OPINION ISSUED NOVEMBER 18, 1992
VECELLIO & GROGAN, INC.
DIVISION OF HIGHWAYS
Warren H. Britt and Stephen A. Weber, Attorneys at Law, for claimant.
Robert F. Bible, Attorney at Law, for respondent.
Vecellio & Grogan, Inc., a West Virginia corporation (hereinafter "V & G", brings this action against
the West Virginia Division of Highways (hereinafter "D/H") for damages resulting for an alleged
breach of a highway construction contract between them, which called for excavation and
construction on Project ID-77-2(50)77 at the Sharon Interchange of the former West Virginia
Turnpike but now Interstate 77, in Kanawha County, West Virginia.
The contract, dated 31 May 1993 is divisible, one part relating to excavation and removal of
unclassified material, and one part relating to new road construction. Performance by V & G was to
be complete by 13 July 1986, without intermediate completion dates as to either part. The
construction part of the whole contract is otherwise irrelevant to this proceeding.
By the terms of the excavation contract, V & G was to remove an estimated 1,469,926 cubic yards
of unclassified material, consisting of rock, shale, and dirt, from its place in nature along the easterly
side of the Turnpike, a two-lane road, to the end that the planned Interstate highway would be wide
enough to accommodate two lanes of traffic in each direction.
In preparing its bid of $4.25 per cubic yard of material excavated and removed, V & G took into
consideration the fact that the cost of excavating rock and shale, the greater part of the mass to be
removed, was appreciably higher than the cost of removing dirt, but the bid price, accepted by D/H
represented a blend of costs for all materials.
It was necessary for D/H to maintain the flow of traffic over the Turnpike during the period of
construction, and it was provided in the contract that V & G should not have the right, in removing
excavated material, to go upon or cross the Turnpike with its hauling trucks. Accordingly, V & G
devised and put into operation a system for material, under which it started excavation operations
at the southerly end of its excavation sector, removed the excavated material by trucks in a southerly
direction, and, as the face of the excavation operations advanced in a northerly direction, the newly
excavated material was removed by trucks over the already excavated area, southward.
The northerly end of the sector awarded to V & G for excavation abutted upon a sector designated
as Project ID-77-2(51)80, upon which the Nello L. Teer Company (hereinafter "Teer") was to
perform excavation and construction under a contract dated 17 June 1983. Apparently, by mistake,
the northerly end of V & G's area of responsibility was also included in the Teer contract, although
it had already been awarded to V & G. Teer was informed by D/H, by letter dated 5 August 1983, that excavation of the "overlap" area would be performed by V & G, and Teer's contract was
amended to reflect the deletion.
V & G conducted excavation operations in 1983 until weather conditions forced it to suspend
operations until the following spring. By 18 September 1984 it had completed more than two-thirds
of its excavation work and was then moving northward through rock, which it had to excavate and
remove in order to gain access to the northern area of its excavation responsibility, the "overlap"
area. Supervisory personnel of V & G testified that they then estimated that, at the rate work was
proceeding, V & G would reach the "overlap" area in November 1984, and that thereafter the
unclassified material, which was stipulated to be mainly dirt, and containing 62,745 cubic yards,
could have been removed at the rate of 3,00 cubic yards per working day, or about 21 working days.
On 18 September 1984, at a meeting convened by D/H and attended by representatives of V & G
then present, was asked by a representative of V & G then present, was asked by a representative of
D/H weather V & G could then move the material in the "overlap" area, and Smith's reply was that
V & G could not do so at the time, as it was obvious that V & G had not yet reached the area by
excavating in that direction. Thereupon, on the same day D/H took the "overlap" area from V & G
and awarded it to Teer excavation, over the protest of V & G. Teer thereafter proceeded to excavate
and remove the dirt from the "overlap" area, completing the work well before the end of 1984.
D/H attempted to justify its decision to take the work from V & G and award it to Teer, by asserting
a right to do so under the provisions of Sec. 104.2 of the Standard Specifications for Roads and
Bridges, made part of the contract and providing in pertinent part as follows:
"104.2 - Altercation of Plans or Character of Work.
The Department reserves the right to make alterations in the Plans or in the quantities of work as may
be necessary or desirable at any time either before or during the work under the Contract. Such
altercations shall not be considered as a waiver of any conditions of the Contract nor shall they
invalidate any of the provisions thereof, except as provided herein. ...."
The Department may omit any item or items in the Contract, provided that notice of intent to omit
such item or items is given to the Contractor before any material has been purchased or labor
involved has been performed, and such omission shall not constitute grounds for any claim for
damages or loss of anticipated profits. The Department may omit any item or items shown in the
Proposal, at any time, by agreeing to compensate the Contractor for the reasonable expense already
incurred and to take over at actual cost any unused material purchase in good faith for use for the
item or items omitted. ..."
We do not agree with the construction sought by D/H for the word "omit", for the following reasons:
(a) the language of the specifications is plain and unambiguous, the word "omit" being commonly
understood to refer to something deleted and not to something taken from one's contract and handed
to another for performance; see Burke v. Board of Improvement Paving District No. Five, 179 S. W.
