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Groves v. Warner Co.

argued: February 23, 1978.



Aldisert, Van Dusen and Weis, Circuit Judges.

Author: Weis


WEIS, Circuit Judge.

A contract for the concrete work on a bridge being constructed over the Schuylkill River in Southwest Philadelphia resulted in heavy losses for appellant S.J. Groves & Sons Company. Alleging that much of its loss was caused by the performance of its subcontractor who supplied ready-mixed concrete, Groves filed suit against Warner in the district court. At trial, however, efforts to recoup a substantial portion of the loss from the subcontractor met with only partial success. Concluding that disallowance of many of Groves' claims was based upon factual determinations supported by the record, we affirm the judgment of the district court except insofar as it too narrowly interpreted the duty to mitigate damages.

As part of a highway improvement program, the Pennsylvania Department of Transportation undertook the erection of the Girard Point Bridge in Southwest Philadelphia and selected American Bridge Company as the prime contractor. Plaintiff-appellant Groves was awarded a subcontract for the placement of the bridge's concrete decks and parapets and contracted with the defendant Warner for the delivery of ready-mixed concrete for use at the Girard Point site. Groves filed this lawsuit claiming extensive losses because of Warner's failure to deliver adequate supplies at scheduled times. The case was tried to the court and after preparing detailed findings of fact and conclusions of law, the trial judge entered judgment in favor of the plaintiff in the amount of $35,401.28.*fn1 Dissatisfied with the denial of a large part of its claimed damages, Groves appealed.

The contract at issue provided that Warner would supply approximately 35,000 cubic yards of ready-mixed concrete at a rate of 40 cubic yards per hour and at times specified by Groves. Having its plant close to the job site, Warner was equipped to prepare and deliver large quantities of concrete.*fn2 The agreement was executed in March, 1970, and the first concrete was delivered to the job site in July of that year. Groves' progress was hindered by three lengthy strikes in the spring and summer of 1970, 1971, and 1972 which postponed completion of its contract from July of 1972 to October of 1972. The work was also delayed by rejections of concrete that failed to meet state specifications, although the number of rejections was within expectations on such a project. Although concrete pours were completed at a later date than anticipated, the number of weeks during which the pours were made remained substantially the same as was originally planned.

Groves expected to pour concrete for the decks of the bridge in the mornings and then to use some of the crew to construct parapets in the afternoons. This general plan was frustrated by Warner's frequent failures to make deliveries in compliance with Groves' instructions. As a result, deck pours originally scheduled for the mornings often extended into the afternoons and evenings and created overtime labor expense.

Concerned with its lagging progress, Groves considered securing other sources of concrete as early as 1971 but found no real alternatives. It was too expensive to build its own batching plant at the site and the only other source of ready-mixed concrete in the area was the Trap Rock Company, located near the Warner plant. Trap Rock, however, was not certified to do state work in 1971 and its price was higher than Warner's. Moreover, the production facilities at Trap Rock were limited, as was the number of trucks it had available. Meanwhile, Warner continued to assure Groves that deliveries would improve.

Despite its promises, Warner's performance continued to be erratic and on June 21, 1972, the Pennsylvania Department of Transportation ordered all construction at Girard Point halted until the quality of Warner's service could be discussed at a conference. A meeting took place the next day with state officials and representatives from Warner, Groves, and other contractors in attendance. Based on Warner's renewed assurances of improved performance, state officials allowed work to resume on June 26, 1972. From that date until July 20, 1972, Warner's delivery service improved significantly, although it still did not consistently meet Groves' instructions. n the months following and until completion in October of 1972, Warner's performance continued to be uneven and unpredictable.

On June 14, 1972, when Groves again approached Trap Rock, that firm maintained that it could service the job at the desired delivery rate but did not reduce its price. On July 11, 1972, Trap Rock was certified by the state and the next day agreed to accept the same price as Warner. Groves, nevertheless, decided to continue with Warner as its sole supplier.

The district judge found that Warner had acted in bad faith by deliberately overcommitting its ability to manufacture and deliver enough concrete, providing an inadequate number of trucks to service Groves' project, and following a policy of providing delivery at only 75 percent of the ordered rate. On that basis, the court stripped Warner of the protection offered by the no-claim-for-delay clause in its contract and awarded damages. In the court's view, on June 15, 1972 Groves had no reasonable expectation that Warner's performance would improve to "totally satisfactory levels" and by July 11, 1972, "there were no practical impediments to employing Trap Rock as a supplemental supplier." The court therefore concluded that "as of July 12, 1972, Groves had an obligation to utilize Trap Rock as a supplemental supplier . . . in order to mitigate any possible 'delay damages' resulting from Warner's service." Accordingly, the court did not award Groves all the delay damages it sought, allowing only $12,534 for overtime which had been paid on days when Warner's deliveries were late before, but not after, July 12, 1972. Claims for loss of productivity not resulting in overtime were denied because, despite its problems, Groves did complete the work it had scheduled on each day.

Since the first pour on July 9, 1970 resulted in an unacceptable deck panel due to Warner's defective concrete and inadequate workmanship by Groves, the court allocated the cost of removing and replacing the panel. The total expenditure was $42,357.11 and Groves was awarded $10,589.43. In another mismanaged pour on June 20, 1972, Warner's deliveries were late and Groves was required to spend an additional $5,861.55. That sum was awarded to Groves and is not now disputed. Neither is the sum of $26,674.75 attributed to Warner's miscalculation of the volume of concrete actually delivered. The court also disallowed Groves' claims for extra parapet crews, construction of extra forms, and loss of overhead and profits, having concluded the plaintiff had not met its burden of proof.

Although Groves sustained heavy losses in its work on the bridge, the district court recognized that not all were properly attributable to Warner. The lengthy strikes - occurring each year at the very beginning of the pouring season - adverse weather, and an overly optimistic expectation of the efficiency which could be obtained on a project of this nature were also substantial factors leading to Groves' misfortune. Thus, rejection of many of Groves' claims was based primarily on factual findings which we may not disturb unless they are clearly erroneous. Krasnov v. Dinan, 465 F.2d 1298 (3d Cir. 1972). The trial judge was exceptionally painstaking in his preparation of the extensive findings of ...

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