Charles Burton Builders, Inc. v. L & S Construction Co.

⁶⁸ Barnes, J., delivered the opinion of the Court. Charles Burton Builders, Inc., one of the appellants and a defendant below (Owner or Burton Builders), challenges before us a judgment for $31,949.98 entered against it by Judge Parker, sitting as the Circuit Court for Prince George’s County, without a jury, in favor of the appellee L & S Construction Company, Inc. (L & S or Contractor) and the action by that Court in dismissing the counterclaim for $35,350.00 of Burton Builders. The controversy arose out of the failure of Burton Builders, as Owner, under a written contract entered into between the Owner and the Contractor on April 19, 1963, for the construction of storm drainage and street paving in the Lakecrest subdivision of the City of Greenbelt, Maryland, to pay the balance allegedly due by the Owner to the Contractor for the work covered by the contract and certain extra work performed by the Contractor. The Owner’s counterclaim is for alleged liquidated damages of $35.00 a day for a claimed delay by the Contractor of 1010 days.

In the action below the Fireman’s Fund, Inc., the remaining appellant, was joined as a party defendant as the Owner’s bonding company. The Globe Indemnity Company, the bonding company for the Contractor, was joined as a party in a cross-claim filed by the Owner, Burton Builders. The Owner raises four contentions before us, i.e., (1) the trial court disregarded the written contract in arriving at its verdict; (2) the decision of the trial court was contrary to the evidence; (3) the judgment was excessive and improper; and, (4) the trial court erred in dismissing the Owner’s counterclaim. We will consider these four contentions in the order mentioned.

The written contract of April 19, 1963, was prepared by Ben Dyer Associates, Inc., an engineering firm originally employed by the Owner and later employed by the City of Greenbelt to act as its engineer in connection with the work done under the contract. The total contract price was $47,862.70 and the work to be done under it was to construct storm drainage and street paving on Lakeside ⁶⁹ Drive, Maplewood Court, Olivewood Court and Pinecrest Court in the Lakecrest Section of the City of Greenbelt. Nineteen items were listed with the unit, quantity, unit price and total price given for the separate items for the total contract price. The work to be done was divided by the $47,862.70 contract into three sections.

Section 1 covered all of Maplewood Court and part of Lakeside Drive, which was to be constructed immediately. Section 2 covered all of the Olivewood Court and a part of Lakeside Drive. Section 3 covered all of Pinecrest Court and the remaining portion of Lakeside Drive. Sections 2 and 3 were to be constructed before September 30, 1963.

In the Proposal Page of the contract, however, there was a statement that the contract would be completed within 60 days with the words written in ink, “Quotation As Directed”, directly below and with a further provision that the contract time would apply to Section 1 only, and that Sections 2 and 3 would be completed “within a reasonable time when notified.” In addition to the three sections mentioned, the contract also provided that the Contractor would put in storm drains. The contract consists of the Proposal of four single-spaced typewritten pages (with certain insertions in ink), four pages of “Special Provisions” (which control if in conflict with the General Provisions) and 15 pages of General Provisions, containing 49 separate single-spaced mimeographed provisions of the general “boiler plate” variety, adapted to the contract by the typewritten insertions. There are two single-spaced typewritten pages headed “CONTRACT” which incorporated by reference the other portions of the contract, and this is duly signed by the respective parties on page 2 (marked page “21”) of the contract. The Performance Bond, executed by the Globe Indemnity Company is also included in the contract as pages 22 and 23.

Contract Drawing No. J-61098 is mentioned as part of the contract in the first paragraph of the Special Provisions. The Special Provision, Sec. 3.03, under the heading “JURISDICTION,” provides that: ⁷⁰ “Work to be performed under this contract is located within the City of Greenbelt, Maryland, and all work must be prosecuted and completed to the satisfaction of thé City Manager.” Sec. 3.17 provides: “The amount of liquidated damages as specified under paragraph 13 of the General Provisions of this Contract will be $35.00 per day and will be paid to Charles Burton Builders Inc.” In the General Provisions the following important provisions are set forth: Sec. 1, “DEFINITIONS,” subsection (c) provides that: “ENGINEER shall mean ‘City Manager — Inspection Ben Dyer Associates, Inc. — Engineering’ or ‘their’ duly authorized agents.” The portions of this section in italics were inserted in typewriting on the mimeographed copy. Subsection (e) provides that: “Whenever, in the specifications or upon the drawings the words DIRECTED, REQUIRED, PERMITTED, ORDERED, DESIGNATED, PRESCRIBED, or words of like import are used, it shall be understood that the direction, requirement, permission, order, designation, or prescription of the Engineer is intended; and similarly the words APPROVED, ACCEPTABLE, SATISFACTORY or words of like import, shall mean approved by, or acceptable or satisfactory to the Engineer, unless otherwise expressly stated.” Sec. 5, “WORK TO BE DONE AND MATERIALS TO BE FURNISHED,” provides that the Contractor shall do the work and furnish the necessary materials necessary or proper to do the work in the manner called for by the specifications and “within the contract time.” The Con ⁷¹ tractor shall complete the work and any extra work “to the satisfaction of the Owners and the Engineer and in accordance with the specifications and drawings.” Sec. 8, “SUPERVISION AND DIRECTION OF WORK,” provides that the “work shall be under the general supervision of the Engineer.” Sec. 9, “DECISIONS AND EXPLANATIONS BY ENGINEER,” provides: “(a) The Engineer shall make all necessary explanations as to the meaning and intent of the specifications and drawings, and shall give all orders and directions, either contemplated therein or thereby or in every case in which a difficult or unforeseen condition arises during the prosecution of the work. Should there be any discrepancies in or between, or should any misunderstanding arise as to the import of anything contained in the drawings and specifications, the decision of the Engineer shall be final and binding.

