Opinion
No. 200 C.D. 2011
05-21-2012
J.D. Eckman, Inc., Petitioner v. Pennsylvania Turnpike Commission, Respondent
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE BERNARD L. McGINLEY, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
This case was assigned to the opinion writer on or before January 6, 2012, when President Judge Leadbetter completed her term as President Judge.
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE McGINLEY
J.D. Eckman, Inc. (Eckman) challenges the order of the Board of Claims (Board) which entered judgment in favor of the Commonwealth of Pennsylvania, Pennsylvania Turnpike Commission (Commission) and against Eckman.
I. History.
On or about March 14, 2006, Eckman and the Commission executed a publicly bid contract for the replacement of bridges No. B-465A at Milepost 197.19 and No. B-645 at Milepost 197.20 in Franklin County which carried State Truck Route 641 over the Pennsylvania Turnpike and for the replacement of existing Type A sign panels in Franklin, Huntington, and Fulton Counties. The contract included a special provision entitled "F31.00 "Selected borrow excavation and Embankment" which addressed certain types of excavation to be performed on embankments. F31.00 required Eckman to acquire a specific type of rock fill material known as "Type B Rock" for use in the construction of steep-sloped embankment benches which supported the abutments to the bridges. The contract documents also incorporated by reference the standard specifications found in Pennsylvania Department of Transportation Specifications, Publication 408/2003-3 (Publication 408). Section 205 of Publication 408 addressed various types of borrow excavation material and provided corresponding definitions for these types of excavation.
The contract documents and drawings directed Eckman to use Type B Rock in areas that cross-referenced the work item called "selected borrow excavation (rock)". Under the contract, Eckman was required to acquire approximately 12,528 cubic yards of Type B Rock for use in the construction of the embankment benches. In its bid for the project with the Commission, Eckman quoted a bid price of $1.50 per cubic yard for the selected borrow excavation. There was not enough Type B Rock at the site. Eckman obtained 8,405.78 cubic yards of Type B Rock from another location and hauled it to the jobsite. Eckman incurred substantial expense hauling the Type B rock.
Under the contract Eckman was also required to use 2,000 cubic yards of "foreign borrow excavation" which did not include Type B rock and was not for use in the construction of embankment benches. Eckman submitted a bid price of $35.00 per cubic yard for foreign borrow excavation. This price reflected the assumption that Eckman needed to obtain foreign borrow excavation offsite and haul it to the jobsite.
Because Eckman needed to acquire Type B rock from a different location and haul it to the jobsite, Eckman requested payment for this material at the foreign borrow excavation of $35.00 per cubic yard rather than its bid price of $1.50 per cubic yard. The Commission paid Eckman for the acquisition of Type B Rock at the contracted bid rate of $1.50 per cubic yard.
On August 27, 2007, Eckman filed a complaint with the Board and alleged that the Commission was required to pay Eckman at the rate of $35.00 per cubic yard for Type B Rock acquired offsite. As a result, Eckman alleged that the Commission owed it $294,202.30. Eckman also alleged that it hauled excess unsuitable materials to the waste site and sought payment of $57,651.70 for a total claim of $351,854.00. Eckman claimed it was due this amount based on the Commission's breach of contract. It also claimed that it was entitled to recover all attorney fees, costs, and penalty and interest pursuant to Section 3935 of the Commonwealth Procurement Code (Code), 62 Pa.C.S. §3935.
The Commission answered and denied the material allegations. As new matter, the Commission alleged that Eckman's claims were barred by the statute of limitations, that Eckman's claims were untimely because it failed to file a claim with the contracting officer within six months of its accrual, that Eckman's claims were untimely because it failed to file a claim with the Board within fifteen days of the mailing of the denial of its claims by the Commission's contracting officer, that Eckman failed to state a claim upon which relief could be granted, that Eckman alleged a breach of a written contract but failed to attach the contract, that Eckman's claims were barred by the doctrines of waiver and estoppel, and that Eckman failed to mitigate its damages. The Commission also asserted that the Board did not have subject matter jurisdiction over the complaint.
In its reply, Eckman denied all of the Commission's averments.
