Lichter v. Mellon-Stuart Company

• Citation: 193 F. Supp. 216
• Decision Date: 10 April 1961
• Docket Number: Civ. No. 17082.
• Parties: Jacob LICHTER and Jennie L. Lichter, d/b/a Southern Fireproofing Company, Plaintiffs v. MELLON-STUART COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

193 F. Supp. 216

Jacob LICHTER and Jennie L. Lichter, d/b/a Southern Fireproofing Company, Plaintiffs v. MELLON-STUART COMPANY, Defendant.

Civ. No. 17082.

United States District Court W. D. Pennsylvania.

April 10, 1961.

Davis C. Burroughs, Jr., Moorhead & Knox, Pittsburgh, Pa., Paul W. Steer, Steer, Strauss & Adair, Cincinnati, Ohio, for plaintiffs.

Charles C. Arensberg, Patterson, Crawford, Arensberg & Dunn, Pittsburgh, Pa., for defendant.

MARSH, District Judge.

In this action the plaintiffs, Jacob and Jennie L. Lichter, citizens of Ohio, and doing business as Southern Fireproofing Company (Southern), a partnership, seek to recover from the defendant, Mellon-Stuart Company (Mellon), a Pennsylvania corporation, with its principal place of business in Allegheny County, Pennsylvania, balances due on two construction contracts and damages for the alleged breach of each. Mellon counterclaimed for damages arising out of an alleged breach of one of the construction contracts. The court has jurisdiction because of diversity of citizenship. The law of Pennsylvania is applicable.

On August 20, 1955, Mellon executed the prime contract (Exhibits 3, 3A, 3B, 5 a-k)^*1 with the Federal Reserve Bank of Cleveland (Owner) to construct a 10-story building as an addition to the Pittsburgh branch of the Federal Reserve Bank at Grant Street, Pittsburgh, Pennsylvania, and to make certain alterations to the existing 7-story bank building. The new building was to tie into the old building.

Mellon, as general contractor for such work, entered into numerous subcontracts, including two subcontracts with Southern (Exhibits 1 and 2), dated September 19, 1955, whereby Southern agreed under one contract to perform the exterior stone work (stone contract) and under the other contract to perform the interior masonry work (masonry contract).

The subcontracts incorporated the prime contract, so far as applicable, together with the plans, specifications and General Conditions. The prime contract provided that the work "shall be substantially completed within twenty months after the execution of this Contract".

The subcontracts did not specify a time for the completion of the stone contract or the masonry contract, but provided:

"That the Subcontractor * * * finish the said work fully, completely, and perfectly to the satisfaction of the Architect and the Contractor and as required by the progress of the work and as directed by the Contractor, time being of the essence of this contract, on the part of the Subcontractor. (Emphasis supplied.)

* * * * * *

"That the Subcontractor * * * do all work required hereunder in harmony with the other Subcontractors * * *, and with such speed that the Contractor and its other Subcontractors shall be enabled, so far as the assistance of this Subcontractor is requisite, to complete said building, within the time stipulated by the contract with the Owner."

The agreed price for the stone contract is $56,190, and for the masonry contract, $161,601; since Southern substantially performed both contracts, it is entitled to recover these amounts. Mellon is entitled to a credit for completing a small portion of the work required by both contracts. P.L.E. Contracts §§ 286, 296. Southern is also entitled to recover the cost of change orders, stipulated to be the sum of $7,858.86, and field orders, stipulated to be the sum of $4,103.66. Mellon is entitled to a credit of $220,966.43 paid to Southern on account of both contracts (supplemental pretrial order No. 1).

Southern admits that it owes Mellon $2,157.17 for services furnished (T., p. 305; see amended complaint ¶¶ 8, 15). In its brief Southern authorizes this credit (Southern's brief, pp. 4, 45; Exhibit 82; plaintiffs' Proposed Findings of Fact and Law).

Southern was informed by Mellon that it could start the stone work prior to June 1, 1956, that the work should be completed within 60 to 90 days, and that the masonry work was to start in the middle of July, 1956 and be completed by December 1, 1956 (Exhibit 6).

Southern calculated its bids on Mellon's representations that the stone work would be completed in the summer of 1956 and that the masonry work would be done in an enclosed building.

