Miller v. City of Broken Arrow, Okl.
| Decision Date | 27 October 1981 |
| Docket Number | Nos. 80-1247,80-1261,s. 80-1247 |
| Citation | 660 F.2d 450 |
| Parties | James W. MILLER, d/b/a Miller Construction Company, United States Fidelity and Guaranty Company, a Maryland Corporation, Defendants-Appellees, v. The CITY OF BROKEN ARROW, OKLAHOMA, Defendant and Third Party Plaintiff-Appellant, v. BENHAM BLAIR & AFFILIATES, INC., a Delaware Corporation d/b/a W. R. Holway and Associates, Third Party Defendant-Appellee. James W. MILLER, d/b/a Miller Construction Company, United States Fidelity and Guaranty Company, a Maryland Corporation, Defendants-Appellees, v. BENHAM BLAIR & AFFILIATES, INC., a Delaware Corporation, d/b/a W. R. Holway and Associates, Third Party Defendant-Appellant, v. The CITY OF BROKEN ARROW, OKLAHOMA, Defendant and Third Party Plaintiff-Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Dennis D. King, Tulsa, Okl. (Ray H. Wilburn, Tulsa, Okl., with him on the brief), of Ray H. Wilburn & Associates, Tulsa, Okl., for City of Broken Arrow, Okl.
Harry M. Crowe, Jr., of Crawford, Crowe & Bainbridge, Tulsa, Okl. (Donald G. Hopkins of Hopkins, Warner & King, Tulsa, Okl., with him on the brief), for Benham Blair & Affiliates, Inc.
David H. Sanders, Tulsa, Okl. (Philip J. McGowan, Tulsa, Okl., with him on the brief), (Sanders, McElroy & Carpenter, Tulsa, Okl., of counsel), for James W. Miller.
Before BARRETT and LOGAN, Circuit Judges, and CHILSON, Senior District Judge. *
These consolidated appeals involve a contract dispute relative to the installation of a sewer line. 1
Miller Construction Company (Miller), a utility contractor, contracted with the City of Broken Arrow, Oklahoma (City) for the installation of the line in accordance with the plans and specifications of Benham-Blair & Affiliates, Inc. (Engineers), the engineering firm retained by City to serve as its representative in the planning, designing, and inspection of the construction of City's sewer line project.
Article II of Miller's contract with City provided:
Article II. CONTRACTOR'S OBLIGATION The work to be done under this contract is specifically set forth in the specifications attached hereto.
The Contractor shall and will, in good and workmanlike manner, do and perform all work and furnish all supplies and materials, machinery, equipment, facilities and means, except as herein otherwise expressly specified, necessary or proper to perform and complete all the work required by this contract within the time herein specified, in accordance with the provisions of this contract and said specifications and in accordance with the plans and drawings of the work covered by this contract, and any and all supplemental plans and drawings, and in accordance with the directions of the Engineers as given from time to time during the progress of the work. The Contractor shall observe, comply with, and be subject to all terms, conditions, requirements, and limitations of the contract, and shall do, carry on, and complete the entire work to the satisfaction of the Engineers and of the City.
(R., Pl. Ex. 62). (Emphasis supplied).
Article III of Miller's contract with City provided:
Article III. ENGINEERS' POWERS AND DUTIES The Engineers shall give all orders and directions contemplated under this contract and specifications, relative to the execution of the work. The Engineers shall determine the amount, quality, acceptability, and fitness of the several kinds of work and materials which are to be paid for under this contract and shall decide all questions relative to said work and the construction thereof. The Engineers' estimates and decisions shall be final and conclusive, except as herein otherwise expressly provided. In case any question shall arise between the parties hereto relative to said contract or specifications, the determination or decision of the Engineers shall be a condition precedent to the right of the Contractor to receive any money under this contract for anything affected in any manner or to any extent by such question.
(R., Pl. Ex. 62). (Emphasis supplied).
City's contract with Engineers provided, inter alia:
NOW THEREFORE, the Engineers agree to perform the engineering services herein described with respect to the investigation, design, and construction of the Project in accordance with the provisions herein set forth. The City agrees to pay the Engineers for such services at the time, in the manner, and according to the schedules herein set forth.
