decided: February 17, 1983.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF COMMUNITY AFFAIRS, PETITIONER
CRAFTECH INTERNATIONAL, LTD., RESPONDENT. CRAFTECH INTERNATIONAL, LTD., PETITIONER V. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF COMMUNITY AFFAIRS, RESPONDENT
Appeals from the Order of the Board of Claims in the case of Craftech International Ltd. v. Commonwealth of Pennsylvania, No. 405.
Mollie A. McCurdy, Deputy Attorney General, with her, Susan J. Forney and Allen C. Warshaw, Deputy Attorneys General, and LeRoy S. Zimmerman, Attorney General, for Department of Community Affairs.
Charles J. Weiss, Timoney, Knox, Hasson & Weand, for Craftech International, Ltd.
Judges Rogers, MacPhail and Doyle, sitting as a panel of three. Opinion by Judge Doyle.
[ 72 Pa. Commw. Page 163]
This is an appeal filed following an adjudication of the Board of Claims (Board) on a claim made by Craftech International, Ltd. (Craftech) against the Department of Community Affairs (DCA). After the Board had made an award in favor of Craftech, DCA filed a petition for review (No. 1664 C.D. 1981) arguing that the Board lacked jurisdiction to entertain Craftech's complaint. In the alternative, DCA argues that Craftech failed to sustain its burden of proof as
[ 72 Pa. Commw. Page 164]
to damages. Craftech filed a cross petition for review (No. 1792 C.D. 1981) contending that the Board adopted an erroneous method of determining the measure of damages.
The salient facts are as follows. During the third week in June, 1972, Tropical Storm Agnes spread torrential rains across the Commonwealth. The floods which resulted therefrom caused fifty deaths, approximately one and a half billion dollars of damage to property and crops, and left over 250,000 persons homeless. Among the hardest hit were the residents of the Wyoming Valley. In an effort to alleviate the suffering of these flood victims, DCA established emergency mobile home parks. Included within these emergency parks were monolithic*fn1 prefabricated structures which served as community centers. Pursuant to a contract executed on October 6, 1972 with DCA, Craftech agreed to construct a maximum of fifty community centers on prepared foundations in accordance with plans approved by DCA. Although the parties never agreed as to when work on the project would begin,*fn2 the contract required that performance be completed within thirty days after performance did begin. In fact, work did not begin until November 27, 1972 when the first foundation became available. As a result of substantial delays, which extended through the winter of 1972-73, construction of the community centers continued until August 10, 1973 when DCA terminated the contract.
On October 15, 1974, Craftech filed a claim with the Board against DCA alleging breach of contract and seeking damages. After the pleadings had closed,
[ 72 Pa. Commw. Page 165]
DCA filed a motion for Summary Judgment pursuant to Pa. R.C.P. 1035, in which it argued that the Board lacked jurisdiction because Craftech had failed to file its claim within six months after its cause of action accrued as required by Section 6 of the Arbitration Act (Act), Act of May 20, 1937, P.L. 728, as amended, 72 P.S. § 4651-6. The Board denied the motion; and, by order dated September 17, 1975, this Court dismissed DCA's interlocutory appeal by permission based on our finding that the pleadings raised issues of fact concerning the controlling question of law as to when Craftech's cause of action accrued. On June 30, 1981, following a hearing before the Board, Craftech was awarded $100,590.78 damages. This appeal followed.
Now, with the benefit of a full record, including the Board's findings of fact and conclusions of law, DCA again argues that the Board lacked jurisdiction. In pertinent part, Section 6 of the Act provides that "[t]he board shall have no power and exercise no jurisdiction over a claim asserted against the Commonwealth unless the claim shall have been filed within six months after it accrued." The jurisdictional period begins to run from the time the cause of action arose and that is when the injuried party is first able to litigate the claim. Allen N. Lashner, Inc. v. Department of Highways, 1 Pa. Commonwealth Ct. 486, 275 A.2d 403 (1971). A party becomes able to litigate a claim when the amount due under the claim is known. Department of Public Welfare v. Federated Security, Inc., 49 Pa. Commonwealth Ct. 411, 411 A.2d 284 (1980). Furthermore, Section 6 of the Act also provides that:
[t]he claimants shall advise the department involved, in writing, of such claim, specifying the details thereof, and shall, within the same period, file with the secretary of the board a concise and specific written statement of this claim,
[ 72 Pa. Commw. Page 166]
signed and verified by the claimant before an officer authorized to administer oaths.
A claim does not accrue until a claimant is able to prepare this detailed statement. Penn-Jersey Contractors, Inc. v. General State Authority, 12 Pa. Commonwealth Ct. 203, 315 A.2d 920 (1974).
In order to determine the moment when Craftech's cause of action accrued, we must review both the course of events and the conduct of the parties over a fourteen month period. On August 10, 1973, DCA sent notice to Craftech of the immediate termination of the contract. The integrated contract between DCA and Craftech provided for termination for default (Article XVII),*fn3 which required thirty days notice, and termination by either party, on written notice (Article XI(c)).*fn4 Although DCA did not identify which termination
[ 72 Pa. Commw. Page 167]
clause it had invoked, it demanded that Craftech turn over to DCA all units and materials on site, as well as all project records and plans as provided by an Article XI(c) termination. In addition, DCA expressed its intention to complete the structures and to hold Craftech liable for expenses which might exceed the contract price. By letter dated August 29, 1973, Craftech acknowledged DCA's notice of termination and, pursuant to termination under Article XI(c), turned over to DCA the material and items it had demanded. Thereafter, on September 11, 1973, DCA informed Craftech that termination was not made pursuant to Article XI(c); at the same time, however, DCA accepted delivery of the structures, materials, records and documents to which it was entitled only under Article XI(c).
