Haener v. Ada County Highway Dist.

• Decision Date: 05 April 1985
• Docket Number: No. 15448,15448
• Parties: James HAENER, dba J & D Construction, Plaintiff-Respondent, v. ADA COUNTY HIGHWAY DISTRICT, a municipal corporation, Defendant-Appellant.
• Court: Idaho Supreme Court

Page 1184

697 P.2d 1184

108 Idaho 170

James HAENER, dba J & D Construction, Plaintiff-Respondent, v. ADA COUNTY HIGHWAY DISTRICT, a municipal corporation, Defendant-Appellant.

No. 15448.

Supreme Court of Idaho.

April 5, 1985.

Charles Lee Mumford and John Frederick Mack, of Holland & Hart, Boise, for defendant-appellant.

Stephen L. Beer, Boise, for plaintiff-respondent.

SHEPARD, Justice.

This is an appeal from a judgment in favor of plaintiff-respondent Haener and against defendant-appellant Ada County Highway District (ACHD) in a dispute arising from a construction contract between the parties. We affirm.

ACHD advertised for bids to excavate for and install a storm drain below an existing paved street in Boise. Haener was the low bidder at $51,640.72. He was awarded the contract, which was signed June 19, 1979. On that same day, he was authorized to begin work.

Before Haener commenced work, but after the parties had signed their written contracts, a pre-construction conference was held between Haener and agents of ACHD. During that conference, there was disclosed to Haener for the first time the possible existence of old buried interurban railway tracks beneath the surface of the street. The possibility of railroad tracks was not included in the specifications for the project, nor was there any mention of it in the contract, albeit other bidding contractors had raised the question of the possible existence of the rails.

A technician for the highway district testified at trial that the district has no documentation of the location or existence of the old interurban trackage, or of what part of the railway might have been removed. He speculated that the Idaho Historical Society might have such records. The trial court found that, although some employees of ACHD were aware of the potential for hitting the old railroad tracks during the excavation, they did not tell Haener of that potential prior to the pre-construction meeting.

Haener began work on June 28, 1979. Five days later, he found that the railroad track was indeed below the surface of the paved street and further that the trackage was imbedded in concrete. Haener notified the ACHD inspector that he had hit railroad tracks and requested a change order under the contract. Although controverted by ACHD, Haener testified at trial that he was told to proceed to remove the rails and that ACHD would settle accounts at the end of the contract for the extra costs incurred in such removal. The findings of the trial court reflect that the court relied upon and adopted Haener's version of the disputed facts. As further found by the trial court, on July 10, Haener calculated his costs for the equipment and labor required to remove the railroad tracks and made a written request to ACHD for payment of $6.00 per lineal foot for that work. ACHD did not respond to this letter from Haener.

There is no dispute that Haener continued to remove the railroad tracks, which removal involved very substantial additional effort and financial expenditure and nearly doubled the amount of time necessary for the completion of the contract work. ACHD was aware of the additional work problems which were presented to Haener because of the unexpected subsoil conditions.

As found by the trial court, "At some time near the end of the contract, Mr. Joines [deputy director of ACHD] informed Mr. Haener that he would need a breakdown of the extra costs." Haener complied with that demand and furnished a breakdown of his costs for the removal of the railroad trackage. There appears no issue as to the validity or accuracy of that cost-breakdown. The findings of the trial court indicate that the court adopted that cost-breakdown in its entirety, with the exception that the trial court did not allow the 15% profit requested by Haener. Joines responded by letter to the Haener cost-breakdown, indicating he had reviewed the claim. Joines stated, "I don't deny that additional work was required, but this was reflected in the additional quantities over those bid for which payment has been made ..." (Emphasis supplied.) In essence, Joines was asserting that all of the additional work and problems presented by the encounter with the railroad trackage were included in the original contract under the unit cost of $4.10 per cubic yard of trench excavation.

