unpublished OPINION ISSUED January 18, 1988, S. J. Groves and Sons,
Company, for the
Benefit of Atlas Machine and Iron Works, Inc. v. Dep't of Highways,
Claim Nos.
CC-82-295 & CC-83- 233. The Court denied the claims based upon over
spray and for the
radius of edges, but allowed recovery for removal of mill scale
from
snipes. However, the
recovery was limited to work performed prior to May 1, 1980.
In the present claim there was no issue made of the necessity of
removal of mill scale from the
snipes. The Court is of the opinion to deny the fifth cause of
action in
its entirety as the problems
confronting Atlas in fabricating steel for West Virginia were
resolved
by May 1, 1980. The steel
girders being fabricated for the bridges on this project were not
due
for delivery until September
1980. Therefore, the Court is of the opinion to and does deny the
claim
of Atlas.
SIXTH CAUSE OF ACTION
The sixth cause of action was brought on behalf of the
subcontractor
Northern Systems, Inc.,
which company was responsible for drilling and grouting the rock
anchors
for two retaining walls
adjacent to the mountain. During construction of the project
Northern
experienced financial
problems. As a result of these problems Northern's bonding company,
Indemnity Insurance
Company, to be hereinafter referred to as Indemnity, expended
certain
funds relating to this
project. The first issue confronting the Court is the standing of
the
indemnitor in this claim, i.e.,
does the bonding company of a subcontractor have the same rights
and
interests as the
subcontractor? The doctrine of collateral estoppel was also raised
by
respondent as there had
been a related lawsuit in Kanawha County Circuit Court wherein
Northern
was defendant and
Indemnity satisfied certain judgments against Northern. Respondent
contends that this lawsuit
involved the same issue which is the basis of the sixth cause of
action,
that the issue was resolved
by the circuit court action and that, therefore, Indemnity cannot
now
have the same issue tried
again before this Court. The Court must resolve these two issues
prior
to a consideration of the
merits of the claim.
As to the issue of standing, the Court is of the opinion that the
surety, Indemnity, has standing in
the Court of Claims to present Northern claim just as a casualty
insurance company brings
actions through its insureds. The Court has determined that
collateral
estoppel is not a bar to this
cause of action inasmuch as the Kanawha County Circuit Court action
was
brought by
Construction Drilling, Inc., to prove and recover damages only. The
issue of liability based upon
misrepresentations on the part of the respondent herein was not an
issue
in that action and was
not considered by that Court.
Indemnity contends that Northern was unable to perform its contract
for
DeFelice because the
depth of the rock anchors was misrepresented on the plans provided
by
respondent. Originally,
the plans indicated 96 rock anchors but respondent reduced this to
71
rock anchors during
construction. Northern was unable to drill certain of the holes as
its
drilling equipment was
inadequate. Construction Drilling, Inc., was brought onto the
project by
Northern to complete
this work. This company was able to perform the drilling necessary as it
had the proper drilling
equipment. Respondent contends that the plans indicated the depth
of the
deepest holes
accurately and that, therefore, the problems encountered by
Northern
were directly related to
the equipment being used by Northern. The Court agrees with
respondent.
The Court is of the
opinion to deny the sixth cause of action as Indemnity has failed
to
establish a breach of contract
on the part of respondent.
In accordance with the foregoing findings and conclusions, the
Court
makes awards in the
following amounts: first cause of action - $976.14; second cause of
action - $59,794.68; third
cause of action - $81,743.06, for a total award in the amount of
$142,513.88 to claimant L. F.
DeFelice, Inc.
Award of $142,513.88.
Judge Baker did not participate in the hearing or decision of this
claim.
OPINIONS ISSUED JANUARY 4, 1991
WANITA SOMMERVILLE/STATE FARM FIRE AND CASUALTY
VS.
DIVISION OF HIGHWAYS
(CC-89-374)
Claimant present in person.
James D. Terry, Attorney at Law, for respondent.
