FOUNDATION INTERN. v. ET IGE CONST.

• Decision Date: 23 October 2003
• Docket Number: No. 21479.,21479.
• Citation: 78 P.3d 23,102 Haw. 487
• Parties: FOUNDATION INTERNATIONAL, INC., Plaintiff-Appellant/Appellee, v. E.T. Ige CONSTRUCTION, INC., Defendant/Crossclaim Plaintiff & Defendant-Appellee/Appellant, Harold T. Miyamoto & Associates, Inc., Defendant/Crossclaim Plaintiff & Defendant-Appellee. and E.T. Ige Construction, Inc., Third Party Plaintiff/Counterclaim, Defendant-Appellant/Appellee, v. State of Hawai'i, Department of Transportation, Highways Division, Third Party Defendant/Counterclaimant-Appellee.
• Court: Hawaii Supreme Court

78 P.3d 23

102 Haw. 487

FOUNDATION INTERNATIONAL, INC., Plaintiff-Appellant/Appellee, v. E.T. Ige CONSTRUCTION, INC., Defendant/Crossclaim Plaintiff & Defendant-Appellee/Appellant, Harold T. Miyamoto & Associates, Inc., Defendant/Crossclaim Plaintiff & Defendant-Appellee. and E.T. Ige Construction, Inc., Third Party Plaintiff/Counterclaim, Defendant-Appellant/Appellee, v. State of Hawai'i, Department of Transportation, Highways Division, Third Party Defendant/Counterclaimant-Appellee.

No. 21479.

Supreme Court of Hawaii.

October 23, 2003.

Reconsideration Denied December 23, 2003.

David Schulmeister & James H. Ashford, & Patrick W. Hanifin (Cades Schutte Fleming & Wright), on the briefs, for Plaintiff-Appellant/Appellee Foundation International.

William M. McKeon & Carla M. Nakata (Paul, Johnson, Park & Niles), on the briefs, for Defendant/Crossclaim Plaintiff & Defendant-Appellee/Appellant, & Third-Party Plaintiff/Counterclaim, Defendant-Appellant/Appellee E.T. Ige Construction, Inc.

Randall K. Schmitt (McCorriston Miho Miller Mukai), on the briefs, for Defendant/Crossclaim Plaintiff & Defendant-Appellee Harold T. Miyamoto & Associates, Inc.

Jack A. Rosenzweig, Deputy Attorney General, State of Hawai'i, on the briefs, for Third Party Defendant/Counterclaimant-Appellee State of Hawai'i, Department of Transportation.

MOON, C.J., LEVINSON, NAKAYAMA, ACOBA, and DUFFY, JJ.

Opinion of the Court by ACOBA, J.

We affirm the summary judgment in favor of Third-Party Defendant/Counterclaimant-Appellee State of Hawai'i, Department of Transportation, Highways Division (the State), the owner of the subject construction project; Defendant/Crossclaim Plaintiff & Defendant-Appellee/Appellant, and Third-Party Plaintiff/Counterclaim Defendant-Appellant/Appellee E.T. Ige Construction, Inc. (Ige), the general contractor on the project; and Defendant/Crossclaim Plaintiff & Defendant-Appellee Harold T. Miyamoto & Associates, Inc. (Miyamoto), an engineering firm; as against Plaintiff-Appellant/Appellee Foundation International, Inc. (Foundation), an excavation subcontractor, inasmuch as: (1) the subject contract provided that (a) a four foot basalt¹ embedment for bridge supports was a minimum depth requirement and (b) the State engineer would determine the final drilling depth into basalt; (2) under such terms, no additional payment under an equitable adjustment or substantial change clause in the contract to Foundation was necessary for drilling in excess of four feet into basalt; (3) Foundation failed to demonstrate any material change to site conditions from that indicated in the contract so as to raise a genuine issue of material fact; and (4) an ex parte conversation between the Circuit Court of the Second Circuit (the court)² and counsel for the State regarding the order herein involved an administration or "housekeeping" matter not requiring the court to recuse or disqualify itself. Accordingly, we affirm the October 1, 1996 order granting summary judgment in favor of the State and Ige and denying Foundation's motion for summary judgment, the October 21, 1996 order granting summary judgment in favor of Miyamoto, and the court's March 9, 1998 final judgment.

I.

A.

The facts of this case, as found by the court and relevant to our decision, are relatively undisputed. This case arises out of a payment dispute over public works project No. BR-RS-0360(8), the Hoolawa Bridge Replacement and Approaches (the project). The project involved the construction of a new concrete bridge across Hoolawa Stream on the island of Maui. One aspect of the project involved the construction of seventy-one "cast-in-place piles, also known as `drilled shafts[.]'" Under the terms of the disputed contract, a drilled shaft is a

[thirty]-inch diameter hole excavated from a set elevation (the "bottom footing elevation") into the subterranean hard basalt layer. A cage-like structure of steel reinforcing bars matching the shape of the shaft is inserted into the hole, and then concrete is poured. The result is a reinforced concrete pile or shaft, extending from within the basalt layer up to the bottom-footing elevation, upon which the bridge abutments are constructed.

