OPINION ISSUED DECEMBER 20, 1991
HOLLOWAY CONSTRUCTION COMPANY
DIVISION OF HIGHWAYS
Thomas E. Potter, James R. Snyder, Abba I. Friedman, and Robert L. Johns, Attorneys at Law, for
Robert F. Bible, Attorney at Law, for respondent.
Claimant contractor entered into a contract with respondent, designated as Project No.
X320-G-73.02(03) or Federal Project No. APD-323(84), on February 19, 1982, for the construction
of that portion of Corridor G from Davis Creek to Charleston, West Virginia. The project
commenced with fill bench construction involving blasting and excavating the earth's surface.
Preconstruction conferences were held on March 3 and March 17, 1982, and notice to proceed was
given. Claimant substantially completed the project on or about June 15, 1986. The project was
accepted by respondent on July 27, 1987. The total amount of the contract for this project was
$27,950,257.59. Claimant alleges its actual cost for construction was $34,323,000.00, with a
resulting loss in excess of $6,617,449.00 not including interest. On June 30, 1988, claimant executed
the final Voucher Estimate for the project in the amount of $27,708,281.10, reserving the right to
bring certain claims, hereafter identified as issues. Claimant filed this action against the respondent
in a 42-count Complaint demanding judgment in the amount of $7,453,096.00, plus interest, on the
FAILURE TO COMPENSATE CLAIMANT FOR
MATERIALS IN ACCORDANCE WITH CONTRACT PROVISIONS
Claimant contends that the contract required respondent to pay claimant for 'aggregate base course"
in an agreed upon quantity of 39,204 cubic yards to be paid in a lump sum. Respondent applied the
unit bid price to 35,768 cubic yards rather than the quantity of 39,204 cubic yards as provided in the
contract. Claimant argues that this resulted in an underpayment of $109,952.00 which remains
unpaid. Respondent denies the allegation. The amounts involved are uncontroverted. The only issue
for the Court is whether the claimant should be paid for unexpended materials, as in this claim for
aggregate base course which was not used on the project. There is no reason in law or equity for
respondent to pay claimant for 39,204 cubic yards of base aggregate when only 35, 768 cubic yards
were provided. This portion of the claim is denied.
CALCULATION OF FUEL ADJUSTMENTS
The fuel adjustments provided under the contract were to be based upon 39,204 cubic yards of base
course. Claimant alleges that respondent applied the adjustment with an erroneous calculation and
that $6,500.00 remains unpaid. Respondent denies this allegation. Pursuant to West Virginia
Department of Highways Special Provision For Price Adjustment of Fuels, §109.10, dated February
15, 1980, and incorporated in the claimant's Bid Proposal, this item could have been paid if properly
due. It is the finding of the Court that this item represents a fuel adjustment based upon the
difference between the 39,204 and 35,768 cubic yards of base aggregate, an amount previously
disallowed, and, in accordance with that finding, the Court denies this item.
WATER AREA RELOCATION
Respondent approved the change and use of a waste area situate between station 263+03 and station
269+00. Respondent designated in this area for claimant's use throughout the construction of the
project. Claimant thereupon used the area for filling and stockpiling stone. On or about May 24,
1984, when claimant had stockpiled 39,000 cubic yards of stone in the designated area, respondent
ordered claimant to immediately remove the stone. Claimant compiled with this request, but alleges
that it lost approximately 19,800 cubic yards of stone during the relocation. Claimant has introduced
evidence that the amount of $5.80 per cubic yard is the customary and reasonable cost of this stone.
The expense to claimant for the lost stone is $115,830.00. Claimant further alleges that it also had
increased costs for equipment, labor, and overhead resulting from the relocation of the stone. The
Court recognizes that the order to remove the stockpiled stone was unilateral on the part of the
respondent. The claimant relied upon representations made to it by respondent to its detriment. It is
the opinion of the Court that the claimant is entitled to recover the cost of the stone lost during the
relocation operation; however, the Court denies the cost for equipment, labor, and overhead.
Accordingly, the Court will make an award to claimant in the amount of $115,830.00 for this item.
