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SUTTER CORPORATION v. TRI-BORO MUNICIPAL AUTHORITY (01/25/85)

filed: January 25, 1985.

THE SUTTER CORPORATION, APPELLANT,
v.
TRI-BORO MUNICIPAL AUTHORITY



No. 02015 Phila., 1982, Appeal from the Order Entered June 18, 1982 in the Court of Common Pleas of Susquehanna County, Civil Division, at No. 93 of 1978.

COUNSEL

Thomas M. Marsilio, Hazelton, for appellant.

Jack M. Stover, Harrisburg, for appellee.

Cavanaugh, Cirillo and Watkins, JJ.

Author: Watkins

[ 338 Pa. Super. Page 220]

This case comes to us on appeal from the Court of Common Pleas of Susquehanna County and involves plaintiff-appellant's appeal from a decision of the court below which found in favor of the defendant-appellee and held that it was entitled to retain the sum of $59,300 in liquidated damages on its contract with plaintiff. Defendant had filed an Answer and Counterclaim to plaintiff's Complaint. The total contract price was $829,071.89.

Plaintiff, a contractor, and defendant, a municipal authority, entered into a written, public construction contract for the construction of an upgraded sewage treatment plant and pumping station on May 21, 1974. Defendant gave plaintiff a "Notice to Proceed" with the work on July 1, 1974. Article II of the Contract specifically provided that work was to be completed within 365 days of the date indicated in the Notice to Proceed. It further provided that in the event that the contractor failed to complete the work during that period that defendant was entitled to retain the

[ 338 Pa. Super. Page 221]

    sum of $200 per day, not including Sundays and other legal holidays, as liquidated damages for each day the completion of the work was delayed. Plaintiff did request and received from defendant one extension of time for completion of the work. Said extension was for 125 days moving the contract completion date to October 31, 1975. The court below held that plaintiff did not complete the work until December 1, 1976 when defendant's engineers certified the project as complete.

Between December of 1975 and December 1, 1976 defendant's engineer (The firm of Gannett, Fleming, Corddry and Carpenter) conducted numerous inspections and mechanical performance tests of plaintiff's work. Extensive listings of deficiencies were found in plaintiff's contract performance. These deficiencies were acknowledged by plaintiff's personnel as late as November 15, 1976.

Financing for defendant's project was by a combination of grants and loans from the Farmers Home Administration, the Environmental Protection Agency, the Department of Environmental Resources and the Appalachian Regional Commission. Because full financing of such projects does not become available until the project is complete defendant had to borrow funds for the project from a private lending institution at an annual interest rate of 6%. The financing from Farmer's Home Administration was at an annual interest rate of %5. Thus, the delay in the completion of the project resulted in defendant being unable to reduce its interim borrowing resulting in excess interest charges. The excess interest charges amounted to $14,000 with regard to the EPA grant and $6,490 per year regarding the Farmer Home Administration financing. In addition the delay resulted in additional engineering fees over and above those originally anticipated. Defendant paid Gannett $42,052.59 over and above the anticipated fee due to plaintiff's delay in completing the project.

As a result of plaintiff's delay defendant assessed its liquidated damages for 296.5 days at $200 per day or $59,300. The matter was tried non-jury by the court below after ...


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