Green Const. Co. v. Kansas Power & Light Co.

• Decision Date: 22 June 1989
• Docket Number: Civ. A. No. 87-2070-S.
• Citation: 717 F. Supp. 738
• Parties: GREEN CONSTRUCTION COMPANY, an Iowa corporation, Plaintiff, Third-Party Plaintiff, v. KANSAS POWER & LIGHT COMPANY, Defendant, v. SEABOARD SURETY COMPANY, Counterclaim Defendant, v. TERRACON CONSULTANTS, SE, INC., Third-Party Defendant.
• Court: U.S. District Court — District of Kansas

717 F. Supp. 738

GREEN CONSTRUCTION COMPANY, an Iowa corporation, Plaintiff, Third-Party Plaintiff, v. KANSAS POWER & LIGHT COMPANY, Defendant, v. SEABOARD SURETY COMPANY, Counterclaim Defendant, v. TERRACON CONSULTANTS, SE, INC., Third-Party Defendant.

Civ. A. No. 87-2070-S.

United States District Court, D. Kansas.

June 22, 1989.

Dale R. Martin, Barokas & Martin, Seattle, Wash., Patrick E. Hartigan, Hartigan & Yanda, P.C., Kansas City, Mo., Frank D. Menghini, McAnany, Van Cleave & Phillips, Kansas City, Kan., for Green Const. Co.

F.B.W. McCollum, Spencer, Fane, Britt & Browne, Kansas City, Mo., J. Nick Badgerow, Overland Park, Kan., Camille Q. Bradford, Topeka, Kan., for Kansas Power & Light Co.

Bernard L. Balkin, Keith Witten, Sandler, Balkin, Hellman & Weinstein, Kansas City, Mo., for Seaboard Sur. Co.

Jeffrey S. Nelson, Thomas R. Buchanan, Shook, Hardy & Bacon, Overland Park, Kan., for Terracon Consultants, SE, Inc.

MEMORANDUM AND ORDER

SAFFELS, District Judge.

This matter is before the court on defendant Kansas Power & Light Company's motion for partial summary judgment and to review certain orders of the magistrate. This case was initiated by plaintiff Green Construction Company ("Green") against Kansas Power & Light Company ("KP & L"). Green is seeking additional compensation for work performed under a contract for the construction of KP & L's Jeffrey Energy Center Auxiliary Makeup Lake. A request has been made for oral argument on the motion for partial summary judgment. The court has determined that oral argument would not be of material assistance in the determination of this matter. Rule 206(d), Rules of Practice of the United States District Court for the District of Kansas.

The following facts have been established for the purposes of the motion for partial summary judgment. On January 16, 1985, Green and KP & L entered into a contract. Under the terms of this contract, Green agreed to perform construction work for the Jeffrey Energy Center Auxiliary Makeup Lake. This work included the construction of an earthen dam and construction of the lakebed. According to the terms of the contract, KP & L was to compensate Green on a lump-sum basis and Green agreed to accept $8,518,496.00 as full compensation for the work required in the contract.

Prior to awarding the contract to Green, KP & L solicited bids from contractors. KP & L provided prospective bidders with information and design specifications, including geotechnical data concerning subsurface conditions. The contract specifications provided that fill for the earthen dam was to be taken from specified burrow areas. In preparing its bid, Green relied on the information provided in the documents given bidders without conducting its own independent research and analysis of the subsurface conditions. Green contends that it had insufficient time to conduct its own investigation of subsurface conditions and that it is the custom and policy of the dam construction industry to rely on geotechnical data provided by owners in the bidding process.

The instructions to bidders, which were incorporated into the contract, contained several sections that are important for the purposes of the present motion. Section A.7, entitled "LOCAL CONDITIONS," stated that "each bidder shall visit the site of the work and thoroughly inform himself relative to construction hazards and procedure, labor, and all other conditions and factors, local and otherwise, which would affect the prosecution and completion of the work and the cost thereof...." This section further stated:

It must be understood and agreed that all such factors have been properly investigated and considered in the preparation of every proposal submitted, as there will be no subsequent financial adjustment, to any contract awarded thereunder, which is based on the lack of such prior information or its effect on the cost of the work.

