M Electric Corporation v Phil-Gets (Guam) International Trading Corporation [2016] GUSC 35 (28 December 2016)

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PHIL-GETS (GUAM) INTERNATIONAL TRADING CORPORATION dba J&B MODERN TECH and CHUNG KUO INSURANCE COMPANY LTD.,
Defendant-Appellees.

Appeal from the Superior Court of Guam
Argued and submitted on February 22, 2016
Hagåtña, Guam

Appearing for Plaintiff-Appellant:
Thomas M. Tarpley, Esq.
Thomas McKee Tarpley Law Firm
414 W. Soledad Ave., Ste. 904
Hagåtña, GU 96910

Appearing for Defendant-Appellee:
Seth Forman, Esq.
Dooley Roberts & Fowler LLP
865 S. Marine Corps Dr., Ste. 201
Tamuning, GU 96913

BEFORE: ROBERT J. TORRES, Chief Justice; F. PHILIP CARBULLIDO, Associate Justice; KATHERINE A. MARAMAN, Associate Justice.

CARBULLIDO, J.:
[1] Plaintiff-Appellant M Electric Corporation (“MEC”) appeals from a final judgment entered in favor of Defendant-Appellees Phil-Gets (Guam) International Trading Corporation d/b/a J&B Modern Tech, and Chung Kuo Insurance Company, Ltd. (“Chung Kuo”) (collectively, “J&B”). MEC argues that the trial court (1) abused its discretion in denying its request for Leave to File Amended Complaint (“motion to amend”) to include a claim for compensable overtime costs (“overtime claim”), (2) erred in finding that its claim for equipment standby costs (“standby claim”) was barred by a “no damage for delay” (“NDFD”) contract provision, and (3) erred in dismissing its claim for additional excavation expenses (“excavation claim”).
[2] J&B argues that the judgment should be affirmed because (1) the Supreme Court of Guam does not have jurisdiction over the denial of MEC’s motion to amend or, in the alternative, the trial court’s decision was not an abuse of discretion, (2) the NDFD clause is valid and relevant exceptions do not apply, and (3) the terms of the Subcontracts bar MEC’s excavation claim. J&B also raises the issue of whether the overtime claim is time barred as to Defendant-Appellee Chung Kuo by arguing that MEC failed to present any evidence concerning Chung Kuo, and failed to bring suit on the overtime claim against Chung Kuo within the applicable one-year deadline. MEC responds by arguing that Chung Kuo is jointly and severally liable by the terms of 5 GCA § 5304 as a surety of J&B’s bond obligations.
[3] We hold that this court has appellate jurisdiction, that the trial court abused its discretion when denying the motion to amend, that the overtime claim is not time-barred with respect to Chung Kuo, that NDFD clauses stated in the contracts at issue cover the type of delays incurred by MEC but further findings are required to determine whether an exception to the NDFD clauses applies, and that the trial court did not err in denying MEC’s excavation claim. For the reasons detailed herein, we affirm in part, reverse in part, and remand for further proceedings not inconsistent with this opinion.

[4] MEC initiated the underlying action by filing its Complaint for Declaratory Relief and Money Owed on Construction Project. J&B answered and moved for summary judgment. The trial court entered judgment in favor of J&B upon its Motion for Summary Judgment. MEC filed its first appeal.
[5] Upon review, this court reversed the trial court’s grant of summary judgment and remanded the case for further proceedings. M Elec. Corp. v. Phil-Gets (Guam) Int’l Trading Corp. (“M Elec. I”), 2012 Guam 23 ¶ 50.
[6] On remand, MEC requested leave to amend its Complaint. After accepting opposition and reply briefs, the trial court denied MEC’s request. After a bench trial, the trial court entered judgment on the merits in favor of J&B. MEC timely filed its second appeal in this matter.