Section 1. Scope of Services. The services to be performed under this Agreement consist of the investigation and design of the Project and inspection of the construction thereof.
a. Preliminary and General Services. The Engineers agree to furnish services as follows:
4. The Engineers shall provide at its own expense a suitable engineering staff to plan, design, prepare the plans and specifications, and inspect the construction of the improvements. The engineering staff shall consist of engineers, inspectors, and assistants as may be necessary to carry on all of the engineering work required in connection therewith, in an efficient and expeditious manner.
b. Design Services. Design services for the project shall include the preparation of preliminary and final plans for the Project, as herein specified, together with all specifications and related documents required for the construction of the Project by the City's construction contractor.
(R., Def's. Ex. BA-BB 952). (Emphasis supplied).
Shortly after Miller started working on the project it encountered an extremely muddy unstable area which would not support the sewer pipe in its natural condition. Contract Change Order No. 1 was therefore prepared by Engineers and executed by Miller and City. This change order provided, inter alia:
This Change Order adds Item 18 Crushed Stone to the contract. This item is added to provide compensation for material required to provide adequate support for pipe to be installed in ditch areas where the nature of the base material is such that other available material is inadequate to satisfactorily support the pipe. Such areas of unstable material could not be anticipated in advance of actual excavation.
Under this item, crushed rock will be furnished and installed as backfill to the normal trench grade in those areas where the material encountered at the planned trench bottom is unsuitable for supporting the pipe. Use of crushed stone in such areas of unusual nature not anticipated in normal trenching shall be authorized by the Engineer.
The crushed stone shall have a nominal size of 11/2 inch with variations to accommodate actual conditions encountered to be authorized by the Engineer.
(R., Def's. Ex. BA-BB 3B). (Emphasis supplied).
After implementation of Change Order No. 1 Miller proceeded to install approximately 93% of the line, utilizing a large backhoe and crushed rock varying in size from 11/2 to 4 to stabilize muddy, unstable areas as encountered. During the course of installing the line Miller was paid on a periodic basis in accordance with estimates prepared by Engineers for completed work inspected and approved by Engineers. Under Miller's contract with City a 10% retainage was withheld pending completion and acceptance of the line by City.
After completing 93% of the line, Miller was unable to complete the remaining 7% which extended through extremely unstable areas. At this point in time, Miller claimed it was impossible to stabilize the muddy areas utilizing crushed rock. Miller subsequently made repeated written and oral requests of Engineers for a design change as to different methods of stabilization, indicating that it would not proceed further until a design change was provided or specific instructions were received on how to complete the project.
Despite Miller's repeated requests, Engineers did not provide specific instructions or authorize a design change. Rather, Engineers ignored Miller's repeated requests for guidance, indicating only that Miller should continue to use crushed rock to stabilize the extremely muddy areas. Engineers' inspector, John Terrell, who was assigned to the project, indicated that he talked to Engineers, his employers, about the problem several times, that he was concerned about it (R., Vol. IV, at p. 507) and that he was told by Engineers "not to worry about it, just keep trying". (R., Vol. IV, at p. 511).
City subsequently, upon the advice of Engineers, denied a design change and terminated Miller for failure to proceed on the project. Miller then canceled its contract with City, alleging that City had failed to make a timely payment on the last periodic estimate. City thereafter relet the contract to another firm, Utility Contractors, who, by utilizing a "clamshell" and large 18 riprap rock, was able to complete the contract. In completing the project, Utility Contractors proceeded on its own, without actively soliciting the advice of Engineers. Virgil McGuire, Utility Contractors' foreman, who operated a "clamshell" to remove the soupy unstable material from the pipeline ditch and also place the large 18 riprap in the ditch, testified that it would have been impossible to complete the project with the crushed rock specified by Engineers in Change Order No. 1. Robert Kuhn, area manager for Utility Contractors, stated that they did not even try to stabilize the pipeline ditch with 11/2 rock because they felt that it was better to stabilize the ditch with larger rock.
Upon Utility Contractors' completion of the line and acceptance by the City, City paid it $439,016.90. Prior thereto, City had paid Miller $1,288,027.29. Thus, the total outlay amounted to.$1,727,043.48, or $286,651.48 above Miller's original contract price of $1,540,392.00 as adjusted by several change orders agreed upon by Miller and City and authorized by Engineers during Miller's work on the project.
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