Any errors or omissions on the drawings or in the specifications may be corrected by the Engineer when such corrections are necessary for the proper fulfillment of their intent as construed by him. “(b) The Engineer shall in all cases determine the amount, quality and acceptability of the work to be paid for under the contract, and shall decide all questions in relation to said work. His decision and estimate shall be final and conclusive, and in case any question shall arise between the parties touching the contract, such decision and estimate shall be a condition precedent to the right of the Contractor to receive payment under that part of the contract which is in dispute. “(c) Decisions and interpretations will be rendered by the Engineer as promptly as pos ⁷² sible, but should delay occur, for any reason, the Contractor shall have thereby no claim for damage or extra compensation.” Sec. 11, “LINES, GRADES, ELEVATIONS, ETC.,” provides that the “Engineer will give all necessary lines, grades and elevations for the guidance of the Contractor . . . .” This section also provides that any work done “without lines, levels and instructions having been given by the Engineer, will not be estimated or paid for except when such work is authorized by the Engineer.” Sec. 12, “TIME OF BEGINNING AND COMPLETION,” provides that the Contractor shall begin the work “within 10 calendar days after the service of written notice from the Engineer so to do and shall diligently prosecute the same, so that it shall be fully completed within the number of days stated in the proposal, after service of written notice from the Engineer to proceed with the work.” Sec. 13, “DEFAULT IN COMPLETION,” provides: “(a) The Engineer shall determine the number of calendar days that the Contractor is in default in completing the contract and shall certify the same to the Owners in writing. For each calendar day so certified, the Contractor shall pay the Owners a sum specified in the Special Provisions, which sum is hereby agreed upon, not as a penalty, but as liquidated damages which the Owners will suffer by reason of such default; provided, however, that the Owners may, as hereinafter provided, extend the time for completion of the work beyond the contract time. The Owners shall be fully authorized and empowered to deduct and retain the amount of any damages, determined as hereinbefore stipulated, for each day that the Contractor shall be in default in completing the work after the time fixed in the contract, or after any later date to ⁷³ which the time for completion may have been extended by the Owners, from any moneys due or to become due the Contractor under the contract, at any time after such damages are so incurred.

The permitting of the Contractor to finish the work or any part of it after time fixed for its completion, or after the date to which the time for completion may have been extended, shall in no wise operate as a waiver on the part of the Owners of any of its rights under the contract.” Sec. 14 “EXTENSION OF TIME,” provides that claims for extension of time shall be made by written notice by the Contractor and certified by the Engineer “in writing to be just and proper.” Sec. 18, “LAWS AND REGULATIONS,” in effect, states that in all operations connected with the work, all ordinances of the town in which it is done as well as all federal, state and county laws “must be respected and strictly complied with” by the Contractor. Sec. 22, “DEFECTIVE WORK,” requires the Contractor to remedy work found to be defective or to have been damaged at any time before the final acceptance of the whole work, without extra compensation, even though not due to any act, default or negligence of the Contractor. Sec. 34, “WAIVER OF CONTRACT,” provides that acceptance of the work by the Owners or the Engineer shall not operate as a waiver of any portion of the contract or any right to damages provided in the contract. Sec. 35, “IMPLIED WORK,” requires the Contractor to perform, without extra compensation, incidental work fairly implied as included in the contract and “which the Engineer shall judge to be so included.” Sec. 37, “EXTRA WORK,” has eight subsections.

