Dravo Corporation v. L.W. Moses Company

• Decision Date: 20 December 1971
• Docket Number: No. 687--I,687--I
• Citation: 6 Wn.App. 74,492 P.2d 1058
• Parties: DRAVO CORPORATION, Appellant, v. L. W. MOSES COMPANY and St. Paul Fire and Marine Insurance Company, Respondent and Cross-Appellant, L. Wayne Moses and Lorraine Moses, his wife, Respondent.
• Court: Washington Court of Appeals

Page 74

6 Wn.App. 74

492 P.2d 1058

DRAVO CORPORATION, Appellant, v. L. W. MOSES COMPANY and St. Paul Fire and Marine Insurance Company, Respondent and Cross-Appellant L. Wayne Moses and Lorraine Moses, his wife, Respondent.

No. 687--I.

Court of Appeals of Washington, Division 1, Panel One.

Dec. 20, 1971.

Rehearing Denied Feb. 25, 1972.

DeGarmo, Leedy, Oles & Morrison, Gerald DeGarmo, Seth W. Morrison, Seattle, for appellant.

Thomas D. Frey, Seattle, for respondent and cross-appellant L. W. Moses Co.

Franklin & Watkins, Ralph E. Franklin, Seattle, for respondent St. Paul Fire and Marine Ins. Co.

UTTER, Judge.

Dravo Corporation brought suit against L. W. Moses Company, a subcontractor, and St. Paul Fire and Marine Insurance Company who furnished a performance bond to Dravo on behalf of Moses. Dravo claimed Moses did not complete certain work contracted for and sought recovery for the cost of completion against Moses and St. Paul. Moses cross-claimed seeking recovery for the work it did do from Dravo.

In a trial to a jury, a verdict was rendered in favor of Moses and St. Paul on the Dravo claim. Judgment was entered upon this verdict dismissing the Dravo claim with prejudice. With respect to the Moses counterclaim against Dravo, a verdict was rendered in favor of Moses. A motion for new trial made by Dravo was granted but limited to the amount of damages recoverable by Moses, and the judgment by Moses against Dravo was affirmed on the issue of liability.

Dravo's assignments of error fall into three categories. It is first contended that Dravo is entitled to a directed verdict on the issue of liability of Moses Company and St. Paul because Moses was not terminated by Dravo and was therefore unjustified in abandoning his subcontract. It is secondly urged that the court erred in refusing to give Dravo's instruction relating to a January 1 completion date and giving an instruction interpreting the contract after finding it ambiguous, in reversing its decision granting a new trial on all issues by virtue of an error in an instruction given, and in allowing testimony concerning precontract negotiations to modify the express contract terms.

The third category of assignments is directed to the court's either giving or failing to give instructions on the issues of interpretation of ambiguity, measure of damages, extension of time for completion, control of subcontractor by the prime contractor, materiality of alleged contract breaches, and, finally, to the court's action in sustaining an objection to the admission of certain evidence.

Moses, in his cross-appeal, assigns error to that action of the trial court which denied Moses their judgment for costs and disbursements and to its action in granting a new trial and setting aside the jury verdict as to damages awarded Moses in their cross-claim against Dravo.

On June 6, 1966, Dravo entered into a construction contract with Metro for construction of a sewage disposal project which included construction of a trunk sewer, a portion of which ran through a navy supply depot crossing under the navy's fuel farm and considerable railroad trackage. Much of the line was constructed by digging a trench, laying pipe and filling over the pipe. There were segments however, that could not be constructed by an open cut due to fuel installations or railroad tracks crossing the line of the sewer and underground methods had to be used. Moses was employed to do portions of the underground work by a process called 'jacking.' By this process, 8-foot long casings, 54 inches in diameter, were forced horizontally through the earth by several powerful jacks, like pushing a cooky cutter against dough. A smaller 27 inch reinforced concrete sewer pipe was then installed inside the casing pipe. The jacking done was in open excavations at the depth required for installation of the sewer pipe.

Negotiations started between Dravo and Moses on July 22, 1966. Documents were exchanged between the parties during August and on August 18, Moses received a purchase order from Dravo confirming the subcontract. Moses in turn informed Dravo by letter that 'Department upon our receipt of signed Contract and Notice to Proceed and Materials involved we plan to proceed at a location selected by you on September 19, 1966.' A letter dated August 26, 1966, delivered Dravo's signed subcontract to Moses. On September 26, 1966, Moses commenced work at a location directed by Dravo. Moses' first preliminary work schedule submitted indicated a completion time of December 31. On November 7, a revised schedule was submitted by Moses showing an extension of the completion date to February 1, 1967.

