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Unity School District v. Vaughn Associates, Inc.

United States District Court, D. New Hampshire

January 20, 2017

Unity School District, Plaintiff
v.
Vaughn Associates, Inc., and Scott Vaughn, Defendants
v.
Excel Mechanical, Inc., and Superior Walls of Hudson Valley, Inc., Third-Party Defendants No. 2017 DNH 013

          ORDER

          STEVEN MCAULIFFE UNITED STATES DISTRICT JUDGE.

         In 2010, the Unity School District entered into two contracts with defendants, Vaughn Associates and Scott Vaughn (collectively, “Vaughn”), to design and oversee construction of a new elementary school in Unity, New Hampshire. What was originally supposed to be a $4.7 million project ballooned into one exceeding $9 million. The contracts between the parties were terminated in early 2014, and the School District eventually brought this action. The District advances four claims: professional negligence (i.e., architectural malpractice); breach of contract; negligent misrepresentation; and unfair and deceptive trade practices in violation of New Hampshire's Consumer Protection Act.

         Pending before the court is Vaughn's motion for summary judgment on all claims. The School District objects. For the reasons discussed, Vaughn's motion is granted in part, and denied in part.

         Standard of Review

         When ruling on a motion for summary judgment, the court must “constru[e] the record in the light most favorable to the non-moving party and resolv[e] all reasonable inferences in that party's favor.” Pierce v. Cotuit Fire Dist., 741 F.3d 295, 301 (1st Cir. 2014). Summary judgment is appropriate when the record reveals Ano genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.@ Fed.R.Civ.P. 56(a). In this context, “[a]n issue is ‘genuine' if it can be resolved in favor of either party, and a fact is ‘material' if it has the potential of affecting the outcome of the case.” Xiaoyan Tang v. Citizens Bank, N.A., 821 F.3d 206, 215 (1st Cir. 2016) (citations and internal punctuation omitted). Nevertheless, if the non-moving party's “evidence is merely colorable, or is not significantly probative, ” no genuine dispute as to a material fact has been proved, and “summary judgment may be granted.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986) (citations omitted). In other words, “[a]s to issues on which the party opposing summary judgment would bear the burden of proof at trial, that party may not simply rely on the absence of evidence but, rather, must point to definite and competent evidence showing the existence of a genuine issue of material fact.” Perez v. Lorraine Enterprises, Inc., 769 F.3d 23, 29-30 (1st Cir. 2014).

         The key, then, to defeating a properly supported motion for summary judgment is the non-movant's ability to support his or her claims concerning disputed material facts with evidence that conflicts with that proffered by the moving party. See generally Fed.R.Civ.P. 56(c). It naturally follows that while a reviewing court must take into account all properly documented facts, it may ignore a party's bald assertions, speculation, and unsupported conclusions. See Serapion v. Martinez, 119 F.3d 982, 987 (1st Cir. 1997). See also Scott v. Harris, 550 U.S. 372, 380 (2007) (“When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment.”).

         Background

         In 2009-10, the School District faced a difficult decision, with serious financial consequences. It had to either renovate an existing elementary school that no longer complied with state building codes, fire safety codes, and educational requirements, or construct an entirely new school. In August of 2010, Scott Vaughn, a local architect, presented a proposal to a special meeting of the School District. He assured the District that he could both design and construct a 28, 500 square foot elementary school in ten months, for less than $4.7 million. See Minutes of August 23 School District Meeting (document no. 48-9); Vaughn PowerPoint Presentation (August 23, 2010) (document no. 46-10). Relying upon those representations, district voters approved a special warrant article authorizing the District to raise and appropriate the necessary tax revenue to cover the $4.7 million cost. Three weeks later, the District retained the defendants, Scott Vaughn and Vaughn Associates, to act as both project architect and construction manager.

