Kuhn Const. Co. v. State Acting Through Price

• Decision Date: 26 November 1968
• Parties: KUHN CONSTRUCTION COMPANY, a corporation of the State of Delaware, Plaintiff, v. The STATE of Delaware, Acting Through Henry T. PRICE, Chairman; Lemuel H. Hickman, Vice-Chairman; Thurman Adams, Jr.; William J. Francis; William G. Dorsey; C. Wardon Gass; Frank H. Mackie, Jr.; William R. Murray; George M. Nelson; Elmer Pratt; and Walter J. Wheatley, who constitute the State Highway Department of the State of Delaware, Defendant.
• Court: Delaware Superior Court

Page 612

248 A.2d 612

KUHN CONSTRUCTION COMPANY, a corporation of the State of

Delaware, Plaintiff, v. The STATE of Delaware, Acting Through Henry T. PRICE,

Chairman; Lemuel H. Hickman, Vice-Chairman; Thurman Adams,

Jr.; William J. Francis; William G. Dorsey; C. Wardon Gass;

Frank H. Mackie, Jr.; William R. Murray; George M. Nelson;

Elmer Pratt; and Walter J. Wheatley, who constitute the

State Highway Department of the State of Delaware, Defendant.

Superior Court of Delaware, New Castle County.

Nov. 26, 1968.

Cross motions for summary judgment on first cause of action.

Defendant's motion for summary judgment on second cause of action.

Plaintiff's motion to amend the complaint.

Emmett J. Conte, Jr., and Daniel B. Ferry, Wilmington, for plaintiff.

S. Samuel Arsht, and David A. Drexler, Wilmington, for defendant.

OPINION

CHRISTIE, Judge.

Plaintiff, Kuhn Construction Company, has brought this action against the State Highway Department in connection with a contract for the construction of a dike, spill-way and pumping station at Port Mahon, Kent County, Delaware. According to the complaint plaintiff was awarded the job at a contract price of $139,125.00. The complaint further alleges in substance that:

First Cause of Action

After credit for payments received and various adjustments in the contract price to reflect the work actually performed, a balance of $8,000.00 remains due on the completed job under the contract.

Second Cause of Action

1. Because of errors in the original plans it was necessary to delay the project two months, to prepare revised plans requiring a seven foot instead of a six foot dike, and to rework a substantial part of the dike as to which extra compensation of $8,421.24 is due.

2. As a result of errors in the specifications as to the pumping station and a submarine cable, a work stoppage was necessary electrical installations had to be re-located, and certain work had to be redone as to which extra compensation of $7,561.27 cable, a work stoppage was necessary,

3. A pump motor was removed and repaired and reinstalled at defendant's request for which extra compensation in the amount of $777.70 is due.

Without filing an answer defendant moved for summary judgment as to both causes of action. The motion was accompanied by an affidavit of defendant's construction engineer. Thereafter, plaintiff filed a motion for summary judgment on the first cause of action and a motion to amend the complaint to allege fraud.

I

As to the first cause of action, the defendant in effect admits that an amount of $7,447.05 is due and owing on the contract but further points out that plaintiff has refused to accept this sum in view of the provision of the Standard Specifications, binding the parties to the contract, by which acceptance of the last payment under the contract operates as a release of all claims for liability in connection with the contract.

Plaintiff contends that if this provision prevents collection of an amount admitted to be due until all other claims arising out of extra work connected with the contract are settled, litigated or abandoned, such provision is inequitable and unenforceable. Plaintiff relies on the dicta in the case of Lichter v. Bowaters Southern Paper Corporation, 1 Storey 492, 148 A.2d 671 (1959). This case lends little support to plaintiff's contention since the case dealt with whether or not interest was due on funds withheld under a contract provision requiring payment within forty days after the completion of the work. Plaintiff cited no other authority on this contention although contract provisions similar to the question are often found in construction contracts.

The obvious intent of the provisions that final payment acts as a final release is to encourage prompt settlement of differences between the contracting parties, to prevent claims from being asserted after final settlement and to assure the Highway Department that it will retain clear title to the land by receiving route releases of liens. It is argued in effect that it is unfair to permit the Highway Department to withhold money it admits to be due just because the contractor is also claiming compensation for what it regards as additional work the contractor says it was asked to do in connection with the same contract. However, plaintiff agreed to these provisions in advance and the provisions are not so unfair as to be unenforceable as against public policy. Furthermore, the Court is not free to rewrite contracts because they contain inequities.

I find plaintiff's contention that the claims for so called 'extra work' are outside the general provisions of the contract to be without merit.

I hold that the provisions requiring that final payment act as a final release find application to all the claims here asserted even though such claims may have been asserted by the contractor and already in process of litigation at the time final payment would otherwise be due. Thus, the Highway Department may withhold final payment pending final disposition of disputes arising in connection with the contract.

Partial summary judgment on this cause of action will, however, be entered under Civil Rule 56(d), Del.C.Ann. to the extent that it is noted that no dispute exists as to $7,447.05 of the amount alleged to be due and any final judgment entered in this case will take into account such sum is due as soon as plaintiff is in a position to release all other claims.

The Court takes no position at this stage of the proceedings as to whether plaintiff is entitled to interest on the funds withheld. It is hoped that the parties will now stipulate the release of these funds to the plaintiff upon an exchange of releases as to all claims except those presently involved in this litigation and the issue of interest on the money withheld.

II

Defendant takes the position that all the claims contained in the second cause of action fall within the broad statutory and contractual grants of authority under which the Director of Operations of the Highway Department is designated as the one to make the final decisions in all matters of performance of contracts, and as to all questions of compensation. The pertinent statute provides:

'The execution and performance of all contracts awarded by the Department shall be under the charge of the Director of Operations, and his decision shall, in all matters concerning the performance of the work and the compliance of (sic) the terms of the contract, be final.' 17 Del.C. § 152

In addition, the Standard Specifications provide:

'Article 5.1 Authority of the Director:--All work shall be done under the supervision of the Director and performed to his satisfaction. He shall decide all questions which may arise as to the quality and acceptability of materials furnished and work performed and as to the manner of performance and rate of progress of the work; all questions which may arise as to the interpretation of the plans and specifications; all questions as to the acceptable fulfillment of the contract on the part of the contractors; And all questions as to compensation. His decision shall be final and he shall have executive authority to enforce and make effective such decisions and orders as the contractor fails to carry out promptly.' (Emphasis added)

Plaintiff contends that the quoted provisions find no application to the claims here presented since, says plaintiff, substantially all of these claims are for 'extra work' made necessary by the Department's mistakes or changes in its own plans and specifications.

I find ...