McDevitt & Street Co. v. Marriott Corp.

• Citation: 713 F. Supp. 906
• Decision Date: 18 May 1989
• Docket Number: Civ. A. No. 88-0102-A.
• Court: U.S. District Court — Eastern District of Virginia
• Parties: McDEVITT & STREET COMPANY, Plaintiff, v. MARRIOTT CORPORATION, Defendant.

713 F. Supp. 906

McDEVITT & STREET COMPANY, Plaintiff, v. MARRIOTT CORPORATION, Defendant.

Civ. A. No. 88-0102-A.

United States District Court, E.D. Virginia, Alexandria Division.

May 1, 1989.

As Amended May 18, 1989.

COPYRIGHT MATERIAL OMITTED

Thomas H. McGrail, Arlington, Va., Edward Graham Gallagher, Washington, D.C., Michael E. Utley, McDevitt & Street Co., Charlotte, N.C., for plaintiff.

Andrew D. Ness, Robert M. Moore, Morgan Lewis & Bockius, Washington, D.C., for defendant.

AMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW

ELLIS, District Judge.

This diversity construction dispute grows out of a contract ("Contract") dated January 31, 1986, in which plaintiff, McDevitt & Street Company ("McDevitt"), agreed to construct for defendant Marriott Corporation ("Marriott") a "Courtyard by Marriott" hotel in Herndon, Virginia. In return, Marriott promised to pay McDevitt a total of $4,946,668.¹ The Contract imposed a strict time deadline: McDevitt was required to complete construction so that Marriott could receive a permanent Certificate of Occupancy and accommodate guests within 330 days from the Marriott-designated start date. The Contract's date for commencement of work was January 24, 1986, and the completion date was, accordingly, December 20, 1986. Lamentably, the road to completion was littered with delays, disputes and alleged plan alterations. In the end, McDevitt did not meet the contractual deadline. Marriott did not receive the equivalent of a permanent Certificate of Occupancy until approximately May 1, 1987, almost nineteen weeks after the scheduled completion date.

Allocating blame for the numerous delays and alleged alterations is the heart of this suit. Throughout the construction period, McDevitt periodically submitted to Marriott both formal and informal proposals for time extensions due to delays ostensibly beyond McDevitt's control and compensation for work performed allegedly exceeding the contractual requirements. Eight of those proposals were denied and are at issue here. Marriott holds McDevitt solely responsible for all delays and alleged additional work under the explicit terms of the Contract and has withheld from McDevitt $450,175 of the contract price. McDevitt, for its part, disclaims responsibility, alleging the delays were excusable or, in some cases, the primary fault of Marriott. On January 29, 1988, McDevitt filed this suit, seeking recovery of the retained payment, reimbursement for alleged extra work, prejudgment interest, and time extensions for allegedly excusable construction delays. As grounds for recovery, McDevitt alleges that Marriott has breached the Contract or, in the alternative, has been unjustly enriched. Marriott then filed a counterclaim against McDevitt, seeking contract damages for the delay in the hotel's completion.

Trial in this case commenced on August 16, 1988 and spanned five days. Twelve witnesses testified. Their testimony filled seven transcript volumes, totaling more than 1000 pages. More than 300 exhibits were admitted. At the conclusion of trial, the parties, at the Court's direction, submitted an agreed outline of the disputed issues. Their proposed findings of fact and conclusions of law with respect to each issue conformed to that outline, as do these findings and conclusions. In a nutshell, the remaining disputes fall into three general categories: (1) McDevitt's claims for additional compensation, (2) McDevitt's claims for time extensions for excusable delays; and (3) Marriott's counterclaim for damages. The Court's findings of fact and conclusions of law, made pursuant to Rule 52(a), Fed.R.Civ.P., correspond generally to the parties' outline.

I. McDEVITT'S CLAIMS

In this suit, McDevitt alleges that it performed work beyond the contractual requirements for which it has not been compensated. To satisfy this claimed debt, McDevitt seeks enforcement of a perfected mechanic's lien against Marriott's hotel in the amount of $1,224,760, with prejudgment interest. See Va.Code Ann. § 43-1 et seq. (1986). McDevitt's claims for additional compensation focus on the following eight proposals.

