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decided: January 31, 1985.


Appeal from the Order of the Board of Claims in the case of Westmoreland Engineering Company, Inc. v. Commonwealth of Pennsylvania, Department of Transportation, Docket No. 542.


John J. Buchy, Jr., Assistant Counsel, with him, Mark F. Brancato, Assistant Counsel, Robert H. Raymond, Jr., Assistant Chief Counsel, Spencer A. Manthorpe, Chief Counsel, and Jay C. Waldman, General Counsel, for respondent.

Thomas P. Shearer, with him, George I. Bloom, for respondent.

Judges Williams, Jr., and Barry and Senior Judge Blatt, sitting as a panel of three. Opinion by Judge Blatt.

Author: Blatt

[ 87 Pa. Commw. Page 286]

The Pennsylvania Department of Transportation (PennDOT) appeals here a decision and order of the Board of Claims (Board) awarding Westmoreland Engineering Company, Inc. (Westmoreland) compensation for professional services rendered pursuant to Contract No. 39630.*fn1

On January 8, 1968, the parties entered into Contract No. 39630 under which Westmoreland agreed to prepare final design plans on L.R. 1015 for a distance of approximately 5.5 miles from Mt. Pleasant to New Stanton, Westmoreland County, in exchange for 3.5% of either the actual construction cost or PennDOT's estimated construction cost if the project was never

[ 87 Pa. Commw. Page 287]

    completed.*fn2 Additionally, any "extra work" authorized by the Chief Engineer of PennDOT, but not specifically included in the contract, was to be compensated in "an amount equal to the direct certified engineering payroll plus the percentage allowances paid by the Engineer [Westmoreland] for Federal and State Unemployment Taxes, Workmen's Compensation Insurance and the Engineer's share of Social Security contributions, plus 100% thereof unless otherwise specified in the contract." The contract further provided that Westmoreland submit Monthly Progress Reports showing the percentage of work completed, which it did beginning in May 1969 and continuing until the contract was cancelled in April 1976.

The Board's findings reveal that, during the negotiation stage of Contract No. 39630, PennDOT stressed its aim to expedite the completion of final design work so as to accommodate the building and opening of a new Chrysler automobile plant along L.R. 1015. As a result, Westmoreland frequently received oral direction regarding changes in the work to be completed under the contract prior to written notification and in contravention of PennDOT's normal departmental procedure. (Board Finding of Fact No. 20.) Furthermore, once work did begin in February of 1968 by order of J. H. Mifflin, PennDOT's District Engineer assigned to monitor Westmoreland's performance on this project, PennDOT continually altered the design plans as it reevaluated how the construction of the Chrysler plant would impact on the design as initially contemplated.

For example, in May 1968, final design work was halted until completion of a feasibility study involving

[ 87 Pa. Commw. Page 288]

    the possible elimination of the existing I-70 intersection with the New Stanton business road (L.R. 64125). Later, in August 1969, work on the final design phase of the project was reinstated, only to be halted again in November 1969 and then recommenced in March 1970. Additionally, as work progressed, PennDOT divided the area covered by the contract into two sections, Section 3 and Section 4, and then, sometime in August 1972, Sections 3 and 4 were further divided to create Section 3A. The parties also executed three written modifications to the contract as the need to add or delete work arose.

Under Contract No. 39630, as originally executed, Westmoreland agreed to develop final design work for, inter alia, a diamond-type interchange contiguous to property owned by Chrysler in the area which was later designated Section 3A. Late in 1971, however, PennDOT determined that the diamond-type interchange would be inadequate to handle the traffic flowing in and out of the Chrysler plant and consequently, that interchange design was abandoned. By this time, however, Westmoreland had already begun to develop the final design plans for the diamond-type interchange. Subsequently, in either January or February 1972, Mr. Mifflin orally directed Westmoreland to begin final design work on a free-flow interchange in place of the recently abandoned diamond-type interchange. Simultaneously, PennDOT requested Westmoreland to prepare a design location study for the free-flow interchange.*fn3

[ 87 Pa. Commw. Page 289]

On June 7, 1973, the parties executed Supplemental Engineering Contract No. 39630-C (Supplement C) which modified Contract No. 39630 and provided that

     the portion of L.R. 1015, Section 3 between Station to 262 to Station 370 including the design of the Chrysler Access Interchange [diamond-type interchange] is to be deleted from Agreement No. 39630 and that the Engineer [Westmoreland] shall be paid a compromise lump sum fee of One Hundred One Thousand Three Hundred Twenty-eight Dollars and Eighty-six Cents ($101,328.86) for this deleted work. This compromise settlement amount was derived as follows: $5,366,284.00 x 3.5% x 53.95% [percent completed] = $101,328.86. (Emphasis added.)

Supplement C also provided that all other provisions of Contract No. 39630 remained in full force and effect. Less than a month later, on July 3, 1973, the parties entered into a lump sum agreement, Contract No. 50746, which provided for final design work on L.R. 1015 Spur, an alternate route designed to accommodate the Chrysler plant. In addition, this lump sum contract provided for the development of right-of-way plans for Section 3A of L.R. 1015 to facilitate the condemnation of Chrysler property for necessary right-of-ways.

When PennDOT cancelled Contract No. 39630 in April 1976, Westmoreland submitted invoices seeking payment for the final design plans developed for the free-flow interchange in Section 3A which it claimed had been completed pursuant to Contract No. 39630. PennDOT refused to pay the invoices, contending that Supplement C had deleted Section 3A in its entirety from ...

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