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Independence Excavating, Inc. v. Joseph McCormick Construction Co., Inc.

Superior Court of Pennsylvania

November 8, 2013



Appeal from the Judgment entered December 7, 2012, in the Court of Common Pleas of Erie County, Civil Division, at No(s): 14604-2008

John F. Mizner, Esquire Joseph M. Kanfer, Esquire Counsel for Joseph McCormick Construction Company, Inc.

Richard A. Lanzillo, Esquire Neal R. Devlin, Esquire Counsel for Presque Isle Downs, Inc.




In this civil action, defendant Joseph McCormick Construction Company, Inc. ("McCormick") appeals, and defendant Presque Isle Downs, Inc. ("Presque Isle") cross appeals, from the trial court's order and ultimate judgment. After careful review, we affirm on the trial court opinion authored by the Honorable Ernest J. DiSantis, Jr.

The parties' dispute arises from a construction project attendant to the Presque Isle casino and racetrack in northwestern Pennsylvania. Presque Isle contracted with McCormick, as general contractor, and Independence Excavating, as subcontractor. The parties became embroiled in a contract dispute. On September 23, 2008, plaintiff Independence Excavating filed a complaint against McCormick, who in turn filed a third party complaint against Presque Isle. During October of 2012, the trial court convened a non-jury trial on McCormick's claims against Presque Isle, and Presque Isle's counterclaims. On October 18, 2012, the trial court rendered a decision finding in favor of each party against the other. The net effect was an award to McCormick in the amount of $140, 211.56. Both parties filed motions for post-trial relief. On December 7, 2012, the trial court denied Presque Isle's motion for post-trial relief, and denied in part and granted in part McCormick's post-trial motion by awarding 1% interest per month, "to begin on the date McCormick Construction paid Independence Excavating, Inc…." Both parties appealed.

Our scope of review on appeal from a non-jury trial is limited to whether the findings of fact are supported by competent evidence and whether the trial court committed an error of law. Roman Mosaic & Tile Co. v. Thomas P. Carney, Inc., 729 A.2d 73, 76 (Pa.Super. 1999). Questions of credibility and conflicts in evidence are for the trial court to resolve, and the reviewing court should not reweigh the evidence; additionally, the evidence is reviewed by this Court in the light most favorable to the verdict winner. John B. Conomos, Inc. v. Sun Co., Inc. (R&M), 831 A.2d 696, 703 (Pa.Super. 2003).

Mindful of the foregoing, we have reviewed the record, heard oral argument, considered the applicable law, and concluded that the trial court committed no error of law. Furthermore, the Honorable Ernest J. DiSantis, Jr., sitting as the trial court, has issued an articulate, thorough and well-reasoned opinion, dated February 19, 2013, which we adopt as our own. Judge DiSantis has ably analyzed the parties' claims, such that further commentary by this Court would be redundant.

Judgment affirmed.

Judgment Entered.


No. 14604 of 2008

Dated: February 20, 2013


Ernest J. DiSantis, Jr., Judge

Appellant, Joseph McCormick Construction Company, Inc. ("McCormick") and Cross-Appellant, Presque Isle Downs, Inc. ("Presque Isle"), appeal from the judgment entered on December 7, 2012 on this Court's Decision dated October 18, 2012 and the Order of December 7, 2012 denying Presque Isle's Motion for Post-Trial Relief and granting in part and denying In part McCormsck's Motion for Post-Thai Relief. Based upon the following, this Court respectfully requests that judgment be affirmed.


This case involves a construction project related to a horse racing track known as "Presque Isle Downs Phase Two Highway Occupancy Permit Roadway Improvements" (the "Project"). The Project involved widening of, and improvements to, State Route 97 and the widening of the on and off ramps of Interstate 90. The Project also involved the construction of drainage facilities, relocation of sewer and water lines, construction of traffic signals, and other incidental work. (NT. Trial (Day 1), 10/09/12, at 14-15). The substantial completion date was set for September 1, 2007. (Id., at 15-16). The parties involved in the Project and relevant to this case are: (1) Presque Isle as Owner; (2) McCormick as general contractor; (3) Independence Excavating, Inc., McCormick's subcontractor, who was responsible for building storm sewers and relocating sanitary sewers and water lines; (4) Henry T. Welka & Associates, LLC ("Welka") as the surveyor/engineer from initial survey through design and construction; (5) Herbert, Rowland & Grubic, Inc. ("HRG") as engineer; (6) Shelane Buehler, from RB Architects, Inc., as architect; and, (7) Turner Construction Company ("Turner") as construction consultant.

