Sam Macri & Sons, Inc. v. USA

• Decision Date: 07 January 1963
• Docket Number: No. 17934.,17934.
• Citation: 313 F.2d 119
• Parties: SAM MACRI & SONS, INC., a corporation, and Continental Casualty Company, a corporation, Appellants, v. U. S. A. for the Use of OAKS CONSTRUCTION COMPANY et al., Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

313 F.2d 119 (1963)

SAM MACRI & SONS, INC., a corporation, and Continental Casualty Company, a corporation, Appellants, v. U. S. A. for the Use of OAKS CONSTRUCTION COMPANY et al., Appellees.

No. 17934.

United States Court of Appeals Ninth Circuit.

January 7, 1963.

COPYRIGHT MATERIAL OMITTED

John E. Manders, Anchorage, Alaska, for appellant Sam Macri & Sons, Inc., and Continental Casualty Co.

Arthur Grunbaum, Seattle, Wash., for appellant Continental Casualty Co.

Shuler, Sayre, Winfree & Rankin, and Robert L. Myers, Portland, Or., for appellant Sam Macri & Sons, Inc.

Connolly & Walton, Anchorage, Alaska and Allen, Degarmo & Leedy, and Stuart G. Oles, Seattle, Wash., for appellee.

Before MERRILL, BROWNING and DUNIWAY, Circuit Judges.

DUNIWAY, Circuit Judge.

This is an action under the Miller Act (40 U.S.C. §§ 270a, 270b). Oaks Construction Company ("Oaks") was a subcontractor and was plaintiff in the trial court and is appellee and cross-appellant here. American Automobile Insurance Co. was a co-plaintiff. It is an assignee of Oaks, and since its rights as such are not questioned, it will not be mentioned further. Sam Macri & Sons, Inc., ("Macri") was general contractor and defendant in the trial court, and Continental Casualty Company ("Continental") is Macri's surety and co-defendant. Macri also cross-complained against Oaks. Macri and Continental appeal from a judgment for Oaks and against them, and Macri also appeals from that portion of the judgment which denies it relief on its cross-complaint. Oaks' cross-appeal is from the part of the judgment awarding Macri certain of the relief demanded in its cross-complaint. Certain other parties will be mentioned later. We conclude that the judgment should be affirmed in its entirety.

The action arises out of a dispute regarding performance of a contract for the construction of outside utilities, road, street and sidewalk paving, and storm drainage at Elmendorf Air Force Base, Alaska, and a subcontract for performance of part of the work, primarily grading and excavation. Oaks' claim was for labor and materials, principally so-called "extras," done by it, and the major dispute is as to whether the work was "extra," and, if so, the price to be paid for it. Macri's cross-complaint was for damages for improper performance and delay, in a sum exceeding an amount otherwise conceded to be owing to Oaks.

The trial court made detailed findings of fact, and we will consider them further in connection with the contentions of the parties. In summarizing evidence, we state only what supports the findings.

I. The appeal of Macri and Continental.

A. The contention that the work involved was not extra.

The trial court found that there was a net sum due Oaks under the contract of $96,992.80. It further found that during the work the Corps of Engineers requested from Macri proposals for extra work not within the scope of either Macri's prime contract or Oaks' subcontract, that each time Macri requested a proposal for such work from Oaks, Oaks made a proposal, in each case on a unit price basis, and, at Macri's direction, did the work. It further found that it was understood that settlement of compensation for the work would be made later; that Macri and the Corps of Engineers, in December, 1955, did make a settlement, but that the unit prices Macri was to pay Oaks were not settled; and that the prices quoted by Oaks were "not more than the reasonable value of the services performed * * * and were fair and reasonable." The total of these "extras" is $34,888.82. It also found that Oaks did substantial work, at Macri's request, on areas designated "pave on existing grade," that this work was not called for by Oaks' subcontract, and that Oaks was entitled to be paid the value of the work, $37,932.26. It found that there were delays, some caused by Oaks and some by the Corps of Engineers, that the total damage to Macri by reason of delay was $36,613.50, and that one-half should be charged to Oaks. The judgment is for the sum of the first three figures, less one-half of the fourth.

Macri attacks these findings, the argument being based primarily upon the terms of the prime contract and of the subcontract. The prime contract, as is customary, embodies by reference detailed specifications and drawings. It lists 25 categories of work, with "estimated quantities" and unit prices for each. The subcontract covers several of these categories, but not including No. 4, "Leveling Course for Roads, Streets, Driveways and Parking Areas," nor any paving.

