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Canyon Partners Real Estate LLC v. Newbanks/Washington Construction Consulting Services, Inc.

United States District Court, E.D. Michigan, Southern Division

April 11, 2019

CANYON PARTNERS REAL ESTATE LLC, Plaintiff,
v.
NEWBANKS/WASHINGTON CONSTRUCTION CONSULTING SERVICES, INC., Defendant.

          OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

          HON. BERNARD A. FRIEDMAN JUDGE.

         This matter is presently before the Court on defendant's motion for summary judgment [docket entry 35]. Plaintiff has filed a response brief, and defendant has filed a reply. Pursuant to E.D. Mich. LR 7.1(f)(2), the Court shall decide this motion without a hearing.

         This is a breach of contract and negligence action concerning a construction project. Plaintiff Canyon Partners Real Estate LLC (“Canyon”), through its subsidiary Can IV Packard Square LLC, provided the financing for the project, a $30-50 million building with apartments and retail space on a six-acre lot in Ann Arbor, Michigan. Canyon, which is located in California, hired defendant Newbanks/Washington Construction Consulting Services, Inc. (“Newbanks”), whose main offices are in Maryland, to serve as a “construction consultant.”

         The parties' agreement, dated May 6, 2014, is attached to the amended complaint as Exhibit 1. For a monthly fee ($4, 450 for “construction documents and cost analysis” and $1, 950 for “monthly construction progress observations”), Newbanks agreed among other things to provide to Canyon a monthly report about building progress; evaluate “projected hard cost exposure”; make “disbursement recommendations”; determine the “percentage of completion” and whether the contractor was accurately reporting progress; identify cost overruns; opine as to whether work was being done within accepted standards and report discrepancies; “comment on any delays, problems, deficiencies, [and] poor workmanship”; determine the feasability of the proposed completion date; provide plaintiff with photos and note problem areas; and determine whether sufficient funds were budgeted for the project.

         Plaintiff is dissatisfied with defendant's performance and has sued for breach of contract (Count I), negligent misrepresentation (Count II), and negligence (Count III). Counts II and III have been dismissed. The central breach of contract allegations are:

36. Defendant breached its obligations under the Agreement by: (1) failing to assess the percentage completion of the Project accurately; (2) failing to observe numerous deficiencies in the construction; (3) failing to report the breakdown in the relationship between the general contractor and Borrower; (4) failing to report that the Project was essentially stalled due to the cessation of work on the Project; (5) failing to correctly assess the amount of time necessary to achieve substantial completion of the Project accurately; and (6) failing to identify and make Plaintiff aware that certain equipment, materials, fixtures, and supplies for the project did not conform to the agreed upon specifications.

Am. Compl. ¶ 36.

         Plaintiff alleges that “[a]s a direct and proximate result of Defendant's breaches of the Agreement, Plaintiff has suffered damages in excess of $1, 000, 000.00.” Id. ¶ 37. In fact, Plaintiff contends that it has suffered “approximately $5.1 million [in] damages” as a result of defendant's breaches. Pl.'s Br. at 9. Plaintiff itemizes its damages in broad terms in three areas, as it explains in its response to the instant motion:

First, as set forth in Plaintiffs Complaint, Defendant recommended in the September 2016 Report[1] that Plaintiff fund the pay applications of the general contractor, the excavation subcontractor and Owner in the following amounts:
A. $850, 423.71 for the general contractor's June 30, 2016 pay application;
B. $583, 007.95 for the general contractor's July 31, 2016 pay application;
C. $24, 615.00 for the excavation subcontractor's June 25, 2016 pay application; and
D. $334, 550.36 for the Borrower's Requisition No. 12.
See ECF No. 7; see also Def's Mot., Ex. B, Van Curen Tr. at 60:11-21. The Agreement expressly required Defendant to, among other things, “[r]eview and comment on submitted contractor's application for payment as to whether or not the itemized amounts are a valid representation of the value of the work in place and materials stored on site.” Ex. 1, p. 7. On the basis of that review, Defendant was then required to conclude with either (1) a recommendation to fund, or (2) a recommendation to withhold funds. Id. Thus, consistent with its express contractual obligations, Defendant recommended that Plaintiff fund these amounts. However, the work that Defendant was required to review and determine whether that work was “a valid representation of the value of the work in place and materials stored on site” was not actually in place. Def's Mot., Ex. B, Van Curen Tr. at 60:11-21; 139:5-25. In other words, it was Defendant's contractual obligation to ensure that work was in place, see, e.g. Ex. 1 at Rider B, ΒΆΒΆ 1-3, 5, 10-11, and then recommend that Plaintiff either fund or withhold funds on the basis of Defendant's review. ...

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