PLAN ERRORS-WATER LINE, GAS LINE, SEWER LINE,
TELEPHONE LINE, AND ELECTRICAL POWER LINE LOCATIONS
The contract required various water, gas, electric, sewer, and telephone lines to be relocated on the
project. Numerous water lines and other underground utilities were mistakenly cut and damaged
when utility plans failed to indicate the proper locations of the lines. As a result, claimant alleges
increased costs for relocating and repairing the broken lines. Claimant also alleges numerous errors
and omissions in the locations of the designated utilities. Additional excavation was necessary
causing inefficiencies and increased costs unanticipated under the contract. Claimant concludes that
as a result of the inadequate utility plans, its schedule was interrupted resulting in increased
equipment, labor, and overhead and other costs. Claimant contends that respondent breached an
implied warranty of the sufficiency of the plans and specifications under the contract, thereby
entitling claimant to be compensated for the increased costs. The claimant cites as its authority
§104.2 of the 1978 Standard Specifications of the West Virginia Department of Highways, which
provides in part:
Should the Contractor encounter or the Department discover during the progress of the work subsurface or latent physical conditions at the site differing materially from those indicated in the
contract, or unknown physical conditions at the site of an unusual nature, differing materially from
those ordinarily encountered and generally recognized as inherent in work of the character provided
for in the contract, the Engineer shall be notified in writing of such conditions; and if the engineer
finds the conditions do materially differ and cause an increase or decrease in the cost of, or the time
required for performance of the contract, an equitable adjustment will be made and the contract
modified in writing accordingly.
Respondent asserts that claimant was informed that there was no guarantee of the exactness of the
utility locations. Respondent cites as its authority the 1978 Stand Specification §105.6 which states:
In general, it is to be understood that the Contractor has considered in his bid all of the permanent
and temporary utility appurtenances in their present or relocated positions as shown on the Plans, and
that no additional compensation will be made by the State for any delays, inconvenience, or damage
sustained by him due to interference from the utility appurtenances or the operation of moving them.
The locations of the underground utilities shown on the Plans have been obtained by diligent field
checks and searches of available records. It is believed that they are essentially correct, but the
Department makes no guarantees as to their exact locations. (Emphasis supplied.)
Respondent further contends that in Tri-State Stone v. Dept. of Highways, 9 W. Va. Ct. Cl. 90
(1972) this Court held that the risk of extra expense for utility relocations falls upon the contractor.
Respondent believes that even if the utility relocations constituted "changed conditions", claimant
should seek compensation only for those changes which were "noticed" to respondent. Respondent
established that claimant failed to provide the required notice of the changed conditions resulting
from utility relocations and should not be compensated. See Westbrook Construction, Inc. v.
Division of Highways, Cc-89-508, W.Va. Ct.Cl., unpublished opinion (1991). The Court finds that
the claimant is bound by the terms of the contract which provided that the respondent did not
guarantee the locations of the utilities; therefore, the Court denies this portion of the claim in its
DEFECTIVE PLANS - STORM DRAINAGE SYSTEM
The plans and specifications provided by respondent for the claimant indicated the location of storm
drainage systems which allegedly contained design defects relative to grade alignment and elevation.
Additional errors are alleged for junction chambers and bend structures with no consideration to the
potential interferences with other utilities. Claimant contends that the storm drainage plan errors
caused increased costs for extra excavation, extra embankment, topographical grading, and
unanticipated rock excavation. Claimant alleges s breach of an implied warranty of sufficiency of
the plans and specifications for performing the contract, and that it incurred additional costs in the
amount of $135,232.00 as a result of this breach. Respondent restates its position that it is not a
guarantor of the sufficiency of plans. The Court determined that all costs attributed to this item must
be denied upon the same principals previously enunciated by the Court in the discussion of the utility
UNILATERAL REDUCTION OF BLASTING LIMITS
Claimant entered into the contract in reliance upon the plans and specifications that permitted
blasting at a maximum peak particle velocity (p.p.v.) of any shot of 2.0 inches per second. Claimant
initiated its blasting operations utilizing the 2.0 p.p.v. per second through the summer of 1983.