In March of 2007, HRG circulated an Invitation to Bid to general contractors, including McCormick, for the Project. The bid documents provided to McCormick included a proposed Construction Contract, instructions to bidders, a bid form, and a preliminary plan and profile drawings. (See, Project Manual for the Project, McCormick's Exhibit "1). The bid form contained several different line items, including one line item related to the relocation of sewer and water lines. That line item provided, "Sewer and Water Line Relocations as shown on drawings provided by Henry T. Welka & Associates" as one lump sum (NT. Trial (Day 1), 10/09/12, at 18; McCormick's Exhibit "1"). The Welka drawings, dated December 13, 2005, were provided to bidders. [1]

In connection with the Project, McCormick solicited bid proposals from subcontractors, including Independence, for excavation, sewer and waterline relocation, and other related services at the Project (collectively, "the Work"). On April 3, 2007, independence submitted its bid to McCormick. (NT. Trial (Day 1), 10/09/12, at 20; Presque Isle Exhibit "T"). Independence relied on the Welka drawings when it drafted its bid and proposal. (NT. Trial (Day 1), 10/09/12, at 117).

In turn, McCormick submitted its bid proposal to Presque Isle for the Project. (McCormick's Exhibit "3). McCormick based its bid on HRG's Project Manual, along with drawings provided by Henry T. Welka and Associates. (Id., at 17). It also relied upon independence's bid. (Id., at 23).

On May 14, 2007, McCormick and Presque Isle entered into a contract for the Project.[2] (NT. Trial (Day 1), 10/09/12, at 21; McCormick Exhibit 4). Article 5(b) of the contract provided the following;

The Owner shall not be responsible for furnishing surveys required for the execution of the Work (unless requested by the Contractor in writing at the time of the Contractor's "Bid" for the Work), or other information as to the physical characteristics, legal [imitations or utility locations for the Project site. Any information so supplied is a courtesy only and without any representation or warranty of any kind or character specifically including fitness for a particular purpose, and it is the responsibility of the Contractor to verify as to the accuracy of same. Contractor shall confirm the location of each utility shall excavate and dispose of each on-site utility and shall cap each off-site utility as required by the Work as may be included in the Specifications. To the extent required for the execution of the Work, the Owner shall only provide to Contractor such test borings and information that it has to subsurface conditions and site geology. Owner does not assume any responsibility whatsoever with respect to the sufficiency or accuracy of borings made, or of the logs of test borings, or of any other investigation, or of the interpretations made thereof, and there is no warranty or guaranty, express or implied, that the conditions indicated by such investigations, borings, logs or information are representative of those existing throughout the Project site, or any part thereof, or that unforeseen developments may not occur. The Contractor represents that it is familiar with the Project site and has received all information it needs concerning the condition of the Project site. The Contractor represents that it has inspected the location of the Work and has satisfied itself as to the condition thereof. Based upon the foregoing inspections, understandings, agreements and acknowledgments, the Contractor agrees and acknowledges (1) that the Contract Sum is just and reasonable compensation for all Work, including foreseen and foreseeable risks, hazards and difficulties in connection therewith, and (2) that the Contractor's Time is adequate for the performance of the Work. The Contractor shall have no claims for surface or reasonably ascertainable subsurface conditions encountered. The Contractor shall exercise special care in executing subsurface Work in proximity of known subsurface utilities, improvements, and easements.

McCormick Exhibit "4".

The Contract also included a representation and warranty by the contractor that it was "familiar with all Federal, State, Municipal and PA DOT laws, ordinances, and regulations, which may in any way affect the Work of those employed herein, including, but not limited to, any special acts relating to the Work or to the Project." Construction Contract, at Article 6(K)(5). Moreover, it also included a representation and warranty that the contractor "carefully examined the Drawings, Specifications and the site of the Work and that from its own investigations, it has satisfied itself as to the nature and location of the Work, the character, quality and quantity of the surface and subsurface materials likely to be encountered". . . "and the general local conditions, and all other materials which may in any way affect the Work. . ." Construction Contract, at Article 6(K)(8). The contract contained representations and warranties by the contractor that it had "determined what local ordinances, if any will affect its Work, " and had "checked for any county, city, borough, or township rules or regulations applicable to the area in which the Project is being constructed..." Construction Contract at Article 6(K)(9). Moreover, the contractor agreed that "[a]ny costs of compliance with local controls shall be included in the Bid, even though documents of such local controlling agencies are not listed herein." Construction Contract at Article 6(K)(9). Additionally, the Contract stated:

The Contractor has satisfied itself as to the accuracy of all dimensions and locations. In the case of interconnection of its Work with existing or other work, it shall verify at the site all dimensions relating to such existing or other work. Any errors due to the Contractor's failure to verify all such locations or dimensions shall be promptly rectified by the Contractor without any additional cost to the Owner. The Contractor shall be responsible for inspection and testing of portions of the Work already performed to determine that such portions are in proper condition to receive subsequent work.

McCormick Exhibit "1".

McCormick awarded the subcontract for the work to Independence, and on or about May 14, 2007, they entered into a written subcontract agreement for the Work..

After work began, Independence discovered several discrepancies between the Weika plans and the subsurface locations of the waterlines, sewer lines, manholes and other utilities (N.T. Trial (Day 1), 10/09/12, at 23-24, 126-145, 162; NT. Trial (Day 2), 10/10/12, at 6, 46). After e-mails and discussions between the parties, a meeting was held on June 15, 2007 to discuss the various problems encountered. Among those present were Dick Corbett (Turner), Jeremy Roberts (Turner), Jim Welka, Joseph Hosey (McCormick), Shelane Buehler, Tim Zimmerman (Independence), and others. (NT. Trial (Day 1), 10/09/12, at 30; McCormick Exhibit "10"). All parties agreed it was not possible to stop work in order to submit pricing and approval. Accordingly, everyone agreed that the work was to proceed on a time and material basts, (N.T. Trial (Day 1), 10/09/12, at 32). This was reflected in Turner's Project Meeting minutes as follows:

1.3 This extra work will need to be done on a Time and Material Basis
1.3.1 All T & M tickets must be signed daily by Turner
1.3.2 All paperwork and as-built drawings must be accurate
1.4 The time and material work should include all sewer work and water line work not shown on the drawings.

McCormick Exhibit "10".

Pursuant to the June 15, 2007 project meeting, and based upon the changes in the Work and ensuing revisions to the Project design, HRG issued several Construction Change Directives to McCormick, directing that several changes be made to the Work. (McCormick Exhibit "13"). Construction Change Directives ("CCD") Nos. 1, 4, and 5 involved the sewer and water line relocation. (Id.). While performing the extra work, Independence, at the direction of McCormick, documented its time and material costs and made them available to McCormick. PID's construction consultant, Turner Construction, subsequently signed the extra work forms relative to waterline and sewer locations.

In reaction to the problems associated with the Welka plans, the parties' representatives, including Joseph Hosey (McCormick's project manager), Patrick Arneault (Presque Isle), Louis Aronson, Esquire (Presque Isle's attorney), Richard Corbett (Turner) and Shelane Buehler (architect)[3], went on at least two walks on the construction site and purportedly discussed the necessity of the additional work and who would pay. According to the testimony of Arneault, Buehler, and Corbett, both Aronson and Arneault agreed that Presque Isle would pay for the additional work. (NT. Trial Day 2, 10/10/12, at 53-54; 155-156; Richard Corbett Deposition, 07/14/10, at 24-26).[4]According to Corbett, during the owner's meetings, Arneault and Aronson directed that the work be done and that the contractors would be paid for the extra work. (Richard Corbett Deposition, 07/14/10, at 27).

On August 27, 2007, (after completion of the extra Work under CCD Nos. 1, 4, and 5), McCormick submitted change order requests. (McCormick Exhibits 19, 21, 23). Change Order Request 17 was in the amount of $68, 565.00 and involved changes to sanitary manholes. Change Order 18 was in the amount of $228, 962.10 and involved changes to waterlines and additional waterlines. HRG approved the requested changes, prepared change orders 8, 9 and 10, and submitted them to Presque Isle for acceptance. (McCormick Exhibits 20, 22, 24). On December 3, 2007, McCormick was advised that Presque refused to approve change orders 8, 9 and 10. Although HRG approved Independence's extra work claims, Presque Isle refused to pay McCormick for the extra work. In turn, McCormick refused to pay Independence for its extra work.