654, (Ark.1915); and Gallagher v. Hirsh, 61 N.Y. S. 609 (App. Div. 1899);
(b) from the record it is quite clear that V & G was well advanced in its performance and that it
received no notice from the D/H of the latter's intent to take the work from V & G;
(c) were the interpretation sought by D/H to be accepted generally, building contracts would be so
uncertain and risky, not to mention litigious, as to create unsettled contracts and an unmanageable
condition in the industry.
We conclude that the excavation contract of 31 May 1983, between D/H and V & G was
unjustifiable breached, in part, by D/H, by its making further performance by V & G impossible, and
that V & G is entitled to such damages as were caused by the breach of contract. We proceed to a
consideration of the proper measure of damages.
In Restatement, Contracts 2d, it is provided in pertinent part:
Sec. 344. Purposes of Remedies
Judicial remedies under the rules of this Reinstatement serve to protect one or more of the following
interests of the promisee:
(a) his "expectation interest," which is his interest in having the profit of his bargain by being put in
as good a position as he would have been had the contract been performed;
(b) his "reliance interest," which is his interest in being reimbursed for loss caused by reliance on the
contract by being put in as good a position as he would have been in had the contract been
(c) . . . .
In Restatement, Contracts 2d, it is provided in pertinent part:
Sec. 347, Measure of Damages in General
Subject to the limitations stated in Secs. 350-53, the injured party has a right to damages based on
his expectation interest as measured by:
(a) the loss of in value to him of the other party's performance caused by its failure or deficiency,
(b) any other loss, including incidental or consequential loss, caused by the breach; less
(c) the cost or other loss that he has avoided by not having to perform.
The Restatement makes the comment that Sec. 347 attempts to put the injured party in as good a
position as he would have been in had the contract been performed, that is, had there been no breach.
Consistent with the Restatement, Contracts 2d, Secs. 344 and 347, are the following decisions of the
Supreme Court of Appeals in West Virginia:
Polino v. Kech, 80 W.Va. 426, 96 S.E. 665 (1917);
Berry v. Huntington Masonic Temple Ass'n., 80 W.Va. 342, 93 S.E. 355 (1917); and
Franklin v. Pence, 128 W.Va. 353, 36 S.E.2d 505 (1945).
See also 22 Am. Jur. 2d 692, Damages Sec. 63.
Applying the rules of said authorities to the facts of this case, we find and conclude that:
(1) D/H unjustifiably refused to permit V & G to perform that portion of their contract for excavation
dated 31 May 1983, which related to the unclassified material in the "overlap" area.
(2) as a result of the breach of contract aforesaid, by D/H, V & G sustained damages measured by
the sum which it would have been entitled to receive if it had been permitted to perform the
excavation in accordance with the contract, less the cost it could have avoided by not having to
(3) V & G would have received the sum of $266,666.25 from D/H completion of excavation of the
"overlap" area, a sum which is realized by multiplying $4.25 (the amount agreed to be paid per cubic
yard of unclassified material removed) by 62,745 (the number of cubic yards removed from the
(4) against the sum of $266,666.25 which V & G would have earned had it been permitted to
perform, D/H is entitled to an offset of $2.066 per cubic yard, representing the sum of costs of
performance by V & G had it been permitted to perform, stated in amounts per cubic yard, for the
(a) payroll labor $0.375
(b) payroll taxes 0.129
(c) support personnel, greasers, mechanics, et al. 0.280
(d) depreciation of company-owned equip. 0.268
(e) fuels and lubrication 0.137
(f) tires and tubes 0.019
(g) supplies 0.071
(h) rental equipment 0. 061
(i) field supervisory personnel 0.296
(j) business and occupation tax 0.083
(k) contingencies 0.248
Items of performance cost (a) to (g), above, are taken from V & G's Exhibit 30, to the admission of
which D/H did not object to which d/H offered no countervailing evidence. Items (j) and (k) are
taken from other portions of the record.
(5) The cost of performance of & G, therefore, in excavating the over-lap" area would have been the
product of multiplying the composite cost per cubic yard, $2.066, by the number of cubic yards
stipulated to have been removed, and that product is $129,631.17;
(6) The damages sustained in this case, by V & G, the injured party, consist of the difference
between its contractual expectancy, $255,666.25, and its costs of performance of that portion of the
contract which it was prevented from performing, or $129,631.17, and that difference is
Damages of $137,035.08 will put V & G in as good a position as it would have been in had the
contract of 31 May 1983 been performed, that is, had there been no partial breach of that contract.
The Court is of the opinion that §109.8 of the Specifications does not apply as the instant claim is
based upon a breach of contract rather than upon worked performed. Therefore, V & G recover
interest on $137,035.08 in accordance with the provisions of W.Va. Code §14-3-1, in effect at the
time of the making of the contract by the parties. V & G may recover interest at 6% per annum from
the 151st day after 15 March 1988, through 18 November 1992, the issue date of this opinion. Award
of $137,035.08, plus interest in the amount of $35,095.24, for a total award of $172,130.32.
Award of $137,035.08, plus interest in the amount of $35,095.24, for a total award of $172,130.32.
Award of $172,130.32.