The specifications of the prime contract contain the following:

"SC-32 ESTIMATED QUANTITIES: The quantities listed in the Unit Price Schedule are estimates only. The Contractor will be required to complete the work specified herein in accordance with the contract and at the contract price or prices whether it involves quantities greater or less than the estimated quantities; provided that, should the actual quantity of work performed under any item vary from the estimated quantity by more than 25% an adjustment in the unit price for any such item shall be made on the following basis. * * * In the event of a dispute as to the amount of any adjustment under this paragraph the matter shall be treated as a question of fact to be determined in accordance with the `Disputes\' articles of this contract."

The subcontract provides:

"It is understood and agreed that this subcontract is on a unit price basis and that quantities and amounts mentioned are approximate only and may be more or less at the same unit price and subject to change as directed by the owner and/or contractor, provided, however, that the unit prices shall be subject to adjustment as provided by paragraph SC-32 of the Special Conditions. The following unit price schedule will be the basis for payment for all work performed under this subcontract, subject to the provisions of paragraph SC-32. The quantities set forth are approximate only and payment will be made on the basis of actual quantities as determined by the owner."

It further provides:

"The contractor\'s engineer will do all necessary engineering and in consideration thereof the contractor will deduct from the contract price 2½¢ per cu. yd. of all excavating and borrowing involved in this subcontract."

Regarding extra work, the provisions of the subcontract are:

"(d) The CONTRACTOR may, without invalidating this SUBCONTRACT, order extra work or make changes by altering, adding to, or deducting from the work; the price herein being adjusted accordingly. All such work shall be executed under the conditions hereof, and of the MAIN CONTRACT, except that any claim for extension of time caused thereby must be agreed upon at the time of ordering such change.

"(e) To make no claims for extras unless the same shall be fully agreed upon in writing by the CONTRACTOR prior to the performance of any such extra work."

"12 — It is understood and agreed that the provisions of the Special Conditions issued by the Corps of Engineers for contract Eng-95-507-54-6, and particularly paragraph SC-32, providing that if the actual quantities of work vary from the estimate be sic more than 25%, an adjustment in prices will be made as provided in said paragraph SC-32, which is made a part of this subcontract."

The corresponding provisions of the prime contract read:

"3. CHANGES AND EXTRAS. — The contracting officer may at any time, in writing, and without notice to the sureties, order extras or make changes in the drawings and/or specifications of this contract providing such extras or changes are within the general scope thereof. If any such extra or change causes an increase or decrease in the amount due under this contract, or in the time required for its performance, an equitable adjustment shall be made and the contract shall be modified in writing accordingly. Any claim of the contractor for adjustment under this Clause must be asserted in writing within 30 days from the date of receipt by the contractor of the notification of extra or change: Provided, however, That the contracting officer, if he decides that the facts justify such action, may receive, and act upon any such claim asserted at any time prior to the date of final settlement of the contract. If the parties fail to agree upon the adjustment to be made the dispute shall be determined as provided in Clause 6 hereof. But nothing provided in this clause shall excuse the contractor from proceeding with the prosecution of the work as changed."

Clause 6, mentioned above, is the usual "disputes" clause, and deals with "any dispute concerning a question of fact arising under this contract," i. e., the prime contract.

As we have seen, the "extras" involved here are of two kinds, and we first consider the item involving areas marked on the drawings "pave on existing grade." Another subcontractor was to do the paving, and Macri itself was to do sidewalks and gutters. Mr. Oaks, a partner in Oaks, testified that in bidding, Oaks assumed that the grading was already done on those areas marked "pave on existing grade," so that Oaks was not to do any work on them, and our examination of the documents and the evidence leads us to the conclusion that this assumption was warranted. Oaks' testimony was supported by that of an experienced construction engineer. In essence, the testimony is that this work was included in item 4, leveling courses, etc., on which Oaks did not bid. The finding that this work was "extra" is not clearly erroneous — it was included in Macri's prime contract, but not in the subcontract of Oaks. Macri, however, required Oaks to do it.

As to the other "extra" work, we think it particularly significant that both the government and Macri treated each item as extra. In each case, the government requested a proposal from Macri; Macri requested a proposal from Oaks; Oaks made a proposal naming prices; Macri thereafter made a proposal to the government, again naming...