North American Land paid in full by SC decision

CHARLESTON – A land company involved in a dispute over excavation of a site it had sold will be paid in full after the state Supreme Court ruled that the company had “substantially complied in all material respects with its obligation under the contract.”

The June 24 memorandum opinion was concurred in by all five members of the court.

Crown Enterprises, Inc., the petitioner, entered into a contract to purchase a tract of land from North American Land, LLC, the respondent, on Oct. 11, 2002. The contract was for the purchase of the land only but it was amended the same day to require certain improvements to the site in order to prepare it for the construction of a truck terminal. The land purchased for the terminal consisted of 14.51 acres of a total of 33 acres of an area of land which was owned by North American.

North American contracted with Lang Brothers, Inc. to perform the excavation and site grading required under the contract with Crown. Crown had previously contracted with Worley Management, Inc. on a design/build basis to construct the terminal, and Worley had contracted with Lang to carry out its portion of the site excavation and grading obligations, as well. So Lang was working on the Crown property both as a contractor for North American and as a subcontractor under the Worley/Crown contract.

The parties had agreed that a portion of the excavated material from the Crown site would be moved on to the remainder of the North American site because it was excess material. This was a good deal for all because it would have been more costly to move it further away and the North American site would benefit because it was receiving fill onto its land.

During the time that the work was being performed, federal regulations changed so that truckers were allowed to drive longer and for more hours during their work days. Due to this regulation change, Crown decided that the truck terminal was no longer needed.

On April 1, 2003, Crown gave a cease work order to Worley although Lang continued to perform work on the site in order to close up the site and protect it from erosion once the project was closed down.

Significantly, Crown did not give a cease work order directly to North American in regard to the work that Lang was doing to fulfill the requirements of the Crown/North American contract. Lang continued to perform work on the site related to this contract.

North American complied in full with the requirements of the contract, the opinion states, with the exception of the requirement to slope all banks at a 2:1 ratio. The circuit court, however, found that Crown had agreed to an amendment of the contract by approving the final site plan which provided for slopes greater than 2:1. The site plan had sought to maximize the surface area available for the truck terminal and North American had complied with this amendment which required more work than the contract’s 2:1 requirement.

After the circuit court found that North American had substantially complied with all of the contract requirements, the court awarded it the $75,000 that was left over in the escrow of $300,000 that had been set aside for the land work. Already paid by Crown was $225,000, leaving only the $75,000 at issue.

Crown appealed from the circuit court order.

“Petitioner raises two primary issues which will be addressed in this decision. First, petitioner argues that the circuit court erred in not finding that respondent breached the contract during its performance because property slopes were not left at a 2:1 ratio," the opinion says.

"Petitioner next complains that the circuit court erred in finding that respondent was not guilty of trespass for moving fill from the Crown site to its property after the project shut down.

“Giving appropriate deference to its factual findings, this Court finds that the circuit court’s account of the evidence in this contract dispute is not clearly erroneous. The record supports the circuit court’s finding that respondent substantially complied in all material respects with its obligations under the contract.

“We concur with the circuit court’s ruling that petitioner agreed to amend the contract provision requiring that slopes on the Crown site be left at a 2:1 ratio, when it approved the final site plan. In fact, if the slopes had been left at a 2:1 ratio, petitioner would not have had a sufficient pad to erect the truck terminal.

“We also find that the circuit court did not commit error by finding respondent was not guilty of trespass on the property after petitioner shut down the Worley project. As discussed above, Lang was the entity that was charged with all of the excavation on the site. When petitioner gave a cease work order to Worley in April of 2003, it gave no cease work order to respondent.

“Lang continued excavating the Crown site for respondent pursuant to the contract. Lang also continued working on the subcontract for Worley as a result of an agreement reached to close up the site. The process to close the site required mass excavation of rock to remove impediments to the sheet flow of water to the drainage ditches.

“The contract between the parties required the installation of the drainage ditches to carry surface water away from the Crown site. Therefore, we find that respondent was not guilty of trespass on the property because it was there to complete work pursuant to the contract. For the foregoing reasons, we affirm.”