(Emphasis added.) The bottom of a drilled shaft is called the "bottom tip elevation." The top of the shaft is the "bottom footing elevation." The term "pile tip elevation" refers to the depth of the drilled shaft. On page S-3 of the project plans, the bottom footing elevation is listed at 474.5 feet and the "approximate drilled shaft tip elev[ation]" is listed at 459 feet. The difference between these two figures results in a drilled shaft length of 15.5 feet. The project plans required thirty-five drilled shafts at abutment³ number one, on the Kahului side of the stream, and thirty-six drilled shafts at abutment number two, on the H;ana side. On appeal, only the shafts at abutment number one are involved.

The bridge design plans and specifications were prepared by Miyamoto. Miyamoto hired the firm Ernest K. Hirata and Associates, Inc. (Hirata) to assist with "geotechnical engineering services" related specifically to the construction of the drilled shafts.

General contractors submitted their bids for the project on an official proposal form (proposal) pursuant to a public bidding process. A schedule attached to the proposal contained bid lines for the drilled shaft work. The first item, number 510.1000, labeled "Cast-in-place piles in drilled holes[,]" referred to the cost of constructing the reinforced concrete piles in the excavated shafts. The second item, number 510.2000, was labeled thirty "Diameter predrilled holes for cast-in-place concrete piles[,]" and was the bid line for the cost of excavating the drilled shafts. In reference to these two items, it is undisputed that "[t]he schedule estimated 963 linear feet for each of these bid items"⁴ and "[b]idders were required to submit a price per linear foot for work required under each of these bid items."

With respect to pricing these items, "the price bid per linear foot is called a `unit price.'" Under the bid, "[t]he unit price bid on [both of] these two items were multiplied by the estimated 963 linear feet to establish a proposed cost for the estimated amount of drilled shaft work required for the [p]roject[.]" This "enabled the State to compare the bids and determine the lowest bidder." (Emphasis added.) Thus review of the bids was accomplished by comparing the proposed cost per linear foot submitted by each bidder for each item.

Before submitting its bid for the whole project, the general contractor, Ige, received an unsolicited proposal from Foundation to do the drilled shaft work. In this proposal, Foundation described abutment one drilled shaft work as being "35 piles of 15 foot length [,]" (emphasis added), and abutment two drilled shaft work as being "36 piles of 12 foot length." Foundation quoted a lump sum amount of $361,125 for both excavation and concrete work for "approximately" 963 linear feet for both abutments. Any additional shaft excavation necessary was proposed at a price of $175 per linear foot. Based on Foundation's proposal, Ige submitted a proposal to the State with a unit price of $194 per linear foot on bid line item number 510.2000.⁵ Ige never intended to conduct drill shaft work itself, but always intended to subcontract that portion of the work if it was the successful bidder. Thus, Ige relied upon the prices quoted by Foundation.

II.

On August 6, 1992, the State and Ige entered into a contract for the project. This contract expressly incorporated the "notice to bidders, the instructions to bidders, the proposal and plans for [the project,]" as well as all amendments, deletions and additions attached to the contract.⁶ On sheet S-1 of the project plans, incorporated into the contract, was the statement that "[d]rilled shafts for abutments and wing walls shall be embedded at least 4 feet into basalt[.]" On sheet S-25, which is entitled "Drilled Shaft Details[,]" is an illustration depicting a sloping basalt layer to the bottom of the pile with "`4'-0' min.⁷ embedment into basalt" indicated. Also, the caption to this illustration read, in relevant part, as follows:

6. Pile tip elevations shown on the longitudinal section (sht.S-3) are estimated elevations. The actual pile tip elevations will be determined by the Engineer.

7. Drilled shafts shall extend a minimum of four feet into basalt.

(Emphasis added.) The public bid document contained a similar section, which stated that

[i]t is understood that the quantities given in the attached proposal schedule are approximate only and are intended principally to serve as a guide in determining and comparing the bids. It is further understood that the Department of Transportation does not, expressly or by implication, agree that the actual amount of work will correspond therewith, but reserves the right to increase or decrease the amount of any class or portion of the work, or to omit portions of the work, as may be deemed necessary or advisable by the Director of Transportation, and that all increased or decreased quantities of work shall be performed at the unit prices set forth in the attached proposal schedule except as provided for in the specifications.

(Emphases added.)

On January 13, 1993, Ige and Foundation entered into a subcontract for bid items 510.1000 and 510.2000. The subcontract referred to Foundation's proposal to Ige and related that payment was to be on a unit price basis. It also stated that Foundation consented to be bound by the terms and specifications of the contract between the State and Ige.

B.

Upon drilling, Foundation reached the basalt layer at abutment one a few feet below the bottom footing elevation. Foundation drove the shaft four feet into the basalt and announced its intention to drill no further. The State protested, insisting that the plans and specifications indicated that the shaft must be excavated to...