         The “Architectural Services Contract” between the parties provided that, “[a]s approved on 23 August 2010, the maximum budget for the total project cost is 4.7 million.” Architectural Services Contract (document no. 48-10) at section 1.1.7. Under the contract's terms, construction was to begin in April of 2011, and be completed by May of 2012. Id. at section 1.2. But, construction did not begin until approximately eight months later than anticipated. The project encountered numerous delays from the start, including two stop-work orders issued by the State Fire Marshal (due to defendants' failure to timely provide copies of constructions plans). By June of 2011, the final building design had been amended to include an additional 6, 500 square feet (for a total of approximately 35, 000 square feet), along with other substantive modifications to the original design. Nevertheless, Vaughn continued to tell the District that, “[b]ased upon meetings with vendors and contractors it appears that the construction cost target for the total Project of $4, 700, 000 is achievable.” Unity Elementary School - Progress Report from Vaughn Associates (Aug. 15, 2011) (document no. 48-16) at 3.

         Eventually, due to the numerous delays in completing the project, the District had to send its elementary students to Claremont for the 2013-2014 school year. And, because the building was still not enclosed by January of 2013, it sustained damage from exposure to the elements. Similar problems were encountered the following winter when, in December of 2013, the building was not properly heated. Damage was sustained to the foundation, pipes, and drains. Apparently, the District had to enlist volunteers from the town to properly secure the building against further damage. See, e.g., Exhibit Y to Plaintiff's Memorandum, Minutes of Unity School Board of Education (January 14, 2014) (document no. 48-28), at 2.

         In January of 2014, after construction had slowed significantly and costs had risen substantially, Vaughn Associates resigned as construction manager and terminated its architectural services contract with the District. The School District then hired Trumball-Nelson to act as the new construction project manager and, soon thereafter, the District retained Banwell Architects to provide architectural and design services necessary to complete the project. The project was not finished until two years after the original contract completion date, and the total project cost nearly doubled, to $9.18 million. This litigation ensued.

         Discussion

         The thrust of Vaughn's argument in support of summary judgment is that the School District cannot prove that it sustained any damages as a proximate result of Vaughn's alleged misfeasance. In short, says Vaughn, “the fact that the New School ultimately cost $9.165 million to construct . . . does not indicate that the [School District] paid more than it reasonably should have to construct the New School or that [Vaughn] was negligent in estimating the cost of a 34, 827 s.f. school building.” Defendants' Memorandum (document no. 46-1) at 13. Moreover, says Vaughn (without pointing to record support), the District “approved all of the design changes which increased the costs of the New School.” Id. Consequently, Vaughn claims the District has suffered no cognizable harm. See, e.g., Defendants' Memorandum at 15 (“[T]he fact that the total cost of the New School falls within the range identified by [the District's] own expert indicates that the [District] did not suffer any pecuniary loss as a result of any alleged conduct by [Vaughn] because the Project was completed for a reasonable cost.”) (emphasis supplied). In other words, Vaughn argues that the District got roughly what it paid for: a $9.165 million elementary school that even the District's own expert believes would cost about $8.094 million to construct (Vaughn apparently dismisses the $1.071 million discrepancy between the actual costs of construction and plaintiff's expert assessment of what the as-built school should have reasonably cost).

         Vaughn's argument, of course, ignores the fact that it repeatedly assured the District that the school could be constructed for approximately half its final actual cost -making representations that induced the voters to approve a $4.7 million bond and prompted the District to enter into the two contracts with Vaughn (and caused the District to abandon plans to renovate the existing elementary school). And, although it claims the District “approved all of the design changes which increased the cost of the New School, ” Defendants' Memorandum at 13, Vaughn has pointed to only a single change order executed by the District that purportedly increased the cost of completing the project, id. at 7.[1]

         Other so-called “approvals” by the School District to design changes appear to have been accompanied by assurances from Vaughn that the original maximum budget of $4.7 million would not be affected. See, e.g., Vaughn Associates School Progress Report (Aug. 15, 2011) (document no. 48-16) at 3 (noting substantial changes to the original plan, but representing that “the construction cost target for the total Project of $4, 700, 000.00 is achievable.”); Vaughn Associates School Progress Report (Dec. 14, 2011) (document no. 48-12) at 4 (noting the addition of approximately $50, 000 in costs and 5, 000 square feet to the original design, but representing that Vaughn would absorb those costs and that “the net effect of the decision to absorb this expense is to convert [Vaughn's contract] from a percentage contract to a fixed price services agreement.”); Id. at 6 (noting that, despite unanticipated additional costs associated with site work, “the money we saved on steel subsidized the site work and maintained the budget for the School) (emphasis ...


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