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COMMONWEALTH PENNSYLVANIA v. OSAGE COMPANY (04/07/76)

COMMONWEALTH COURT OF PENNSYLVANIA


decided: April 7, 1976.

COMMONWEALTH OF PENNSYLVANIA, THE GENERAL STATE AUTHORITY (NOW KNOWN AS THE DEPARTMENT OF GENERAL SERVICES)
v.
OSAGE COMPANY, INC., APPELLANT

Appeal from the Order of the Board of Arbitration of Claims in case of Osage Company, Inc. v. Commonwealth of Pennsylvania, General State Authority, Docket No. 302.

COUNSEL

James C. Larrimer, with him Dougherty, Larrimer & Lee, for appellant.

David W. Reager, Assistant Counsel, with him Arnold L. Wainstein, Assistant Counsel, Richard D. Holahan, Assistant General Counsel, and Michael A. Madar, Chief Counsel, for appellee.

President Judge Bowman and Judges Crumlish, Jr., Wilkinson, Jr., Mencer, Rogers and Blatt. Judge Kramer did not participate. Opinion by Judge Wilkinson.

Author: Wilkinson

[ 24 Pa. Commw. Page 277]

This case is an appeal from a decision by the Board of Arbitration of Claims (Board) which denied claims by appellant for certain items of additional expense it incurred under a contract with the General State Authority (GSA) (now the Department of General Services). We affirm in part and remand to the Board for further proceedings.

On October 18, 1968, appellant, as successful bidder, executed a contract with the GSA for the general construction of a marina channel and jetties at Presque Isle State Park in Erie County. As the contractor, appellant was required to dredge the marina channel in areas and

[ 24 Pa. Commw. Page 278]

    to elevations indicated on the contract drawings. Upon commencing the dredging operation, appellant discovered that the elevations of the channel bottom to be dredged were actually higher than those stated in the drawings, thus necessitating the dredging of a greater quantity of material than appellant anticipated. Appellant was also required to install soil-cement pavement at various locations in the park. Following the initial installation of the pavement, the GSA informed appellant that the soil-cement material did not meet contract specifications and directed appellant to remove the pavement and make another installation. Appellant complied.

By writing dated July 14, 1970, subsequent to the completion and final inspection of the project, appellant submitted a list of claims to the GSA, which included damages related to the extra dredging of the channel and to the rejection of the first soil-cement pavement installation.*fn1 The GSA denied the claims and appellant filed a complaint with the Board. Hearings were held in September, 1974, and January, 1975, at which extensive testimony was taken and numerous exhibits introduced. The Board refused the claims that grew out of the extra dredging and the rejection of the pavement installation.*fn2 Appellant is now before this Court challenging that refusal.

DREDGING

Citing language contained in paragraphs 8 and 9 of the "Special Requirements" incorporated into the contract and our decision in Department of Transportation v. Acchioni and Canuso, Inc., 14 Pa. Commonwealth Ct. 596,

[ 24 Pa. Commw. Page 279324]

A.2d 828 (1974), the Board denied the claim for additional costs resulting from the extra dredging. Paragraph 9 expressly places the risk for the accuracy of all data concerning subsurface conditions on the contractor.*fn3 In Acchioni and Canuso, Inc., we held that similar language precluded a contractor from additional compensation although the contractor relied on subsurface information provided it by the Department of Transportation which subsequently proved erroneous. Paragraph 8 states that excavation done under the contract is "unclassified" and that "[n]o extra or additional compensation will be paid for excavation under this contract."*fn4 Accordingly, the Board held that appellant assumed

[ 24 Pa. Commw. Page 280]

    the risk that the elevations shown on the contract drawings may differ from the actual levels of the channel bottom.

Appellant, however, argues that the elevations contained in the drawings do not constitute "subsurface information" as contemplated by paragraph 9, and that paragraphs 8 and 9 relate only to "excavation," not to "dredging."*fn5 Rather, appellant contends that paragraph 21 of the "General Construction" specification and paragraph 27 of the "General Conditions" actually require the contractor to rely on the elevations.

Paragraph 21 provides:

"The Contractor shall remove material by dredging from the areas and to the elevations as shown on the drawings, and shall deposit the dredged material as required for fills. Dikes shall be built and maintained by the Contractor for the retention of hydraulically placed material."

Paragraph 27 states:

"The Contractor shall employ a competent Engineer satisfactory to The Authority to lay out the work from the initial points of instruction as given by The Authority and he shall take as a basis the figures on the plans, and shall lay out all intersections, all building lines at corners and centers, test and check all elevations and levels, locate levels and plumb lines of walls, beams and columns and other parts of the construction as the work progresses. All work of every description shall be laid out by the Contractor, who will be held solely responsible for its correctness, and all expenses in connection with this work shall be paid for by the Contractor."

