Blumenthal Kahn Electric Ltd. Partnership v. Bethlehem Steel Corp.

BYRNES, Judge. This appeal is from a judgment entered against appellant Blumenthal-Kahn Electrical Limited Partnership, in the Circuit Court for Baltimore County, on a contract claim by Bethlehem Steel Corporation. Blumenthal initiated suit, alleging that Bethlehem Steel had breached an electrical services contract between the companies by failing to pay Blu-menthal the final balance for services performed. Bethlehem counterclaimed, alleging that Blumenthal was itself in breach by virtue of its defective performance and subsequent refusal to correct its work. ⁶³³ The case was tried by the circuit court, sitting without a jury.

The court ruled against Blumenthal on its contract claim and in favor of Bethlehem Steel on its counterclaim. It awarded Bethlehem Steel damages in the sum of $189,345.00. On appeal, Blumenthal presents the following questions for review, which we have rephrased slightly: I. Was the trial court’s factual finding that Blumenthal-Kahn breached its contract with Bethlehem Steel by improperly locating electrical stubouts in sections one through four of a twelve section tunnel project clearly erroneous?

II

Did the trial court err in interpreting the language of the contract between Blumenthal-Kahn and Bethlehem Steel so as not to require Bethlehem Steel to avoid additional losses caused by its failure to inspect or negligent inspection and, thus, mitigate its damages? Our review of the record reveals that the trial court’s factual findings were not clearly erroneous and that there was no error in its interpretation of the contract language. Accordingly, we affirm the judgments entered below. FACTS In 1991, Blumenthal and Bethlehem Steel entered into an electrical services contract in connection with the construction of an underwater tunnel.

The Massachusetts State Highway Department had approved the Boston Central Artery Tunnel project to extend the Massachusetts Turnpike from south Boston to an area near Logan Airport, through the Boston Harbor. A large number of contractors formed a joint venture for the project. Morrison, Knudsen, Interboten and White (“MKIW”), a “sponsoring partner” of the joint venture, contracted with Bethlehem Steel to fabricate twelve 300 foot tunnel sections at Bethlehem Steel’s Sparrows Point plant. Bethlehem Steel was to build the steel tubes constituting the tunnel sections; install within the tubes a gridwork of reinforcing steel (known as “rebar”), electrical fittings, and mechanical fittings; stabilize the tubes with a small amount of ⁶³⁴ concrete; and deliver them to Boston by barge.

Once in Boston, the tubes would be submerged in the Boston Harbor, joined end to end, and encased in concrete, which would be poured around their interiors and exteriors over form plates. Blumenthal subcontracted with Bethlehem Steel to install the electrical fittings, including junction boxes, conduit connections, and exit points, called “stubouts,” from the junction boxes to the interior tunnel walls. The electrical fittings were to be installed behind the rebar grid. Because the electrical fittings were to be embedded in concrete, the stubouts were needed, and allowed, for installation of lighting systems, traffic control systems, fire alarms, and other electrical workings inside the tunnel.

Each tunnel section was to have 54 stub-outs. The terms of the contract required, and Massachusetts State regulations dictated, that the stubouts be located at uniform heights throughout the tunnel sections. Bethlehem Steel agreed to pay Blumenthal $1,411,490.72 for the electrical work it was to perform under the tunnel project subcontract. Blumenthal was to invoice Bethlehem Steel monthly for work performed, with a ten percent retention payable upon completion and acceptance of all work.

In determining the correct stubout locations, Blumenthal referred to drawings that accompanied and were part of the contract. The drawings specified that the stubouts were to be situated two feet above the ceiling height of the tunnel. Blumenthal could not determine the precise stubout locations, however, as the drawings did not specify the tunnel ceiling height. Blumenthal asked Bethlehem Steel for that specification, and Bethlehem Steel in turn made inquiry of MKIW.

MKIW informed Bethlehem Steel that the ceiling tunnel height was 9’8” above the horizontal axis. Bethlehem Steel then conveyed this specification to Blumenthal. Bethlehem Steel constructed the tunnel sections two at a time, in reverse order, beginning with section twelve. Blu-menthal completed the electrical work in tunnel sections five through twelve, and, following inspection by employees of Bethlehem Steel at Sparrows Point, those sections were ⁶³⁵ shipped to Boston.

After they were submerged in the Boston Harbor and encased in concrete, MKIW notified Bethlehem Steel that some of the stubouts were incorrectly located. Upon further investigation, MKIW determined that the 9’8” ceiling dimension originally given to Bethlehem Steel, and conveyed to Blumenthal-Kahn, was inaccurate. The proper ceiling dimension actually was 11’8” above the horizontal axis. By the time that this discovery was made, however, Blumen-thal had commenced work on tunnel sections one through four.