The parties in the beginning did not contemplate that the stone work would be performed in the winter or that the masonry work would be performed during the winter months in an unenclosed building. See Progress Schedule received by Southern on October 13, 1955 (Exhibit 6). This schedule showed that the entire project was to be completed on June 30, 1957, which was two months and ten days longer than the twenty months' time limit specified in the prime contract.²

The specifications, inter alia, provided:

"Alterations to the old building * * * shall be done in definite sections or divisions, and work confined to limited areas, in which the work shall be completed before other sections or divisions are commenced.

"Work on alterations within the existing building shall not be started until the addition is practically complete and comparable space or elevators can be provided in the addition. The Owner and contractor shall compromise and agree as to the time and procedure of all alterations within the existing building * * *." (p. B.)

"Procedure

"The demolition of the exterior walls of the existing building and the alterations within the existing building shall not be done until the new floors and walls of the addition are in place and the work on the addition is nearing completion." (p. 9.)

Without fault on the part of Southern, its work under the contracts was delayed for various reasons and had not been completed as of January 10, 1958, when the contracts were terminated. Mellon completed the work and for so doing is entitled to credits as hereinafter set forth.

Southern experienced considerable delay in performing both contracts. The whole project from the beginning was plagued by many unforeseen contingencies which caused delay. Among these were (1) issuance by the Architect of some 192 change orders; (2) postponement of the start of the stone work from June 1, 1956 to the latter part of August, 1956; (3) shortage of steel which resulted in slow-paced fireproofing of the spandrel beams with concrete; (4) erection of hoist by Mellon on Grant Street side of addition which interfered with normal setting of stone by Southern;³ (5) some stone purchased by Mellon and set by Southern was rejected because of defects and had to be replaced; (6) late arrival of roofers; (7) late installation of windows; (8) winter weather; (9) failure of materialmen to deliver material; (10) strikes; (11) failure of other subcontractors to complete their work pursuant to the Progress Schedules; (12) failure in putting elevators into service; (13) failure of Architect to make prompt decisions; (14) security regulations arising from altering the old bank building while the bank was doing business; (15) interference by Inspector Antolic, an employee of the Owner.⁴

In my opinion, under the provisions of the contracts,⁵ Mellon is not liable to reimburse Southern for its increased costs caused by these delays. In general, the aforesaid delays were contemplated by the contracts, were not caused by Mellon, and time of performance was duly extended by Mellon to Southern. Cf. Henry Shenk Co. v. Erie County, 319 Pa. 100, 178 A. 662; United States v. Howard P. Foley Co., 329 U. S. 64, 67 S.Ct. 154, 91 L.Ed. 44; Crook Co. v. United States, 270 U.S. 4, 46 S.Ct. 184, 70 L.Ed. 438; United States v. Rice, 317 U.S. 61, 63 S.Ct. 120, 87 L.Ed. 53. Article 18 in the Shenk contract is almost identical to the first paragraph of Article 18 in the instant contracts. See footnote 5. The instant contracts contain no other provisions for recovery of damages for delay except Article VII of Exhibits 1 and 2 which is not applicable.

The controlling principle of law seems to be that absent contractual provisions to the contrary, the contractor is not liable to reimburse the subcontractor for the latter's increased costs caused by delays contemplated in the contract, but the contractor is liable in damages when any delay caused by the contractor constitutes a breach of the contract express or implied.

The Masonry Contract

Beginning in January, 1957, Mellon required Southern to start the interior masonry work. It had become increasingly apparent that Mellon was deviating from the two Progress Schedules (Exhibits 6 and 12) received by Southern on October 13, 1955 and September 21, 1956, respectively. When in January, 1957, Mellon directed Southern to erect the incinerator in its entirety instead of performing the masonry work in a normal floor by floor manner, the latter protested immediately and repeatedly. Southern promptly demanded payment for increased costs. Mellon suggested that the invoice be submitted at the end of the work; this was done, and Mellon submitted Southern's claim to the Architect who rejected it.

Because the building was not ready for the interior masonry work, Southern in January, 1957, requested a suspension of the interior masonry work until the mechanical trades had completed their work in order that it might proceed in an orderly manner on each floor in sequence. Mellon refused and thereafter required Southern to perform its masonry work piecemeal and in a haphazard and disorderly manner.⁶ In addition, contrary to the specifications, Southern was directed by Mellon to do its (Southern's) masonry work on the alterations of the old building before the new building was "practically complete". All this required Southern to perform the masonry work over a longer period of time than if it had been performed in sequence, floor by floor, and increased its costs considerably.

Although there was some evidence to the contrary, I find as a fact that the Owner did not, indeed could not, compel Mellon to order Southern to proceed in advance of the other trades and out of sequence. The most that can...