HANLON, JUDGE:
On or about January 15, 1989, claimant, Wanita Sommerville,
formally
complained to
respondent about a recurring problem of tar and gravel splashing
against
her house from a
near-by hole in State Route 19, in Clarksburg. Not only did this
claimant call respondent, she
also visited their District Office in Clarksburg. Claimant
identified to
the Court both the name of
the individual she complained to, and the date and time of such
discussion. Respondent, while
not maintaining a log or record of such discussions, testified that
such
conversations "probably
occurred.: Although respondent's work records indicate that the
hole was
repaired with "cold
patch" on the 3rd and 17th of January, 1989, such temporary repairs
were
not effective, and the
section of road surface adjoining claimant's house was eventually
repaved to remedy the
problem. Prior to the repaving however, claimant's house was
damaged by
the tar and gravel
splash, which produced dents and black scars to the aluminum siding
of
the house. Repair of the
described damage cost $265.00. Claimant filed this invoice for
repair
with her home owners
insurance, State Farm Fire and Casualty. The insurance company paid
$165.00 of this claim,
while claimant requests the return of her $100.00 expenditure, and
the
insurance company, a
co-claimant in this action requests the return of its $165.00
expenditure. These enumerated
amounts have been stipulated to respondent. This Court must decide
whether these amounts are
recoverable by claimant (s), as a result of negligence on the part
of
respondent in failing properly
to maintain the road adjoining claimant's house.
Respondent avers that it did not commit any act of negligence which
proximately caused the
damage complained of. Respondent further argues that the damage was
the
result of intervening
and superseding causes, not directly attributable to any act or
omission
on its part. Essentially,
respondent believes the damage was an act of nature, for which it
should
not be held
responsible. This Court believes otherwise.
While these is no evidence that respondent placed the cold patch in
a
negligent manner, it was
certainly foreseeable that it would be a short-lived solution.
Respondent had both constructive
and actual knowledge of the hole in the road surface that was
producing
the splash on claimant's
house. The respondent knew or should have known that as the cold
patch
deteriorated over the
course of the winter its components would add to the problem. The
Court
is of the opinion that
respondent breached its duty of reasonable care and diligence in
repairing this hole and,
therefore, respondent is liable for the damage to claimant's house.
This Court is of the opinion to and does award to claimant Wanita
Sommerville, the amount of
$100.00. This award represents the reimbursement of her
out-of-pocket
expense of the
deductible assessed by her insurer. Although co-claimant is a
subrogee
under her home-owners
policy, and this Court has previously permitted subrogation claims,
we
believe that such a
practice can no longer be permitted in equity and good conscience.
In State Farm Mutual Automobile Insurance Company, Assignee to the
rights of Sarah
G. Romans, its assured, Claimant v. West Virginia Department of
Highways, 8 Ct.Cl. 169
(1970), this Court recognized that a subrogee may have the same
right of
recovery as the
insured, "absent some provision of the Statute conferring
jurisdiction
upon the Court which
would deny the subrogee the remedy afforded to the insured/" It is
the
position of this Court in
reinterpreting West Virginia Code §14-2-13(1), that "claims and
demands....which the state as
a sovereign commonwealth should in equity and good conscience discharge
and pay," mandates
that claims which may permit unjust enrichment be disallowed.
Subrogation, as defined in
Michie's Jurisprudence, Section 2 at page 3, "is purely an
equitable
right, and being an equity, it
is subject to the rules governing equities." Equity does not
embrace,
nor allow unjust enrichment.
Premiums are paid by the insureds for insurance, and, when claims
are
paid, the accumulated
premiums or reserves are used to cover such expenditures. If no
claims
are made, the premiums
are never expended. This is a risk assumed by an insurance company
for a
valuable
consideration, and there is no reason the company should escape the
risk. In any event, it is the
opinion of the Court that neither equity nor good conscience
requires
the State to reimburse an
insurance carrier for having paid a claim for which it received a
premium, a premium which is
designed to allow a reasonable profit to the insurer. The claim of
the
subrogee is accordingly
disallowed and an award is made to the insured in the amount of her
deductible which is
$100.00.
Award of $100.00 to Wanita Sommerville.
OPINIONS ISSUED JANUARY 24, 1991
WESTBROOK CONSTRUCTION, INC.
VS.
DIVISION OF HIGHWAYS
(CC-89-508)
John A. Jenkins and M. Blane Michael, Attorneys at Law, for
claimant.
Robert F. Bible, Attorney at Law, for respondent.
BAKER, JUDGE:
Claimant contractor entered into an agreement with respondent,
designated as project no.
I-6404 (72)123, on November 25, 1985, for the construction of the
Glade
Creek bridge,
identified as bridge no. 3382. Claimant had substantially underbid
other
competitors for the
project, which entailed the construction of a four-lane 2,180 foot
long,
bridge in Raleigh County.
The $28,876,876.00 bridge has two main piers, and two intermediate
piers, connecting to
abutments. Claimant alleges that it encountered unexpectedly hard
rock
in building two of the
piers, designated as pier 2 and pier 3. The foundations for piers
2 and
3 were drilled caissons,
which were constructed by Meredith Drilling Company, Inc., and
Permian
Rat Hole Drilling, a
joint venture which was a subcontractor of claimant. During the
drilling
of the caissons for both
piers 2 and 3, claimant alleges the density of the rock base its
subcontractor encountered was
two to four times greater than was identified by respondent's core
drillings. Claimant contends
the hard rock constitutes a changed condition of the contract,
entitling
claimant to equitable
adjustment for the resulting cost and delay occasioned by
additional
labor, equipment,
maintenance, and overhead necessary to complete the drillings.
