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Axenics, Inc. F/K/A Rentec Corporation v. Turner Construction Company & A.

March 13, 2013


The opinion of the court was delivered by: Bassett, J.

a.m. on the morning of their release. The direct address of the court's home page is:

Argued: September 12, 2012

The defendants, Stryker Biotech, LLC (Biotech) and Stryker Sales Corporation (Sales) (collectively Stryker), and Turner Construction Company (Turner), appeal a ruling of the Superior Court (McNamara, J.) finding them liable on a theory of unjust enrichment and awarding damages to the plaintiff, Axenics, Inc. f/k/a RenTec Corporation (Axenics). Axenics cross- appeals, challenging the amount of damages awarded and the trial court's failure to find the defendants liable on its breach of contract and New Hampshire Consumer Protection Act (CPA) claims, see RSA ch. 358-A (2009 & Supp. 2012). We affirm in part, reverse in part, vacate in part, and remand.

The trial court found, or the record establishes, the following facts. This case arises out of the construction of a biotech facility (facility) in West Lebanon. Biotech operates the facility, and Sales owns the property where it is located. Turner was hired as the general contractor to build the facility. Axenics provides "manufacturing, installation, and field services for ultrapure gas and liquid distribution systems in the biotechnology, pharmaceutical, and semiconductor industries."

On April 15, 2004, Axenics entered into a subcontract with Turner to furnish labor, materials, equipment, and services for the installation of "process pipe" at the facility. The original subcontract price was $1,992,506. Both parties agreed that the facility would be completed as quickly as possible. The "mechanical completion" date for the facility, including the process pipe installation, was December 2004. Ultimately, Axenics' last day on the job was June 2, 2005.

The subcontract contemplated the possibility of delays and hindrances as well as changes to the scope of the work and its cost. The subcontract provided that "all instructions given to [Axenics'] supervisory or management personnel by Turner's Superintendent, Engineer, or other duly authorized representative shall be understood to be included as part of this Subcontract." If Axenics believed "work to be beyond the scope of" the subcontract, it was required to inform Turner before proceeding. In the event that the parties could not reach an agreement at that time, Turner could issue "an S.I.S. (Superintendent's Instructions to Subcontractors) for record purposes until such an agreement [could] be reached."

In the event that Turner directed additional work to be performed "and the value of such work [was] to be determined other than by actual signed tickets for material," Axenics was to "submit a lump sum proposal accompanied by an itemized breakdown of material, using established contract unit rates where applicable." The "lump sum proposal" had to be "accompanied by accurate written estimates of the cost" and "be submitted to Turner within five (5) calendar days of the receipt of the directive." If the "[p]roposals for additional work" were not received within five calendar days, Turner would "assign a fair and reasonable value for the additional work, and the additional work w[ould] become part of [Axenics'] scope of work."

Likewise, when Axenics initiated requests for changes to the work, it had to "provide [a] written request for change and obtain Turner's written concurrence before proceeding with any Work believed not to be within the scope of [the] subcontract." The subcontract further provided that if Axenics was "delayed, obstructed, hindered or interfered with in the commencement, prosecution or completion of the" work, it was required to notify Turner in writing about what caused the delay within forty-eight hours "of the commencement thereof." Axenics also had to demonstrate that it could not have anticipated or avoided the delay and had "used all available means to minimize the consequences thereof." This notice was "an essential condition precedent to [Axenics'] rights in connection with any such delays, obstructive hindrances or interferences."

In addition, in the subcontract, Axenics agreed:

that it shall not be entitled to nor claim any cost reimbursement, compensation or damages for any delay, obstruction, hindrance or interference to the Work except to the extent that Turner has actually recovered corresponding cost reimbursement, compensation or damages from the Owner under the Contract Documents for such delay, obstruction, hindrance or interference, and then only to the extent of the amount, if any, which Turner on behalf of [Axenics], actually received from the Owner on account of such delay, obstruction, hindrance or interference. Notwithstanding any term or provision herein to the contrary, [Axenics] expressly waives and releases all claims or rights to recover lost profit (except for profit on work actually performed), recovery of overhead (including home office overhead), and any other indirect damages, costs or expenses in any way arising out of or related to the [subcontract], including the breach thereof by Turner, delays, charges, acceleration, loss of efficiency or productivity disruptions and interferences with the performance of the work.

Axenics' "work [was] to be coordinated with the structural, architectural and [mechanical, electrical, and plumbing] services prior to fabrication," and "[p]roject coordination procedures [were] outlined in [an] attached project coordination plan." The project coordination plan provided that: (1) Turner was responsible for scheduling, facilitating, and controlling the "coordination process"; (2) the engineer was responsible for supporting and reviewing "design changes required due to field coordination issues"; and (3) Axenics was responsible for producing, maintaining, and approving "coordination drawings" as well as implementing "coordination[-]driven images."

