reede wrote back that it "recogniz[ed] the request to complete the concrete repairs" and "intend[ed] . . . to execute the work needed to complete the work requested." However, Reede again requested reimbursement for any such repairs. DOT responded that Reede would need to file a formal claim, and DOT reiterated its position that any costs for repairs should be borne by Reede.

         [¶7.] In March 2009, Reede sued DOT, claiming breach of contract, quantum meruit, and unjust enrichment. DOT counterclaimed for breach of contract and breach of implied warranty of workmanship. The parties conducted extensive discovery. On November 9, 2015, a ten-day jury trial commenced. Both sides offered numerous exhibits, and the jury heard extensive testimony, including from experts. The jury returned a verdict awarding no damages to either party. On February 17, 2016, DOT filed a motion for a new trial. On April 11, the circuit court indicated orally that it would deny the motion. On April 13, the court issued its order denying DOT's motion for a new trial.

         [¶8.] DOT appeals, arguing the circuit court abused its discretion by not granting DOT's motion for a new trial. Reede responds that DOT failed to preserve the issue for review by ...

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