Subsection (a) provides that the Contractor shall perform extra work ordered in writing by the Engineer for which ⁷⁴ itemized statements and bills shall be delivered by the Contractor to the Engineer before the 5th day of the following month. The formula for computing the amount to be paid for the extra work is set forth, i.e., (1) Wages of employees on the extra work plus 25% ; (2) materials at actual cost plus 10%; and (3) rental of equipment “as the Engineer shall determine to be reasonable and fair.” Subparagraph (b) specifically eliminates certain allowances and charges from the calculation of the amount to be paid for extra work. Subparagraph (c) states that the extra work shall be done as economically as possible with the use of current labor rates and the lowest market price for materials. The Owners may furnish materials and necessary equipment for the extra work and the Contractor will receive no allowance thereon.

Subsection (d) provides: “The decision of the Engineer shall be final and binding upon all questions relating to extra work. If he shall deem that any extra work bill is unreasonable or improperly made up in any particular, he shall be empowered to require its revision and adjustment, in accordance with such terms as he shall judge to be fair and reasonable.” Subsection (e) states: “The Engineer will certify to the Owners for payment proper bills, made out as above provided and submitted before the prescribed date, upon each written order for extra work. Payment, as approved, for the work done under each extra work order completed during any month will be made upon the current estimate for work completed under the contract during that month, and shall be subject to all the provisions of the contract relating to the payment of current estimates. Should the work under any extra work ⁷⁵ order remain uncompleted during any month, payment thereupon shall not be made until the current estimate is paid for the month during which the work under said extra work order is completed.

The Contractor shall not be entitled to any claim for interest on any bill for extra work on account of delay in its approval.” Sec. 47, “FINAL ESTIMATE,” provides for the making by the Engineer of a final written estimate when he deems that the Contractor has fully completed the work and shall certify to the Owners the completion of the work and the amount of the final estimate. The principal witness for the Contractor at the hearing before the trial court was Alfred Nelson Myers, Jr., Vice President of L & S when the contract was executed and President of L & S at the time of trial. Mr. Myers explained the reason for the ambiguity in the contract in regard to the completion date of the various sections. The Owner was building houses in sequence in its development of a subdivision.

It could get a better price on three sections than it could on one section, even though it did not intend to do all the work at one time. Accordingly, the words “as directed” were inserted in ink on the Proposal pages of the contract because Sections 2 and 3 were not ready. When the contract was submitted for bids, the Contractor was furnished a set of plans (Plaintiff’s Exhibit 2). After its bid was made, the plans were revised to add sidewalks and driveways, a price agreed upon for this, and a revised plan (Plaintiff’s Exhibit 3) was furnished.

Mr. Myers marked the location of the storm drain on the original plan (Plaintiff’s Exhibit 2) in red and Sections 1, 2 and 3 in green on this plan. 1 ⁷⁶ The Contractor began work on the storm drain on April 23, 1963. This work was finished on May 25, 1963, except for tops and throats on the inlets which, Mr. Myers stated, had to tie in with the curb, gutter and sidewalk. While the Contractor was working on the storm drain, it encountered a waterline on Lakeside Drive at a different elevation than that shown on the plan. The plan was revised by the Washington Suburban Sanitary Commission on May 7, 1963.

Mr. Myers marked the date of the revision in red on Plaintiff’s Exhibit 3. There were no complaints about this as part of the work and the storm drains “were acceptable.” The Contractor was not permitted to begin the work on the streets until the Engineer had furnished the grade sheets.* 2 These grade sheets were furnished the Contractor by the Engineer for Section 1 on May 21, 1963. The Contractor began work on Section 1 the same day by grading and thereafter installing curbs, gutters, sidewalks and driveway aprons. Then the Contractor laid the gravel base and the base paving.

It also did certain undercutting to straighten up the bottom in accordance with an order of the Engineer and a Mr. Snyder, the general superintendent of the Owners. Photographs were offered showing this aspect of the work. The Contractor left a uniform grade for sod which was to be done under other contracts and which was necessary for acceptance of the street on behalf of Greenbelt. On July 15, 1963, the Contractor submitted to the Owner a bill for work as of that date for $24,913.17, in- ⁷⁷ eluding curb, gutter, driveway, sidewalk and gravel base.

The Contractor had not yet done the asphalt surface and this was not included in the bill submitted. The work which was included in the bill had been done by the end of June 1968, but the submission of the bill was delayed because the work had to be approved by the Engineer. The paving in Section 1 was completed by the Contractor on July 29,1963, which included everything to be done except the asphalt topping on Lakeside Drive. It included the asphalt base on Lakeside Drive; but the asphalt topping on Lakeside Drive was held up at the Owner’s request so that it would not be torn up or injured by the work then being done by the Owner on the remainder of its job.

