A.G. Cullen v. State System of Higher Educ.
| Decision Date | 15 March 2006 |
| Citation | 898 A.2d 1145 |
| Parties | A.G. CULLEN CONSTRUCTION, INC., Petitioner v. STATE SYSTEM OF HIGHER EDUCATION, Respondent. State System of Higher Education, Petitioner v. A.G. Cullen Construction, Inc., Respondent. |
| Court | Pennsylvania Commonwealth Court |
Alice B. Mitinger, Pittsburgh, for petitioner, A.G. Cullen Construction, Inc.
Thomas J. Madigan, Pittsburgh, for appellee, State System of Higher Education.
BEFORE: COLINS, President Judge, and SIMPSON, Judge, and LEAVITT, Judge.
OPINION BY Judge SIMPSON.
This matter presents cross-appeals of A.G. Cullen Construction, Inc. (A.G. Cullen) and the Commonwealth of Pennsylvania, State System of Higher Education (State System) from a decision of the Board of Claims (Board). The parties' claims arise out of a contract for the renovation of the administration building on a state university campus. While the parties collectively raise over a dozen contentions, the primary question is whether the Board properly assigned responsibility for delays associated with completion of the project. Upon review, we affirm, but remand the matter for an award of attorney's fees on a limited issue.
This case arises out of a contract between A.G. Cullen and the State System for the renovation of John Sutton Hall, the administration building on the Indiana University of Pennsylvania (IUP) campus. Originally constructed in 1875, John Sutton Hall is noted as the centerpiece of the IUP campus and is valued as an historic structure. The State System selected a project architect with extensive experience in the restoration of historic buildings to design the project.
In April 2000, the State System solicited bids for the project from prime contractors. A.G. Cullen was the successful bidder for the general construction prime contract. A.G. Cullen's scope of work included the removal and replacement of 550 wood-framed windows, replacement of plumbing and heating systems, and the installation of ventilation and air-conditioning systems.
The State System issued A.G. Cullen a notice to proceed on June 1, 2000. Pursuant to the contract specifications, the scheduled project completion date was August 24, 2001.
As a result of delays, however, A.G. Cullen did not complete the project as scheduled. Rather, the project architect issued A.G. Cullen a certificate of substantial completion on February 12, 2002. The architect also provided A.G. Cullen with a detailed punchlist of several hundred unfinished items. The State System substantially reduced its payments to A.G. Cullen pursuant to a liquidated damages clause in the contract and the estimated cost of completing the punchlist items.
A.G. Cullen subsequently filed four complaints against the State System with the Board. Through its complaints, A.G. Cullen sought damages for the following alleged breaches of the contract:
• Failure of a window manufacturer identified in the contract to provide windows that complied with design specifications;
• Failure of the contract specifications to include provisions for the abatement of lead-based paint;
• Withholding payment of the contract balance upon substantial completion and assessment of liquidated damages; and,
• Changes in A.G. Cullen's scope of work and other acts and omissions that delayed completion of the project.
In addition to contract damages, A.G. Cullen sought to recover interest, penalties and attorney's fees. Hearings ensued before the Board.
Following eight days of hearings and about 4000 pages of testimony, the Board issued a comprehensive opinion, consisting of 124 findings of fact, 37 conclusions of law and 30 pages of discussion. A summary of the Board's findings follows.
Pursuant to its contract, A.G. Cullen's scope of work included the removal and replacement of 550 wood-framed windows. The windows, which were original to the old building, varied widely in size and shape, and the window frames were elaborate.
The project's bid specifications identified two manufacturers to provide the required windows: Kolbe & Kolbe Millwork Company, Inc., and Weather Shield Manufacturing, Inc. Significantly, the specifications also permitted the use of other manufacturer's windows as long as the windows complied with the required specifications.
After issuance of the notice to proceed in June 2000, A.G. Cullen began negotiations with a supplier that proposed to purchase new Weather Shield windows from an authorized distributor. A.G. Cullen subsequently entered into a purchase agreement, pursuant to which the supplier agreed to furnish Weather Shield windows that complied with the contract specifications.
