Glassman Const. Co., Inc. v. Maryland City Plaza, Inc., Civ. No. 20428.

• Decision Date: 07 March 1974
• Docket Number: Civ. No. 20428.
• Parties: GLASSMAN CONSTRUCTION CO., INC., a District of Columbia corporation, v. MARYLAND CITY PLAZA, INC., et al.
• Court: U.S. District Court — District of Maryland

371 F. Supp. 1154

GLASSMAN CONSTRUCTION CO., INC., a District of Columbia corporation, v. MARYLAND CITY PLAZA, INC., et al.

Civ. No. 20428.

United States District Court, D. Maryland.

March 7, 1974.

COPYRIGHT MATERIAL OMITTED

Marvin P. Sadur, Sadur, Pelland, Braude & Caplan, Chartered, Rockville, Md., for plaintiff.

Charles R. Donnenfeld, Robert B. Hirsch, Arent, Fox, Kintner, Plotkin & Kahn, Washington, D. C., A. David Gomborov, Gomborov, Steinberg & Schlachman, Baltimore, Md., for defendant.

WATKINS, Senior District Judge.

This is an action for the balance claimed to be due on a contract price and for the claimed value of extra work performed in the construction of a shopping center. Plaintiff, Glassman Construction Company, is a District of Columbia corporation, with its principal place of business in a state other than the State of Maryland. Defendant, Maryland City Plaza, Inc., is a Maryland corporation; and defendants, Herbert H. Haft and Gloria Haft, are the owners of Maryland City Plaza and are citizens of the State of Maryland.

This Court has jurisdiction in the matter under 28 U.S.C. § 1332(a), by way of diversity of citizenship of the parties and the amount claimed.

On April 13, 1967, having learned that bids were being received on a shopping center to be constructed for defendant, plaintiff, through its president, Stanley Glassman, met with defendant, Herbert Haft, to discuss the possibility of a partnership agreement. At this meeting only vague reference was made to the existing leases for the stores to be built; however, defendant did mention that he would want a "turn-key" job. A preliminary figure of $1,050,000 for construction costs was mentioned by plaintiff.

Plaintiff then took the existing plans and specifications in order to prepare a firm estimate. After review of these plans, and upon initial receipt of some subcontractor bids, plaintiff determined that the center could not be constructed for the proposed price, and, as a consequence of this, a second meeting occurred. At this meeting the parties agreed to enter into a general contractor arrangement, rather than a partnership, if a price could be agreed upon. A subsequent figure of $1,225,000 was reached and agreed to.

Defendant's attorney drafted the contract; and, on May 1, 1967, the parties met to sign the instrument. Glassman claims this was the first time he saw the contract although, apparently, a draft copy had been delivered to plaintiff's attorney earlier, for review. At the meeting, several minor changes were made in the contract; however, there was no discussion concerning the leases or their content. The contract was then signed by the parties.

Among the provisions of the contract was the following clause:

8.7 The Contractor agrees to construct the entire Shopping Center . . . on a turn-key job basis; that is, the stores to be constructed by the Contractor shall be accepted by the tenants thereof and the requirements of the tenants in accordance with their leases shall be met. . . .

On May 8, plaintiff received from defendant copies of the leases as they then existed, with an accompanying letter that stated:

Enclosed herewith are the following copies of leases on the Maryland City Plaza which may be used only in connection with co-ordinating tenants' lease requirements with the construction of the center. . . .

Plaintiff apparently never read the leases, either before signing the contract or upon their receipt on May 8. Glassman claims that he felt the requirements of the leases would be reflected within the plans and specifications he had been given at the original meeting. Upon receipt of the leases a week after signing the letter he claims he still considered the leases to be of no particular significance since he felt all of the lease requirements were incorporated within the plans. It was not until several months later, as revisions to the plans began to arrive, that plaintiff claims to have become aware that not all of the lease requirements were reflected within the plans. As plaintiff attempted to charge defendant for "extras" resulting from these changes and additions, it was discovered that defendant's concept of turn-key meant that the contract price also included subsequent negotiations between the owner and the tenants. From this point on plaintiff did all of its work under protest.

CONTRACT INTERPRETATION

The contract on its face favors defendant's interpretation. In addition to article 8.7, which called for the requirements of the leases to be met, article 8.8 states:

It is the understanding of the parties that the aforesaid Contract sum is a firm irrevocable price for the construction of the Shopping Center; . . . that except for the costs specifically hereinabove referred to as costs¹ which are excluded from this Contract that all costs incurred in the development of the Shopping Center shall be borne by the Contractor and not by the Owner.

