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SHOOK OF W. VA. v. YORK CITY SEWER AUTH.

February 8, 1991

SHOOK OF WEST VIRGINIA, INC., PLAINTIFF,
v.
YORK CITY SEWER AUTHORITY, DEFENDANT.



The opinion of the court was delivered by: Rambo, District Judge.

MEMORANDUM

Before the court is the motion of York City Sewer Authority ("York"), to dismiss this action on the grounds that plaintiff, Shook of West Virginia, Inc. ("Shook") has not exhausted the dispute remedy provided in the construction contract between the parties. York refers to the motion as one to dismiss under Fed.R.Civ.P. 12(b)(1) and 12(b)(6). The parties' briefs, however, only address grounds for a 12(b)(1) dismissal for failure to exhaust contractual remedies and the motion will be treated accordingly.*fn1 Because there is a dearth of case precedent involving the precise issue in this factual context, the court will set forth the background to the action in detail.

THE CONTRACT

In 1987, York was awarded a federal Environmental Protection Agency ("EPA") construction assistance grant for the purpose of modifying York's wastewater treatment plant. Thereafter, on November 12, 1987, York and Shook entered into a contract whereby Shook would perform construction required to renovate two sewage treatment "trains," and perform certain piping and mechanical work. The contract called for Shook's work to progress in three phases, so as to accommodate continuous operation of the existing facilities. The Phase I work was scheduled for completion by January 15, 1989, Phase II work by June 20, 1990, and Phase III work by February 20, 1991. Phase I and Phase II are now completed*fn2 and Phase III is in progress. During the performance of Shook's work, there have been other contractors performing work on the project under separate contracts with York.

York hired Buchart-Horn, Inc. ("B-H") to serve as Project Engineer and construction manager for the project. Under the contract between York and Shook, B-H was given a wide range of responsibilities. For example, as project engineer, B-H must process applications and make recommendations for payment, review and approve shop drawings, certifications, or samples required by the contract documents, approve change orders, observe work in progress and, when necessary, reject defective work in progress or demand special inspections or testing. What is significant to the instant motion is that the contract also gives B-H authority to make initial decisions on disputes between the parties. A review of the relevant contract language is critical to the determination of how far B-H's authority extends in the dispute resolution process.

ARTICLE 9-ENGINEER'S STATUS DURING CONSTRUCTION

Owner's Representative:

  9.1 The ENGINEER shall be the OWNER'S
  representative during the construction period.
  The duties and responsibilities and the
  limitations of authority of the ENGINEER as the
  OWNER'S representative during construction are
  set forth in Articles 1 through 19 of these
  General Conditions and shall not be extended
  without written consent of the OWNER and
  ENGINEER.

Clarifications and Interpretations:

  9.3 The ENGINEER will issue with reasonable
  promptness such written clarifications or
  interpretations of the Contract Documents (in the
  form of drawings or otherwise) as he may
  determine necessary, which shall be consistent
  with or reasonably inferable from the overall
  intent of the Contract Documents. If the
  CONTRACTOR believes that a written clarification
  and interpretation entitles him to an increase in
  the Contract Price, he may make a claim therefor
  as provided in Article 11.

Decisions and Disagreements:

  9.9 The ENGINEER will be the initial interpreter
  of the terms and conditions of the Contract
  Documents and the judge of the performance
  thereunder. In his capacity as interpreter and
  judge he will exercise his best efforts to ensure
  faithful performance by both the OWNER and the
  CONTRACTOR. He will not show partiality to either
  and shall not be liable for the result of any
  interpretation or decision rendered in good
  faith. Claims, disputes and other matters
  relating to the execution and progress of the
  Work or the interpretation of or performance

  under the Contract Documents shall be referred
  initially to the ENGINEER for decision, which he
  shall render in writing within a reasonable time.

ARTICLE 10-CHANGES IN THE WORK

  10.2 The ENGINEER may authorize minor changes or
  alterations in the Work not involving extra cost
  and not inconsistent with the overall intent of
  the Contract Documents. These may be accomplished
  by a Field Order. If the CONTRACTOR believes that
  any minor change or alteration authorized by the
  ENGINEER entitles him to an increase in the
  Contract Price, he may make a claim therefor as
  provided in Article 11.

ARTICLE 11-CHANGE OF CONTRACT PRICE

  11.2 The Contract Price may only be changed by a
  Change Order. Any claim for an increase in the
  Contract Price, shall be in writing delivered to
  the OWNER and the ENGINEER within fifteen days of
  the occurrence of the event giving rise to the
  claim.*fn3 Any change in the Contract ...

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