State, Department of General Services v. Cherry Hill Sand & Gravel Co.

Morton, J., delivered the opinion of the Court. The State of Maryland, through its Department of General Services, appellant and cross-appellee herein, solicited bids from construction contractors to construct a fish hatchery on the grounds of Cedarville State Park in Anne Arundel County. The plans and specifications as prepared by Frederick Ward Associates, Inc., required the clearing, excavation, and grading of a large site and the lining of 27 excavations which would become ponds. ³⁰¹ Several interested contractors, including Cherry Hill Sand and Gravel Company, Inc., appellee and cross-appellant herein, before putting in their bids, inquired of David Hall, an employee of Frederick Ward Associates, Inc., whether there was on-site "impervious fill” sufficient to line the 27 excavations as required. Mr. Openshaw, the president of Cherry Hill, and at least one other inquiring contractor were advised that there was.

Cherry Hill prepared its bid, a component of which was $194,920, a $4 per cubic yard charge for placing, compacting, and shaping an estimated 48,730 cubic yards of borrow, or "impervious fill.” Cherry Hill, acting on the assumption that all the impervious fill needed was on the site, did not include in its estimate a cost for hauling the fill or other costs associated with hauling fill from an off-site area. Cherry Hill was awarded the contract. The written contract entered into between the parties provided, at Paragraph 2B-9a, that the contractor was to supply the fill required where cuts did not provide sufficient materials. No representation was made within the written contract that sufficient quantities were available on site.

During construction it became apparent that there was very little borrow on-site which met the requirements of impervious fill, and Cherry Hill was forced to retrieve 45,997 of the 49,941 cubic yards needed from areas 800 to 1500 feet "off-site” — away from the ponds — thus incurring additional costs. Cherry Hill filed a declaration in the Circuit Court for Anne Arundel County (Williams, J.) against the State of Maryland, Department of General Services, first alleging that it incurred the additional expense of hauling the fill and was owed $321,979 under the contract, based on a figure of $7 per cubic yard for 45,997 cubic yards of borrow. The trial judge in an oral opinion issued at the end of the trial concluded that the oral representation made to Cherry Hill two days before bids were accepted was a part of the written contract which followed. He awarded as damages for the State’s breach $1.96 per cubic yard for the hauling of ³⁰² 46,041 cubic yards and the cost of opening and closing two "pits,” in addition to $1,665.84 to repair a cable in one of the pits that Cherry Hill was forced to use.

The State herein appeals the final judgment entered in favor of Cherry Hill in the amount of $91,906.20, arguing that the court erred in ruling that the contract between the parties contained an oral representation made by the State engineer prior to the time that the parties entered into a written contract. It argues that under the parol evidence rule, the prior oral assertion made by Hall that there was sufficient on-site impervious fill is not admissible to vary, alter, or contradict the complete and unambiguous written contract later entered into by the parties. Indeed, argues the State, such parol evidence would not be admissible even to explain the meaning or determine the construction of a writing susceptible as this is to a reasonable construction. The contract, appellant asserts, was clear and unambiguous: "2B9 Borrow and Surplus Cut a.

When sufficient materials are not available from cuts to establish the required grading, the contractor shall supply the fill required .... b. The Contractor shall note that some fill, if required, is available from the site designated 'Borrow Area’ as shown on the drawings unless otherwise directed . . ..” As such, parol evidence of a prior representation to the contrary was not admissible. For support, appellant relies on the case of Delmarva Drill Co. v. Tuckahoe Shopping Center, 268 Md. 417 (1973), where the Court of Appeals held inadmissible an oral statement by a drill company employee to appellee that usable water would be found, whereas a written contract subsequently entered into between the company and appellee specifically disclaimed any guarantee as to water quality. Judge Levine, quoting several of his predecessors, stated, at 426: ³⁰³ " '[P]arol evidence is inadmissible to vary, alter or contradict a writing which is complete and unambiguous, where no fraud, accident or mistake is claimed, [citation omitted] but where doubt arises as to the true sense and meaning of the words themselves or difficulty as to their application under the surrounding circumstances, the sense and meaning of the language may be investigated and determined by evidence dehors the instrument.’ ” Appellee corporation initially raises the threshold issue of waiver.

It argues that after appellant objected to Openshaw’s testimony that he was "assured” by Hall that there was sufficient impervious fill, it called Hall to the stand and questioned him on the alleged conversation, thus waiving its prior objection to the evidence of that conversation. The record reflects that the appellant did indeed solicit this testimony from its witness Hall: "Q. Now, Mr. Openshaw in his testimony stated that he had a phone call with you on or about March 15, 1977 .... Q. What was said in the conversation between you and Mr. Openshaw? A. Are you talking about the alleged . . .