II. Hearing before Board.
On October 20, 2009, the Board heard Eckman's claims. David Gates (Gates), senior project manager and estimator for Eckman, testified that he served as the estimator for the job. Notes of Testimony, October 20, 2009, (N.T.) at 45; R.R. at 134a. Gates testified that a provision of the contract, item 4205-0200, was "titled selected borrow excavation rock embankment item 4205-0200. . . . The four in front of the 205 indicates that it was a special provision. . . . Which means it supersedes the PennDOT definition of selected borrow excavation which is item 0205-200." N.T. at 51-52; R.R. at 140a-141a. Gates testified that the contract specified that the material needed for the embankment "would be available from the onsite excavation." N.T. at 55; R.R. at 144a. When preparing the bid for this item Gates did not take into account bringing in material from off site for select borrow excavation because "[t]o bring in material from off site would have been foreign material." N.T. at 57; R.R. at 146a. Prior to the bid, Gates made three calls to Brad Updegrave (Updegrave), the Commission engineer, who was listed as the contact person if there were questions concerning the project. N.T. at 59; R.R. at 148a. Gates telephoned Updegrave to obtain a clarification on the select borrow excavation. Updegrave called him back and said, "Rock on job." N.T. at 60; R.R. at 149a. A third time Updegrave "called bring rock in under item. I pointed out conflicts in item special provision. Brad agreed. And then it said about the class one, the select borrow is available from the class one. Brad agreed, but was told by consultant we might have to bring the rock in. I requested addendum to clarify or pull job and rebid. Brad informed me no time for either. Bid it as I see it." N.T. at 61; R.R. at 150a. Based on his own experience and his visit to the site, Gates did not believe that there was sufficient Type B Rock because "[t]he bridge was built on the line for steel H pile, which means the rock is deep. The visual inspection of the existing cuts in the bank didn't show any rock. I just --- my gut feeling didn't feel the rock was going to be there." N.T. at 61-62; R.R. at 150a-151a. Gates testified that he bid for the contingency that Type B rock would be needed and brought on to the site under foreign borrow excavation. N.T. at 63; R.R. at 152a. On cross-examination, Gates admitted that after his conversations with Updegrave he was aware rock had to be brought to the site. N.T. at 72; R.R. at 161a.
Paul A. Logan, attorney for Eckman, read into the record a portion of a deposition from John Ozimok (Ozimok), construction engineer and manager for the Commission who testified concerning the use of foreign borrow excavation and selected borrow excavation as well as the hauling of material from offsite.
Michael L. Perloski (Perloski), project manager with Eckman, testified that based on special provision F31 he believed that the rock type B or select borrow excavation was on site. N.T. at 109; R.R. at 198a. He explained that it was called select borrow but it was not select borrow it was "something completely different." N.T. at 110; R.R. at 199a. He also interpreted F31 to mean that foreign and select borrow would have to be the same material. N.T. at 111; R.R. at 200a. Perloski interpreted "selected borrow excavation" as being onsite and "foreign borrow" was offsite. N.T. at 112; R.R. at 201a. Perloski explained why Eckman believed that it was entitled to payment for hauling material away from the site:
I think the original quantity of class one excavation on the job was roughly 22,000 cubic yards. Out of that 22,000 cubic yards, the special provision for select borrow led me to believe 12,000 of it was to stay on site as select borrow, rehandle and
place. So that means 10,000 of it would have had to be hauled off the job, 10,000 cubic yards of excavation.N.T. at 118; R.R. at 207a.
But since we didn't find any of that 12,000 cubic yards on site, we now had to haul off the full 22,000 cubic yards of material. This was a cost association with hauling that additional material off site that we didn't anticipate, which has no pay item associated with it.
Updegrave, the Commission's project manager, testified on behalf of the Commission. Updegrave received a telephone call from Gates approximately a day or two before the bid was due. N.T. at 186; R.R. at 275a. Gates questioned him concerning the item for the F31 spec. Gates wanted to know whether the material was onsite. Updegrave called Gates back and told him the rock was onsite. N.T. at 188-189; R.R. at 277a-278a. Shortly after that, Updegrave received a telephone call from Domenic Piccolomini (Piccolomini), one of the owners of SP&K Engineering, the design consultant for the project. Piccolomini informed him that the first statement provided to Updegrave concerning the F31 specification was incorrect and the onsite material was unsuitable so that F31 was anticipated to be select borrow. Updegrave again telephoned Gates to give him the new information. N.T. at 192-193; R.R. at 281a-282a. Gates expressed his confusion over the specification. As a result, Updegrave consulted with the Commission's geotechnical engineer and project manager in the geotechnical department, Alan R. Williamson (Williamson) and they went to Bonny Shepler (Shepler), construction management service manager for the Commission. Shepler was responsible for collecting the documents when a project goes out and reviewing everything for completeness and accuracy. Shepler did not see a problem. N.T. at 193-196; R.R. at 282a-285a. Updegrave then called Gates back and told him that Shepler told him that nothing would be changed and "that you will just have to bid it as you see it." N.T. at 196; R.R. at 285a. Updegrave received no other inquiries concerning this provision from other potential bidders. N.T. at 197; R.R. at 286a. On cross-examination, Updegrave admitted that he believed that an addendum should have been issued to clarify any confusion over whether the Type B Rock was onsite. N.T. at 202-203; R.R. at 291a-292a.