Claimant
seeks to recover its
own excess costs and those of its subcontractor, Meredith/Permian
Rat
Hole, in the aggregate
amount of $2,054,823.02.
Claimant and respondent agree that the prebid core drillings for
pier 2
indicated that the
caissons were expected to be drilled in sedimentary rock described
as
sandstone, shale and
siltstone with a range of rock harness varying from soft to hard.
No
very hard sandstone was
indicated. Prebid core drillings for pier 3 did indicate hard to
very
hard sandstone in one of the
five sample drillings. Based upon the representations of
respondent's
prebid drillings, claimant
estimated its construction costs and submitted its bid. However,
claimant alleges that when the
drilling for pier 3 caissons was performed, claimant encountered
vary
hard sandstone of higher
strength and abrasiveness than indicated by respondent's bid
samples.
Claimant also alleges that
greater quantities of this material were discovered than
anticipated.
Claimant's witnesses
indicated their belief that the lost time and additional costs of
pier 3
would be recovered and
offset by pier 2 performance. Accordingly, with regard to pier 3
claimant provided no formal
notice to respondent of a changed condition, nor were force account
records maintained.
However, when pier 2 caissons were drilled, very hard sandstone
was
again found and again
obstructed and impaired claimant's performance on the project.
Respondent's witness, Mr. John
O'Neil, a geologist with respondent and assigned to the Glade Creek
bridge project, testified that
the sandstone in the area of pier 2 was "10 to 21 percent" harder
then
originally indicated in the
pre-bid core samples. Mr. O'Neil further testified that, "...some
of the
sandstone was indeed
harder than hard. It logged as very hard, based on compressive
strength
testing." Mr. O'Neil's
testimony was consistent with that of claimant's expert, Dr. James
W.
Mahar. It is of particular
interest to the Court that the prebid core samples of pier 2
indicated
soft to hard rock, and no
very hard rock. Mr. O'Neil's subsequent findings of very hard rock
were
the result of claimant's
request for retesting and serve as the foundation for this
equitable
adjustment claim.
The retesting as to pier 2 is described in respondent's exhibit
no. 7,
Materials Inspection
Report No. 1180771. The Report at paragraph 2.4.1 states that "the
Department (respondent)
has never had any intent to make any representation or description
of
the abrasive qualities of
rock strata in soils information presented in contract documents,
nor
are there any standardized
tests for abrasiveness of which we are aware."
The Court observes that no retesting of core samples was requested
or
made as to pier 3.
Although claimant was awarded this contract in November 1985, it
did
solicit bids from
subcontractors for the caisson work until December 1985.
Representatives
of the subcontractor
which was ultimately awarded the bid visited the respondent's
office in
Princeton, West Virginia,
to inspect the core samples available to all prospective bidders.
The
subcontractor had not
performed drilling operations in the State of West Virginia prior
to
this particular contract. The
fact that the subcontractor was unfamiliar with the nature of
subsurface
strata in southern West
Virginia may have been reflected in its bid which was substantially
lower than the bids of other,
more experienced contractors which have performed drilling projects
in
all areas of the State.
It appears from the evidence that certain geotechnical data were
obtained by respondent
during the design stage for this project. The data included
unconfined
compressive strength tests
in some of the strata, but, as was the usual and customary practice
during the pre-bid stage, this
information was not made available to prospective bidders. While
the
information may have
been of assistance to claimant herein at the pre-bid stage, the
Court
believes that it was withheld
by inadvertence, and not by design. In the future respondent may
wish to
consider disclosing the
availability of such information to prospective bidders.
Whether or not the differing subsurface conditions previously
described
permit claimant the
remedy of equitable adjustment is the issue this court will now
address.
Provision for equitable
adjustment is made in section 104.2 of the West Virginia Department
of
Highways Standard
Specifications of 1982, and reads in part as follows:
....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
condition; 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. (Emphasis added.)
