M.J. Lee Const. v. Oklahoma Transp.

• Decision Date: 06 December 2005
• Docket Number: No. 102,057.,102,057.
• Citation: 125 P.3d 1205,2005 OK 87
• Parties: M.J. LEE CONSTRUCTION COMPANY, an Oklahoma corporation, Plaintiff/Petitioner, v. OKLAHOMA TRANSPORTATION AUTHORITY, an instrumentality of the State of Oklahoma, Defendant/Respondent.
• Court: Oklahoma Supreme Court

125 P.3d 1205

2005 OK 87

M.J. LEE CONSTRUCTION COMPANY, an Oklahoma corporation, Plaintiff/Petitioner, v. OKLAHOMA TRANSPORTATION AUTHORITY, an instrumentality of the State of Oklahoma, Defendant/Respondent.

No. 102,057.

Supreme Court of Oklahoma.

December 6, 2005.

COPYRIGHT MATERIAL OMITTED

On Writ of Certiorari to the District Court in Oklahoma County, Oklahoma, District Judge Vicki Robertson, Presiding.

¶ 0 This is a suit on a highway construction contract. The engineer for the Oklahoma Transportation Authority suspended and delayed the contractor's work. The contractor

filed a claim for additional compensation. The engineer and the deputy director of the Authority denied the claim, and no settlement was reached in mediation. The contractor filed suit in the district court in Oklahoma County, alleging damages in the same amount as submitted to the engineer and the deputy director of the Authority. At pretrial, the contractor increased the alleged damages over the amount originally claimed. The Authority objected, arguing the contractor may not seek more damages in the district court than it claimed before the Authority. The district court ruled that the contractor must present all its claims to the Authority; any claim not presented to the Authority is deemed waived; and any claim presented to the Authority may not be changed, either the items included or amounts thereof, in a subsequent judicial proceeding. The district court found that its legal ruling affects a substantial part of the merits of the controversy and that an immediate appeal may materially advance the ultimate termination of the litigation and certified the interlocutory order for immediate appeal. 12 O.S.2001, § 952(b)(3) and S.Ct.R. 1.50, 12 O.S.2001, ch. 15, app.1. We previously granted certiorari to review the interlocutory order.

CERTIFIED INTERLOCUTORY ORDER VACATED; CAUSE REMANDED FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION.

Gerald G. Stamper and Trent A. Gudgel, Nichols Wolfe Stamper Nally Fallis & Robertson, Tulsa, Oklahoma, for plaintiff/petitioner.

John B. Hayes, Hayes Magrini & Gatewood, Oklahoma City, Oklahoma, for defendant/respondent.

TAYLOR, J.

¶ 1 The district court certified, for immediate appeal, an interlocutory order construing the Oklahoma Transportation Authority's 1999 Standard Specifications for Turnpike Construction. The specifications are part of a contract between the Oklahoma Transportation Authority,¹ defendant/respondent (Authority), and a highway construction contractor, M.J. Lee Construction Company, plaintiff/petitioner (M.J. Lee). Two questions are presented: 1) Do the specifications limit the damages a contractor may recover in the district court to the amount the contractor claimed before the Authority? and 2) Do the specifications allow the contractor to recover damages in the district court for items of expense it did not claim before the Authority? We answer both questions in the negative. We vacate the certified interlocutory order and remand this case for further proceedings consistent with this opinion.

I. Facts and Proceedings Below

¶ 2 The Authority let bids on a series of construction projects to connect the turnpikes around Tulsa, Oklahoma.² The projects involved separate contracts for a variety of work to be done, including utility relocation, grading, drainage, bridges and paving.³ M.J. Lee bid on a project to construct nine bridges on a portion of the Broken Arrow South Loop of the Creek Turnpike. On June 3, 1999, the Authority awarded the bridge project contract to M.J. Lee in the amount of $3,847,229.82. The contract included the 1999 Standard Specifications for Turnpike Construction (specifications).⁴

¶ 3 The Authority approved M.J. Lee's schedule to start the bridge work on July 1, 1999, and finish it by July 28, 2000. However, the Authority did not authorize M.J. Lee to begin work until September 29, 1999, and then suspended M.J. Lee's work from January 18, 2000, until May 22, 2000. The delays were at least partly due to another contractor's failure to finish work that had to be completed before M.J. Lee could begin the bridge work.

¶ 4 On April 17, 2000, M.J. Lee gave written notice of its intent to make a claim for additional compensation and additional time to complete the work due to the delays.⁵ On May 1, 2000, the Authority's on-site representative acknowledged the notice and advised that documentation of delay costs should be collected for review at the pertinent time.