Q. The one that . . . A. ... in March? Q. Yes. A. Well, for one thing, let me set the record straight.

I do not recall every [sic] talking to Jim Openshaw before the bids.” Hall testified that he did, however, recall talking to one of Openshaw’s estimators, Mr. Vonella, about the borrow. He told Mr. Vonella that it was Vonella’s responsibility to determine whether there was sufficient impervious material on-site and that he would guarantee nothing, but that his ³⁰⁴ "gut reaction, off the record” was that there was enough material in and beyond the area of the pond. While appellee acknowledges that appellant need not "play the ostrich and simply ignore the evidence” admitted over its objection in order to preserve the issue for appeal, City of Baltimore v. Smulyan, 41 Md. App. 202, 219 (1979), it argues that appellant’s actions at trial exceeded allowable bounds. In Smulyan , Judge Wilner, speaking for this Court, alluded to those bounds, at 219: "[Appellant] may cross-examine . . . the witness about the evidence, Peisner v. State, 236 Md. 137, 144 (1964), and make other reasonable efforts to show that the evidence, admitted over his objection, should nevertheless be discounted or disregarded by the trier of fact.

This is all that [appellant] did in this case, and it is quite different from soliciting (or failing to object to) the independent reception of the same evidence, from which a waiver may be implied.” (Emphasis supplied.) We agree that a party may, under some circumstances, waive his objection to testimony by subsequently offering testimony on the same subject. Peisner v. State, 236 Md. 137 (1964). The rationale, as noted in Linkins v. State, 202 Md. 212, 224 (1953), is that "[i]f inadmissible evidence is admitted over objection, or produced by the party who objected, the error is harmless.” We do not think, however, that the general rule of Peisner and Linkins is applicable under the facts of this case. Any error made in the admission of Openshaw’s testimony was not rendered harmless by Hall’s complete denial on direct examination.

Rather, that denial was a "reasonable effort” on the part of appellant to show that Openshaw’s testimony "should nevertheless be discounted or disregarded.” In our view there was no waiver by appellant. Having found no waiver, we now deal with the substance of the parol evidence rule. In Whitney, Exec. v. Halibut, 235 Md. 517, 527 (1964), the Court, quoting from 3 Corbin, Contracts § 573 (rev. 1960), stated: ³⁰⁵ " 'When two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing.’ ” The statement of the rule suggests the limitations of its application. The parol evidence rule only applies where the parties to a written contract agree or intend that the writing shall be their whole agreement. 4 Jaegar, Williston on Contracts § 633 (3d ed. 1961); 32 A. C.J.S. Evidence § 945 (1964); 3 Corbin, Contracts § 582 (1960).

Whether it is applicable in this case requires an initial substantive determination of what constitutes the final and integrated agreement of the parties. See Restatement (Second) of Contracts §§ 213, 214. Appellee argues, and the trial judge agreed, that the representation made by appellant’s engineer to Openshaw was an oral clarification meant to be incorporated as part of the contract. As specifically provided for in the definitional section of the Department of General Services contract: "The Contract Documents consist of the Agreement, the General Conditions, Supplementary Conditions, Instructions to Bidders, Proposal, Bond, the Drawings and Specifications, all Addenda duly issued prior to submission of bids, all Change Orders duly revised, and any amendments to the contract duly executed by both parties.

These form the contract.” (Emphasis supplied.) The "Instructions to Bidders” clause, expressly made a part of the contract, includes this paragraph: "7. Discrepancies Should a bidder find discrepancies in the plans and/or specifications or should he be in doubt as to the meaning or intent of any part thereof, he must, ³⁰⁶ not later than seven (7) days (Saturdays and Sundays excluded) prior to the bid opening, request clarification from the Architect, who will issue an addendum or otherwise clarify the matter. Failure to request such clarification is a waiver to any claim by the bidder for expense made necessary by reason of later interpretation of the contract documents by the Architect.” An addendum, as defined in the contract, "is the form of clarification amending or interpreting the Contract Document issued by the Architect prior to the receipt of the bids.” Appellee maintains that the above cited contract language, in conjunction with the conspicuous lack of an integration clause, indicates that the parties contemplated that pre-bid clarifications such as the one given by appellant’s agent Hall to appellee were to be incorporated into the contract, and the contract does not require these clarifications to be in writing. Since the parties, according to appellee, did not consider the written contract to be