Defendant argues that plaintiff's reliance solely upon the plans and specifications used for the estimates was unjustified because article 8.2 of the contract had a blank space for the insertion of dates and descriptions of drawings, plans and specifications, and no plans, drawings or similar documents were enumerated within this space, thus indicating that the plans were not final.

Plaintiff contends, however, that the contract should be limited to the plans received at the first meeting. Plaintiff further argues that the defendant had adequate time after the signing of the leases to incorporate the lease requirements into the plans used for estimating purposes, and, that defendant never gave any indication that these plans were incomplete. Plaintiff therefore argues it was justified in relying on the original plans as the final plans, and, plaintiff now claims $160,672.36 for work beyond that called for in the original plans, on the theory that this is "extra" beyond the contract price.²

Defendant early in the negotiations stated that he wanted a "turn-key" job; neither party throughout the preliminary stages sought or gave a definition to this term. Defendant apparently understood the term to mean a job whereby a flat fee was to be set and the contractor was to do all work required without additional charge. However, the trade usage of the term is not nearly so broad. As defined, a turn-key job is "a job or contract in which the contractor agrees to complete the work of building and installation to the point of readiness for operation or occupancy." Webster's Third International Dictionary 2468 (1963 ed.). In essence, this means a project in which all the owner need do is "turn the key" in the lock to open the building with nothing remaining to be done and all risks to be assumed by the contractor. Judicial interpretations of the term have been consistent with this definition. See Robins v. C. W. Meyers Trading Post, Inc., 253 N.C. 474, 117 S.E.2d 438 (1960); Gnatt v. Van der Hoek, 251 S.C. 307, 162 S.E. 2d 267 (1968). Defendant's intention that all additional work, including changes and additions subsequent to the contract date, was to fall within the turn-key concept is of a wider scope than the trade usage. Ordinarily the industry understanding of the term would be controlling. Restatement, Contracts § 247(c) (1932). However, in the instant contract the term was expressly defined as requiring compliance with the tenant's lease requirements and bearing all costs, therefore controlling over the industry usage. Arc & Gas Welder Associates, Inc. v. Green Fuel Economizer Co., 285 F.2d 863 (4 Cir. 1960), cert. denied, 366 U.S. 919, 81 S.Ct. 1095, 61 L. Ed.2d 241 (1961); Restatement, Contracts § 247, comment (d) (1932). At the same time the contract is self-limiting.

Article 8.4, which immediately precedes the provisions covering the turn-key concept, states that "notwithstanding any other provisions of this Agreement and General Conditions to the contrary, the Contractor, Owner and Architect shall be bound by the following terms and provisions." This does not mean that the provisions of articles 8.4 through 8.11 should not be read in connection with the remainder of the contract, and where possible the contract should be read as a whole. Kelley Construction Co. v. Washington Suburban Sanitary Commission, 247 Md. 241, 230 A.2d 672 (1967); Restatement, Contracts § 235(b) (1932). Article 1.1.2 of the General Conditions states that the "Contract Documents form the Contract," and that the "Contract may be amended or modified only by a Modification as defined in Subparagraph 1.1.1." Article 1 of the contract states that the contract documents consist of "this Agreement, Conditions of the Contract . . ., Drawings, Specifications, all Addenda issued prior to execution of this Agreement and all Modifications issued subsequent thereto." Modification is defined as a written amendment signed by both parties, a change order, a written interpretation issued by the architect or a written order for a minor change in the work issued by the architect. In the standard AIA contract used by the parties article 12 provides for change orders; however, this article was excised with a notation to see articles 8.4 through 8.9. These articles were provisions inserted by the parties, and there was no provision within these articles for change orders. The only reference to change is article 8.4, which provides the method for changes by the contractor without the owner's permission.

In the absence of ambiguity, an objective test of determining the meaning of a contract by its terms, irrespective of the parties' individual subjective intents, should be applied. Slice v. Carozza Properties, Inc., 215 Md. 357, 137 A.2d 687 (1958). This objective intent is measured by the meaning a reasonably intelligent person with knowledge of the circumstances prior to and contemporaneously with the making of the integration, other than oral statements, would place upon it. Katz v. Pratt Street...