In the original bid, Haener had included a unit price for each item under the contract, i.e., specified dollar amounts per lineal foot of particular types of pipe, a stated amount per lineal foot of travel surface restoration, and $4.10 per cubic yard of trench excavation. Haener's total bid was then calculated according to the estimates of ACHD of the quantity of each item that would be required for the project, and the final bid was then presented as the specific sum of $51,640.72. However, the parties agree that that specific sum was not fixed, but rather, Haener was to excavate for the trench, following which an engineer for ACHD would measure the dimensions of the trench. Then Haener was to be paid, according to that measurement, at the contract rate of $4.10 per cubic yard. Both parties expected that Haener might, and probably would, be paid a sum below or above the final contract figure, because the specifications were only approximations, and final figures were to depend upon actual excavation measurements.

When the dispute between the parties could not be compromised, this action was filed and a court trial was held. Thereafter, the trial judge found that the parties had entered into a valid and binding contract "to construct a storm drain;" that Haener had encountered materially different subsoil conditions from what he had justifiably anticipated; that the parties had mutually agreed that Haener would perform the additional work necessary to remove the rails; that the parties had agreed that Haener would be compensated for that additional work; that there was no agreement reached on the amount of payment to be made to Haener for the work; that the contractual provisions for modification in the case of materially different subsoil conditions were not followed, and thus that there was a failure to agree on an essential term; that the wage rates and equipment costs furnished by Haener in his cost-breakdown were reasonable, and that each of the items of costs had been incurred for the benefit of ACHD; and finally, that Haener was entitled to recover the reasonable value of the labor and equipment he had provided at the request of ACHD. The trial court then entered judgment in favor of Haener in accordance with Haener's cost-breakdown, but subtracting the 15% profit item contained therein.

Appellant ACHD argues that the trial court erroneously relied on the following language in the general conditions of the contract:

"Should the subsoil conditions be found to differ materially from those indicated by logs of test borings and/or records made by other methods of underground exploration, adjustment in cost, either more or less, shall be made as provided in the general conditions of changes in the work."

ACHD asserts that language in the contract specifications should govern the instant situation. Those specifications state, in pertinent part:

"This section covers excavation, trenching, and backfilling for pipelines and appurtenances complete. This item shall consist of all necessary clearing, grubbing and site preparations; traffic control devices, removal of all material of whatever description that may be encountered; removal and disposal of debris; handling and storage of materials to be used for fill and backfill; all necessary bracing, shoring and protection; pumping and dewatering as necessary; all backfill, preparation of subgrades; and final grading, dressing and cleanup of the site.

* * *

* * * "Payment for trench excavation will be made at the contract unit price bid per cubic yard, which price shall include all clearing, trench excavation and dewatering and all other work necessary or incidental for completion of the item." (Emphasis added.)

The findings of the trial court clearly indicate that Haener had no knowledge of the possible existence of the railroad trackage at the time he bid the job and signed the contract. When the railroad tracks were discovered, it was apparent that substantial extra and uncontemplated work would be required to remove those rails. Haener requested a written change order, which was never acted upon by ACHD. Rather, ACHD's agent directed Haener to remove the rails and complete the project and told Haener he would receive extra compensation for performing that work.

The essence of ACHD's position is that Haener was required under the contract to remove all material of whatever nature in excavating the trench, and that Haener should only be compensated at the contract unit price of $4.10 per yard for such work, regardless of the extra costs that might be incurred and the additional time required to remove any unexpected material. On the other hand, the essence of Haener's position is that the encountering of the railroad trackage was not anticipated by him, and that the bargain struck in the contract did not contemplate such an eventuality. Haener asserts that he is entitled to rely upon the contract, which states, "should the subsoil conditions be found to differ materially ...," and that he rightfully anticipated therefrom that he would receive extra compensation if unusual subsoil conditions were encountered.

In the instant case, the terms of the contract, when read together, are at best ambiguous regarding the above-stated position of each of the parties. Arguably, under the contract terms relied upon by the trial judge, Haener could expect an upward adjustment in costs for the extra time, effort and costs incurred in removing the trackage. The holding of the trial judge, that Haener should receive extra compensation for rail removal, is further supported by the evidence and findings...