Interesting Decision in City of Kimberling City v. Leo Journagan Construction Company, Inc.

By March 31, 2011 February 27th, 2018 Updates

The Missouri Court of Appeals handed down an interesting decision in City of Kimberling City v. Leo Journagan Construction Company, Inc.:

After completion of a sewer project, the City’s streets began sinking in many locations, which it claimed was due to improper compaction by Journagan, the general contractor on the project.  It also claimed that the trenching work was not performed in a  workmanlike manner, since Journagan did not use aggregate bedding and a large majority of the material was clay and chert, rather than the required granular fill.  The City filed suit against Journagan.  Journagan asserted that the City had waived its claims by accepting the Work and making final payment to Journagan.

The trial court granted summary judgment in favor of Journagan, finding that as a matter of law that the City had accepted the Work.  Specifically, under the Contract Documents, the Engineer, E.T. Archer, acted as the Owner’s Representative and had the right to reject Work and act as the initial interpreter of the Documents.  Throughout the project, Archer approved progress payments and then approved final payment.

The appellate court found that although the representations of Archer placed itself “in the line of fire” with the City, it did not have authority to actually bind the City.  The Court relied upon the Journagan contract,  providing that neither approval of a progress or final payment by the Engineer “will constitute an acceptance of Work not in accordance with the Contract Documents or a release of Contractor’s obligation to perform the Work in accordance with the Contract Documents . . . .”   In addition, it held that although Archer was the initial interpreter of the Documents, by implication the City was the final interpreter.   Thus, the Court held that the City was not bound by Archer’s actions.  The Court found in favor of the City and reversed the Summary Judgment that had been granted to Journagan by the lower court.