On September 23, 2008, Independence filed a Complaint against McCormick. McCormick subsequently filed third party complaints against Presque Isle and Henry T. Welka & Associates, Inc. In its complaint against Presque Isle, McCormick alleged that Presque Isle breached its obligation by failing to pay McCormick for additional work performed by independence Excavation related to water line and sewer relocations directed by Presque Isle's consultant, Turner Construction, and approved by Presque Isle's engineer, HRG. McCormick further alleged a claim of unjust enrichment and violation of Pennsylvania's Contractor and Subcontractor Payment Act ("CASPA), 73 P.S.§501 et. seq.

On July 27, 2010, Independence filed a Motion for Summary Judgment, which this Court granted on October 5, 2010. That Order required McCormick to pay Independence $270, 479.26 within thirty days.

On October 6, 2010, McComnick filed an Amended Third Party Complaint against Presque isle.

On November 15, 2010, Welka filed a Motion for Summary Judgment. On November 23, 2010, Presque Isle filed a partial motion for summary judgment. On March 14, 2011, this Court granted Welka's motion and denied Presque Isle's motion.

Following a three day bench trial (October 9, 10 & 15 of 2012), this Court entered its Decision on October 18, 2012. This Court awarded damages to McCormick in the amount of $301, 542.19 on its breach of contract claim. This Court found that McCormick was not the substantially prevailing party. Therefore, it did not grant McCormick's request for attorney fees or penalties. See, 73 P.S. §§ 501, et. seq. Damages were awarded to Presque Isle on its counterclaim in the amount of $161, 330.63.

On October 19, 2012, McCormick filed a Motion To Mold Verdict, which this Court denied on October 22, 2012.

On October 25, 2012, McCormick filed a Motion For Post-Trial Relief. On November 5, 2012, Presque isle filed its Motion For Post-Trial Relief

On December 7, 2012, this Court granted, in part, Presque Isle's Motion for Post Trial Relief. This Court found that, pursuant to 73 P.S. § 505 (c), McCormick was entitled to recover interest at the rate of 1% per month, on the amount of $140, 211.56s, beginning on the date it paid Independence. In all other respects, McCormick's motion was denied.

On December 7, 2012, McCormick filed its Praecipe to Enter Judgment. Judgment was entered that day.

On December 11, 2012, McCormick filed its Notice of Appeal, and on December 12, 2012, this Court ordered it to file a concise statement of matters complained of on appeal, pursuant to Pa.RAP. 1925. McCormick complied on December 14, 2012.

On December 20, 2012, Presque Isle filed its Notice of Cross-Appeal and on December 21, 2012, this Court ordered it to file a concise statement of matters complained of on appeal, pursuant to Pa.R.A.P. 1925. Presque Isle complied on January 10, 2013.

On appeal, McCormick raises the following issues for review:
1. This Honorable Court erred by excluding testimony of witness Patrick Arneault concerning [Presque Isle's] understanding of the construction contract and the meaning of its terms where the contract was ambiguous, Patrick Arneault was [Presque Isle's] designated agent at the time the contract was concluded, Patrick Arneault was involved in the negotiation of the contract, and Patrick Arneault executed the contract on behalf of [Presque Isle].
2. This Honorable Court erred by failing to award [McCormick] attorneys' fees pursuant to the Contractor and Subcontractor Payment Act (CASPA), 73 P.S. § 501 et seq., where the contract upon which [McCormick's] claims were based is undisputedly a construction contract, this Honorable Court found in favor of [McCormick] on its breach of contract claim against [Presque Isle] due to withholding payment owed [McCormick], and [McCormick] is the substantially prevailing party in the instant case.
3. This Honorable Court erred by failing to award [McCormick] interest pursuant to the Contractor and Subcontractor Payment Act (CASPA), 73 P.S. § 501 et seq. at the rate of 1% per month from September 28, 2007 until payments is made in full where this Honorable Court found in favor of [McCormick] on its breach of contract claim against [Presque Isle] due to withholding payment owed [McCormick].
4. This Honorable Court erred by failing to award [McCormick] the statutory penalty pursuant to the Contractor and Subcontractor Payment Act (CASPA), 73 P.S. § 501 et seq. in the amount of 1 % per month from September 2007 through the present where this Honorable Court found in favor of [McCormick] on its breach of contract claim against [Presque Isle] due to withholding payment owed [McCormick], the amount withheld by [Presque Isle] bore no reasonable relation to any good faith claim of [Presque Isle], and [Presque Isle] therefore wrongfully withheld the amount due [McCormick] from September 2007 through the present.