Williamson testified that the test borings of the site were incorporated as part of the contract documents. N.T. at 218; R.R. at 307a. Williamson also testified that materials excavated at the site and not utilized on the project were expected to be taken offsite. N.T. at 218; R.R. at 307a. Williamson explained that the Commission relied on the definition of selected borrow excavation provided in Publication 408. N.T. at 224; R.R. at 313a. On cross-examination, Williamson did not agree with Gates that the specification indicated that the select borrow excavation rock was supposed to be onsite. N.T. at 236; R.R. at 325a.
Ozimok testified that he determined that Eckman would get paid the $1.50 per cubic yard for selected borrow excavation rather than the $35.00 per cubic yard they requested. N.T. at 244; R.R. at 333a. He explained that he looked over the specs, looked at where the item was listed, and paid Eckman its bid cost for that item. N.T. at 245; R.R. at 334a. Ozimok believed that he was acting in good faith. N.T. at 248; R.R. at 337a.
III. Board Decision.
By order dated January 13, 2011, the Board entered judgment in favor of the Commission and against Eckman. The Board made the following relevant findings of fact and conclusions of law:
31. Based on the Contract documents alone, it was not unreasonable for Eckman to interpret SPF31.00 to mean that there was Type B rock suitable for use in the construction of the bridge embankment benches to be found on the project site. . . .
32. The general definition of 'selected borrow excavation' in Pub. 408 § 205 conflicted with the indications in the special provision SPF31.00 that selected borrow excavation of Type B rock could be found on the Project site. . . .
33. The Contract documents, as a whole, were ambiguous as to whether or not Type B Rock for selected borrow excavation to be used for bridge abutment embankments would be found on the project site. . . .
34. SPF31.00 also conflicted with the Contract drawings in that the structure core borings in the drawings showed no positive indication of rock material meeting the requirements for Type B rock on site, and the summary table of quantities indicated that the 12,528 cubic yards of selected borrow excavation was separate from the aggregate 22,400 cubic yards of total Class 1 excavation on the Project. . . .
35. Although the core borings and the quantity estimates in the Contract drawings suggest Type B rock was not to be found on site, the drawings also stated that the core boring data was limited to the specific locations drilled and not part of the Contract and that the summary table of estimated quantities did not waive or alter any provisions of the Contract (such as SPF31.00).
36. In light of the conflicting language and indications regarding selected borrow excavation in the Contract documents noted above . . . the Board finds that the Contract documents, as a whole, were ambiguous with regard to whether
or not Type B rock for embankment benches supporting bridge abutments would be found on the Project site. . . .
. . . .
42. Mr. Gates' review of the structure core boring results on the Contract plans and drawings also led him to believe it was improbable that sufficient Type B rock for the Project would be found on site. . . .
43. Typical use of the term 'selected borrow excavation' refers to material to be found offsite and no witness at hearing could recall any other circumstance where 'selected borrow excavation' referred to materials found on site. . . .
44. In the course of forming his opinion that the Contract documents (particularly SPF31.00) indicated the existence on site of Type B rock suitable for selected borrow excavation, Mr. Gates did not, as was permitted by the Section 102.05 of the Contract, contact the Turnpike Commission to review the foundation report relating to the geotechnical characteristics of the jobsite. . . .
45. Eckman also failed to submit a request for interpretation of SPF31.00 and its use of the term 'selected borrow excavation' before the 10-day period preceding the bid deadline in accordance with Section 102.15 of the Contract in order to clarify whether or not the provision meant that selected borrow/Type B rock could be found on site. . . .
46. At no time prior to its bid submission did Eckman submit a written request for interpretation of the Contract documents. . . .
. . . .
63. After learning from Mr. Updegrave that selected borrow excavation in SPF31.00 referred to offsite Type B rock and that no addendum regarding this issue would be put forth by the Turnpike Commission, Eckman still formulated its bid price for the 12,528 cubic yards of selected borrow excavation at a mere $1.50/cy. . . .
64. Eckman submitted a bid price of $1.50/cy for selected borrow excavation because it interpreted SPF31.00 and selected borrow excavation as referring to on site Type B rock despite specific oral advice from the Turnpike Commission to the contrary. . . .
65. After learning from Mr. Updegrave that Type B rock for selected borrow excavation would need to be brought in from offsite, Eckman's reliance upon its own interpretation of SPF31.00 ran contrary to its actual knowledge regarding the lack of Type B rock on the Project jobsite. . . .
66. In contrast to its bid price for selected borrow excavation, which Eckman admits to having interpreted as referring to offsite excavation and thus entailing hauling costs, was $35/cy.
