Environmental Waste Management, Inc. v. Industrial Excavating & Equipment, Inc.
| Decision Date | 06 October 1998 |
| Docket Number | No. WD,WD |
| Citation | 981 S.W.2d 607 |
| Court | Missouri Court of Appeals |
| Parties | ENVIRONMENTAL WASTE MANAGEMENT, INC., Respondent, v. INDUSTRIAL EXCAVATING & EQUIPMENT, INC., Appellant. 54823. |
Richard W. Miller, Weston A. Sechtem, Miller Law Firm, Kansas City, for appellant.
Ward K. Brown, Kansas City, Thomas W. Rynard, Craft Fridkin & Rhyne, Jefferson City, for respondent.
Before ELLIS, P.J., and LOWENSTEIN and RIEDERER, JJ.
Environmental Waste Management, Inc. filed suit against Industrial Excavating and Equipment, Inc. for breach of contract in Jackson County circuit court. A jury rendered a verdict in favor of Environmental Waste Management, Inc., awarding damages in the amount of $263,663.59. Industrial Excavating and Equipment, Inc. brings this appeal.
In 1992, the federal government, acting through the General Services Administration ("GSA") contracted with Rand & Co. ("Rand") to make general improvements to the Internal Revenue Service building on Bannister Road in Kansas City. During the course of the improvements, workers discovered what they thought were two underground storage tanks ("UST's") that had to be removed before completion of the project. The UST's were located under an asphalt parking lot and had been used to store oil. Workers eventually confirmed there were two 15,000 gallon tanks and one 600 gallon tank, all full of oil. Oil had leaked out of the tanks and contaminated a large amount of soil surrounding the tanks. The tanks, the oil, and the contaminated soil had to be removed from the site.
As already noted, the government's general contractor was Rand. The government also contracted with Energy Masters Corporation ("Energy Masters") to provide contract services for the project. Rand hired Industrial Excavating & Equipment, Inc. ("Industrial," defendant/appellant) as a subcontractor to provide certain labor and materials for the removal of the tanks. Industrial then contracted with Environmental Waste Management, Inc. ("EWM," plaintiff/respondent) to provide labor and materials to aid in site excavation, tank removal, soil removal, soil disposal, and the drafting of a closure report. 1 The main issues at trial revolved around what agreement, if any, Industrial and EWM reached with respect to the prices Industrial agreed to pay EWM for its services and the method used to determine the amount of contaminated soil removed from the site. 2
Originally, Industrial contracted with EWM to aid in the removal of a different UST at the IRS building project. EWM performed its services under that contract and Industrial paid EWM based on a lump sum bid. The provisions of that contract were fully performed by both parties and are not an issue in this case. After the discovery of the UST's under the parking lot, Industrial and EWM began negotiating a second contract. EWM submitted a lump sum bid of $39,492.00 to Industrial on July 1, 1992. 3 Industrial requested EWM provide a price breakdown, detailing how it arrived at the lump sum reflected in the bid. Industrial told EWM the numbers did not have to be accurate, they just had to add up to the amount of the lump sum bid. Industrial had to submit the breakdown to Energy Masters, the government's contract representative, to substantiate its own costs. Michael Duffey, vice president of EWM, produced a document with primarily fictitious numbers, warning Industrial the numbers did not reflect EWM's actual costs. EWM worked backwards from their quote of $39,492.00, plugging in numbers that would add up to the total of the lump sum bid. As a result, the numbers did not reflect actual prices for each individual item.
Energy Masters, the government's contract representative, met with the parties in early August, 1992. Energy Masters had a problem with all the costs submitted to it by the various contractors, including the breakdown provided by EWM. Energy Masters told the parties they might have to begin work on the removal of the UST's and proceed on a PDL basis. 4 Ultimately, Industrial and EWM did not reach an agreement based on the lump sum bid EWM submitted July 1, 1992, nor the subsequent breakdown of the lump sum bid submitted on July 22. EWM never agreed to work for Industrial on a PDL basis. Industrial and Rand eventually agreed to proceed with their work on a PDL basis.