Respondent unilaterally ordered a blasting limit reduction to a maximum p.p.v. of 1.0 inches per
On August 22, 1983, claimant formally objected to the respondent's new limit of 1.0 inch per second.
Claimant appears to have requested a meeting to be held in the District Office of the respondent in
order for respondent to justify this change and for the claimant to explain to respondent that its
blasting records demonstrated that it had been meeting all the specifications. Respondent replied by
correspondence dated September 7, 1983, informing claimant that if it presented evidence that no
damage had occurred as a result of claimant's blasting, respondent would consider restoring the
maximum peak particle velocity to 2.0. Claimant was unable to do this as there had been some
damage to buildings in the area due to fly rock.
As a result of respondent's directive, claimant changed its blasting techniques. An analysis of
claimant's blasting records reveals that after September 1, 1983, claimant reduced the average
amount of explosives per hole from 33.97 lbs. to 18.33 lbs. (or 46%); decreased average hole depth
from 14.03 feet to 12.33 feet (or 12%); and decreased its average powder column height from 7.87
feet to 5.63 (or 28%).
These unilateral reductions as mandated by respondent attenuated the progress of claimant's
excavation, grading, utility relocation, and bridge work. Prior to the change, claimant's grading cycle
consisted of excavation (blasting), loading excavated rock onto a truck and trucking the rock directly
into fills. Due to the reduction in the parameters of claimant's excavation, the rock generated by
blasting was so large that much of it had to be reblasted and subsequently broken up by a crane with
a pumpkin ball before it could be used in the fill operations. In addition, the blasting reduction
resulted in smaller cuts, thus confining the work area. It appears to the Court that the changes caused
a significant reduction in production and productivity. Claimant introduced trucking records
revealing that after September 1, 1983, excavation production was reduced by approximately 50%,
from nearly 80,000 cubic yards per month to less than 4,000 cubic yards per month.
As a result of the blasting reduction, claimant completed grading operations ten months behind
schedule, was forced into one unplanned winter of work, and was required to spend an additional
eight months to shoot and move rock material on the project. Claimant states that increased costs for
equipment, labor, fuel, and overhead resulted as enumerated at page 14 herein.
Respondent avers that it was not timely notified that claimant expected extra compensation due to
peak particle velocity reductions. Accordingly, respondent contends that the claimant's failure to
provide notice of the changed conditions precludes claimant from receiving compensation for any
alleged extra work. Respondent cites as its authority Vecellio and Grogan v. Department of
Highways, 14 W.Va. Ct.Cl. 451 (1983), and Westbrook Construction, Inc. v. Division of Highways,
CC-89-508, a W.Va. Ct. Cl., unpublished (1991), wherein this Court denied compensation to claimant contractors for changed conditions where notice was not provided to respondent and force
account records were not maintained by respondent.
The Court finds that the blasting reduction caused additional costs to the claimant, but these costs
are not construed as "extra work" as defined by §105.17 of the Standard Specifications. Extra work
contemplated under §105.17 is work outside of the contract. The blasting reduction and resulting
costs to the claimant involved work clearly within the contract. The Court stated in C.J. Langenfelder
& Son, Inc. v. State of West Virginia and the State Road Commission of West Virginia, 8 W.Va. Ct.
Cl. 197 (1971), that work clearly covered within the contract is not "extra work." Accordingly, the
provisions of §105.17 are not applicable. Claimant incurred increased costs for performing the
blasting operation, and the Court will make an award for a portion of these costs as discussed in the
Damages section of this Opinion.
A portion of this loss represents extra costs incurred as a result of a storm in 1986. On May 10, 1986,
claimant formally notified respondent that it was substantially completed with the project. On May
12 and 13, 1986, a severe storm occurred and caused significant damages to complete work. On May
13, 1986, claimant's officials met with respondent's Project Engineer to request extra payment for
the washed out areas pursuant to the "Act of God" clause contained in the specifications. Standard
Specifications Roads and Bridges Adopted 1978, §107.16.