Mr. Myers testified further that the work on Section 1 was done in 59 days inasmuch as there were 69 days between the date of the notice, May 21, and the date of completion, July 29; and the Contract (General Provisions, Sec. 12) provided that work was to begin within 10 days after the service of written notice by the Engineer. Lakeside Drive, where the Owner had directed that the asphalt topping not be put down, was to be the haul road into the job where the Owner was building houses; and if the asphalt topping had been laid, it would have been broken up. Mr. Myers described the putting down of the topping as putting part on the street to make it look pretty when one finished using it and the Owner had decided to do it this way because it anticipated that it would “be a couple of years in finishing this thing.” The Contractor received the grade sheets from the Engineer for Section 2 on October 9 and 10, 1963. About that time it started the work and did curb, gutter, sidewalk, driveway aprons and gravel base that winter so that people could get in and out of their houses, but it got too cold to lay the asphalt, so that the Engineer and Mr. Snyder, the Owner’s general superintendent, determined that the paving be done the following May of 1964.

The work on Section 2 was completed on May 25, 1964, except again for the final asphalt topping on Lakeside Drive, ⁷⁸ in that building was still going on in back of that street. The Engineer furnished the Contractor a grade sheet for Section 3 on July 7, 1964. This section was finished on October 27, 1964, except again for the final topping on Lakeside Drive because the Owner was still building houses. On November 30, 1964, the Contractor submitted a bill to the Owner for the work completed as of that date for $45,696.70, less a credit for $18,809.13, leaving a balance due of $26,887.58.

At this time, Mr. Myers testified, the only things remaining to be done were the topping on Lakeside Drive and some punch list items of repairs to be done sometime in 1965. There was a punch list of relatively minor items prior to the final paving as a result of an inspection on July 15, 1965. Mr. Myers, on behalf of the Contractor, wrote Charles Bresler, president of the Owner, on July 19, 1965, advised the Owner that on July 15, 1965, James K. Giese, the Greenbelt City Manager, James H. Hummer, Jr., the engineer from Ben Dyer’s office, had gone over the job with Mr. Myers and had agreed upon corrections needed to complete the work; but Mr. Myers asked for a statement that the Contractor would be paid for this as extra work and understood that the Contractor was interested in getting thé work completed. No reply to this letter from the Owner was received by the Contractor, but the Contractor did the work in order to get the topping done and made no charge for it.

Mr. Myers, on July 27, 1965, took photographs and made notations in regard to the damage being done to the curb and gutter during the construction of houses by the Owner and had a discussion with Mr. Snyder, the Owner’s general superintendent. Mr. Snyder instructed the Contractor when to do the final topping and he participated in giving the directions for the final topping. The final topping was done on July 22,1966. Thereafter, there was a final inspection on August 5, 1966.

On August 8, a final punch list was provided and on August 31, 1966, the Contractor submitted its final ⁷⁹ bill. This final bill included $49,363.36 on the original contract and reflected the various adjustments based on differences in quantities shown in the original contract for which there was a unit price. In addition to the adjustments, $11,506.85 was added for driveways and sidewalks at unit prices agreed upon, and various invoices showing extra work of $8,458.29 were filed. The total bill was for $69,328.50, which after giving credit for $43,809.13, previously paid, left a net balance due of $25,519.37.

Mr. Myers testified that he made many attempts to see Mr. Bresler to close out the final punch list and on November 15, 1966, wrote to him to set up a meeting on November 29 to attempt to agree on methods of completing the list. No one, however, appeared at the meeting so that on December 14, Mr. Myers wrote Mr. Bresler by certified mail suggesting a meeting between December 19 and December 22, 1966. Again, he wrote Mr. Bresler on January 13, 1967, by certified mail, the receipt of which was acknowledged by Mr. Bresler, threatening to refer the matter to the Contractor’s attorney. Thereafter, counsel for the Contractor communicated with Mr. Giese, the Greenbelt City Manager, and also with the Owner.

Mr. Giese, by a letter of October 26, 1967, to the Contractor, attached a copy of the punch list of August 8, 1966, and represented that this was the work which was to be completed. The Owner also replied to the letter from counsel for the Contractor but refused to deal with the Contractor directing that any arrangements be made with the City of Greenbelt. Mr. Myers was advised by counsel to complete the work and seek recovery for it later. Mr. Myers testified that “We went back and did the punch list according to the way the engineer wanted it and had the final inspection with the engineer and he said it was okay.” This was done in November 1967.

A bill for the amount of $1,174.14 for this work was submitted by the Contractor to the Owner on November 30, 1967; but no money was paid, although the Contractor had an investment of money in the job for labor and ma ⁸⁰ terials and “had to borrow money for interest. . .to use in place of it.” Mr. Myers calculated interest on the $25,519.37 bill as follows: He began the calculation on August 31, 1966, when the Contractor had billed it after the work was done, allowed 30 days until September 30, 1966, and