Around August 20, 1992, Industrial and EWM again entered into contract negotiations regarding the removal of the UST's. Industrial asked EWM, instead of submitting a lump sum bid, to provide a price list reflecting what it would charge per unit of work on the project. EWM provided Industrial with a letter dated August 21, 1992 which outlined the prices it would charge for certain services. The prices were set out as follows:
Labor
Supervisor $ 40.00/hour
Laborer $ 30.00/hour
Clerical $ 25.00/hour
Equipment & Supplies
EWM Pickup $ 10.00/hour
Cleaning Chemicals $ 40.00/gallon
Explosion Meter $125.00/day
Pumps & Hoses $125.00/day
Sampling Supplies $ 5.00/sample
Tank Head Cleaner $250.00/day
Poly Sheeting $ 70.00/roll
Transportation $700.00/load
Liquid"Disposal $000.75/gallon
Hazardous Sludge Disposal $350.00/drum
Laboratory Analysis/BETX $300.00/sample
& TPH Rush
A day or two after EWM sent the August 21 letter to Industrial, Ken Gray, who worked for Industrial at the time and had the power to enter into contracts on its behalf, telephoned EWM. He spoke to Michael Duffey. Gray pointed out to Duffey that the price list did not include a price for the disposal of contaminated soil. EWM's prior bid included a cost of $32.20 per cubic yard of soil removed from the site. Duffey told Gray he would still honor that quote.
Another day or two later, Gray called again and spoke to both John and Michael Duffey. 5 Gray complained that he thought the prices EWM was charging for its services were too high. John Duffey told Gray that Industrial did not have the expertise to do the job themselves, they needed EWM's experience, and the prices on the list were the amounts it would cost Industrial to hire EWM. Gray again complained about the "mark-ups" and asked whether the prices on the list included everything; meaning cost, overhead, and profit. John Duffey told him it did and that when Industrial received EWM's daily bills, these prices would be on the bills. Gray again asked EWM to provide a further breakdown of the numbers to "make them more palatable to the client" (presumably the federal government). Michael Duffey told Gray he could do whatever he wanted to with the numbers, but that the price list was what EWM would work for.
After another day or two, Gray again called and spoke only with Michael Duffey. During this conversation, Gray simply told Michael Duffey they would accept the numbers and said, "Let's go to work." Throughout the project, EWM billed Industrial on a daily basis. Each daily billing reflected the prices outlined in the August 21 letter.
The other major issue in the case revolved around the method used to determine the amount of contaminated soil removed from the site. The parties seem to agree Industrial agreed to pay EWM $32.20 for each cubic yard of contaminated soil removed from the site. EWM claims workers removed 8930 cubic yards of contaminated soil from the site, while Industrial claims only 4704 cubic yards of soil were removed. The disparity between the two numbers results from vastly different methods of measuring the amount of soil.
EWM's 8930 cubic-yard measurement reflects "swelled" yardage hauled off the site in "struck full" truck loads. "Swelled yardage" refers to the phenomenon of soil's expanding when it is removed from the ground. If one were to mark off one cubic yard of soil in the ground and dig it up, that cubic yard of soil would not fit into a box of the same dimensions. When soil is removed from the ground it expands because of the air mixed in with the soil. In the case at bar, Industrial wanted to measure the amount of soil removed from the site based on the size of the hole. Obviously this would only reflect the volume of the soil while it was still compacted in the ground. EWM wanted to measure the soil based on its size after being removed from the hole--i.e. swelled yardage.
"Struck full" loads refers to measuring the amount of soil removed based on the size of the trucks that hauled it off. Measuring based on struck full loads is a fairly common procedure in the industry. EWM and Industrial agreed to measure based on struck full loads. Therefore, EWM measured the bed of each truck before loading it up with contaminated soil the first time. Assume a truck pulls in to the lot. Workers measured the bed of the truck at ten cubic yards. The truck was given the label "A." Each time truck "A" loaded up and left the lot with contaminated soil, EWM billed Industrial for another ten cubic yards of soil. "Struck full" means the parties were to assume the trucks were leaving the lot full of soil. Even if truck A left with only six cubic yards of soil, EWM billed Industrial as if the truck were "struck full" and carrying ten cubic yards. The evidence at trial revealed Industrial not only agreed to measuring the trucks to determine the amount of soil removed from the site, but Industrial wanted EWM to bill on the struck full basis.
Industrial ascertained 4704 cubic yards of soil were removed based on measuring the size of the hole from which the soil came. EWM never agreed to measure the amount of soil based on the size of the hole left in the ground when workers were finished digging out the contaminated dirt.
The parties agree EWM performed the work it agreed to perform and did so in a satisfactory manner. EWM's...
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