Respondent also relies upon §104.2, and this Court finds the
section to
be operative and
controlling in the contract between the parties. Accordingly, the Court
will apply the section to
the claims asserted for damages relating to the excess costs of
constructing pier 3 and pier 2,
respectively. Before undertaking this consideration, the Court must
emphasize that §104.2 is not
operative when a claimant fails to invoke the section and abide by
its
directives in a timely
manner. Although claimant has demonstrated by a preponderance of
the
evidence that very hard
rock was encountered, and not anticipated, this Court does not
believe
the circumstances
excuse a strict interpretation of and compliance with §109.4 and
§109.4.8, providing that:
Extra work performed in accordance with the requirements and
provisions
of 104.3 will be
paid for at the unit prices or lump sum stipulated in the order
authorizing the work, or the
Department may require the Contractor to do such work on a force
account
basis to be
compensated in the manner hereinafter prescribed.
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 such records. No payment will be made for work
performed
on a force
account basis until the Contractor has furnished the Engineer with
duplicate itemized
statements.... (Emphasis added.)
Accordingly, the Court makes the following findings or fact and
conclusions of law:
Pier 3
Claimant's subcontractor began drilling caissons for pier 3 on the
project to pier 2. The plan
was to drill a pilot hole with a 12-inch diameter carbide tricone
bit,
using sufficient down
pressure and air circulation with medium drill bit rotation to
produce a
straight hole. The hole
was then enlarged using an 18-inch hole opener and then a 36-inch
auger
hole opener. This
equipment was contained on a Williams LLDH-80 drilling rig. Using
this
process and equipment
38 caissons were drilled for pier 3. The progress of the drilling
was
slowed when very hard rock
was encountered almost immediately. Foam and water were then
utilized by
claimant to increase
drilling productivity, but this practice was suspended until
adequate
pollution safeguards were
taken. In the interim a hole was attempted with air only resulting
in
substantial damage to the hole
opener. Testimony suggests the hole opener "burned up" when the
cutters
became so hot that the
bearings disintegrated. Concerned and falling behind the critical
path
(schedule), claimant
resorted to what it described as "a radical change in drilling
technique." Using 36-inch air barrels,
a 36 inch thin wall core barrel, two additional hole openers, and
foam
and water, the caissons
were completed, but not without additional cost. Despite the
difficulties encountered at pier 3,
Terry Allen Penn, General Manager for Permian Rat Hole, testified
that
"as far as our
production and expenses on the job at that point, we still felt
like we
could make up the
difference on pier 2." Since there was no intent to put forth a
claim
based upon a changed
condition on pier 3, it appears to the Court that subcontractor
consciously made the decision not
to provide "notice" to respondent.
Respondent avers that the failure on the part of claimant to
"notice"
the respondent's engineer
that there was a changed condition in pier 3, as required by
§§104.2,
109.4, and 109.4.8,
supra, resulted in the respondent not keeping force account records
on
the construction of pier
3 to ascertain actual costs in accordance with the Specifications.
We
cannot now speculate as
to same. Respondent received notice that claimant was making a
claim for
pier 3 through
correspondence received in February 1986, well after the completion
of
the pier.
Since claimant failed to provide timely notice to respondent as to
the
allegation of a changed
condition, no force account records were maintained by respondent.
Therefore the claim relating
to pier 3 must be disallowed, consistent with the previously
described
sections, and the holding
of Vecellio and Grogan, Inc. vs. Dept. of Highways, 14 Ct.Cl.451
(1983).
Pier 2
The Court now turns its attention to the issue of pier 2. Claimant
has
provided convincing
evidence that unforeseeable subsurface conditions and abrasive rock
were
encountered,
conditions which differed materially from those indicated in
respondent's bid proposal. Claimant
did provide the requisite notice to respondent concerning pier 2.
Accordingly, claimant contends
that the difficulties encountered entitle it to an upward equitable
adjustment in the contract price
under the terms of the "changed condition clause" of the "differing
site
condition clause" in
§104.2, as cited supra.
By reason of the materially indifferent conditions encountered at
pier
2, claimant incurred extra
expense not contemplated under the contract. The claimant provided
notice of the changed
conditions to respondent by letter dated October 1, 1986, and same
was
acknowledged for
investigation by respondent in its letter dated November 5, 1986.
It is
therefore uncontroverted
that the requisite notice to invoke §104.2 was timely given and is
operative and controlling in
this claim for pier 2 expenses. Claimant testified that 44 drilling
shifts were estimated to drill the
pier 2 shafts, but 298 drilling shifts were ultimately required to
drill
the very hard rock. The
additional labor and equipment expense incurred for the additional
shifts are the bases of this
equitable adjustment is best set forth by this Court A. J. Baltes
v.
Dept. of Highways, 13 W.
Va. Ct. Cl. 1 (1979), which states in part:
"The recoverable items of cost must be realistically confined to
additional cost incurred by the
claimant, wand which were directly and proximately caused by the
changed
conditions.
