Chase Precast Corp. v. John J. Paonessa Co., Inc.
| Decision Date | 31 July 1990 |
| Docket Number | No. 88-P-734,88-P-734 |
| Citation | 28 Mass.App.Ct. 639,554 N.E.2d 868 |
| Parties | CHASE PRECAST CORPORATION v. JOHN J. PAONESSA COMPANY, INC., et al.; 1 Commonwealth, third-party defendant. |
| Court | Appeals Court of Massachusetts |
David A. Talman, Worcester, for plaintiff.
John J. Spignesi, for John J. Paonessa Co., Inc.
Gerald K. Kelley, Asst. Atty. Gen., for Dept. of Public Works.
Before ARMSTRONG, KAPLAN and DREBEN, JJ.
The plaintiff (Chase), a producer of precast concrete products, appeals from a judgment dismissing its action for damages that resulted from cancellation of its contract to supply median barriers in a road reconstruction project. The circumstances were these. The Commonwealth, acting through its Department of Public Works (D.P.W.), in the summer of 1982 entered into two contracts with John J. Paonessa Company, Inc. (Paonessa), for resurfacing and improvements for two stretches of Route 128 in Gloucester, Manchester, and Essex. Part of each contract called for rebuilding the median strip between the north and southbound lanes. A grass strip was to be replaced with bituminous concrete surfacing and permanent precast, double-face, concrete median barrier. Paonessa entered into two contracts with Chase to supply (in the aggregate) 25,800 linear feet of double-face median barrier to the specifications required for D.P.W. highway construction.
The road rebuilding began in the spring of 1983. By late May the D.P.W. was receiving protests from angry residents whose concerns were environmental and aesthetic. A resident group (numbering about one hundred) engaged counsel and on June 6 filed an action in the Superior Court to stop installation of the concrete median barrier and some other aspects of the work. So far as appears no injunctive order was granted; but on June 17, the D.P.W. and the residents' group entered into a settlement which provided, in part, that no additional concrete median barrier would be installed. On June 23 the D.P.W. finally deleted the permanent concrete median barrier item from the Paonessa contracts.
Paonessa had learned of the protest by residents around June 1. Anticipating modification by the D.P.W., it notified Chase by letter dated June 7 to stop producing concrete median barrier for the projects. Chase did so on receipt of the letter the following day. At that point Chase had produced approximately half of the concrete median barrier (in ten-foot segments) called for by its contracts with Paonessa, and had delivered most of it to the construction sites. For all that it had produced, Chase was paid by Paonessa at the contract unit price, $14.50 per linear foot.
Chase brought this action to recover its anticipated, lost profit on the median barrier called for by its supply contracts with Paonessa but not produced. The judge found the lost profit to be $64,291. 2 Neither this finding nor the general proposition that Chase should be entitled to recover its lost profit from Paonessa if the latter is in breach is contested in this appeal.
Paonessa, named as the defendant in Chase's action, brought its own cross action against the Commonwealth for indemnification in the event it should be held liable to Chase.
Supply Contract.
Paonessa argues that it is in a position analogous to that of a stake holder: if the D.P.W. was entitled under the conditions of the general contract to effect the modifications that eliminated permanent, precast concrete median barrier, leaving Paonessa remediless against the Commonwealth, Chase should similarly be held remediless against Paonessa, because the supply contract between the two incorporated implicitly the conditions of the general contract. To establish such an incorporation, Paonessa relies primarily on language in the purchase orders calling for "980.32 Median Barrier Double Face."
Chase, having previously supplied precast concrete median barriers for State construction projects, would recognize "980.32" as a reference to a particular type and quality of concrete barrier called for in the contract between Paonessa and the Commonwealth. This seems beyond dispute. The figure "980.32" defined the product that Paonessa ordered. The record shows that concrete barriers are produced to several different sets of specifications. 3 Chase is properly charged with knowledge of subsection 980.32 of the general contract, including, it can be argued, the provision that states:
Subsection 980.32 is given full effect, however, if it is read as defining the product and the method by which the quantity of barrier, 25,800 linear feet, was to be measured. It was not intended to give the Commonwealth or, through incorporation, Paonessa a unilateral power to back out of a contractual obligation. It would surely not limit Chase's right to damages for a contract breach in the event that Paonessa should decide, for example, to switch suppliers and thus to accept smaller quantities or none at all from Chase.
Paonessa also suggests that the Chase-Paonessa contract, by indicating, however cryptically, that the work was for a D.P.W. project, incorporated by reference the terms and conditions known in the trade to be generally applicable to D.P.W. work, including the provisions of the general contract giving the Commonwealth broad power to effect contract modifications with limited (or no) liability. 4 This argument, we think, loads too much into the terse language of the purchase orders, which only call for 25,800 feet of "980.32 Median Barrier Double Face" at $14.50 per linear foot, including delivery to and offloading at the job site. In this respect the judge correctly ruled that the case is governed by Chicopee Concrete Serv., Inc. v. Hart Engr. Co., 20 Mass.App.Ct. 315, 320-321, 479 N.E.2d 748 (1985), S.C., 398 Mass. 476, 477-478 (1986). The Paonessa-Chase purchase orders contained no provision contemplating that the quantities called for in those orders might be cancelled or cut back by action of the Commonwealth and its engineer. So far as appears from those orders or from other evidence in the case, the supply contracts were not made subject to the conditions elaborated in the general contract.
We turn therefore to the question whether Paonessa, having failed to adapt the terms of the supply contract to protect itself in the event of subsequent, major modifications in the general contract, nevertheless has a defense under common law principles.
The judge ruled that Paonessa was excused from performing its contract to purchase additional median barrier by the doctrine of impossibility, or, more accurately, frustration of purpose. 5 The doctrine, as applied to supervening events, is described in the Restatement (Second) of Contracts § 265 (1981):
"Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary."
Here Paonessa's principal purpose in ordering the median barrier was to use it to reconstruct the median strip in accordance with the specifications of the two contracts. It appears substantially clear from the record that Chase knew the purpose. Contrast Chicopee Concrete Serv., Inc. v. Hart Engr. Co., 398 Mass. at 478-479, 479 N.E.2d 748. It knew, as earlier discussed, that the work was for a D.P.W. road project; and it is inconceivable that it did not know the particular road project, as it undertook to deliver the barrier segments to the job site within the contract price of $14.50 per linear foot. . Paonessa bore no responsibility for the contract modifications.
The Restatement formulation leads to the conclusion that the parties to the Chase contract were discharged from further performance. The decisive facts are that the D.P.W.'s contract modifications wholly frustrated Paonessa's reason for contracting with Chase; the modifications were not contemplated by either party; and the purchase orders made no allocation of the risk in the event of such an occurrence. Such a result does no injustice between the parties. Chase was paid for all it produced. The parties share the loss of the profits they each anticipated from the project as originally bid and signed.
We find nothing in Massachusetts cases that casts doubt on the applicability of § 265 of the Restatement...
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Chase Precast Corp. v. John J. Paonessa Co., Inc.
...described the basis of the trial judge's decision than the doctrine of impossibility. Chase Pre cast Corp. v. John J. Paonessa Co., 28 Mass.App.Ct. 639, 554 N.E.2d 868 (1990). We agree. We allowed Chase's application for further appellate review, and we now The pertinent facts are as follow......
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Chase Precast Corp. v. John J. Paonessa Co., Inc.
...Chase Precast Corporation v. John J. Paonessa Co., Inc., Commonwealth Supreme Judicial Court of Massachusetts. JUL 31, 1990 28 Mass.App.Ct. 639, 554 N.E.2d 868. ...