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 Court Interprets
Contractual Terms
By
Alexander A. Miuccio, Esq.
CIC General Counsel
In most government contracts, the terms and conditions cannot be changed. In heavy construction in particular, a contractor does not have the leverage to negotiate changes in the standard contract form of a governmental agency.
Although the courts have often interpreted standard contract provisions of government agencies, these precedents do not always make the litigation outcome predictable. In the recent case of Harrison & Burrowes Bridge Constructors, Inc. v. State of New York, an appellate court was called upon to interpret disputed contract terms.
Background
Harrison & Burrowes contracted with the State of New York to rehabilitate and resurface eight bridges along State Route 17 in Delaware County. After the final payments were made, the contractor disputed certain items and commenced an action seeking additional compensation. Following a trial, the Court of Claims ruled in favor of the contractor.
The contractor was required under the contract to temporarily install tubular traffic markers. A tubular marker is an orange plastic tube several feet high, adorned with reflective sheeting, which is used to temporarily reroute traffic during construction. The contractor bid the markers on a per unit basis, with the contract calling for the replacement of damaged markers within 24 hours or as directed by the Engineer.
The contract provided that “the unit price bid for tubular markers shall include the cost of furnishing all labor, materials, equipment, and all incidentals necessary to complete the work…The unit price bid shall include the cost of replacing damaged reflective sheeting. The cost to remove and reset tubular markers due to contractor error shall be borne by [contractor]. Removal at the completion of the work or when no longer needed shall also be included in the unit bid price.”
Though the bid proposal called for 868 tubular markers, the contractor installed a total of 2,346 due to the excessive damage of markers by traffic. The State refused to pay for the extra markers replaced on account of damage by traffic. The contractor argued that the contractual provisions did not require a bidding contractor to include in its unit price bid the cost of replacing tubular markers damaged by traffic. The State argued to the contrary and also took the position that the contract’s damages provision barred payment to the contactor for the replaced tubular markers. The trial court sided with the contractor, holding that the State was required to pay the contractor for each tubular marker installed in place of one damaged by traffic.
The contractor also claimed that it was entitled to be paid extra for the costs associated with curing cement in cold weather. The trial court again ruled for the contractor, finding that the State’s delay in reviewing shop drawings delayed the entire project, requiring the contractor to comply with cold weather curing procedures. The State appealed the decision of the trial court.
Decision
The appellate court affirmed in favor of the contractor with respect to the tubular marker dispute, holding that the State was required to pay the contractor for the total number of tubular traffic markers temporarily installed, including those which replaced markers damaged by traffic. The Court stated that “if an agreement is clear, complete and unambiguous, the contract should be enforced according to its terms, reading the document as a whole to put the words and phrases in proper focus.” Additionally, the Court stated that “the express terms of a unit price contract govern the parties’ rights and obligations.”
According to the Court, the language of the contract did not require a contractor to include in its unit price bid the cost of replacing tubular markers damaged by traffic. Nor did the Court find that the unit price bid called for a mark-up by the contractor for tubular markers installed to replace those damaged by traffic.
With respect to the State’s argument that the contract’s damages provision barred payment, the Court stated that the provision was inapplicable. According to the Court, the contractor was simply seeking payment under the terms of the contract, not compensation for damages to the work, as was covered by the damages provision.
Based on these findings, the State was required to pay the contractor for each marker installed, except for those improperly installed or damaged due to contractor error.
As for the extra work claim for curing cement in cold weather, the appellate court held that the State was not required to reimburse the contractor for the extra costs associated with curing cement in cold weather. The court relied on the “no-damage-for-delay” clause in the contract, which precluded the contractor from making claims for extra costs attributable to delays caused by the State, such as delays in reviewing shop drawings. The court pointed out that the contractor attempted to cast its claim as one to recover for extra work, not as a delay claim. According to the court however, the claim boiled down to damages caused by the State’s delay and therefore was barred by the “no-damages-for-delay” provision of the contract.
Comment
Both the trial and appellate court narrowly interpreted the express terms of the contract regarding the tubular marker dispute. Though the contract language required the contractor’s unit bid price for the markers to include the cost of furnishing all labor, materials, and incidentals necessary to complete the work, and the cost of replacing damaged reflective sheeting, the contract did not specifically state that the unit bid price was required to include the cost of replacing tubular markers damaged by traffic. Based on the absence of any such requirement, the contractor was entitled to compensation for each marker installed, including those which replaced markers damaged by traffic.
With respect to the extra costs related to curing concrete in cold weather, the contractor was unable to circumvent the harsh contract language of the “no-damage-for-delay” clause by arguing that the claim was for extra work. It was obvious to the court that it was a claim for delay damages, which was precluded under the “no-damages-for-delay” provision.
About the author: Mr. Miuccio is a partner of the law firm of Welby, Brady & Greenblatt, LLP and General Counsel to the Construction Industry Council of Westchester & Hudson Valley, Inc.
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