Based on its purchase agreement, A.G. Cullen planned to begin installation of the windows in the late summer of 2000. However, the supplier, the distributor and Weather Shield did not meet the production schedule and proved unable to provide windows that satisfied the project specifications.
A.G. Cullen continued to work with the supplier and Weather Shield to obtain conforming windows. Despite correspondence, meetings and discussions, however, Weather Shield failed to provide required shop drawings, sample windows or the actual windows. A.G. Cullen persisted in its attempts to work with Weather Shield until November 8, 2000, when it canceled its purchase agreement with the supplier.
Approximately a month later, A.G. Cullen entered into an agreement to purchase new Kolbe & Kolbe windows. Kolbe & Kolbe worked expeditiously to supply the windows, and the windows arrived at the project site in late April 2001.
As a result of Weather Shield's failure to perform, A.G. Cullen sought a six-month extension in the scheduled project completion date and an increase in the amount due under the contract. However, the State System denied both requests.
Pursuant to its contract with the State System, A.G. Cullen was required to remove and replace the wood frames of the windows. Unknown to A.G. Cullen and undisclosed in the project specifications, however, the window frames were painted with hazardous lead-based paint. Although the State System was aware of the existence of lead paint on the window frames, the project specifications did not include provisions for the abatement of lead paint. The absence of specifications concerning lead paint abatement was an oversight on the part of the State System.
Prior to bidding on the project, the State System issued a "notice to contractors" that addressed the issue of hazardous materials. The notice indicated the State System would address all "lead containing materials affected by the project." Reproduced Record (R.R.) at 1007a. Despite this notice, the State System did not provide information concerning the existence of lead paint on the window frames.
Nevertheless, in September 2000, approximately three months after the project began, the State System requested A.G. Cullen provide an estimate for the costs of performing the lead paint abatement work. Due to its realization that the contract did not provide for the removal of lead paint, the State System was prepared to pay A.G. Cullen costs reasonably incurred for lead paint abatement. Between February and April 2001, A.G. Cullen submitted written requests for payment to remove the lead paint. Ultimately, the State System denied payment for any costs associated with the lead paint abatement.
In early May 2001, A.G. Cullen's project manager learned the paint on the window frames contained hazardous levels of lead, with which A.G. Cullen would have to deal. As a result, A.G. Cullen ceased work on the window demolition portion of the project for the safety of its workers until it could implement an appropriate lead paint abatement program.
During suspension of the demolition work, A.G. Cullen arranged to train its employees to safely conduct the lead paint abatement work. Approximately a month later, A.G. Cullen resumed work with systems in place to protect its employees. A.G. Cullen incurred direct costs for implementing lead paint precautions including: training, testing and monitoring of workers, protective clothing, air-monitoring, protective enclosures, respirators and blood tests.
The parties' contract contained a clause that permitted the State System to retain liquidated damages of $500 per day "for each and every calendar day beyond the scheduled completion date" of August 24, 2001. R.R. at 1122a. The State System considered the project substantially complete on February 12, 2002, 172 days beyond the scheduled completion date. As a result, the State System retained $86,000 in liquidated damages (172 days × $500/ day = $86,000).
The State System determined the renovation project was substantially complete as of February 12, 2002. When it issued the certificate, the State System made a payment representing the contract balance, less $86,000 for liquidated damages $245,898 for the estimated cost of completing the punchlist items and $122,949, which represented an additional 50% of the cost of completing the punchlist items as permitted under the contract.
After conducting its "substantial completion inspection," the State System prepared a punchlist, which contained more than 700 unfinished items it required A.G. Cullen to complete. Following receipt of the punchlist, A.G. Cullen sent its workers to the project site to complete the unfinished items. Disputes arose between the parties as to the degree to which A.G. Cullen already completed the items listed. In addition, A.G. Cullen claimed many of the items were beyond the scope of its contract. After the parties were unable to resolve the disputes, A.G. Cullen removed its workers from the project site in January 2002. The State...
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