Expenses which the contractor would have been required to expend in
any
event had no
changed conditions occurred are not compensable as part of an
equitable
adjustment." Baltes at
6-7.
This Court therefore applies an "actual cost" theory as the
appropriate
measure of damages.
Actual cost is defined in Baltes, supra, at 6, as "a daily cost
analysis
of the additional expenses
required by the changed condition." In doing so the recoverable
items as
enumerated must be
realistically confined to the additional costs incurred by the
claimant.
Expenses which the
contractor would have been required to expend had no changed
condition
occurred are not
compensable. See Dale Ingram, Inc. v. United States, 475 F.2d 1177 (Ct.
Cl. 1973).
The condition of "very hard rock" was not anticipated by claimant.
The
claimant was required
to drill at substantially higher cost to complete pier 2, and the
cost
for that labor and equipment
will be compensated. However, care must be taken to avoid
duplications
and overlap, with
recovery limited to those costs directly and proximately caused by
the
changed conditions. In
particular, the evidence concerning additional equipment for road
maintenance, extra grader and
operators appears redundant, if not unrelated.
The Court finds that claimant was in part responsible for the
increased
costs by not exercising
greater diligence in preparing and estimating its project bid. It
is
uncontroverted that claimant's
bid was substantially lower than others received. Although the
Court
does not adopt
respondent's argument that, "the four-fold increase in actual
versus
estimated time of drilling is
attributable to lack of knowledge of local conditions combined with
inadequate examination and
testing of core samples," the Court is of the opinion that claimant
must
shoulder some
responsibility for its bid.
Claimant's request that the Court award the cost of "travel and
sustenance" will not be
considered. Claimant has failed to prove that local labor was
unavailable. Furthermore, these
costs were not a part of the stipulated labor rate.
The Court therefore considers only the following in its
determination
of recoverable costs,
pursuant to §§109.4 to 109.4.7, which the evidence indicates to be
the
direct and proximate
result of the changed conditions of pier 2:
Labor - $ 50,349.00
Mark up on Labor- 20,140.00
Equipment rental-
(subcontractor owned)- 213,033.00
Equipment rental-
(non-owned) 19,350.00
Mark up on non-owned
equipment 3,870.00
Clean out costs for caisson
holes- 35,076.00
Welding subcontractors 20,000.00
Expendables - 80,000.00
TOTAL FOR MEREDITH
PERMIAN RAT HOLE $441, 818.00
These costs incurred by claimant Westbroook which were the result
of the
changed conditions
at pier 2 have also been considered by the Court. The Court is of
the
opinion to and does make
an award to Westbrook in the amount of $119,397.46.
The Court has considered interest on the total award of
$516,251.46 in
accordance with
Provision 9 of the contract which provides for the rate of six (6)
per
centum per annum. As
calculated, the interest to the issue date of this opinion is
awarded in
the amount of $52,030.46.
Therefore, the total amount of the award is $613,245.92.
Award of $613,245.92.
OPINIONS ISSUED JANUARY 25,1991
BARBOUR COUNTY SHERIFF'S DEPARTMENT
VS.
DIVISION OF CORRECTIONS
(CC-91-51)
Claimant represents self.
Lowell D. Greenwood, Assistant Attorney General, for respondent.
PER CURIAM:
Claimant, Barbour County Sheriff's Department, provides and
maintains a
facility for the
incarceration of prisoners who have committed crimes in Barbour
County.
Some of the
prisoners held in the facility are guilty of crimes which require
the
sentencing of prisoners to
facilities provided and maintained by the respondent, Division of
Corrections. Claimant brought
this action to recover the costs of housing for prisoners who have
been
sentenced to a State
penal institution, but due to circumstances beyond the control of
the
county, these prisoners
have had to remain in the county prison facility for periods of
time
beyond the date of the
sentencing order.
The Court previously determined in the County Comm'n. of Mineral
County
v. Div. of
Corrections, an unpublished opinion of the Court of Claims issued
November 21, 1990, that a
daily rate of $15.00 for each inmate is fair and reasonable to both
claimant and respondent at
this time, and directed the parties to calculate a dollar amount
based
upon the time frame and
daily inmate rates of $15.00 excluding, however, all days wherein
inmates remained in the
county as a result of a stay pending appeal or at the request of
county
officials and a two week
holding period beyond the date of a commitment order.
Pursuant to the guidelines provided in the Mineral County opinion,
the
respondent reviewed
this claim to determine the number of inmate days for which
respondent
may be liable and filed
an Answer admitting the validity and amount of the claim.
In view of the foregoing, the Court makes an award to claimant in the
amount of $2,850.00.
Award of $2,850.00.