¶ 5 M.J. Lee completed the bridge project on July 31, 2001, a year later than the original time allowed in the contract. Pursuant to specification 105.19,⁶ M.J. Lee submitted a claim on August 7, 2001, to the Authority's chief engineer for additional compensation for delay costs in the amount of $655,040.00.

¶ 6 Specification 105.19 prescribes a "nonbinding procedure for claim settlement." It allows the contractor to file a claim for compensation over and above the contract price after the project work is completed. The specification provides for review and settlement of the claim, first by the Authority's engineer and then its deputy director. It also allows for mediation of the claim and suit in the district court. After the engineer denied the claim on September 10, 2001, M.J. Lee submitted the claim to the deputy director and then to mediation.

¶ 7 In November of 2002, M.J. Lee filed a contract action in the district court in Oklahoma County against the Authority to recover the balance of $143,394.17⁷ due on the original contract price and damages for breach of contract in the amount of $649,318.89. M.J. Lee alleged the Authority breached the contract when it delayed, disrupted, obstructed and interfered with M.J. Lee's work, failed to coordinate M.J. Lee's work with other contractors, and failed to administer the project effectively. At a pretrial conference, M.J. Lee increased the amount of its alleged damages to $1,052,328.00. The Authority objected to the increase, arguing that the contract specifications preclude M.J. Lee from seeking damages in the district court in an amount greater than it claimed before the Authority. M.J. Lee responded that any contract provision prohibiting it from seeking its total damages for breach of contract is contrary to law.

¶ 8 The district court ruled that a contractor must present all its claims to the Authority; any claim not presented to the Authority is deemed waived; and any claim presented to the Authority may not be changed, either the items included or amounts thereof, in a subsequent judicial proceeding. The district court found that its legal ruling affects a substantial part of the merits of the controversy and that an immediate appeal may materially advance the ultimate termination of the litigation and certified the interlocutory order for immediate appeal. See 12 O.S.2001, § 952(b)(3) and S.Ct.R. 1.50, 12 O.S.2001, ch. 15, app.1. We previously granted certiorari to review the interlocutory order.

II. Contentions and Arguments of the Parties

¶ 9 M.J. Lee asserts that it is entitled to recover additional compensation for changes in character of work, suspension of work, and delays of work. M.J. Lee also asserts that the increased amount of its claim in the district court is for equipment costs that could not be calculated until it received documentation from the Authority accurately identifying the equipment used on the project and the number of days each item was used. M.J. Lee contends that specifications 104.05, 105.18, and 109.04 allow it to seek additional compensation and additional time for unreasonable suspensions of work and for altered and extra work; that specifications 108.07(c) and 109.10 allow it to seek additional compensation for delays; and that specification 105.19 provides a mechanism for settling its claim against the Authority before litigation. M.J. Lee argues that neither specification 105.19 nor any other specification caps the damages a contractor may recover in a judicial proceeding for breach of contract.

¶ 10 The Authority contends that the contractor's notice of claim and the claim for additional compensation required to be submitted to the engineer and deputy director are conditions precedent to its liability for any delay damages under specifications 105.19 and 109.10. Accordingly, it argues that M.J. Lee cannot increase the $649,318.89 claim for delay costs submitted to the engineer and the deputy director to a $1,052,328.00 claim in the district court.

III. Standard of Review

¶ 11 The meaning of specification 105.19 is at the heart of this controversy. The mere fact that the parties press for different interpretations of specification 105.19 does not make the specification ambiguous. See Pitco Prod. Co. v. Chaparral Energy, Inc., 2003 OK 5, ¶ 14, 63 P.3d 541, 544-545. Whether contract language is ambiguous is a question of law for the court. Id. at ¶ 12, 63 P.3d at 544. If the contract language is free of ambiguity, its meaning is a matter of law for the court. GEICO General Ins. Co. v. Northwestern Pacific Indemnity, 2005 OK 40, ¶ 11, 115 P.3d 856, 858. Accordingly, we review the pertinent language in the contract to ascertain its ambiguity or its meaning as a matter of law. Questions of law are reviewed by a de novo standard. Gladstone v. Bartlesville Indep. Sch. Dist. No. 30, 2003 OK 30, ¶ 5, 66 P.3d 442, 445. Our de novo review is plenary, independent and non-deferential. Id.

IV. Rules for Construing the Specifications

¶ 12 Unless otherwise provided by law, a public contract is subject to the same rules that govern private contracts. 15 O.S.2001, § 151. The specifications are standardized contract provisions prepared by the Authority and included in most, if not all, of its highway construction contracts awarded in 1999.⁸ They are not the result of bargaining between the parties, rather the specifications are adhesion clauses⁹ that must be "liberally construed, consistent with the object to...