McCormick 1925 (b) statement, at ¶¶ 1-4.

In its cross-appeal, Presque Isle raises the following issues:

1. The Trial Court erred in finding that [McCormick] had met its burden of establishing a legally valid subsequent modification to the parties' written construction contract or a new agreement modifying the parties' written construction contract.
2. The Trial Court erred in returning a verdict for [McCormick] on its claim against Presque Isle and in awarding damages to [McCormick] because the so-called "extra work" for which [McCormick] sought additional compensation was within the scope of [McCormick's] obligations under the parties' original written construction contract and [McCormick] provided no new consideration to support any contract change or modification.
3. The Trial Court erred in finding a legally valid subsequent modification to the parties' written construction contract or a new agreement modifying the parties' written construction contract when [McCormick] provided no new consideration to support such a modification or agreement.
4. The Trial Court erred in awarding damages to [McCormick] in excess of actual "time and material" charges where [McCormick] neither claimed nor submitted any evidence to supporting a finding that Presque Isle had agreed to pay more than actual time and material charges for the "extra work" at issue.
5. The Trial Court erred in permitting [McCormick] to admit the deposition testimony of Richard Corbett and denying Presque Isle's motion to strike Corbett's testimony.
6. The Trial Court erred in permitting [McCormick] to call Shelane Buehler on rebuttal.

Presque Isle 1925 (b) statement, at ¶¶1 -6.


A. Whether the trial court properly excluded testimony of witness Patrick Arneault concerning [Presque Isle's] understanding of the construction contract and the meaning of its terms where the contract was unambiguous?

It is well established that when a written contract is clear and unequivocal, its meaning must be determined by its contents alone. Murphy v. Duquesne University, 777 A.2d 418 (Pa. 2001). "The fundamental rule in interpreting the meaning of a contract is to ascertain and give effect to the intent of the contracting parties." Id., at 429. In the absence of fraud, accident, or mistake, contracts will be interpreted and enforced as written, except as to unconscionable provisions. National Cash Register Co. v. Modern Transfer Co., Inc., 302 A.2d 486, 490 (Pa.Super. 1973); Delaware River Port Authority v. Thornburgh, 585 A.2d 1123, 1125 (Pa.Cmwlth. 1989),

"A contract is not ambiguous if the court can determine its meaning without any guide other than a knowledge of the simple facts on which, from the nature of language in general, its meaning depends; and a contract is not rendered ambiguous by the mere fact that the parties do not agree upon the proper construction." Metzger v. Clifford Realty Corp., 476 A.2d 1, 5 (Pa.Super. 1984), quoting Commonwealth State Highway and Bridge Authority v. E.J. Albrecht Co., 430 A.2d 328, 330 (Pa.Cmwlth. 1981). Contractual terms are ambiguous only if they are subject to more than one reasonable interpretation when applied to a particular set of facts. Madison Construction Co. v. Harleysviile Mut. Ins. Co., 735 A.2d 100, 106 (Pa. 1999). Any ambiguity in the contract should be construed against the drafter. Central Transp., Inc. v. Board of Assessment Appeals of Cambria County, 417 A.2d 144, 149 (Pa. 1980). Furthermore, courts will not distort the meaning of the language or resort to strained contrivance in order to find ambiguity. Madison Construction Co., supra, at 106. In the absence of ambiguity, the plain meaning of the agreement will be enforced. Murphy, supra, at 430. The meaning of an unambiguous written instrument presents a question of law for resolution by the court. Murphy, supra at 430.

Here, those portions of the Contract relating to permit and inspection fees were clear and unambiguous. See, Contract (McCormick Exhibit "4), at Articles 5(A) and 6(E). Accordingly, this Court properly precluded Patrick Arneault from testifying concerning his understanding - or interpretation of the contract- as to whether McCormick would be responsible to pay for inspection fees incurred by Presque Isle. (N.T. Trial (Day 2), 10/10/12, at 56). This called for a legal conclusion and Arneault's understanding was irrelevant as the contract was specific on the subject. (Id., at 57). Nevertheless, this Court allowed Arneault to testify as to whether he made any representations concerning those inspection fees and whether he authorized payment at some point independent of the contract. (Id., at 57).

B. Whether McCormick was the substantially prevailing party, thereby entitling it to attorneys' fees pursuant to the Contract and Subcontractor Payment Act (CASPA), 73 P.S. § 501 et. seq.?

