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Coppage Construction Company, Inc. v. Sanitation District No. 1 and Dci Properties-Dky

January 25, 2013



The opinion of the court was delivered by: Lambert, Judge:

RENDERED: JANUARY 25, 2013; 10:00 A.M.



AFFIRMING ** ** ** ** **


Coppage Construction Co., Inc. (Coppage) appeals from an order of the Kenton Circuit Court dismissing all of Coppage's contract, statutory, and tort claims against Appellee Sanitation District No. 1 of Northern Kentucky (SD1) on grounds of sovereign immunity. After careful review, we affirm the circuit court's order.

In 2005, DCI Properties-DKY, LLC (DCI) entered into an agreement with the City of Dayton, Kentucky, to build a mixed-use development project known as Manhattan Harbour north of the city's floodwall along the Ohio River. The design for DCI's proposed project required the relocation of an existing combined sanitary sewer line owned by SD1. SD1 is a sanitation district organized under Kentucky Revised Statutes (KRS) Chapter 220 that provides sewer services to a number of communities located within Boone, Campbell, and Kenton Counties.

DCI originally proposed to replace the existing line, which was made up of approximately 7,400 linear feet of pipe ranging from 21" to 27" in diameter, with one of the same size and capacity. However, after DCI submitted its plans to SD1 for approval, SD1 determined that the project presented an opportunity to improve its storm water and sewage storage capacity in that area by expanding the size of the proposed sewer line. SD1 had previously entered into a Consent Decree with the United States Environmental Protection Agency and the Kentucky Environmental and Public Protection Cabinet that required it to make "extensive improvements to its sewer systems to eliminate unauthorized overflows of raw sewage and to control overflows of combined sewage and storm water." SD1 and DCI subsequently entered into negotiations to replace the existing sewer line with an expanded 84" diameter line spanning over 8,000 linear feet.

Because DCI apparently had limited experience in the construction of sewer projects, SD1 and DCI requested a price proposal for labor, materials, and construction from Coppage, which had experience in sewer system construction.

After Coppage provided its proposal, SD1 and DCI entered into a contract on June 21, 2007, under which SD1 agreed to pay $10,550,000.00 of the project's then-estimated $14,651,356.00 total cost. This sum was based on the estimated cost to lengthen and upsize the sewer line. The record reflects that SD1 would purchase the sewer line and all associated easements upon completion. Under the contract, DCI was to be responsible for retaining the contractor, purchasing supplies, and entering all other contracts necessary to construct the sewer line. Although Coppage was not listed as a party to the contract, the contract identifies Coppage as the party to perform the work on the project and expressly incorporates Coppage's proposal.

On July 5, 2007, DCI entered into a construction contract with Coppage for Coppage to construct the sewer line. Under this contract, DCI agreed to pay Coppage approximately $15.4 million to construct the sewer line. The contract further called for Coppage to perform the work and to provide the materials, supplies, and equipment set forth therein. SD1 was not a party to this agreement.

According to Coppage, after it had installed more than half of the line, its work was impacted and suspended for several months beginning in early 2008 due to delay caused by SD1 and DCI, including disputes between SD1 and DCI over engineering issues, the scope of the project, and payments owed to the project's geotechnical engineer. Appellees deny this version of events. Coppage eventually notified SD1 and DCI that it believed its contract with DCI had been breached because of these issues and provided an opportunity to cure. However, on August 7, 2008, DCI terminated its contract with Coppage pursuant to a "termination-for-convenience" provision that permitted either party to terminate the agreement "at any time without cause."

On September 3, 2008, DCI filed a complaint in Kenton Circuit Court seeking a declaration that Coppage was not entitled to any delay damages, and also seeking damages for breach due to Coppage's allegedly excessive billing and harm allegedly caused to the Manhattan Harbour project. On September 29, 2008, Coppage filed an answer denying any breach, as well as a counterclaim alleging claims for breach of contract, unjust enrichment, promissory estoppel, and violation of the Kentucky ...

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