[7] Guam Power Authority (“GPA”) hired J&B under construction contracts (“Contracts”) to perform work on two underground power line conversion projects (collectively, “Projects”). The first was to convert power lines from the Macheche Substation to the Guam International Airport Authority (“GIAA”). The second was to convert power lines from Macheche Substation to Harmon Substation to San Vitores existing electrical manhole (“San Vitores”). J&B hired MEC as a subcontractor to “provide labor, equipment, and materials to excavate, install underground pipes, and restore excavated areas and roads.” M Elec. I, 2012 Guam 23 ¶ 3.
[8] GPA held a pre-bid conference prior to awarding the Contracts to J&B. An engineering manager for GPA, Joven Acosta, testified that he informed bidders at the pre-bid conference that delays obtaining permits from the Guam Department of Public Works (“DPW”) should be expected. He also testified that he informed bidders to increase their bids to account for delay-related costs because “getting the permits from DPW [would] be a challenge.” See Transcripts (“Tr.”) at 31 (Bench Trial, Nov. 13, 2014).
[9] Generoso Bangayan, J&B’s president, testified that he was present at the pre-bid conference and heard Acosta’s comments. Acosta’s comments were not reflected in writing in any of the contracts or related documents.
[10] Noel Lomtong, MEC’s project engineer on the Projects, testified that he and Carlos Nunez were present for the pre-bid conference. The sign-in sheet for the pre-bid conference showed the names of both men and listed their company of affiliation as “M Electric.” Def.’s Ex. I (Sign In Sheet for Pre-Bid Conference Bid No. GPA-020-07), M Elec. Corp. v. Phil-Gets (Guam) Int’l Trading Corp., CV1423-10. The contact number listed for Nunez was MEC’s phone number.
[11] MEC’s president and general manager, Marcelo Moises, testified that Nunez was an MEC employee at the time of the pre-bid conference but Lomtong was not. He also testified that Nunez was simultaneously employed as a project manager with DA-RI Trenchless (“DA-RI”), a Philippine company. He testified that MEC was not involved in the Projects at the time of the pre-bid conference because it was not capable of performing the horizontal drilling originally required by J&B. The trial court was not persuaded that Nunez and Lomtong did not attend the pre-bid conference as representatives of MEC.
[12] MEC began working with J&B on the Projects after the pre-bid conference when J&B accepted MEC’s written job proposals. J&B accepted and signed the proposals for each of the Projects and drafted corresponding subcontracts (“Subcontracts”). Moises signed the Subcontracts and initialed each page. This court held in M Electric I that the Subcontracts were supported by consideration and binding on the parties.
[13] The Subcontracts both contained “time of the essence” (“TOE”) clauses. The GIAA Subcontract read: “The Subcontractor shall substantially complete the Work to the satisfaction of the Contractor and the Owner on or before December 20, 2008. Time shall be of the essence in the Subcontractor’s performance of this Agreement.” Record on Appeal (“RA”), tab 15, Ex. A at 2 (Subcontract Agreement, Mar. 24, 2008). The San Vitores Subcontract contained a nearly identical clause, modifying only the completion date, January 13, 2009. RA, tab 15, Ex. B at 2 (Subcontract Agreement, Apr. 16, 2008).
[14] The Subcontracts and prime Contracts each contained NDFD clauses. The Subcontract NDFD clauses provided for extension of time as the exclusive remedy available to MEC for delays caused by J&B. The NDFD clauses required a written claim “within five . . . days from the inception of such delay.” RA, tab 15, Ex. A at 2 (Subcontract Agreement, Mar. 24, 2008); RA, tab 15, Ex. B at 2 (Subcontract Agreement, Apr. 16, 2008). The prime Contracts between GPA and J&B contained a general NDFD clause which stated that “[n]o extended overhead costs or standby costs shall be awarded/granted as a result of delays from the Civil work.” Def.’s Ex. C at SP-2 (Special Provisions, San Vitores Contract), M Elec. Corp. v. Phil-Gets (Guam) Int’l Trading Corp., CV1423-10. The Subcontracts contained “Changes to Plans” provisions, requiring a written, signed order prior to any work performed that differed from that described by the agreements and stating that “the Contractor shall be under no obligation to pay for . . . unauthorized work.” RA, tab 15, Ex. A at 2-3 (Subcontract Agreement, Mar. 24, 2008); RA, tab 15, Ex. B at 2-3 (Subcontract Agreement, Apr. 16, 2008).
[15] At numerous times during performance of work under the Subcontracts, MEC experienced delays based on not being able to obtain the necessary permits from the Department of Public Works (“DPW”). Lomtong testified that no change order was made until the Projects were completed. Tr. at 85 (Bench Trial, Nov. 5, 2014) (“No, because they told us that . . . we have to do the other change order until [sic] . . . the project was done.”). The vice-president of J&B, Nelia Bangayan, testified that upon completion of the Projects, J&B paid MEC the full contract amount. GPA did not pursue liquidated damages for the delays. Acosta testified at trial that GPA did not assess damages against J&B because the company understood that obtaining highway encroachment permits from DPW would be difficult and inclement weather was to be expected.
[16] J&B moved for summary judgment, arguing that the plain and unambiguous terms of the Contracts and Subcontracts barred MEC’s claims. MEC opposed J&B’s motion, arguing that the Subcontracts were not legally binding. The trial court entered judgment in favor of J&B upon its Motion for Summary Judgment in March 2012 (“March 2012 Judgment”).