Lewis v. Anchorage Asphalt Paving Co.

• Decision Date: 21 May 1975
• Docket Number: No. 2136,2136
• Parties: J. R. LEWIS, d/b/a Four Season Mobiland, Appellant, v. ANCHORAGE ASPHALT PAVING CO., an Alaska Corporation, Appellee.
• Court: Alaska Supreme Court

Page 1188

535 P.2d 1188

73 A.L.R.3d 1196

J. R. LEWIS, d/b/a Four Season Mobiland, Appellant, v. ANCHORAGE ASPHALT PAVING CO., an Alaska Corporation, Appellee.

No. 2136.

Supreme Court of Alaska.

May 21, 1975.

Raymond A. Nesbett, Anchorage, for appellant.

Karl L. Walter, Jr., of Groh, Benkert & Walter, Anchorage, for appellee.

Before RABINOWITZ, C. J., and CONNOR, ERWIN, BOOCHEVER and FITZGERALD, JJ.

OPINION

BOOCHEVER, Justice.

This appeal arises out of a suit by Anchorage Asphalt Paving Co. (hereinafter Anchorage Asphalt) to recover certain payments due upon a paving contract it had entered into with J. R. Lewis. Lewis asserts that the paving job done pursuant to the contract was performed in such a manner as to constitute a breach of certain express and implied warranties that the project would be executed in a workmanlike manner. In his counterclaim, Mr. Lewis seeks damages in an amount necessary to repair the deteriorating streets of his trailer court to the extent that the deterioration is attributable to the breach of contract.

The trial court rendered a judgment for Anchorage Asphalt for the unpaid balance of the contract price plus interest. Lewis on appeal seeks reversal of that decision on the grounds that certain of the trial judge's findings of fact were clearly erroneous, and that he misconstrued the law applicable to this case.

I STATEMENT OF FACTS

In approximately 1965, Mr. Lewis ¹ purchased 40 acres of land near Anchorage, Alaska and he began, shortly thereafter, to develop this tract into a trailer court which he named Four Seasons Mobiland. Since much of the property was composed of peat the first phase of development required that this portion be filled in and leveled to create a stable surface acceptable for trailer sites. Much of the fill was obtained by cutting into a high hill in the southeast corner of the property and then spreading this soil, which was composed primarily of glacial till, over the peat according to an established grade which would provide proper drainage. Glacial till is the residue deposited by a retreating glacier composed of boulders, gravel, dirt, clay, some sand and a fine silt all intermingled. In its natural state, it resembles hard pack and is a very stable material. When the material is removed and disturbed, it tends to revert to its separate components and must be compacted to a high degree in order to make it stable so as to support heavy loads. Thus, the ground upon which the trailer court was located consisted of an upper layer of fill ranging in depth from two to six feet resting on a peat base which itself would range up to ten to twelve feet in thickness.

For the most part, Mr. Lewis acted as the general contractor. He did some of the filling himself, and the rest was done by a subcontractor. The over-all design of the trailer court was the handiwork of Lewis and his mechanical engineer. In particular, Lewis located and designed the streets. For the first year as a temporary measure, Lewis put a one-to two-foot layer of pit run gravel in the roadbeds since the glacial till alone was not a suitable road surface. At that time, there were only three streets servicing his original two rows of trailers. It was anticipated that these roads would eventually be paved.

In 1968, Lewis contracted with a different company, Alaska Asphalt Paving Company, to pave those first three streets. He specified that he wanted a 'cold mix' or 'chip and penetration oil mix' used since it was cheaper than asphalt, and he had seen this method used with some success on other roads in the vicinity. The three roads (32,000 square feet) were paved at a cost of $14,000. Unfortunately, snow removal equipment scraped and peeled away much of this fragile surface that following winter.

In the summer of 1969, Lewis decided to have four new streets of his trailer court paved, and the three old streets repaved. He realized that the loss on the first job had been due to his own inexperience. This time he wanted the streets paved with the more durable hot mix asphalt. He testified that he had asked for a 'good' and 'complete' paving job during the preliminary negotiations indicating he wanted the contractor to do whatever was necessary to achieve a satisfactory pavement which would last the normal useful life (ten to fifteen years).