[ 24 Pa. Commw. Page 281]

We find that appellant has placed an unwarranted interpretation on the foregoing provisions. Paragraph 21 only directs the contractor to rely on the contract drawings for (1) the locations, i.e., the "areas," in which dredging is to be performed, and (2) the levels, i.e., the "elevations," which are to result from the dredging. The language does not direct the contractor to rely on the pre-dredging elevations representing the actual levels of the channel bottom. Indeed, the paragraph expressly states that the contractor is to dredge material to the elevations indicated on the drawings, not from the elevations. Similarly, paragraph 27 does not direct the contractor to accept blindly the figures on the drawings in laying out the work. Rather, the paragraph provides that the engineer of the contractor is to use such figures only as the initial basis for the work lay out. The engineer is then required to "test and check all elevations and levels," the correctness of which is the sole responsibility of the contractor. Consequently, we reject appellant's contention that it was required to rely on the elevations shown on the contract drawings and hold, as did the Board, that appellant assumed the risk of any discrepancy between those elevations and the actual levels of the channel bottom.*fn6

However, we need not go as far as the Board and hold that appellant specifically undertook that risk under paragraphs 8 and 9 of the "Special Requirements." It is fundamental that "a contractor is presumed, in the absence

[ 24 Pa. Commw. Page 282]

    of an express provision to the contrary, to have assumed the risk of unforeseen contingencies arising during the course of the work, unless performance is rendered impossible by an act of God, the law, or the other party." O'Neill Construction Co., Inc. v. Philadelphia, 335 Pa. 359, 361, 6 A.2d 525, 526-27 (1939); accord, Department of Transportation v. Acchioni and Canuso, Inc., supra. Since neither the provisions cited by appellant nor any others contained in the contract materials are contrary, and since an act of God, the law or the GSA is not involved, this presumption applies to the channel bottom elevations and is controlling. Thus, it is unnecessary to decide whether appellant specifically, under paragraphs 8 and 9, assumed the risk that the actual elevations may differ from those in the drawings when, absent those paragraphs, appellant is nonetheless presumed to have borne that risk.

SOIL-CEMENT

Citing paragraph 69 of the "General Construction" specification, the Board held that appellant was not entitled to damages resulting from the rejection of the first soil-cement pavement installation. Paragraph 69 requires the contractor to have five tests performed on a trial mix of material it intends to use for soil-cement by a GSA approved laboratory, the results of which are to be submitted by the contractor to the GSA.*fn7 The Board found

[ 24 Pa. Commw. Page 283]

    that appellant began pouring the first soil-cement pavement before all five tests were completed on a trial mix, thereby failing its duty under paragraph 69.*fn8

Appellant admits its responsibility under paragraph 69 and that it poured, albeit unwittingly, the soil-cement before all tests were completed. However, contending constructive fraud and interference with contract by the GSA, appellant argues that it was not responsible that all tests were not performed at the time of the initial cement installation. Particularly, appellant alleges, and presented evidence at the hearings, that the GSA, through separate contracts with the testing laboratory, maintained exclusive control over the testing processes and distribution of the results thereof;*fn9 that appellant submitted a trial mix to the GSA for the performance of all five tests; that the GSA represented to appellant that all tests had been performed and that the trial mix had met the specifications; and that the GSA participated in scheduling the installation of the soil-cement pavement by appellant without notifying appellant that all tests had not actually been completed.

[ 24 Pa. Commw. Page 284]

We have carefully reviewed the contract materials and find that appellant had undertaken substantial risks which, however, did not include affirmative misrepresentations by the GSA regarding the testing of soil-cement material as required by paragraph 69. Nevertheless, we cannot determine the merits of appellant's contentions since the Board failed to make any findings and conclusions on these issues.*fn10 Consequently, we have no alternative but to vacate that portion of the Board's order denying appellant's claim for damages resulting from the rejection of the first soil-cement pavement installation and to remand to the Board for further proceedings.*fn11

Accordingly, we enter the following

Order

Now, April 7, 1976, the order of the Board of Arbitration of Claims, at Docket No. 302, dated September 17, 1975, is hereby affirmed except as follows:

That portion of the order denying the claim of appellant herein for damages resulting from the rejection of the first soil-cement pavement installation is hereby vacated, and the record in this case is hereby remanded to the Board of Arbitration of Claims with directions to make appropriate findings of fact and conclusions of law and to enter an order thereon concerning appellant's allegations of constructive fraud and interference with contract by the General State Authority (now the Department of General Services).

Disposition

Affirmed in part and vacated in part. Case remanded.


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