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GREEN INTERNATIONAL v. DEPARTMENT GENERAL SERVICES (01/08/87)

decided: January 8, 1987.

GREEN INTERNATIONAL, INC. AND MCCORMICK, TAYLOR & ASSOCIATES, INC., A JOINT VENTURE, PETITIONERS
v.
DEPARTMENT OF GENERAL SERVICES, RESPONDENT. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF GENERAL SERVICES, PETITIONER V. GREEN INTERNATIONAL, INC. AND MCCORMICK, TAYLOR & ASSOCIATES, INC., A JOINT VENTURE, RESPONDENTS



Appeals from the Order of the Board of Claims, in case of Green International, Inc. and McCormick, Taylor & Associates, Inc., a joint venture v. Commonwealth of Pennsylvania, Department of General Services, No. 850, dated September 25, 1985.

COUNSEL

Michael D. Reed, Chief of Litigation, with him, Thomas M. Devlin, Assistant Counsel, and Anthony P. Krzywicki, Chief Counsel, for petitioner/respondent, Commonwealth of Pennsylvania, Department of General Services.

Brian W. Ashbaugh, with him, Richard DiSalle, Rose, Schmidt, Chapman, Duff & Hasley, for petitioners/respondents, Green International, Inc. and McCormick, Taylor & Associates, Inc., a joint venture.

Judges Craig and Barry, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Craig.

Author: Craig

[ 103 Pa. Commw. Page 85]

Green International, Inc. (Green) and McCormick, Taylor & Associates, Inc. (MTA), two corporations acting as a joint venture, and the Department of General Services (DGS) cross-appeal from an order of the Board of Claims (board) directing DGS to pay the joint venture $157,446.68 in damages for a breach of a construction contract executed by the parties on September 23, 1971.

[ 103 Pa. Commw. Page 86]

    delay damage calculations by DGS when it made the $43,649.01 award.

The board's calculation of damages is as follows:

Basic Service Fee $311,077.73

Additional Compensation for

Delay 90,120.25

Additional Work 83,164.15

New Water Well 95,770.00

Change Order Fees 4,069.93

TOTAL: $584,202.06

Subtract payments received

     by Claimant 426,755.38

TOTAL due Claimant $157,446.68

Both parties contend that the board committed computational errors and errors of law when it arrived at the $157,446.68 total due to the joint venture. We will address each claim in the order in which it is raised.

II. DGS Appeal

A. New Well Payments

On April 2, 1975, DGS and the joint venture executed an amendment to the agreement providing:

(c) The Professional shall receive an additional sum not to exceed the amount of Ninety-Five Thousand, Seven Hundred Seventy and 00/100 Dollars ($95,770.00) to cover the cost of a New Water Well. . . .

The agreement designates Green and MTA as "the Professional".

The parties do not dispute the joint venture's performance under the terms of the amendment through a subcontractor to the MTA Corp. Neither do the parties dispute DGS' tender of $105,347 in six checks payable to MTA ($95,770 plus 10% contractor's fee). DGS, however,

[ 103 Pa. Commw. Page 88]

    argues that the board erred when it failed to credit DGS with the $105,347 payment to MTA.*fn1 The joint venture contends that the board properly excluded the credit because DGS tendered payment to MTA alone, and not to the joint venture as designated in the amendment.

The record contains the following: five letters mailed from MTA to DGS between September 6, 1974 and April 27, 1975 enclosing invoices from the subcontractor, Layne-New York Company, Inc., for work done on GSA 800-145 -- Penn State University-New Well; six invoices from Layne-New York Company totaling $95,768.38; and copies of six checks drawn by DGS under project No. 800-145 "Par C" -- the amounts of which correspond to the Layne invoices plus a ten percent fee for MTA.

The joint venture contends, without citing authority, that for DGS to claim credit for the new well payments, it must prove: (1) that the joint venture with whom it contracted is a partnership rather than an association; (2) that MTA was acting as a member of such partnership when it received the payments totaling $105,347; and (3) that DGS's proof of the payments is credible.

DGS argues that it made the checks payable to MTA alone to expedite payment to Layne-New York Co., the subcontractor under MTA's supervision, and that the classification of the joint venture as a partnership or an association is irrelevant to the validity of the credit

[ 103 Pa. Commw. Page 89]

    claim. DGS argues that the relevant determination is the board's Conclusion of Law No. 16 which states:

Payment to one party of a joint venture constitutes payment to the joint venture.

We need not resolve the question of whether or not the board's Conclusion of Law No. 16 is a correct statement of Pennsylvania law, however, because it is not determinative of DGS's entitlement to the $105,347 credit. Even if payment to MTA does not constitute payment to the joint venture in this case, DGS' oversight amounts to an immaterial departure from the contract's requirements.

A review of the facts concerning the operation of the joint venture reveals that the Green-MTA joint venture is a joint venture in name only. The record does not contain evidence of a joint venture agreement between Green and MTA, nor does the record indicate that the two companies exerted mutual control over any segment of the project. To the contrary, the record reveals that Green requested that DGS treat Green and MTA separately for GSA 800-145 purposes because the work of the two companies did not interrelate. DGS refused to alter the agreement treating MTA and Green as a joint venture.*fn2

Furthermore, Green and MTA state that they do not share in the profits or losses realized in the DGS contract. Apparently, the only area of joint control between the companies is a joint checking account into which DGS payments are deposited and from which individual disbursements are made to Green or MTA.

[ 103 Pa. Commw. Page 90]

Although a literal reading of the contract amendment mandates payment to the joint venture for the new well, DGS' payments to MTA, instead of to Green-MTA, appears to be a harmless error in light of MTA's exclusive interest in the new well payments. We, therefore, conclude that the board erred as a matter of law when it failed to add $105,347 to the $426,755.38 total representing payments received by the joint venture. The correct calculation of the total of DGS's payments is $532,102.38.*fn3

B. Delay Damages

DGS argues that the board's Finding of Fact No. 71(c), which states that DGS is liable for delay damages based on a delay in construction from January 10, 1977 to July 27, 1981 (55 months), is in error because it conflicts with the board's Conclusion of Law No. 12, which states that the joint venture is responsible for six months of the delay, and Conclusion of Law No. 13, which states that Phase II construction concluded in December, 1980.

The relevant contract provision states:

4.2.100 Effect of Delays in Construction. If the actual period of construction shall not exceed the period of construction specified in the Contract Documents by more than twenty percent (20%) the Professional shall perform all construction inspection

[ 103 Pa. Commw. Page 91]

    and review services during the period of such delay in accordance with Section 2.2.503 without additional compensation except that, on request, the Authority may during such period release up to fifty percent (50%) of the remainder withheld under Section 4.1.104(a). If the period of this delay shall exceed such twenty percent (20%) through no fault of the Professional, then the Professional shall, for each month of such additional delay [beyond such twenty percent (20%)] during which there is additional and active ...


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