Several delays, which affected Axenics' work, arose during construction of the facility. Some of the delays caused the schedule to be compressed and required Axenics personnel to work overtime to complete the work on time. In addition, there were occasions when Turner requested changes to the process piping, which Axenics believed to be a "change in scope." When this occurred, Axenics was instructed to continue working and that "SISs [would] follow."

During construction, Turner met with Stryker weekly to review change order requests. Change order requests, as well as applications for payment, had to be approved by Stryker. Axenics submitted eight written change orders, which upon approval by Turner and Stryker, increased the contract price to $2,518,078. The change orders that increased the contract price contained the following language:

Through acceptance of this Change Order, [Axenics]

acknowledges that it has reviewed the progress of the Work related to this Project and the potential impact of the added work on the progress of the project in the future. As a result, this Change Order includes compensation to [Axenics] for any and all effects, delays, inefficiencies or similar demands associated with this Project and [Axenics] recognizes that there is no basis for any such claim in the future.

Please note that all other terms and conditions of the subcontract remain unchanged and that all costs to maintain our original contract schedule with the inclusion of the adjusted scope of work as set forth by this change order are included within the lump sum change order amount stated herein.

Axenics later submitted a ninth change order, in the amount of

$435,929, which it characterized as a "Claim Settlement." The defendants did not pay this change order.

In late 2004, a dispute arose when Axenics notified Turner of additional change orders related to delays and work that it believed to be outside the scope of the contract. Turner initially responded to Axenics' request with an email "rejecting the claim." However, during the next several months, Axenics worked with Turner to obtain payment from Stryker for these change orders. Stryker questioned some of the work for which Axenics sought payment and requested that Axenics submit backup documentation for its requests. Turner assisted Axenics in preparing a presentation for Stryker regarding the requested funds, and Axenics made its presentation to Stryker in April 2005. Before the presentation, Turner representatives provided Stryker with rebuttal to some of Axenics' requests for additional payment, but also told Stryker that it agreed with several of them. Subsequently, Stryker refused to pay Axenics the requested funds.

In November 2007, Axenics sued the defendants, asserting that Turner had breached the subcontract when it failed to pay Axenics sums due. Axenics also brought claims against Turner and Stryker for violation of the CPA and unjust enrichment. It sought $1.7 million in damages for materials, labor, equipment, and services as well as enhanced damages under the CPA and attorney's fees. In response, the defendants counterclaimed, alleging breach of contract and violations of the CPA.

At the conclusion of the eighteen-day trial, in its post-trial memorandum Axenics alleged that "Turner deviated from the . . . subcontract . . . in so many material respects" that Turner had "abandoned the [s]ubcontract, and [Axenics], rather than declaring breach, continued working." According to Axenics, this reflected the parties' mutual agreement to abandon the subcontract, making unjust enrichment "available to compensate [Axenics] for the benefits it conferred on Turner and Stryker through its work at the" facility. Axenics further alleged that Turner breached the subcontract by intentionally delaying payments and failing to coordinate Axenics' work with that of the other subcontractors, which hindered and delayed Axenics' performance of its contractual duties.

The court issued a lengthy decision in which it found that neither party had abandoned the subcontract and ruled against Axenics on its breach of contract claim. However, the trial court ruled in favor of Axenics on its unjust enrichment claim, concluded that the defendants were jointly liable, and awarded Axenics $1,080,000 in restitution damages. With respect to Axenics' CPA claim, the court ruled "that neither Stryker's nor Turner's actions" violated the CPA. Finally, the court ruled against the defendants on all of their counterclaims, including their request for attorney's fees. This appeal and cross-appeal followed.

On appeal, the defendants argue that the trial court erred in allowing Axenics to recover "in unjust enrichment because a valid, express contract governed the precise subject matter of Axenics' unjust enrichment claim, and that contract was neither abandoned nor breached." They further contend that the court erred in finding them "liable for unjust enrichment when they did not receive a benefit that would be unconscionable to retain," and "the record was devoid of any evidence showing the value of any extra-contractual benefit [they] purportedly received." Finally, they argue that the court violated New Hampshire Rule of Evidence 408 by failing to exclude evidence of an offer to compromise.

Axenics cross-appeals, arguing that the trial court erred in failing to find that the parties had abandoned the subcontract. In the alternative, Axenics argues that the trial court should have found "that Turner breached the [s]ubcontract." Axenics also claims that, regardless of whether the subcontract was abandoned or breached, the trial court erred by not awarding it "damages measured by its costs plus reasonable profit, or $1.7 million." In addition, Axenics maintains that the trial court erred in failing to find that the defendants violated the CPA. We first address the ...

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