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J.I. Hass Co. v. Gilbane Building Co.

argued: February 28, 1989.

J.I. HASS CO., INC.
v.
GILBANE BUILDING COMPANY, A CORP. IN THE STATE OF RHODE ISLAND, GILBANE BUILDING COMPANY, APPELLANT IN NO. 88-5465; J.I. HASS CO., INC., APPELLANT IN NO. 88-5523 V. GILBANE BUILDING COMPANY, A CORP. IN THE STATE OF RHODE ISLAND



On Appeal from the United States District Court for the District of New Jersey (Newark) (D.C. Civil Action No. 83-1746).

Higginbotham, Jr., Stapleton and Cowen, Circuit Judges.

Author: Higginbotham

Opinion OF THE COURT

A. LEON HIGGINBOTHAM, JR., Circuit Judge

This is both an appeal and a cross-appeal from the judgment of the district court awarding the plaintiff-appellant quantum meruit compensation pursuant to a jury verdict. The plaintiff-appellant contends that the district court erred in its determination of the prejudgment interest due under the award. The defendant-cross-appellant appeals from the district court's judgment on the merits of this case, contending that the district court misapplied the law and committed reversible trial errors. Upon our review of the record before us and the legal precepts involved, we find for the cross-appellant. Accordingly, we will reverse the district court's judgment and remand for a new trial.

I.

This action arises out of a contractual dispute between a prime contractor and subcontractor, both of whom were involved in the construction of a brewery for the Miller Brewing Company ("Miller") in Trenton, Ohio. The Gilbane Building Company of Rhode Island ("Gilbane"), one of Miller's prime contractors, entered into a subcontract with the J.I. Hass Company, Inc. of New Jersey ("Hass"), a painting contractor. This subcontract, dated March 24, 1981, was written and executed by both parties and required Hass to perform painting work in certain buildings in the construction project.*fn1 The subcontract also contained language, standard in the construction trade, allowing Gilbane to direct Hass to perform extra work through the issuance of change orders that increased the subcontract's scope. Under these change orders, Hass was to receive additional compensation in exchange.

Section 7(b) of the parties' subcontract provided for the performance of extra work and the payment thereof as follows:

(b) No changes shall be made in the work except upon the written order of the Contractor; the amount to be paid by the Contractor or allowed by the Subcontractor by virtue of said changes to be stated in said orders. In the event of any additions, the amount of compensation to be paid, as so ordered, shall be determined as follows:

(1) By such applicable unit prices as set forth in the contract, or

(2) If no such unit prices are set forth, then by a lump sum mutually agreed upon by the Architect, General Contractor and Subcontractor, or

(3) If no such unit prices are set forth, and if the parties cannot agree upon a lump sum, then by the actual net cost in money to the Subcontractor of materials and labor . . . plus compensation of 5% for overhead and 10% for profit.

Appendix ("App.") at 3378.

Pursuant to ยง 7(b), change order no. 1 was entered on June 1, 1981. Under that change order, Hass agreed to paint more facilities for an additional $753,000. App. at 3466. After Hass had begun performing under change order no. 1, however, a dispute arose between Gilbane and Hass as to whether certain painting of the buildings' "mechanical systems"*fn2 fell within the change order's scope. Gilbane directed Hass to perform the work that was disputed. Hass subsequently performed some of the work under protest, submitting a claim for compensation pursuant to the extra work provisions of the subcontract. Gilbane adhered, ...


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