Section A.8, entitled "SUBSURFACE CONDITIONS," stated that "the determination of the character of subsurface materials which will be encountered shall be each bidder's responsibility." This section further stated that test borings and laboratory and field tests had been performed for the purposes of the project design. This information was made available to bidders. Section A.8 stated, however, that "logs of test borings may not be indicative of all subsurface conditions that may be encountered."

Other important contract provisions included sections SC.16, 2B.11.3, 2C.14.4 and 2C.15.4 and D.27. Section SC.16 placed the risk of loss resulting from natural causes on the contractor. This section stated:

All loss or damage arising out of the nature of the work, or from the action of the elements, or from floods or overflows, or from ground water, or from any unusual obstruction or difficulty, or any other natural or existing circumstance either known or unforeseen which may be encountered in the prosecution of the work, shall be sustained and borne by the Contractor at his own cost and expense.

Section 2B.11.3 placed on the contractor the burden of taking whatever steps were necessary to ensure that the soil used in the construction of the dam was at uniform moisture content. Also, section 2C.14.4 placed on the contractor the burden of ensuring that each layer of soil was "sprinkled, wetted, or dried as required to provide a uniform distribution of moisture within the specified range of moisture content after which the layer shall be compacted to the required density...." Section 2C.15.4 stated that "if the fill material in burrow areas or other excavations contains an excess of moisture prior to excavation, the Contractor will be required to excavate the drainage channels or perform such work as may be necessary to reduce the moisture content of the material." Finally, section D.27 provided for the method by which the contractor could recover increased compensation for "extra work" or changes to the work required under the contract.

The contract proposal form provided each bidder the opportunity to note any exceptions or variations to the contract documents. Green took various exceptions, two of which were accepted by KP & L and incorporated into the contract. Two other exceptions by Green were not accepted. Green took no exception or variation to any of the contract clauses cited above.

During the excavation of the borrow areas, plaintiff encountered ground water at higher elevations than indicated in the geotechnical data provided by KP & L. Also, plaintiff found the soil in designated burrow areas to contain greater moisture than expected. This caused Green to expend more resources for excavation and foundation work than it anticipated when it bid on the project. Green was required to obtain material from areas outside of the burrow areas. Also, Green had to alter its method of excavating and constructing the foundation of the dam. During the course of construction, Green submitted a claim to KP & L requesting additional compensation in the amount of $1,991,992.84 because of the additional and increased costs associated with the excessive moisture in the soil. KP & L refused Green's request for additional compensation. On February 10, 1987, Green initiated this present lawsuit. Defendant now moves for partial summary judgment on plaintiff's claim for additional compensation in the amount of $1,991,992.84.

A. Summary Judgment

A moving party is entitled to summary judgment only when the evidence indicates that no genuine issue of material fact exists. Fed.R.Civ.P. 56(c); Maughan v. SW Servicing, Inc., 758 F.2d 1381, 1387 (10th Cir.1985). The requirement of a "genuine" issue of fact means that the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The moving party has the burden of showing the absence of a genuine issue of material fact. This burden "may be discharged by `showing'—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). "A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. Thus, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Id. The court must consider factual inferences tending to show triable issues in the light most favorable to the existence of those issues. United States v. O'Block, 788 F.2d 1433, 1435 (10th Cir.1986). The court must also consider the record in the light most favorable to the party opposing the motion. Bee v. Greaves, 744 F.2d 1387, 1396 (10th Cir.1984), cert. denied, 469 U.S. 1214, 105 S.Ct. 1187, 84 L.Ed.2d 334 (1985).

Green is prosecuting its claim for additional compensation under three theories of recovery. Green contends it can recover the additional compensation because (1) there has been a constructive change in the contract; (2) KP & L breached an implied warranty regarding information provided to bidders on the subsurface conditions; and (3) KP & L misrepresented information provided to bidders. The court will deal with each theory individually, and determine whether plaintiff can proceed with its claim for additional compensation under these theories.

B. Constructive Change

It is undisputed that Green encountered excessive moisture in the soil at the project site. As a result, Green's performance of the contract was made more difficult and more expensive. The issue to be determined is which party should bear the added cost of this complication. Green contends that it is entitled to the additional compensation because the...