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WEST PENN POWER COMPANY v. BETHLEHEM STEEL CORPORATION (09/22/75)

decided: September 22, 1975.

WEST PENN POWER COMPANY, ET AL., APPELLANTS,
v.
BETHLEHEM STEEL CORPORATION



Appeal from judgment of Court of Common Pleas, Civil Division, of Allegheny County, Jan. T., 1969, No. 2194, in case of West Penn Power Company, Monongahela Power Company, and The Potomac Edison Company v. Bethlehem Steel Corporation.

COUNSEL

David J. Armstrong, with him Richard S. Dorfzaun, Charles W. Kenrick, John Dickey, and Dickie, McCamey & Chilcote, and Sullivan & Cromwell, for appellants.

William B. Mallin, with him Milton W. Lamproplos, Willis A. Siegfried, Jr., G. Robert Moore, David M. Beckwith, and Eckert, Seamans, Cherin & Mellott, for appellee.

Watkins, P. J., Jacobs, Hoffman, Cercone, Van der Voort, and Spaeth, JJ. (Price, J., absent). Opinion by Spaeth, J. Cercone, J., concurs in the result. Price, J., did not participate in the consideration or decision of this case.

Author: Spaeth

[ 236 Pa. Super. Page 415]

This is an appeal from the refusal of a court en banc to remove a compulsory non-suit and to grant a new trial.*fn1 Appellants brought this action to recover about $7,000,000 as consequential damages for appellee's alleged breach of contract. Because of the scope of the case (appellants' evidence took eight weeks to present; the transcript is about 7,000 pages; and many issues have been briefed and argued that we do not find it necessary to discuss), we shall first state, in a general way, the background of the contract, adding later such facts as needed.*fn2

[ 236 Pa. Super. Page 416]

    provide the steel on a faster schedule, albeit at a higher price. A division of United States Steel was chosen to supply the steel for the lower voltage part of the system. APS invited bids from construction contractors in January, 1965, and chose Electrical Contractors, which had bid the job on a unit price basis, i.e., payment to be made on each completed tower. The general relationships thus established were that appellee was to fabricate and ship steel parts of the types and quantities requested to the destinations indicated by Sargent & Lundy, for use by Electrical Contractors, which was to establish receiving yards, preferably with railroad sidings.

Work began in March, 1965. Appellants do not concede that appellee was faithful to whatever commitment existed at any stage of the project. Nevertheless, construction proceeded. The contract between APS and Electrical Contractors contemplated that the line would be built on a 40-hour week, but that APS would reimburse Electrical Contractors for overtime payments if agreed to in advance. Apparently the men who work on this type of project tend to be transient, and in late summer of 1965, Electrical Contractors informed APS that it would have to offer more overtime in order to induce men to work on the line. This authorization was given on December 7, 1965. At the end of 1965, appellants transferred about 20% of the tower steel order from appellee to Creamer & Dunlop. This was apparently done by mutual consent; appellants claim it was necessitated by appellee's poor performance with respect to deliveries.

In the summer of 1966, Electrical Contractors informed APS that because of delays in the work, it was no longer willing to continue on the unit price basis. It blamed these delays on the failure of APS to provide timely access to right of way for the lines and also on a lack of steel. In order to keep Electrical Contractors

[ 236 Pa. Super. Page 418]

    on the job, which appellants claim was vital in order to finish the line on time, the construction contract was renegotiated on November 21, 1966, to change the computation of compensation to a cost plus fixed fee basis retroactive to the beginning of the project (i.e., back about eighteen months). No demand was made on Electrical Contractors' bonding company, APS's theory being that Electrical Contractors was not to be blamed for the delays. In January, 1967, in another move to expedite the work, appellant West Penn Power Company contracted with the construction firm of Day & Zimmerman for the completion of one part of the line. This contract also provided for payment on a cost plus fixed fee basis.

The line was completed by July, 1967. Although this was about two months later than originally planned, it was possible to place the line in commercial service on schedule by shortening the testing period. This suit was brought on November 18, 1968.*fn4

[ 236 Pa. Super. Page 419]

Stating appellants' three separate claims as one, the damages claimed may be summarized as follows:

(a) Additional costs resulting from

     the change in the manner of compen-

     sation for Electrical Contractors from

     fixed unit price to cost plus fixed fee,

     plus cost of adding Day & Zimmerman

     to the project $6,672,647.63

(b) Purchase of additional line string-

     ing equipment to make up for lost

     time 24,611.84

(c) Difference between the price paid

     to Creamer & Dunlop for steel it sup-

     plied and the price that would have

     been paid to appellee 46,032.64

(d) Cost of the audits 25,809.61

Total $6,769,101.72

As is evident these figures reflect the theory that appellee should pay so much of the cost of the work on the power line as exceeded the cost that would have accrued if Electrical Contractors had performed in accordance with its original contract and had been paid on a unit price basis. While the size of the figures is of no legal significance, it does give some indication of the factual complexity of this litigation -- a consideration that will become important later, in our discussion of the motion to amend the complaint.

The Contract as Pleaded in the Complaint

Paragraph 5 of the complaint reads ...


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