DCA's position was contradictory and caused great confusion in Craftech's effort to determine its rights and the extent of its claim.*fn5 For the purpose of clarifying the method of termination, numerous calls were made to DCA and numerous messages were left for DCA representatives to contact Craftech representatives.*fn6 DCA officials, however, were directed not to
[ 72 Pa. Commw. Page 168]
respond to Craftech messages, and in fact, did not respond to any inquiry from Craftech.*fn7 By letter dated April 18, 1974, DCA advised Craftech of an alleged breach of structural warranties concerning the community centers, and indicated its willingness to enter into negotiations with Craftech to settle amicably. This letter resulted in a meeting between the parties in May, 1974. At that meeting, Craftech discovered that: (1) DCA would not supply any clarification regarding its method of terminating the contract; (2) Regardless of the method of termination, Craftech would not own, receive or be entitled to any of the materials, inventory and equipment at the construction sites; (3) Craftech would not receive payment for services performed and for expenses incurred to the date of termination; and (4) DCA would have no cost claim or setoff against Craftech because DCA never completed and did not intend to use the buildings. Negotiations between the parties completely broke down following a subsequent meeting held on July 15, 1974. Thereafter, on October 15, 1974, Craftech filed its complaint with the Board.
DCA argues that Craftech's claim accrued upon receipt of the August 10, 1973 notice of termination. If this is true, then the Board would not have jurisdiction over Craftech's claim, filed fourteen months later on October 15, 1974. We conclude, however, that as a result of DCA's conduct, Craftech's claim did not accrue until May, 1974. It was not until the meeting held during
[ 72 Pa. Commw. Page 169]
that month that Craftech was able to either determine the value or amount of its claim, see Federated Securities, Inc., or file a concise and specific written statement of its claim. See Penn-Jersey Contractors, Inc. DCA was aware of Craftech's genuine confusion regarding the method of termination. At the direction of DCA representatives, however, Craftech's reasonable attempts to clarify the circumstances surrounding termination were ignored. Such affirmative conduct, which concealed facts necessary to institute Craftech's action, estops DCA from asserting the limitation of action as a defense. Schaffer v. Larzelere, 410 Pa. 402, 189 A.2d 267 (1963); Hauptmann v. Department of Transportation, 59 Pa. Commonwealth Ct. 277, 429 A.2d 1207 (1981); Nyo v. Pennsylvania Labor Relations Board, 53 Pa. Commonwealth Ct. 646, 419 A.2d 244 (1980); Med-Mar, Inc. v. Dilworth, 214 Pa. Superior Ct. 402, 257 A.2d 910 (1969). The Board's jurisdiction was proper since Craftech's complaint was filed within six months of the May, 1974 meeting.
DCA, exercising prudent foresight, argues in the alternative that Craftech failed to sustain its burden of proof in measuring damages. Citing as authority Lichter v. Mellon-Stuart Co., 305 F.2d 216 (3d Cir. 1962), DCA asserts that the proper measure of damages should not include expenditures attributable to any cause other than the breach of the other party. Specifically, DCA argues that extra costs due to theft and vandalism, which the Board included in damages, were not caused by its failure to provide prepared foundations as required by the contract. Therefore, based on Lichter, DCA concludes that the Court should reject Craftech's claim for these damages. We disagree. The Board found that Craftech was ready and able to complete performance within thirty days.*fn8 Due
[ 72 Pa. Commw. Page 170]
to DCA's conduct, however, construction was frequently delayed and continued over a nine month period. It was during these periods of delay that the partially completed structures fell victim to theft and vandalism.*fn9 The necessary expense for replacement and repair, being a foreseeable consequence of DCA's breach which increased Craftech's actual costs, was properly included in the measure of damages. Department of Highways v. S. J. Groves and Sons Co., 20 Pa. Commonwealth Ct. 526, 343 A.2d 72 (1975).
Finally, in its cross appeal, Craftech argues that the Board adopted an erroneous measure of damages. Our review reveals that while the Board adopted the proper formula to measure damages, they applied that formula improperly. In addition to being entitled to recover excess costs, S. J. Groves and Sons Co., Craftech is also entitled to recover the profit anticipated under the contract. C. J. Langenfelder & Son, Inc. v. Department of Transportation, 44 Pa. Commonwealth Ct. 585, 404 A.2d 745 (1979). The method of determining excess cost is the difference between the contract price paid and the actual cost incurred by Craftech and attributable to DCA's breach. S. J. Groves and Sons Co. The figures necessary to determine the appropriate measure of damages are not in dispute. Upon execution of the contract, Craftech received payment of one-half the contract price, or $128,750.00. The actual cost to perform one-half of the contract was $201,238.78. The excess cost is the difference between those figures, or $72,488.78. If the contract had been completed as expected, Craftech would have made a profit
[ 72 Pa. Commw. Page 171]
of $56,204.00. The correct measure of damages therefore must include lost profit as well as the excess cost, or a total of $128,692.78. In calculating lost profit, the Board included only the lost profit for the second half of the contract, or $28,102.00. The Board reasoned (theoretically) that the one-half contract price which Craftech had received included one-half of the expected profit. In fact, however, our careful review of the testimony and exhibits discloses that, as a result of DCA's breach, Craftech realized no profit from the $128,750.00 initial payment received upon execution of the contract.
Now, February 17, 1983, the judgment entered by the Board of Claims by order dated June 30, 1981 is modified so as to add thereto the amount of $28,102.00; and as so modified, the said judgment is affirmed.
Affirmed as modified.