The underlying purpose of [CASPA] is to protect contractors and subcontractors. . . [and to encourage fair dealing among parties to a construction contract. Ruthrauff, Inc. v. Ravin, Inc. 914 A.2d 880, 890 (Pa.Super. 2006). The statute provides rules and deadlines to ensure prompt payments, to discourage unreasonable withholding of payments, and to address the matter of progress payments and retainages. Under circumstances prescribed in the statute, interest, penalty, attorney fees and litigation expenses may be imposed on an owner, contractor or subcontractor who fails to make payment to a contractor or subcontractor in compliance with the statute.

Zimmerman v. Harrisburg Fudd, I, LP., 984 A.2d 497, 500-01 (Pa.Super. 2009)(quotation marks omitted).

Section 512 of CASPA addresses attorney fees. That section provides, inter alia:

§ 512. Penalty and attorney fee

(b) Award of attorney fee and expenses.--Notwithstanding any agreement to the contrary, the substantiaily prevailing party in any proceeding to recover any payment under this act shall be awarded a reasonable attorney fee in an amount to be determined by the court or arbitrator, together with expenses.

73 P.S. § 512 (emphasis added). "While the mandatory language of section 512(b) requires an award of attorney's fees to a substantially prevailing party, the issue of whether any party to a lawsuit substantially prevailed is left to the trial court's discretion." J.J. Deluca Co., Inc. v. Toll Naval Associates, 56 A.3d 402, 418 (Pa.Super. 2012), quoting Imperial Excavating & Paving, LLC v. Rizzetto Constr. Mgmt., Inc., 935 A.2d 557, 564 (Pa.Super. 2007)(quoting Zavatchen v. RHF Holdings, Inc., 907 A.2d 607, 610 (Pa.Super. 2006), appeal denied, 591 Pa. 685, 917 A.2d 315 (2007)(internal quotation marks omitted) (emphasis in original).

In Zavatchen v. RHF Holdings, Inc., 907 A.2d 607 (Pa.Super. 2006), the Pennsylvania Superior Court defined 'prevailing party' as t:

[a] 'prevailing party' is commonly defined as 'a party in whose favor a judgment is rendered, regardless of the amount of damages awarded.' While this definition encompasses those situations where a party receives less relief than was sought or even nominal relief, its application is still limited to those circumstances where the fact finder declares a winner and the court enters judgment in that party's favor.

Id., at 610, quoting Profit Wize Mktg. v. Wiest, 812 A.2d 1270, 1275-76 (Pa.Super. 2002)(internal citations omitted)).

It is not enough that one may qualify as a "prevailing party". S/he must constitute a substantially prevailing party. A substantially prevailing inquiry does not "turn[] on a simple mathematical comparison of the parties' respective recoveries" or "simply because a party won a net judgment." Zavatchen, 907 A.2d at 609. In defining "substantially prevailing party", the Pennsylvania Superior Court in Zimmerman, supra., cited with approval LBL Skysystems (USA), Inc. v. APG-America, Inc., 514 F.Supp.2d 704, 713 (E.D.Pa. 2007). In LBL Skysystems, the District Court found that a subcontractor, although prevailing on its breach-of-contract counterclaim against a contractor, did not "substantially prevail" as to its CASPA claim. It found that, "to qualify as a substantially prevailing party, the subcontractor in LBL Skystems needed, not only to recover on its claim but also to prove the contractor, without good faith reason, failed to comply with the CASPA's mandate of prompt payment." Zimmerman, 984 A.2d at 503, citing LBL Skysystems 514 F.Supp.2d at 713.

This Court found that McCormick did not substantially prevail and, therefore, was not entitled to attorneys fees. In arriving at its decision, this Court considered the following: (1) Presque Isle prevailed on its counterclaim; (2) McCormick had no good faith reason to withhold payment from Presque Isle for permit and inspection fees and from Independence for the work it performed; and, (3) Presque Isle did not act in bad faith. This last point requires some explanation. The faulty nature of the Welka drawings became evident after the parties had entered into the Contract. It was an unanticipated situation that left Presque Isle in a difficult situation. If the work was not completed by September 1. 2007, its license was in peril. Therefore, the work had to be completed before that date. Presque Isle's position that it was McCormick's responsibility to assume the expense for the additional time was not shared by all its representatives, particularly those "on the ground". Its concern was meeting the September 1st deadline. However, its counsel, relying on his interpretation of the contract, saw it differently. This was not evidence of bad faith, but rather a bona fide difference of opinion. Contrast this with its counterclaim. Articles 5(A) and 6(E) of the contract are clear as to inspection fees. McCormick's decision not to pay them, although tactically practical, was not legally defensible. So too, McCormick's decision not to pay Independence Excavating based upon a "pay when paid" theory was untenable.

