Lamb Const. Co. v. Town of Renova

• Decision Date: 27 December 1990
• Docket Number: No. 89-CA-0832,89-CA-0832
• Citation: 573 So.2d 1378
• Parties: LAMB CONSTRUCTION COMPANY v. TOWN OF RENOVA, Mississippi.
• Court: Mississippi Supreme Court

Page 1378

573 So.2d 1378

LAMB CONSTRUCTION COMPANY v. TOWN OF RENOVA, Mississippi.

No. 89-CA-0832.

Supreme Court of Mississippi.

Dec. 27, 1990.

H.L. Merideth, Jr., Greenville, for appellant.

Willie L. Bailey, Bailey & Griffin, Willie Griffin, McTeer & Bailey, Greenville, for appellee.

EN BANC

PITTMAN, Justice, for the Court:

Lamb Construction Company filed suit in Bolivar County Chancery Court against the Town of Renova, Mississippi, G.E. Alexander, and Virden, Field & Alexander, Ltd., G.E. Alexander's engineering firm, alleging a breach of contract and asking for damages and an injunction. Lamb Construction also moved for summary judgment on the claim. The chancery court denied the summary judgment motion, deferring the question of costs and attorneys' fees until the hearing on the merits. After the hearing, the chancery court found in favor of the Town of Renova. The chancery court also denied costs and attorneys' fees for the Town of Renova as a result of the

denial of Lamb Construction's summary judgment. Lamb Construction appeals, assigning as error:

I. THE TRIAL COURT ERRED IN FINDING IN FAVOR OF THE TOWN OF RENOVA, AS THE CONTRACT IN QUESTION WAS A PER UNIT CONTRACT AND NOT A LUMP SUM CONTRACT.

The Town of Renova cross-appeals:

II. THE TRIAL COURT ERRED IN FINDING THAT THE TOWN OF RENOVA WAS NOT ENTITLED TO AN AWARD OF ATTORNEYS' FEES AND COSTS FOR PREVAILING ON THE MOTION FOR SUMMARY JUDGMENT.

STATEMENT OF THE FACTS

This case involves a breach of contract action. The three principal players, and the only witnesses at the hearing in this cause, are Sam H. Lamb, president of Lamb Construction Co.; Maurice F. Lucas, mayor of the Town of Renova, Mississippi; and Ed Alexander, engineer for Renova and a member of the firm of Virden, Field & Alexander, Ltd.

On March 19, 1986, Lamb Construction submitted a bid to construct a water distribution system for Renova. Item 2 on the bid listed 6 inch class 160 PVC waterline pipe. Item 2 listed a unit price of $5.50. The amount of pipe listed was 5,530 feet. $5.50 X 5,350 equals $29,425.00. However, the extended total price for Item 2 was $18,725.00, which would have been the correct total had the unit price been $3.50. The typewritten portion of the bid was completed by Ed Alexander. Lamb filled in what was handwritten, including the unit price of $5.50 and the extended total price of $18,725.00 for Item 2. The total price of the entire bid, including the $18,725.00, was $155,749.60.

Lamb explained that Items 1-18, including the Item 2 discrepancy, were to be constructed in the rural section of Renova. Items 19-30 were to be completed in the municipal section. Lamb testified that the rural items were not itemized as specifically as the municipal items, as the municipal section included payment for fittings, which the rural section did not. Lamb stated that there were approximately 50 to 60 fittings which were of necessity installed but were not itemized in the bid. The cost of the fittings alone for the rural items was approximately $3,700.00, and this did not include labor or concrete necessary for installation or stabilization. Lamb stated that the fittings had to be installed and the price had to be absorbed somewhere, so he added the cost to the unit price of Item 2. Lamb testified that this was a standard business practice.

Lamb left a few minutes after the bids were opened on March 19, and did not discuss the matter with Lucas or Alexander. Alexander pointed out the discrepancy concerning Item 2 to Lucas and the Renova Board of Aldermen. The recognition of the discrepancy appears in the minutes of the Board of Aldermen's meeting for March 19, 1986. Alexander offered to call Lamb and get the matter cleared up. Alexander testified that he checked with Lamb by phone, either that night or within the next few days. According to Alexander, "... I don't remember exactly what was said. But I just remember when I hung up the phone, I was satisfied that he agreed with the facts of this particular contract." Alexander stated that he knew Lamb and had dealt with him on other occasions, and for this reason he felt that formal or written efforts to rectify the discrepancy in Item 2 were not necessary. Lamb testified that he didn't notice a mistake in Item 2 at that time and denied that Alexander contacted him about the Item 2 discrepancy at that time. Alexander wrote a letter to the Renova Board of Aldermen recommending that the Board accept Lamb's bid of $155,749.60. A copy of this letter is not in the record. Based on Alexander's letter, Lamb's bid was accepted.