67. In light of the fact that Eckman was given clear notice that selected borrow excavation Type B rock would have to be brought in from offsite, the discrepancy in Eckman's prices for selected borrow excavation and foreign borrow excavation demonstrates that Eckman blatantly chose to ignore what it had recently learned through Mr. Updegrave—that Type B rock for selected borrow excavation, as used in SPF31.00, would need to be brought in from offsite.
68. Even though SPF31.00 conflicted with other parts of the Contract and made the Contract ambiguous, Eckman's reliance upon its interpretation of SPF31.00, which assumed the presence of on site Type B Rock, was not reasonable reliance on the part of Eckman given Mr. Updegrave's final advice prior to Eckman's bid submission (confirming Mr. Gates own prior site inspection) that Type B rock would have to be brought in from outside the Project site. . . .
69. Eckman could not reasonably rely upon the ambiguity in the Contract created by SPF31.00 in submitting a bid based on the premise that Type B rock could be found on the Project site given Mr. Updegrave's final advice prior to Eckman's bid submission (confirming Mr. Gates own prior site inspection) that Type B rock would have to be brought in from outside the Project site. . . .
. . . .
70. Following Eckman's bid submission on or about February 8, 2006, but before the bid was awarded to Eckman, the Turnpike Commission wrote a letter to Eckman dated February 9, 2006 which, among other things, informed Eckman that its bid price for selected borrow excavation (rock) item no. 4205-0200 significantly deviated from the engineer's estimate. . . .
. . . .
72. The Turnpike Commission's February 9, 2006 letter further reinforced Mr. Updegrave's statements to Mr. Gates right before Eckman's bid submission and Eckman's bid submission and Eckman's own inspection of the jobsite provided a final opportunity for Eckman to address its low ball price for selected borrow excavation based on its incorrect assumption that sufficient Type B rock would be found on the Project site. . . .
73. The Turnpike Commission's February 9, 2006 letter put Eckman on notice as to the contractual terms to which it was agreeing and the fact that it was going to be compensated at the rate of $1.50/cy for obtaining the Type B rock if it proceeded. . . .
. . . .
75. Eckman chose to ignore the Turnpike Commission's warning set forth in the February 9, 2006 letter, its own site inspection, and Mr. Updegrave's final advice regarding the need to bring in Type B rock from outside the jobsite and made an apparent business decision to stick with its submitted bid price of $1.50/cy for selected borrow excavation (rock), item no. 4205-0200 in order to win the Contract bid. . . .
. . . .
77. The plain terms of the Contract state that $1.50/cy is the price at which Eckman was to be paid for selected borrow excavation. . . .
. . . .
81. Type B rock was not available on site and Eckman was compelled to acquire 8,405.78 cubic yards of it from an offsite location and haul it to the jobsite. . . .
. . . .
95. Eckman has failed to provide the Board with any credible evidence that the actual cubic yard amount of Class 1 excavation on the site exceeded the estimated quantity of Class 1 excavation identified in the summary tables of quantities in the Contract drawings.
. . . .
97. There is no credible evidence that the Turnpike Commission's decision to allow Eckman to use approximately 4122 cubic yards of on site material in place of the Contract's selected borrow excavation requirement of 12,528 cubic yards of offsite Type B rock in any way resulted in Eckman being
compelled to haul excess unsuitable material away from the jobsite. . . .
98. Eckman has not established with reasonable certainty the damages it claims it is due as a result of its alleged extra work hauling excess material away from the Project site due to the selected borrow controversy. . . .
. . . .
104. Because the Turnpike Commission's refusal to pay Eckman additional compensation at the rate of $35/cy for obtaining approximately 8400 cubic yards of selected borrow excavation was based on the $1.50/cy bid price for this work item submitted by Eckman (which later became a term of the Contract), the Turnpike Commission's refusal to compensate Eckman for the selected borrow excavation at a rate of $35/cy rather than $1.50/cy was not arbitrary or vexatious. . . .
105. Because the Contract does not provide for reimbursement to a contractor for hauling unsuitable on site material away from the jobsite, and because Eckman has not established that it performed this work at the direction of the Turnpike Commission or the cost incurred therefore, the Turnpike Commission's refusal to pay Eckman for its extra work claim was not arbitrary or vexatious.
CONCLUSIONS OF LAW
12. Because the Contract contained a conflict between both SPF31.00 and Pub. 408 §205 and the drawings, the Contract, as a whole, was ambiguous as to whether 'selected borrow excavation' referred to on site or offsite Type B Rock. . . .
13. The ambiguity of the Contract language in the drawings, Pub. 408 § 205 and the poorly drafted Special Provision SPF31.00 was further confirmed by the response of Turnpike Commission representatives when they too agreed with Eckman representatives, as [sic] least initially, that the language of SPF31.00 suggested the existence of Type B rock on the Project site.