He solicited bids by Telephone from three contractors. Other than the fact that he wanted hot mix asphalt, Lewis presented no plans or specifications for the paving job and even left the amount of asphalt surface to be applied up to the discretion of the contractor. Lewis chose to accept the bid from Anchorage Asphalt. ²

Before making the bid, Joe Longoria, Vice-President of Anchorage Asphalt, spoke with the defendant who indicated that he wanted a good paving job. Later, Julian Longoria, another representative of the company, came out to look over the site. Finally, Joe Longoria himself came out to examine the trailer court premises in order to prepare his bid. He rode around the area in a car. He saw what looked like gravel in the roadbeds although he did not get out of the car to conduct a more thorough inspection of the soils. Joe Longoria did not see any peat nor did he inquire of Mr. Lewis what type of soil was under the surface fill. He did observe that there was some earthwork being done in the trailer court, and he assumed from this that the excavation and backfilling of the roadbeds would be done by others prior to and independent of the paving obligation. At no point in the record is there any indication that Mr. Lewis intentionally concealed any information relating to the condition of the premises, composition of the soil, etc.

The contract entered into was drafted by Joe Longoria on a standard Anchorage Asphalt form. The bid proposal read as follows:

Install A. C. paving on new road and repair paving on existing roads with 2 A. C. mix. The subgrade will be prepared by us and paved for $2.50 per square yard. The estimated area to be paved is 18,586 square yards. Actual field measurements will determine the total amount of this contract upon completion of work. We will provide fundamental engineering for $500.00. In all cases the unit price will prevail.

This was followed by a brief section stating certain guarantees and making certain disclaimers.

All material is guaranteed to be as specified. All work is to be completed in a workmanlike manner according to standard practices. Any alteration or deviation from above specifications involving extra costs will be executed only upon written orders, and will become an extra charge over and above the estimate. All agreements contingent upon strikes, accidents or delays (are) beyond our control. Owner to carry fire, tornado and other necessary insurance. Our workers are fully covered by Workmen's Compensation Insurance.

Anchorage Asphalt performed the contract by shaping and compacting the existing fill that was in the designated roadways and then spreading two inches of asphalt directly on top of the fill material. The total contract price based on surface area paved came to $57,052.50. Lewis made the initial down payment of $10,000 on September 1969 and five monthly installments of $4,000 each (reduced from $5,000 per month by agreement of the parties) in October, November and December of 1969 and February and April of 1970. This totaled $30,000 leaving a balance of more than $27,000.

Mr. Lewis claimed that minor defects and deficiencies began to appear in the pavement some three to four weeks after the completion of the streets. Although he was outside the State for much of the winter of 1969-70, he was kept advised of the worsening situation by his manager, Fred Sampson. Lewis directed the manager to contact Anchorage Asphalt and tell someone to come out to see what could be done. The wife of the manager made this telephone call, but she was told that there was no guarantee on the roads.

Of the seven streets paved by Anchorage Asphalt (four new streets and the three old ones which were repaved), the three northernmost new streets suffered the most rapid deterioration over the course of the first year. Portions of these streets settled causing a roller-coaster effect. This settlement interfered with proper drainage and caused ponding in the lower areas which would freeze during the night. Potholes, cracks and alligatoring ³ also appeared. At that time, the one other new street and the three older ones exhibited only minor defects. However, by the time this case came up for trial in July 1973, the pavement on these four streets too had begun to break up. Lewis estimated that these streets were a 30 to 50 percent failure whereas the three northerly streets were a total loss and would have to be completely rebuilt. Unlike the three northerly streets where the basic problem was a settlement leading to roller-coastering, the primary defects in the remaining streets were cracks and holes, not sinking. ⁴

Anchorage Asphalt's position at the trial was basically that the term 'prepare subgrade' did not encompass the laying of a crushed rock or gravel subgrade. It asserted that the asphalt used was not defective, and it denied the existence of any implied warranty of the roads other than as to the quality of the materials used. It further denied any duty on its part to warn the defendant of the potential for failure due to the inadequacy of the subgrade material. ⁵

Lewis argued that there were express and implied warranties that the work would be done in a workmanlike manner which included placing a layer of gravel under the asphalt if necessary for a properly built subgrade. ⁶

At the conclusion of the trial, Judge Kalamarides, sitting without a jury, found, inter alia, that there was in fact an uneven settling or roller-coaster effect, alligatoring, potholes and breaking up of the surface of portions of the roads. The failure was attributed to moisture in the subgrade that caused the...