Since the occurrence of the storm does not bring claimant within the "Act of God" provision,
claimant contends that had it been allowed to perform its work in accordance with the original
blasting specifications, the project would have been completed prior to the storm. For replacing the
washed out areas claimant alleges additional costs of $107,000.00. The Court denies this portion of
the claim as claimant has failed to establish any liability on the part of the respondent.
TRAFFIC CONTROL PLAN DESIGN CHANGES AND UNREASONABLE
DELAYS IN IMPLEMENTING SUCH CHANGES
The urban location of the construction contract required claimant to provide unimpeded domestic
traffic flow throughout the construction site in its traffic control plan. Detours could and did cause
construction inefficiency and interruptions to planned construction activities on the project. Although
claimant submitted requests for changes in the project traffic control plan, it is alleged that
respondent failed to consider the requests in a timely fashion, resulting in unnecessary delay and
disruption to construction and contract completion. Claimant contends that respondent breached its
duties to administer the traffic control, thereby creating increased costs for equipment, labor, fuel,
overhead, and general delay damages, in the amount of $25,176.00. Respondent countered that the
contract plans did not require seven-day responses to detour requests and that traffic control was not
impeded by the conduct of respondent's agents. The Court, having reviewed the documents
pertaining to this item of damage, is of the opinion to make an award to the claimant in the amount
REFUSAL TO ACCEPT COMPLETED WORK
Claimant put forth a claim on behalf of its subcontractor, Charleston Construction, Inc., for increased
costs which resulted when respondent would not accept certain pavement and shoulder work.
Specifically, claimant was required to remove and replace approximately eighty feet of 24' wide
pavement, fifty feet of 3" wide roadway shoulder, and thirty feet of 10" wide roadway shoulder in
the area of Station No. 312+50. As a result of removing and replacing the described roadway
pavement and shoulder, claimant alleges its subcontractor incurred additional labor, equipment, and
materials in the amount of $10,954.85, however, Claimant's Exhibit No. 33 shows the actual costs
to be $10,254.85;
Respondent denies that it is responsible for the costs of removing and replacing the pavement.
The evidence established that there was a water problem beneath the pavement which caused the
pavement to settle. The claimant placed the pavement in accordance with the specifications of the
contract. The Court is of the opinion that the replaced pavement was necessitated by factors which
were not within claimant's control. The Court makes an award for $10,254.85 for this item of
FAILURE TO COMPENSATE CLAIMANT FOR WORK
PERFORMED AND COSTS INCURRED
Claimant requests additional costs resulting from respondent's revisions to the retaining wall
constructed at Station No. 385+00. The work involved in this revision was paid for by respondent
under the unit bid prices; however, the amount of $200.00 remains due and owing for surveying.
Respondent admits that the described retaining wall survey cost is properly due, and has agreed that
claimant is entitled to recover $200.00 for this work; the Court therefore makes an award for the
Claimant subcontractor, N.H. Stone, Inc., installed and relocated chain link fence in the area of
Route 119 and Route 601. A change in a controlled access right-of-way unilaterally implemented
by respondent resulted in increased costs for fencing in the amount of $1,022.61. Respondent does
not deny that additional fencing was required by these changes in the contract. The Court makes an
award in the amount of $1,022.61 for this item.
As a result of the delays in the performance of this contract, claimant's subcontractor, Charleston
Construction, Inc., incurred increased costs for labor and concrete plant equipment rental. Claimant
requests the amount of $49,319.91 for the increases costs. However, the actual cost, according to the
calculations of the subcontractor, was $46,093.30. The Court makes an award to claimant on behalf
of this subcontractor in the amount of $46.093.40.
Respondent directed claimant to relocate a quarry road to provide better access for residential
driveways in the area. Claimant relocated the quarry road, thereby incurring increased labor,
equipment, fuel, and overhead costs for which claimant has not been paid. Claimant has not provided
documentation of the increased costs for this road, and the Court will not speculate as to same. This item is denied.
At the conclusion of the project, claimant was ordered to backfill and landscape areas not called for
under the original contract. Claimant seeks additional compensation for its extra costs incurred for
such construction activity, but "force account records" were not maintained for this "extra work."
The Court will also deny this portion of the claim.