14. A contractor's reliance on erroneous or ambiguous contract language is unreasonable where the contractor has additional knowledge which puts it on notice as to the error or clarifies the
perceived ambiguity and correctly informs it as to the actual scope of work it will have to perform under the contract. . . .Board of Claims Decision, January 18, 2011, (Decision), Findings of Fact Nos. 31-36, 42-46, 63-70, 72-73, 75, 77, 81, 95, 97-98, 104-105, and Conclusions of Law Nos. 12-15, 17, 25, and 27 at 6-8, 10-12, 15-16, and 18-20; R.R. at 1331a-1333a, 1335a-1337a, 1340a-1341a, 1343a-1345a.
15. A contractor is not owed additional compensation due to ambiguous or erroneous contract language where its officers knew, prior to bid and regardless of any such ambiguity or error in the contract language, that the contractor would have to pay a higher price than what it bid for a particular item of work. . . .
. . . .
17. Because Eckman's reliance on the ambiguous language of SPF31.00 was unreasonable where it knew it was required to obtain Type B rock from an offsite source to fulfill the selected borrow excavation requirement the Turnpike Commission is only required by the Contract to pay for selected borrow excavation at the $1.50/cy rate submitted in Eckman's bid. The Turnpike Commission's refusal to pay Eckman the higher foreign borrow excavation rate at $35/cy for its fulfillment of the Contract's selected borrow excavation requirement does not represent any breach of Contract by the Turnpike Commission, and Eckman's claim for damages in this regard must be denied. . . .
. . . .
25. Because 1) there is no factual support for Eckman's assertions that it hauled excess unsuitable material away from the jobsite or that it was ordered to do this work by the Turnpike Commission 2) the Contract provides no basis for a contractor recovering costs for hauling excess material away from the jobsite and 3) Eckman did not establish its damages in support of its extra work claim for hauling unsuitable material away from the jobsite with reasonable certainty, the Turnpike Commission did not breach the Contract by failing to pay Eckman's claim for hauling unsuitable material offsite and Eckman's extra work claim must be denied in full.
. . . .
27. Because Eckman is not a prevailing party in this case, it therefore cannot recover attorney's fees pursuant to 62 Pa.C.S. § 3935. . . .
IV. Eckman's Challenge.
Eckman contends that the Board committed legal error when it excused the Commission from paying Eckman for the imported foreign borrow work by concluding that SPF 31.00 included obtaining Type B rock from off-site sources; that the Board erred when it failed to properly distinguish between the prebid legal obligations of a public owner and bidder by imposing on Eckman an obligation to bid based on something other than the common standard shared with all other bidders; that the Board committed legal error when it failed to award Eckman any amount for hauling excess materials from the Class I excavation; and that the Board erred when it dismissed Eckman's claims for penalties, interest, and counsel fees.
This Court's review is limited to a determination of whether the Board committed an error of law and whether the Board's findings of fact are supported by substantial evidence. Black Top Paving Co., Inc. v. Commonwealth of Pennsylvania, Department of Transportation, 466 A.2d 774 (Pa. Cmwlth. 1983).
A. Type B Rock.
Initially, Eckman contends that the Board erred when it interpreted SPF 31.00 to include Type B rock obtained from off-site sources.
SPF31.00 provides in pertinent part:
F31.00 SELECTED BORROW EXCAVATION (ROCK) AND EMBANKMENT (ITEM: 4205-0200)
F31.01 Description-This work is the construction of embankments and backfills.SP (05-036-RCLF-C) at 30-31 and 33; R.R. at 796a-797a, and 799a.
F31.02 Material-
(a) Embankment Material. Obtain material for embankment construction from the various classes of excavation on the project, including Common Borrow Excavation, Foreign Borrow Excavation, and Selected Borrow Excavation, all meeting the following requirements:
. . . .
1.c. Rock. Includes natural material that cannot be excavated without blasting or using rippers; also boulders and detached stones of a size that cannot be readily placed and compacted in loose 8-inch layers and having insufficient soil to fill the voids in each layer; and further defined as follows:
. . . .
Rock, Type B. Durable, sound, and hard sandstone greater than 90 percent pure sandstone with less than 10% non-durable rock. Limestone, or other rock types, may only be used with the approval of the Commission's Geotechnical Representative. Neither material width nor thickness shall be less than one third its length. Acceptance will be based on visual inspection.
. . . .
F31.03 Construction -
. . . .
Locate and identify a source meeting the requirements above for each category of rock within the limits of Class 1 Excavation.
Subsurface soil and geological information was used to estimate quantities and locations of durable rock. The intent is to optimize the use of material from excavation. The classified materials are to be used to the extent practical to obtain quality construction. This is not to imply that the classified material as identified is not subject to change during construction, but is to be used unless otherwise directed. Variations of depth and character from those shown are not a basis for changed conditions.
