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Kimberling City’s acceptance of sewer system didn’t negate contractor’s warranty


Kimberling City occupies several ridges and valleys where Missouri Highway 13 crosses the heart of Table Rock Lake. You would have a hard time finding a place where the installation of a sewer system was more difficult and expensive per customer, due to the steep and rocky terrain and the necessity of pumping the wastewater collected in each valley over the hills to eventually reach the treatment plant.

Kimberling City grew from almost nothing to a population of nearly 5,000 since the completion of the dam that created Table Rock Lake in 1959. Permanent residents and vacationers are attracted to the scenic beauty and the lake’s clean water. Preserving the water quality of the lake (or at least slowing its perhaps inevitable decline)  requires modern sewer treatment, rather than the use of septic tanks and leach lines, a technology unsuited for Ozarks geology.

By 1990, Kimberling City’s citizens were well aware that septic systems and a few small treatment plants were inadequate, and regulators were properly concerned about the effect of poorly treated sewage on Table Rock Lake. With assistance from state-sponsored financing mechanisms, Kimberling City went forward with a plan to build a modern wastewater collection and treatment system. E. T. Archer Engineering designed the system and Leo Journagan Construction Company was awarded the contract for the excavation and laying of the sewer lines. Archer was to look over Journagan’s work during the course of the project.

Kimberling City sued Journagan, claiming that the collection and pumping system was not constructed as designed. Journagan’s defense was that Archer, as the City’s engineer, inspected the sewer lines as they were laid and approved Journagan’s work. The City, according to Journagan, had accepted Journagan’s work, so that Journagan was not responsible for fixing it. The trial judge agreed with Journagan and entered a summary judgment, so that the City didn’t get to have a trial.

The City appealed, and the Southern District of the Missouri Court of Appeals in City of Kimberling City v. Leo Journagan Construction Co., reinstating the case in the trial court.

The appellate court based its holding on the contract language indicating that the engineer’s inspections do not relieve the contractor of its obligations to comply with the construction plans and specifications. While the engineer may have been a representative of Kimberling City, the contractor’s obligation to perform could not,be excused just because the engineer didn’t spot bad work before it was covered up with rocks and dirt. The Court of Appeals wrote

The representation to the third party [Archer, the engineer] does not provide a basis as a matter of law that Journagan had complied with the Contract Documents. Thus, it cannot be the basis for summary judgment.

While the opinion of the Court of Appeals was based on the contract language, the holding of the opinion makes sense generally:  a contractor should be responsible for defective work, even if the defective work wasn’t noticed by an inspector. Otherwise, contractors would have a great incentive to bribe, mislead and distract inspectors, to the detriment of the taxpayers.

Small cities are run by volunteers, who depend on consulting engineers, contractors and financial advisors to guide them through multi-million dollar contracts, which impose large financial burdens on their citizens. Those who financially benefit from these municipal projects should be held to a standard higher than whatever they can get by with. The Court of Appeals recognized that Kimberling City should have its day in court to attempt to show that Journagan’s work was not built as designed.

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About Harry Styron

I'm a lawyer who lives in Branson, Missouri, whose professional interests involve real estate, construction and local government.

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