The testimony shows substantial difficulties occurred between Moses and Dravo from September 26 to January 1. Testimony introduced by Dravo indicates Moses had completed only a small percentage of the work contracted for by January 1, and that by that date a substantial length of tunnel that he was to install was so far off grade as to be unsatisfactory. Testimony introduced by Moses, on the other hand, indicates many of the delays were occasioned by the failure of Dravo to have necessary work done prior to the time that Moses could start or complete his portion of the work and that he had been required to do much of the work Dravo was to have completed prior to the time Moses started. On December 29, Metro notified Dravo of its dissatisfaction with the long section of pipe which was off grade and Moses acknowledged the conditions by a letter of December 29 to Dravo and outlined the difficulties he had encountered and proposed corrective measures.

On January 5, a meeting was held between Lancaster, Dravo's superintendent and others, at which meeting Lancaster advised Moses that his contract time was up and that Lancaster was giving Moses '72 hours to expedite the work and he asked me what I was going to do.' Lancaster then handed Moses a letter dated January 4, 1967 which stated in part,

The date of completion of all work to be done under this contract was January 1, 1967 . . . Pursuant to the provisions of article 12 of the subcontract agreement above mentioned, you are hereby notified that you are in default for failure to complete the work within the time set forth in the subcontract . . . Should you fail to comply with this notification, we will exercise the rights and remedies as provided by article 12 of the subcontract . . .. We hereby make demand on you to forthwith and in no event later than 72 hours from the time of delivery of this notification, place upon the project additional equipment and personnel required to expedite and perform the work under your subcontract and continuously thereafter prosecute such work as required by the terms of your agreement with us.

Moses thereafter worked a few days, installing additional piping. A meeting was held on January 12 between Lancaster and others from Dravo and Moses and two representatives from St. Paul Fire and Marine Insurance Company. Moses' testimony of what occurred at that meeting was that Lancaster told him 'I hadn't done anything, I had not expedited the work, I had not lived up to the subcontract and that I was through.' He further stated Lancaster said a letter would be mailed to him immediately to the effect that 'we were through and he was terminating our subcontract.' Moses testified that although he was told his contract was terminated on January 12, he did not leave the project on that date because Lancaster told him he would follow up with a letter. Lancaster's version differs from that of Moses and indicates merely that prior to the meeting he learned the work being done by Moses in the preceding days was off grade and requested the bonding company to assist Moses in the work. He specifically denied terminating the contract.

Following the meeting Lancaster on behalf of Dravo wrote a letter to St. Paul indicating that in accordance with article 12 of the subcontract, they were giving notice of default in performance of the work. They specifically claimed:

1. The subcontractor has failed to complete the work within the specified time.

2. The subcontractor has failed to prosecute the work continuously with sufficient workmen and equipment to insure completion within the specified time.

3. The majority of the work completed to date is not in accordance with the plans and specifications of the original contract between the owner and Dravo Corporation.

We herewith notify you of default as surety for the principal, L. W. Moses Company, and urge that immediate and remedial steps be taken before further delay and loss incurred by Dravo Corporation.

Moses then wrote a letter on January 19 to Dravo, noting that he had been defaulted by Dravo but denying the contract was actually in default. The letter states in part:

Because of your wrongful termination of my subcontract, I have stopped work and hereby notify you that I will hold you fully responsible for all my loss and damage because of your breach of contract and for the value of my work performed to this date.

Dravo claims it is entitled to a directed verdict on the issue of liability because the testimony, as a matter of law, does not indicate Moses was ever in fact terminated by Dravo and therefore had no legal justification for abandoning the project on January 19, 1967.

In ruling upon Dravo's contention, we cannot set aside the verdict unless we can say as a matter of law there is neither evidence nor reasonable inference from the evidence to support the verdict. After viewing the evidence in a light most favorable to the party against whom the motion is made, all competent evidence favorable to the party who obtained the verdict must be taken as true and that party must be given the benefit of every favorable inference which reasonably may be drawn from the evidence. If there is substantial evidence to support the verdict it must stand. Substantial evidence is that character of...