Bethlehem Steel paid Blumenthal-Kahn an additional sum to revise its work in those tunnel sections, so as to conform to the amended ceiling height. Upon completion of the electrical work for tunnel sections one through four, employees of Bethlehem Steel inspected each tunnel section. Tubes one and four were inspected on May 28, 1993; tubes two and three were inspected on July 30, 1993. The inspections did not reveal any irregularities.

Bethlehem Steel transported the sections from Sparrows Point to Boston, by barge. In February, 1994, after those sections had been submerged in the Boston Harbor and encased in concrete, MKIW informed Bethlehem Steel that the stubouts in those sections were not located properly either. In particular, the stubouts were not uniformly located; rather, they appeared at different heights and different locations in the interior walls of the tunnels. MKIW and the Massachusetts State Highway Department demanded that Bethlehem Steel correct the stubout locations.

Bethlehem Steel notified Blumenthal of the problem and demanded that it take action to correct the defect. Blumen-thal refused to do so, and notified Bethlehem Steel that it was disclaiming liability for the improperly placed stubouts. Thereafter, Bethlehem Steel informed Blumenthal that it was reserving its right to take action against it, and proceeded to correct the stubout locations in sections one through four itself, at a cost of $277,147.00. Blumenthal issued a final invoice to Bethlehem Steel for the contract retainage amount of $144,149.07.

After Bethlehem ⁶³⁶ Steel refused to pay, asserting that Blumenthal had breached the contract, Blumenthal filed suit against Bethlehem Steel, in the Circuit Court for Baltimore County, seeking the retainage sum as damages. Bethlehem Steel counterclaimed for the costs it had incurred in relocating the electrical stubouts. 1 At trial, the parties each called two witnesses and placed numerous documents into evidence. At the close of the evidence, the court found that Blumenthal’s performance under the contract had been defective. It awarded Bethlehem Steel $189,345.00 in damages for the costs of repairs necessitated by Blumenthal’s defective electrical work.

The court credited the $144,149.07 retainage against the damage award, and entered judgment in the amount of $45,196.00 in favor of Bethlehem Steel and against Blumenthal. Blumenthal noted a timely appeal. Additional facts will be supplied as necessary to our discussion. DISCUSSION I. Standard of Review On review of a case tried without a jury, we will not disturb the factual findings of the trial court unless they are clearly erroneous.

Md. Rule 8 — 131(c); Urban Site v. Levering, 340 Md. 223, 229-30 , 665 A.2d 1062 (1995); Spector v. State, 289 Md. 407, 433 , 425 A.2d 197 (1981). We review the case on both the law and the evidence, giving due regard to the opportunity of the lower court to judge the credibility of the ⁶³⁷ witnesses. Md. Rule 8-131(c). “On our review we are obligated to consider the evidence produced at trial in a light most favorable to the prevailing party; and if substantial evidence is presented to support the trial court’s determination, it is not clearly erroneous and hence will not be disturbed on appeal.” Geo. Bert.

Cropper, Inc. v. Wisterco, 284 Md. 601, 620 , 399 A.2d 585 (1979).

II

In ruling against Blumenthal and in favor of Bethlehem Steel, the circuit court made the following factual finding: I find based on [the] evidence that the credible evidence and the reasonable inference to be drawn therefrom, that the ... stubouts ... were improperly, incorrectly installed and that it was a defect that occurred within one year. And pursuant to paragraph five of the contract was a responsibility of Blumenthal Kahn [sic]. Blumenthal contends that this factual finding was clearly erroneous because there was no direct evidence demonstrating that the stubout locations did not conform to the contract requirements when the tunnel sections were inspected in Baltimore, before they were shipped to Boston. Specifically, Blumenthal argues that the court rested its finding upon three pieces of documentary evidence that were not sufficient to sustain it and were irrelevant: two reports of inspections of the tunnel sections, conducted after they had been submerged in the Boston Harbor and encased in concrete, revealing that the stubout locations deviated from the contract specifications, and an August 11, 1993 letter by Frederick L. Graefe of Blumenthal, in which he conceded that thirty-one of the sixty stubouts in tunnel sections six through twelve were “imprecisely” located.

Blumenthal asserts that, in the absence of direct evidence that the stubouts were incorrectly located when the tunnels left Baltimore, the only rational conclusion that the court could have reached was that Blumenthal had located the stubouts correctly, but that the stubouts later ⁶³⁸ shifted position, either during transit to Boston or when the concrete was poured. Blumenthal’s argument fails to take into account several important aspects of the fact-finding process. First, a factfinder considers evidence together with and in light of the other evidence presented, not in a vacuum. See Proctor Elec.