Stage construction to obtain on-site material. Off-site material meeting the requirements may be used upon written authorization.
The Pennsylvania Department of Transportation's Publication 408 Specification, Section 205 defines "Selected Borrow Excavation" as "Excavation of or obtaining material used in specific items of work and designated by quality, size, and/or gradation, from sources outside the limits of the project that cannot be measured before and after excavation." Publication 408, Section 205 at 205-1; R.R. at 801a.
Eckman argues that the Board initially erred when it attempted to reconcile the definitions of "selected borrow excavation" in Section 205 of the Publication 408 Specifications with the language contained in SPF 31.00. Eckman asserts that the Board placed the two definitions on equal legal footing and concluded that SPF 31.00 was in conflict with Section 205 of the Publication 408. According to Eckman, the Board resolved the perceived conflict by effectively rewriting SPF 31.00 to include the definition of "selected borrow excavation" found in Section 205 of Publication 408 as one of the plain terms of the contract. As a result, Eckman asserts, the Board erred because it is well established that the parties have the right to make their own contract, and it is not the function of a tribunal to rewrite a contract or give it a construction in conflict with the plain meaning of the language employed. Department of Transportation v. Burrell Construction Supply Co., 483 A.2d 589 (Pa. Cmwlth. 1984).
Eckman argues that there was no ambiguity in the Contract documents as they relate to SPF31.00 which displaces and supersedes the definitions contained in Section 205 of the Publication 408 specifications. The data on the contract plans and the pre-bid investigation by Gates led Eckman to believe that the quantities of on-site Type B rock were overstated and would have to be adjusted, either through an addendum or after the award of the contract and during construction when the actual quantities and source of the Type B rock could be determined. Eckman contends that the Board's conclusion that SPF 31.00 included off-site selected borrow excavation as defined in Section 205 of Publication 408 was clearly erroneous.
The fundamental rule in construing a contract is to give effect to the intention of the parties. Sun Co., Inc. v. Pennsylvania Turnpike Commission, 708 A.2d 875 (Pa. Cmwlth. 1998). The intention of the parties must be ascertained from the document itself, if its terms are clear and unambiguous. Id. A contract is ambiguous if it is reasonably susceptible to different constructions and capable of being understood in more than one sense. A determination of whether a contract is ambiguous is a question of law. Id. When interpreting contract language, specific provisions ordinarily will be regarded as qualifying the meaning of broad general terms in relation to a particular subject. A.G. Cullen Construction, Inc. v. State System of Higher Education, 898 A.2d 1145 (Pa. Cmwlth. 2006). If a contract term is found to be ambiguous, the rule of contra proferentem generally requires the language to be construed against the drafter and in favor of the other party if the other party's interpretation is reasonable. Departmant of Transportation v. Semanderes, 531 A.2d 815 (Pa. Cmwlth. 1987).
A review of SPF31.03 states that the "intent is to optimize the use of material from excavation." It also states that "Offsite material meeting the requirements may be used upon written authorization." That language indicates that there was a possibility that the Type B Rock would not be found on site and does not limit the definition of "selected borrow excavation" to that which was found on-site. The fact that Class I excavation did not yield the Type B rock needed for the project did not change the definition of "selected borrow excavation." SPF31.03 recognized that offsite materials could be used.
Although Type B Rock was not found on the jobsite, the Commission permitted Eckman to use approximately 4,122 cubic yards of other material found on site in place of the contract requirement of 12,528 cubic yards of Type B Rock.
Further, the definition of Type B Rock in SPF31.00 fits within Publication 408's definition of "selected borrow excavation." Eckman's argument that SPF31.00 redefined the term "selected borrow excavation" as limited to the Type B Rock found in Class 1 excavation disregards the fact that the definition of Type B Rock found in SPF31.00 was consistent with the definition in Publication 408 in that it was "material used in specific items of work and designated by quality, size and/or gradation, from sources outside the limits of the Project."
Also, Eckman failed to establish that the Commission affirmatively represented the amount of Type B Rock located on site. Had the Commission done so, it would have buttressed Eckman's argument that the Commission anticipated that there was sufficient Type B Rock onsite.
Because it was not clear whether sufficient Type B Rock was available at the site, the contract language was ambiguous. The Board did not err when it made that determination.
B. Construe against the Commission.
Eckman next contends that any ambiguity in the interpretation of SPC 31.00 must be construed in favor of Eckman and against the Commission as the drafter of the contract. In general, ambiguous contract terms are construed against the drafter. Semanderes.
This Court does not agree. Prior to submitting its bid, Eckman was aware through Gates's communications with Updegrave that it was unlikely that the site contained sufficient Type B rock for the project.
