Mecklenburg School District Wins $1.6 Million Award

2001 car crash got officials worried about school’s walls

Six years after a mail courier drove a car into the side of a Mecklenburg County elementary school, the Charlotte-Mecklenburg School District has reached a settlement — not with the driver but with the building’s general contractor.

The 2001 accident exposed a significant flaw in the school’s construction — the lack of reinforcing steel beams in the walls.

The settlement came April 24, just weeks after the school district won a $1.6 million arbitration award against the contractor, lawyers for CMS said.

In a Feb. 19 judgment, Mecklenburg County Superior Court entered the arbitration award of $1,622,661 in the case of Charlotte-Mecklenburg Board of Education v. R.L. Casey, Inc., et al.  Both sides filed appeals with the state Court of Appeals.  Last week’s settlement put those actions to rest.

The award was entered after the arbitrator found the general contractor liable for willful or wanton negligence.  The award represented a 25 percent reduction of the $2,163,549 in principal damages that CMS originally sought.

Although CMS raised a claim for a violation of the Unfair and Deceptive Trade Practices Act, the arbitrator did not award treble damages.

Rod Malone and Kristopher Gardner, of Raleigh’s Tharrington Smith law firm, represented the plaintiff.  Representing the contractor was Gregory L. Shelton of Smith, Currie and Hancock’s Charlotte office.

Malone said the settlement allowed the parties to establish details of a payment plan.  Efforts to reach counsel for the defendant were unsuccessful.

Defendant R.L. Casey, Inc., the contractor that built the school in the early 1990’s, was sued after CMS officials, inspecting the car-damaged wall in the days after the 2001 creash, noticed there were no steel reinforcing bars, or “rebar,” inside it.  No one was inside the school at the time of the crash, but under state building codes and the school’s construction plans, rebar was a required component in the walls.

Further investigation indicated that rebar was missing throughout the structure.  Repairs and remediation cost about $2.1 million, according to Malone and Gardner.

The school is Crown Point Elementary in Matthews.

“What they ultimately found was that only 19 percent of the walls were built properly,” said Gardner.

That discovery led to a legal battle that hinged in part on whether the district’s claims were limited under North Carolina’s six-year statute of repose for improvements to real property.

The contractor contended “to avoid the statute of repose, CMS had to prove that [the contractor] committed fraud or willful or wanton negligence” in constructing the school.

The prelude to the battle started Oct. 27, 2001, when the mail courier decided to test-drive a car she thought she might want to buy.  Her Saturday drive in the empty parking lot of Crown Point Elementary ended with the car crashing into a wall directly beneath a classroom window.  That set the stage for the legal action.

At the point of impact, the required rebar should have been visible inside the wall, Gardner said.

It wasn’t.  Instead a gaping cavity yawned where the car had punched a hole through unreinforced brick and concrete block.

CMS hired a structural engineer to see whether rebar was misisng from the walls around 30 other windows.  It was, along with wall fill.  CMS then authorized testing of all the school’s load bearing concrete masonry walls.

Lawsuit Filed

On Oct. 10, 2004, 11 years after the school’s completion in 1993, CMS filed suit, claiming that 81 percent of the walls were improperly built.

CMS initially pursued nine claims:  breach of contract, breach of express warranties, negligence, fraud, negligent misrepresentation, gross negligence or willful or wanton conduct, negligence per se and unfair and deceptive trade practices.  The last six claims were also filed against the masonry subcontractor hired by Casey for the school project.

In response to the complaint, Casey filed a motion to compel arbitration, citing the presence of an arbitration clause in a standard AIA agreement between the parties.  The Mecklenburg Superior Court stayed the lawsuit and referred the dispute to binding arbitratioin.

Eventually, the action boiled down to CMS versus Casey on the fraud claim and willful or wanton conduct.  The masonry subcontractor, an unincorporated South Carolina entity, never made an appearance in the case, according to Gardner.

CMS sought principal damages of more than $2 million and treble damages in excess of $6 million, according to court documents.

CMS contended that Casey failed to properly supervise the work of the masonry subcontractor, according to the arbitrator’s Jan. 12 decision.  That failure, CMS alleged, was the direct cause of the masonry subcontractor’s failure to install steel reinforcing bar and pea gravel concrete in the walls.

Casey did “not seriously dispute the contention that a significant portion of the verticle rebar and grout was either not installed or not properly installed in the . . . walls of the school,” arbitrator Gary S. Hemric wrote in the decision.

Instead, the contractor contended that the failure “either was, or should have been, readily apparent to representatives of CMS . . . and that CMS failed to take timely action to correct the construction deficiencies prior to accepting the school as being substantially complete.” according to Hemric’s opinion.

The contract for the school project permitted “authorized representatives” of CMS to inspect the work, materials, payrolls, personnel records, invoices “and other relevant data,” Hemric wrote.

Those representatives — CMS’s structural engineering consultant, Armfield Engineering, P.A. and Clary, Martin, McMullen & Associates, Inc., CMS’s project architect, which hired Armfield — were empowered to conduct field observations of the construction activities.  An Armfield engineer visited the site several times during construction, Hemric found.

On April 27, 1992, when the Armfield employee noticed no rebar protruding from the top of concrete masonry walls in several locations, he notified Casey’s project superintendent.  The Casey employee “told him it was there,” Hemric found.

In a July 10, 1992 report, the engineer mentioned not seeing any protruding vertical rebars during an inspection of the kindergarten wing, Hemric found.  The engineer wrote that the superintendent “assured” him the bars would be properly installed.

On two other occasions, Armfield cautioned the project superintendent as to placement of rebar and wall fill, receiving the Casey superintendent’s assurances on the second occasion that the work was being carried out properly.

Arbitrator’s Conclusions

Hemric found Casey “chargeable with acts and omissions constituting willful or wanton negligence” and that the contractor “wrongfully concealed evidence” of the negligence by “affirmative representations to agents of CMS that the  . . .  wall system contained reinforcing bar and grout . . . called for in the plans and specifications and that these materials had been properly installed, when in fact [he] knew that was not the case.”

The arbitrator also concluded that CMS’s agents “had at least constructive notice of specific deficiencies and/or omissions in construction.”  They also had opportunities to do more inspections, Hemric found.

Their failure to do so was caused “in part” by the representations of Casey’s project superintendent, Hemric wrote.  Thus, “Casey and CMS’s agents bear responsibility for CMS having to ultimately retrofit the school,” he said.

Hemric assigned primary liability to Casey and secondary liability to its agents, Armfield and Clary, Martin, McMullen & Associates.

That led to the 25 percent reduction of CMS’s award.  Since CMS and its agents shared liability, and since neither CMS or Casey asserted a direct claim against Armfield or CMMA, “a monetary recovery by CMS against those parties is not appropriate,” Hemric wrote.

“However, since these parties were acting on behalf of CMS, their responsibility should take the form of an equitable reduction in the amount Casey should be required to pay to CMS.”

And the fate of the mail courier?

“She, I think, suffered some minor injuries, but that question remains unanswered,” Gardner said, “But if it weren’t for test-driving of that car, we may never have known about the condition of that school.”

A case report on Charlotte-Mecklenburg Board of Education v. R.L. Casey, Inc. et al will appear in next week’s paper.

ARTICLE PUBLISHED BY PERMISSION FROM LAWYERS WEEKLY.

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