In order to calculate the additional costs incurred by claimant with respect to the blasting claim, the
utilities claim and traffic control claim, claimant used two alternative methods, one based on lost
productivity and one based on delay. Respondent contends that these calculations are theoretical. As
to the blasting claim, claimant's damage analyses were based upon claimant's certified payrolls and
equipment records, which tracked each piece of equipment while it was on the job. Claimant's
damages arising from the blasting change were calculated by comparing actual pre-change and
post-change excavation productivity to determine the additional costs incurred by Holloway for the
productivity analysis. The scheduling analysis also examined pre-change and post-progress records
to determine the delay caused by the change.
Claimant's expert witness, Thomas P. Dekar, furnished an analysis of the blasting, utility, and traffic
control claims by utilizing the actual labor and equipment records.
Respondent objected to Dr. Dekar's calculations of actual direct labor cost, especially to the markup
of 40% to cover overhead.* The markup is permissible by §109.4.1 of the Specifications where force
account records are maintained. Force account records were not maintained; therefore, the 40%
markup will bot be considered by the Court as an item of the damages. The 7% prime contractor
markups will not be included by the Court on any of the items of damages.
Claimant asserts that the following enumerated costs resulted from the delays associated with utility
relocations, blasting reduction, and traffic control, collectively in the amounts of:
Gross Labor $2,172,341.54
40% Overhead Markup* 868,936.62
Payroll Taxes & Insurance 477,915.13
Union Fringes 332,473.78
Quantity Control 17,633.81
PL & PD Insurance 140,000.00
The Court has determined that this itemization is more accurate for determining the actual damages
sustained by the claimant.
Without reviewing the relative merit of each item at this time, nor adjusting or disallowing same, the
Court must first determine the issue raised by the respondent that timely notice was not provided,
whereupon the respondent did not maintain force account records. Respondent avers that the failure
to notice the respondent's engineer that there were changed condition(s) requires the disallowance of all such items. Section 109.4.8 of the West Virginia Department of Highways Specifications of
1978 further provides that:
The Contractor's representative and the (respondent's) Engineer shall compare records daily of the
cost of work done as ordered on a force account basis, and shall indicate agreement by signature on
No payment will be made for work performed on a force account basis until the Contractor has
furnished the Engineer with duplicate itemized statements of the cost of such force account work
It is uncontroverted that force account records were not maintained. But this is not a claim asserting
"extra work." It is, in the language in Langenfelder, "essentially a claim for damages resulting from
a breach of contract, causing losses to the contractor sounding in tort." Id. Claimant has demonstrated
by a preponderance of the evidence that substantial damages were suffered in the performance of this
The Court concludes that the unilateral breach of contract by the respondent relating to the reduction
of blasting limits was the direct and proximate cause of claimant's most significant increased costs.
However, the Court finds that the claimant was in part responsible for the increased costs by not
exercising greater diligence in the performance of the blasting operations. There were other problems
encountered by claimant during the blasting operations which may have contributed to the 50%
decrease in efficiency, including, but not limited to, the method of the blasting operations and the
haul road problems. The Court is of the opinion that the respondent's action in limiting the peak
particle velocity contributed to at least 37.5% of the delays experienced by claimant. Therefore, the
Court will make an award for 75% of the increased costs. The Court, having reviewed all of the
particulars put forth by claimant, makes an award for two portions of the blasting delay. The gross
labor costs and the insurance portions are awarded by the Court in the amount of$1,747,481.52.
A recapitulation of the award made by the Court for all items considered hereinabove is as follows:
Blasting Operations $1,747,481.52
Waste Area Relocation 115,830.00
Subcontractor (Charleston Construction, Inc).
Extra Costs 46,093.40
Subcontractor (Charleston Construction Inc.)
Pavement Replacement 10,254.85
Traffic Control 20,624.00
Subcontractor (N.H. Stone, Inc.)
Retaining Wall Survey Costs 200.00
The Court is of the opinion to and does award to claimant and its subcontractors the amount of
$1,941,506.38, plus interest in the amount of $464,994.00 in accordance with the provisions of
W.Va. Code §14-3-1, for a total award of $2,406,500.38.
Award of $2,406,500.38.