In Commonwealth of Pennsylvania v. Brayman Construction Company, 382 A.2d 767 (Pa. Cmwlth. 1978), Brayman Construction Company (Brayman) entered into a contract with the Department of Transportation (DOT) for the construction of a portion of Interstate 79. Part of the contract included the relocation of a township road and the construction of a new arch to carry the relocated road over a channel. Before bidding on the contract, Brayman examined the proposals, plans, and specifications regarding the project and also made a physical inspection of the property covered by the contract. While Brayman was in the process of constructing the relocated road, it noticed a pre-existing, reinforced concrete arch which Brayman asserted was not designated on DOT's specifications and plans. DOT asserted that Brayman should be responsible for the cost of removing the arch under the contract. Brayman completed the excavation of the pre-existing arch under protest. DOT refused to pay Brayman for the cost of removing the arch on the basis that it was covered in the items listed for excavation. Brayman argued that it was not covered and filed a claim with the Board of Arbitration of Claims (BAC). At hearing, Brayman's expert stated that Brayman did not consider the arch when it bid for the job because the arch did not appear on DOT's documents. DOT's expert asserted that the construction drawings contained reference lines to a wing wall in the area of the existing arch. DOT also argued that a visual inspection of the site would have put Brayman on notice that the arch removal was included in the quantities listed for excavation. The BAC entered judgment in favor of Brayman in the amount of $12,869.18. The BAC concluded that the contract, documents, plans, and specifications were ambiguous as to the existence of the old arch and the necessity of removing the arch under the terms and conditions of the contract. The BAC construed the ambiguity against the party who drafted the contract, in this case, DOT. Brayman, 382 A.2d at 768.
On appeal to this Court, DOT contended that even if an ambiguity existed, DOT was not liable because the contract contained language regarding the examination of the site. When it signed the contract, Brayman covenanted and warranted that it had examined the site and was aware of the conditions at the site and that its contract prices were based on its own independent inspection of the site. Brayman, 382 A.2d at 768-769.
This Court reversed:
Brayman admits that when it examined the site, it saw the protruding wing wall of the old arch. If Brayman was not certain as to the job requirements, it should have sought clarification of the situation from the Department [DOT]. This it did not do. Instead, Brayman submitted its bid realizing that the removal of the existing arch was not covered by a special bid item. Thus, it cannot be said that Brayman suffered the added burden of increased excavation work through no fault of its own. Brayman is bound by its contract.
. . . .
. . . Brayman knew or should have known there was an unresolved problem with the removal of the existing arch after
its on-site inspection. It should have sought clarification from the Department [DOT] regarding the old structure or should have adjusted its bid to include a sum of money for the removal of the structure in the event it was not contained in the excavation quantities.Brayman, 382 A.2d at 769.
While Eckman argues that it strictly complied with the directives in the bidding instructions to provide pricing in bid item 4205-0200 for on-site Type B rock, under Brayman, Eckman should have adjusted its bid when it became aware through its own inspection and through communication with Updegrave that the site did not contain a sufficient amount of Type B rock for the needs of the project. Because Eckman had actual knowledge that the jobsite did not contain a sufficient amount of Type B Rock, the Board did not err when it failed to construe the contract against the Commission.
C. Extra Payment for Hauling.
Next, Eckman contends that the Board committed legal error when it refused to find that Eckman performed extra work for which it was entitled to be paid when it hauled away the excess excavation. Eckman's position before the Board was that because the contract quantities and bid items expressly anticipated excavating Type B rock from the site and reusing that material for the embankment, it then had to import the Type B rock and haul away a corresponding amount of excavated material.
The Board determined:
We find no merit to Eckman's claim for allegedly hauling excess unsuitable material off the job site. To the extent this claim is based on the ambiguity created in the Contract by SPF31.00 which Eckman asserts led it to the mistaken assumption that 12,000 cubic yards of Type B rock was
available for reuse on the jobsite (and thus reduced the total Class 1 excavation to be removed from the site from 22,000 cubic yards to 10,000 cubic yards), we have already determined that Eckman did not reasonably rely on the initial ambiguity created by SPF31.00 because it had actual knowledge that the Type B rock instead had to be brought in from offsite. Eckman's rationale for this second claim is further undermined by the fact that the selected borrow quantity of 12,528 cubic yards was never represented to be included in, or part of, the estimated 22,400 cubic yards of Class 1 excavation, but was instead indicated to be a separate, additional quantity on the Project plans and drawings.
