Indiana Dept. of Highways v. Small, Inc.

• Decision Date: 24 July 1986
• Docket Number: No. 50A03-8602-CV-40,50A03-8602-CV-40
• Citation: 495 N.E.2d 248
• Parties: INDIANA DEPARTMENT OF HIGHWAYS, Defendant-Appellant, v. SMALL, INC., Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 248

495 N.E.2d 248

INDIANA DEPARTMENT OF HIGHWAYS, Defendant-Appellant, v. SMALL, INC., Plaintiff-Appellee.

No. 50A03-8602-CV-40.

Court of Appeals of Indiana Third District.

July 24, 1986.

Linley E. Pearson, Atty. Gen., Thomas R. Hamill, Deputy Atty. Gen., Indianapolis, for defendant-appellant.

Timothy J. Abeska, Roemer & Mintz, South Bend, for plaintiff-appellee.

GARRARD, Judge.

Small, Inc. contracted with the state for the removal and replacement of a bridge deck on a highway bridge. The work was completed and accepted but Small claimed it was entitled to additional compensation because the depth of the old concrete and asphalt deck on the bridge was greater than shown on the plans and it was required to remove a concrete sidewalk which was not shown on the plans. Small brought suit for additional compensation and in a second count sought the retainage held by the state. ¹

The trial court granted summary judgment for Small as to the retainage amount and awarded prejudgment interest from December 16, 1982. The state appeals.

We first note that the form of judgment entered by the trial court is not in strict compliance with the requirements of Indiana Rules of Procedure, Trial Rule 56(C) for treatment as an appealable order. We will nevertheless address the appeal pursuant to Appellate Rule 4(E) since the appellee has not opposed appealability and from the preappeal conference conducted it appears that trial on the merits has been completed on Small's other count.

The state initially argues that summary judgment was improper because pursuant to IC 8-13-5-7(e) it was not required to pay to Small the amount of the retainage ($7,617.81) while a "dispute," as defined by the statute, existed between the parties. It also contends that it was improper for the court to award prejudgment interest. Small responds that judgment was proper because there was no dispute as to the amount of retainage and the interest was authorized.

The state's argument concerning the propriety of summary judgment is misplaced. The statute relied upon addresses when the state is required to pay amounts due under its highway commission contracts. In the context of this lawsuit the first question presented by Small's motion for summary judgment was whether it was entitled to judgment as a matter of law for the amount it claimed had been retained by the state. The state, in its brief, confesses that the completed project had been accepted and that the retainage amount was that claimed by Small. ² Thus, if it was error to grant summary judgment on the state of the record, the error was harmless.

The second issue presented in the summary judgment is whether Small was entitled to prejudgment interest on the amount of the retainage. The statute provides:

"(f) For each day after one hundred eighty days, or thirty days after settlement of a claim, the department shall pay to the contractor interest for late payment of money due to the contractor. However, interest shall not be paid for those days that the delay in payment is not directly attributable to the department. The annual percentage rate of interest that the department shall pay on the unpaid balance is twelve percent [12%]."

IC 8-13-5-7(f).

The state asserts that because Small was asserting a claim for additional compensation a "dispute" existed which relieves it of liability for interest. It relies upon IC 8-13-5-7(e) which states:

"(e) Each contract entered into pursuant to the provisions of this chapter shall provide for final payment within one hundred eighty days after final acceptance of the contract. However, final payment shall not be made on any amount which is in dispute or the subject of a pending claim, but final payment may be made on that portion of a contract or those amounts which are not in dispute or the subject of a pending claim, and such partial payment shall not constitute any bar, admission or estoppel or have any other effect as to those payments in dispute or the subject of a pending claim. For the purpose of this section, a dispute exists when the contractor makes any claim for increase or decrease to any part of the contract, or seeks additional compensation for any reason." (our emphasis)

The statute is certainly no model of clarity in expression. It states that final payments shall not be made on amounts which are in dispute, but that they may be made on amounts which are not in dispute. Then, rather than defining when an "amount" is in dispute, it instructs us that "a dispute exists" whenever a contractor seeks additional compensation for any reason. If a contractor seeks "additional compensation for any reason," so that a dispute exists, how is the highway department to determine that it is prohibited from paying...