A. Additional Compensation

1. Proposal No. 9 — Soils Problems

a. FINDINGS OF FACT²

On July 31, 1986, McDevitt submitted Proposal No. 9 in writing to Marriott, seeking a fifty-six day time extension and additional compensation for corrective work allegedly necessitated by poor soil conditions on the Project site. (PX 30). Specifically, Proposal No. 9 alleged that an unusually high level of precipitation during January and February of 1986 had left the construction site too wet to perform the work required by the Contract. Marriott did not grant McDevitt's request. As a result, McDevitt claims that it had to accelerate its performance and perform additional, extra-contractual work in order to meet the Contract deadline. This additional work included stockpiling cut soil on the site; laying stone for temporary roads and drains; digging test pits to determine soil moisture levels; aerating and spreading soil to dry; raking soil to remove roots; over-excavating footings; backfilling over-excavated footings with lean concrete; building structural slabs; removing, backfilling and grading soils removed from over-excavated footings; and the attendant overtime work required of McDevitt's and its subcontractors' employees. For this work, McDevitt now seeks $266,828 in additional compensation.

(i) Compensation for Additional Work due to Soil Conditions

McDevitt first asserts that Marriott, in effect, misled them with respect to the actual condition of the soils on the Project site by failing to provide McDevitt a second soils report which allegedly presaged the problems later encountered by McDevitt. The evidence contradicts this assertion.

Before accepting bids on the Project, Marriott retained Geosystems of Virginia, Inc. to prepare a subsurface geotechnical investigation report (the "Geosystems" report) for the Project site. Marriott provided McDevitt a copy of that report (the "Geosystems" report) dated July 1, 1985. (PX-2; DX-35; Barry, Tr. at 121). This occurred prior to McDevitt's submission of its bid on the Project. The Geosystems report described the soil underlying the topsoil layer in the Project area as consisting of three types: Stratum I, extending two to three feet below the topsoil, was primarily plastic clays, susceptible to shrinking or swelling, depending on moisture levels, and silt; Stratum II, below Stratum I and up to ten feet below the surfact soils, consisted of silty sands and sandy silts; and Stratum III, located below Stratum II, was decomposed rock. (DX-35, at 3-4). The Geosystems report recommended that all Stratum I soils be removed from the site because they were unsuitable for use under foundations, pavements or grade slabs, or as compacted fill. (DX-35, at 5; Barry, Tr. at 75). Stratum II soils, however, were considered suitable for use as structural fill, provided they had the right moisture level for adequate compaction. (Drumheller, Tr. at 143-44). The Geosystems report also recommended a number of preventive and corrective measures to ensure proper soil moisture levels during site preparation. (DX-35, at 5-8). Importantly, the report warned that the contractor might need to dry soils during wet weather or dampen soils during dry weather to achieve the required minimum compaction level. The Contract defines the minimum compaction level as "at least 95% of the standard Proctor maximum dry density within 2% of the optimum moisture content determined from the Proctor density test." (DX-35, at 7; see also PX-2, Specs., Section 02200, Part 3.04(B)(4) and (C)(4)).

Marriott had in its possession, but did not provide to McDevitt, an earlier soils report prepared in June, 1983, by Law Engineering Testing Co. (the "Law Engineering report"). (DX-36). In that report, Law Engineering warned that "the soils of Stratum II are marginal for compacted fill.... It is anticipated that drying of these soils to allow compaction will be time prohibitive. If any substantial amounts of compacted fill are required, we expect fill material will have to be imported from off-site." (DX-36 at 7). McDevitt suggests that had it been aware of this report, it would have made adjustments in time and costs for the additional work necessary to haul in off-site fill to replace the on-site Stratum II soil in fill areas. (Barry, Tr. at 79-80). Contrary to McDevitt's assertion, however, the conclusions of the Geosystems report and the Law Engineering report were not, in fact, inconsistent. Rather, the Law Engineering study analyzed an area almost double the size of this Project site, and its summary conclusions were based on test results from the entire area. (Drumheller, Tr. at 166-67). Importantly, the Law Engineering results relating to the Marriott Project site areas were incorporated in the Geosystems report by Joe Drumheller, a Geosystems geologist. (Drumheller, Tr. at 167). Also significant is that the actual conditions of the soils encountered on the Project site were fully anticipated in the Geosystems report. (Drumheller, Tr. at 180). In any event, Marriott, in the Contract Specifications, expressly disclaimed "any responsibility for the Geosystems data as being representative of the conditions and materials which may be encountered.... Test results are made available to interested parties solely as a matter of convenience and general information." The Specifications further assert that "no claim shall be entertained for conditions found to different from those discovered during testing." (PX-2, Specs., Section 02010, Part 1.03(A); Barry, Tr. at 120). Marriott also encouraged all bidders on the Project to make their own independent examinations, tests, and exploratory borings to determine the nature of the soil conditions underlying the Project site. (PX-2, Specs., Section 02010, Part 1.02(B); Barry, Tr. at 120). McDevitt chose not to do so. (...