Additionally, Eckman's rationale for this excess hauling claim does not support its damage calculation. Specifically, Eckman's stated explanation of this claim would lead one to conclude that there should have been approximately 12,000 cubic yards of excess material to be removed from the site. . . . Allowing for the 4,122 cubic yards of on site material the Turnpike Commission allowed Eckman to use in place of the original Type B rock at certain locations, this reasoning would still suggest Eckman had approximately 8,000 cubic yards of excess material to remove. However, its cost/damage calculation . . . shows it removing only 4,123 cubic yards. Thus, Eckman's own explanation for the creation of excess unsuitable material, which it claims to have hauled away as a result of the selected borrow excavation controversy, does not match its own damage estimate for this work.
. . . .
Under the circumstances of this case, we do not find that Eckman has adequately quantified the amount of its alleged extra work hauling unsuitable material away from the jobsite or identified sufficient documentation to substantiate its costs. In point of fact, Eckman has failed to provide the Board with any credible evidence that the actual cubic yard amount of Class 1 excavation on the site exceeded the estimated quantity of Class 1 excavation initially estimated in the summary tables of quantities in the Contract drawings. In sum, Eckman's extra work claim for alleged hauling of excess unsuitable material from the jobsite fails factually because its explanation of its claim is based on several incorrect premises, does not support its damage calculation and fails to quantify the amount of this
alleged extra work or calculate damages incurred with reasonable certainty. . . .Decision at 42-44; R.R. at 1367a-1369a.
Moreover, the Turnpike Commission is correct that, under Section 105.14 of the Contract, Eckman is 'responsible for proper disposal of all excess excavation and waste material.' . . . This responsibility is reiterated in Section 203.3(k) ('Construction') of the Contract as follows:
(k) Unsuitable and Surplus Material. Dispose of unsuitable and surplus material in suitable waste areas obtained, as specified in Section 105.14
. . . .
Section 102.04 of the Contract . . . also directs the contractor to '[r]emove any surplus materials from the site at no additional expense to the Commission' . . . . Absent unusual circumstances such as a significant misrepresentation in the bid documents as to quantity or quality of excavation to be performed on the job, or some similar problem, the Board finds no reason why it should not apply Sections 105.14, 203.03(k), 102.04 of the Contract to Eckman's claim for offsite disposal of excess waste material.
Eckman has not established that the Contract indicated otherwise or was ambiguous regarding its responsibility to haul waste material away from the jobsite at its own cost. . . . Coupled with the fact that Eckman did not establish a factual explanation for this claim in a credible manner, nor show its damages as to its alleged extra work with reasonable certainty, the Board finds no basis for Eckman to recover on this claim. (Citations omitted).
This Court's review of the record reveals no error of law by the Board. Where, as in the present case, a contractor has encountered difficulties in the performance of a contract due solely to the contractor's own preparations, the owner will not be held liable for damages. Green Construction Company v. Department of Transportation, 643 A.2d 1129 (Pa. Cmwlth. 1994), petition for allowance of appeal denied, 543 Pa. 718, 672 A.2d 311 (1996).
D. Penalty and Attorney Fees.
Finally, Eckman contends that the Board erred when it failed to find that Eckman was entitled to damages under Section 3935 of the Commonwealth Procurement Code (Code), 62 Pa.C.S. §3935.
Section 3935 of the Commonwealth Procurement Code provides:
(a) Penalty.—If arbitration or a claim with the Board of Claims or a court of competent jurisdiction is commenced to recover payment due under this subchapter and it is determined that the government agency, contractor or subcontractor has failed to comply with the payment terms of this subchapter, the arbitrator, the Board of Claims or the court may award, in addition to all other damages due, a penalty equal to 1% per month of the amount that was withheld in bad faith. An amount shall be deemed to have been withheld in bad faith to the extent that the withholding was arbitrary or vexatious. An amount shall not be deemed to have been withheld in bad faith to the extent it was withheld pursuant to section 3934 (relating to bad faith claims).
(b) Attorney Fees.—Notwithstanding any agreement to the contrary, the prevailing party in any proceeding to recover any payment under this subchapter may be awarded a reasonable attorney fee in an amount to be determined by the Board of Claims, court or arbitrator, together with expenses, if it is determined that the government agency, contractor or subcontractor acted in bad faith. An amount shall be deemed to have been withheld in bad faith to the extent that the withholding was arbitrary or vexatious.
In order to recover a penalty under this section of the Code, a party must establish that it was due a payment that was withheld in bad faith. Because this Court has determined that the Commission complied with the terms of the contract, Eckman is not entitled to a penalty. Similarly, in order to recover attorney fees under this section, a party must prevail. Because this Court has determined that Eckman did not prevail, it is not entitled to attorney fees.
Accordingly, this Court affirms.
/s/_________
BERNARD L. McGINLEY, Judge ORDER
AND NOW, this 21st day of May, 2012, the order of the Board of Claims in the above-captioned matter is affirmed.
/s/_________
BERNARD L. McGINLEY, Judge