Accordingly, this Court did not abuse its discretion by not awarding attorneys fees.

C. Whether McCormick was entitled to recover interest for the time period during which it wrongfully withheld payment to its subcontractor and Presque isle?

In regard to payment and interest, Section 505 of CASPA provides:
(c) Time for payment.--Except as otherwise agreed by the parties, payment of interim and final invoices shall be due from the owner 20 days after the end of a billing period or 20 days after delivery of the invoice, whichever is later.
(d) Interest.-Except as otherwise agreed by the parties, if any progress or final payment to a contractor is not paid within seven days of the due date established in subsection (c), the owner shall pay the contractor, beginning on the eighth day, interest at the rate of 1% per month or fraction of a month on the balance that is at the time due and owing,

73 P.S. § 505 (c)-(d).

On December 7, 2012, this Court ordered that pursuant to 73 P.S. § 505(c), McCormick was entitled to recover interest at the rate of 1% per month on the amount of $140, 211.56 (the difference between McCormick's and Presque Isle's awards), beginning on the date it paid Independence pursuant to this Court's October 6, 2010 Order. However, as a matter of equity, it was not entitled to interest for the time period during which it withheld payment from Independence Excavating.

In addition, this Court found that McCormick was not entitled to interest on the full amount of its claim because it wrongfully withheld payment from Presque Isle for inspection fees.

D. Whether McCormick was entitled to recover penalty fees under CASPA?

a) Penalty for failure to comply with act.-- If arbitration or litigation is commenced to recover payment due under this act and it is determined that an owner, contractor or subcontractor has failed to comply with the payment terms of this act, the arbitrator or court shall award, in addition to all other damages due, a penalty equal to 1% per month of the amount that was wrongfully withheld. An amount shall not be deemed to have been wrongfully withheld to the extent it bears a reasonable relation to the value of any claim held in good faith by the owner, contractor or subcontractor against whom the contractor or subcontractor is seeking to recover payment.

73 P.S. § 512(a).

For the same reasons stated above relative to attorney fees, McCormick was not entitled to penalties.

E. Whether the parties entered into an oral agreement whereby McCormick would perform additional work relating to the water and sewer line relocation lines and Presque Isle would pay for the additional work in excess of actual "time and material" charges?

In Pennsylvania, "[t]he law is well settled that a written agreement can be modified by a subsequent oral agreement provided the latter is based upon a valid consideration and is proved by evidence which is clear, precise and convincing." Pellegrene v. Luther, 160 A.2d 298, 299 (1961)(citations omitted). "[T]his modification may be shown by writings or by words or by conduct or by all three". Bonczek v. Pascoe Equip. Co., 450 A.2d 75, 77 (Pa.Super. 1982)(citations omitted).

Here, the deficiencies in the Welka plans created a situation not contemplated within the scope of work in the original contract. To address these problems, the parties orally agreed that construction would continue and Presque Isie would reimburse McCormick on a time and materials basis. See, N.T. Thai (Day 1), 10/09/12, at 35; N.T. Trial (Day 2), 10/10/12, at 53-54, 155-156; Richard Corbett Deposition, 07/14/10, at 24-27 (McCormick Exhibit "37"). Patrick Arneault and Richard Corbett, on behalf of Presque Isle, acted within their authority by directing that extra work be performed and promising to pay McCormick.

The unanticipated situation caused by Welka's faulty drawings left Presque isie in a difficult situation because it had to complete construction by September 1, 2007 to obtain the license. Based upon Presque Isle's promise to pay McCormick for the additional work, McCormick and Independence performed the work and incurred additional costs for materials and labor, including overtime in order to complete the project for Presque Isle. Therefore, there was consideration to support the modification to the contract.

As noted at trial, a 10% markup was customary when calculating time and material. (N.T. Trial (Day 1), 10/09/12, at 100-101). In addition, when this Court ordered McCormick to pay Independence (see, Opinion and Order, dated October 5, 2010), a 10% markup was included. Therefore, it was appropriate to award McCormick that amount.