Co. v. Zink, 217 Md. 22, 33 , 141 A.2d 721 (1958)(“It is the [fact-finder’s] duty to take into consideration all the evidence, whether circumstantial or otherwise, tending to disprove any statement of fact made by a witness, ... and thus determine the weight or credibility to be given to such statement.”); Locklear v. State, 94 Md.App. 39, 45 , 614 A.2d 1338 (1992)(“The fact finder may accept or reject any evidence presented to it.”); 32A C.J.S. Evidence § 1320 (1996). In reaching its decision, the fact-finder may rely upon the factual evidence presented as well as the reasonable inferences that may be drawn from the facts. Peterson v. Underwood, 258 Md. 9, 17 , 264 A.2d 851 (1970)(“An ‘inference’ is a deduction or conclusion which reason and common sense lead a jury to draw from the facts proved.”); Edwards v. State, 198 Md. 132, 157-58 , 83 A.2d 578 (1951); Miller & Co. v. Palmer, 58 Md. 451, 459 (1882). Finally, the fact-finder may rely upon circumstantial as well as direct evidence.

Mangum v. State, 342 Md. 392, 398-99 , 676 A.2d 80 (1996); Hebron v. State, 331 Md. 219, 226-27 , 627 A.2d 1029 (1993)(quoting Gilmore v. State, 263 Md. 268, 292-93 , 283 A.2d 371 (1971), vacated in part, Gilmore v. Maryland, 408 U.S. 940 , 92 S.Ct. 2876 , 33 L.Ed.2d 763 (1972)). More important, Blumenthal’s argument ignores the other evidence that the court considered and relied upon in making its factual findings. The court based its findings, in part, upon evidence demonstrating that the incorrect stubout locations were not a consequence of causes other than defective workmanship. Larry Snyder, Bethlehem Steel’s project manager, was the only witness to address the shipment of the tunnel sections.

Mr. Snyder testified that the reports he received about the barge ⁶³⁹ voyages indicated that they took place “basically without incident.” On the basis of that testimony, the court found: [Tjhere is no evidence to support or draw a reasonable inference!] that the tube or tubes and that the boxes or stubouts or the conduits or any of the above were damaged while in transit via barge transit. The court also considered evidence demonstrating that the stubout locations had not been adversely affected when the tunnel sections were encased in concrete. David Thorne, an engineer with Bethlehem Steel, testified that the rebar steel in tunnel sections one through four did not move when the concrete was poured over it and that, for the stubout locations to have been altered by the concrete pour, the rebar would have had to move. Accordingly, the court concluded that the imprecise stubout locations had not resulted from either of the extrinsic circumstances suggested by Blumenthal-Kahn.

Having determined that Blumenthal’s exculpatory explanations for the incorrect stubout locations were not supported by the evidence, the court considered the affirmative evidence presented by Bethlehem Steel about Blumenthal’s workmanship. That evidence demonstrated that Blumenthal used tie wire to support the conduit stubouts, in violation of the contract specifications and contrary to a written instruction by Bethlehem Steel that use of tie wire for that purpose was unacceptable. In addition, an electrical engineer testified on behalf of Bethlehem Steel that Blumenthal’s use of string to measure and locate the stubouts had been substandard; without using a template, Blumenthal could not measure with the accuracy and precision needed to locate the stubouts properly. Blumenthal did not produce any records showing that it had taken dimensional measurements or had performed inspections of the stubout locations in tunnel sections one through four, or, if it had done so, what the measuring and inspections revealed.

Blumenthal argues that the court ignored the evidence that it presented that the electrical work conformed to the contract specifications when the tubes left the Baltimore shipyard and evidence that Bethlehem Steel ⁶⁴⁰ admitted as such. As a fact-finder, the court was free to accept or reject evidence, based upon its own determinations of credibility of the witnesses. Binnie v. State, 321 Md. 572, 580 , 583 A.2d 1037 (1991); Snyder v. State, 104 Md.App. 533, 549 , 657 A.2d 342 , cert. denied, 340 Md. 216 , 665 A.2d 1058 (1995). The court rejected the evidence presented by Blumenthal to show that the stubouts met the contract specifications in Baltimore.

Moreover, the court did not find, as Blumenthal suggests, that Bethlehem Steel accepted the electrical work prior to shipment to Boston, irrespective of any defects that existed but were not then known. While Blumenthal is correct that there was no direct evidence that the stubouts in tunnel sections one through four were imprecisely located when they were shipped from Baltimore, its assertion that the absence of direct evidence renders the court’s factual finding clearly erroneous is incorrect. The document memorializing the later inspection of the tunnel sections established that the stubouts were in the wrong locations after the concrete pour. That evidence, in combination with the evidence eliminating the transit and concrete pour as