A Notice of Award giving the job in question to Lamb was executed on March 30, 1986. The Notice stated that the bid of $155,749.60 had been accepted. The Town of Renova entered into a written agreement for construction of the water distribution system on March 31, 1986. Item 4 of Payment will be made for water distribution system piping at the Contract Unit Price per linear foot, which price shall constitute full compensation of or furnishing all pipe joints, fitting, specials and all other material not particularly specified for separate payment; for furnished tools, all labor, equipment and incidentals; for performing all work including excavation, installation of pipe, backfill, testing, sterilization, clean-up and any other operations essential to completing the water system as specified herein and as shown on the Contract Drawings.

                the agreement stated:  "The CONTRACTOR agrees to perform all of the WORK described in the CONTRACT DOCUMENTS and comply with the terms therein for the sum of $155,749.60 or as shown in the BID schedule."   Section 3.10(1) of the agreement stated
                

Item 14.1 under the agreement stated:

CHANGES IN CONTRACT PRICE

The CONTRACT PRICE may be changed only by a CHANGE ORDER. The value of any WORK covered by a CHANGE ORDER or of any claim for increase or decrease in the CONTRACT PRICE shall be determined by one or more of the following methods in the order of precedence listed below:

a. Unit prices previously approved.

b. An agreed lump sum.

Lamb also executed a payment bond and a performance bond. Each showed the total amount of the contract to be $155,749.60.

A pre-construction conference was held on May 23, 1986. Sam Lamb, Mayor Lucas, and Ed Alexander were present. Lamb stated that no one said anything to him about the discrepancy in Item 2. Lucas testified that he emphasized to Lamb that Renova only had so much money for the project and could under no circumstances go over that. Lucas said that Lamb agreed to work within these constraints. Lucas stated that Lamb never said anything about a discrepancy in Item 2.

A change order was approved by all parties on June 24, 1986. This order removed $18,731.00 of work from Lamb's contract, which was eventually performed by another party. The face of the change order showed that after the change, the amount of the work remaining was $137,018.60. The total of the two figures was $155,749.60, the total amount of the bid.

Lamb's Partial Payment Estimate 1 (payment request) covered the time period June 30-July 25, 1986. This payment request listed the amount of the contract as $155,749.60. It also listed the unit price for Item 2 as being $5.50. By the end of this time period, July 25, 1986, all of the Item 2 pipe called for under the contract, 5,530 feet, had been installed. According to Lamb, Alexander called him a day or so after he (Alexander) had received Partial Payment Estimate 1, to tell him that a mistake had been made, and the correct unit price for Item 2 should have been $3.50. Alexander also said that he had already submitted the price to the FHA as $3.50, and could not sign or forward the request. Lamb told Alexander he was not going to change the price, that Alexander should go ahead and submit the request and he (Lamb) would take his chances on whether the FHA paid it. Alexander eventually signed the request and submitted it, and Lamb was eventually paid according to the request.

On September 3, 1986, Alexander wrote to Lamb to tell him that he was in receipt of Lamb's second Partial Payment Estimate. Alexander repeated the assertion that the correct unit price for Item 2 was $3.50 and not $5.50. Alexander also stated: "Although I let it get by last month, we need to make a correction this month." He also stated that the Town of Renova would refuse to approve the pay request. Lamb testified that this was the first written notice he had received to the effect that Renova viewed the proper unit price for Item 2 as $3.50 and not $5.50.

Partial Payment Estimate 2 covered the time period June 30-September 25, 1986. The unit price on Item 2 had been changed from $5.50 to $3.50. An asterisk appeared by Item 2. The notation following the asterisk stated: "The unit price of $3.50 in this estimate is entirely without prejudice to the contractor's position that the unit price under the contract is $5.50." Payment Estimate 2 also shows that Lamb laid 125 more feet of 6 inch class 160 PVC pipe than originally estimated. Subsequent correspondence between Mr. Merideth and Mr. Bailey indicates that the Town of Renova agreed that Lamb could be paid without forfeiting his claim for the alleged shortage on Item 2 pipe.

As of February 3, 1988, Lamb claimed that he had been paid a total of $115,833.92 by the Town of Renova. He alleged that Renova still owed $7,376.98, "for retainage on original contract and for additional fire hydrants installed but not yet paid." This was unrelated to the claim for the discrepancy from Item 2, which Lamb continued to claim as being owed.

Lamb Construction filed suit on July 1, 1988, in Washington County Chancery Court against the Town of Renova, G.E. Alexander, and the firm of Virden, Field & Alexander, Ltd. Lamb alleged that it had laid 5,495 feet of 6 inch class 160 PVC waterline pipe under the contract with Renova. It alleged that the $5.50 unit price should control, and not the $3.50...