F. Whether this Court properly admitted the deposition testimony of Richard Corbett?

A proponent of a deposition at trial must demonstrate the unavailability of the witness or the exercise of due diligence on his part in attempting to locate the witness. Kuntz v. Firth, 264 A.2d 432, 433 (Pa.Super. 1970). A determination of sufficiency of proof as to unavailability is within the trial court's discretion, and after the trial court is satisfied that the witness is unavailable, the witness's deposition may be admitted as substantive evidence. Williams v. A-Treat Bottling Company, 551 A.2d 297, 300 (Pa.Super. 1988); Beaumont v. Etl Sen/ices, Inc., 761 A.2d 166, 172 (Pa.Super. 2000)(citation omitted).

Pa.R.C.P. 4020 governs the use of deposition testimony at trial and, provides, inter alia, as follows:

(a) At the trial, any part or all of a deposition, so far as admissible under the rules of evidence, may be used against any party who was present or represented at the taking of the deposition or who had notice thereof if required, in accordance with any one of the following provisions:
(3) The deposition of a witness, whether or not a party, may be used by any party for any purpose if the court finds
(a) that the witness is dead, or
(b) that the witness is at a greater distance than one hundred miles from the place of trial or is outside the Commonwealth, unless it appears that the absence of the witness was procured by the party offering the deposition, or
(c) that the witness is unable to attend or testify because of age, sickness, infirmity or imprisonment, or
(d) that the party offering the deposition has been unable to procure the attendance of the witness by subpoena, or
(e) upon application and notice that such exceptional circumstances exist as to make it desirable, in the interest of justice and with due regard to the importance of presenting the testimony of witnesses orally in open court, to allow the deposition to be used.

Pa.R.C.P. 4020 (a).

During its case-in-chief, McCormick requested to present portions of Richard Corbett's deposition testimony. Corbett was construction manager for Turner Construction. McCormick claimed Corbett was "unavailable" because he lived in Maryland, was beyond McCormick's subpoena power, and was unwilling to voluntarily return to Erie to testify. (NT. Trial (Day 2), 10/10/12, at 32-33). Presque Isle responded that McCormick failed to make a prima facie showing of unavailability or any effort to procure his attendance. (Id., at 32-33). Furthermore, it claimed Corbett's deposition transcript was not identified as a deposition for use at trial and its admission would be prejudicial. (Id., at 32, 33, 36).

After review, this Court ruled that Corbett was unavailable and admitted the deposition transcript. (Id., at 34-35). Joseph Hosey testified that approximately one week before trial, he contacted Corbett. Corbett told him that he moved to Maryland and adamantly refused to return and testify. (Id., at 97-98, 101). In addition, McCormick's counsel informed the Court that he made several unsuccessful attempts to contact Corbett. Therefore, this Court properly concluded that Corbett was an unavailable witness..

G. Whether this Court erred in permitting McCormick to call Shelane Buehler as a rebuttal witness?

The admission or rejection of rebuttal evidence is within the sound discretion of the trial judge. Mitchell v. Gravely International, Inc., 698 A.2d 618 (Pa.Super. 1997). "The decision as to what is proper rebuttal evidence is within the discretion of the trial court." Harsh v. Petroll, 840 A.2d 4.4, 431 (Pa.Cmwlth. 2003)(citation omitted).

Prior to trial, Presque Isle moved in limine to exclude the testimony of Shelane Buehler, the project architect, on the grounds that McCormick failed to list her as a potential witness in its pretrial narrative statement. The motion was granted. However, Louis Aronson, Esquire (Presque Isle's counsel) testified that Buehler was not involved in any of the walks conducted on the construction site when discussions purportedly took place about the necessity of additional work and expenditures of time and materials. Aronson further testified that he walked Route 97 with Dick Corbett and Patrick Arneault a couple of times, but that there were no discussions that Presque Isle would pay for the change orders. (Id., at 135).

In light of Aronson's testimony, McCormick requested that Buehler be allowed to testify to rebut Aronson on these points. Presque Isle objected in light of this Court's earlier ruling. Id., at 152.[5] Critical to the resolution of this case was an evaluation of parties' conduct and discussions that occurred at the job site after the problems with the Weika survey surfaced. Aronson's testimony about the events opened the door for Buehler's rebuttal testimony as it directly contradicted him. Therefore, it was admissible.


Based upon the above, this Court respectfully requests that judgments be affirmed.


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