Main v. Department of Highways

• Decision Date: 14 June 1965
• Citation: 142 S.E.2d 524,206 Va. 143
• Court: Virginia Supreme Court
• Parties: Robert T. MAIN, Jr., and Kathryn M. Main, Partners, trading as Robert T. Main Company, v. DEPARTMENT OF HIGHWAYS and Sidney C. Day, Jr., Comptroller of Virginia.

Page 524

142 S.E.2d 524

206 Va. 143

Robert T. MAIN, Jr., and Kathryn M. Main, Partners, trading as Robert T. Main Company, v. DEPARTMENT OF HIGHWAYS and Sidney C. Day, Jr., Comptroller of Virginia.

Supreme Court of Appeals of Virginia.

June 14, 1965.

William R. Cogar, James C. Roberts, Richmond (Collins Denny, III, Denny, Valentine & Davenport, Tucker, Mays, Moore & Reed, Richmond, on the brief), for plaintiffs in error.

Frederick T. Gray, Richmond (Robert Y. Button, Atty. Gen.; M. Ray Johnston, Asst. Atty. Gen., Paul D. Stotts, Asst. Atty. Gen., Williams, Mullen & Christian, Richmond, on the brief), for defendants in error.

Before EGGLESTON, C. J., and SPRATLEY, BUCHANAN, SNEAD, I'ANSON, CARRICO and GORDON, JJ.

EGGLESTON, Chief Justice.

On this appeal we are to determine whether the lower court erred in sustaining demurrers to and dismissing the original an amended petitions which Robert T. Main, Jr., and Kathryn M. Main, partners trading as Robert T. Main Company, hereinafter called the plaintiffs, filed in the lower court against the Department of Highways and the State Comptroller to recover the amounts alleged to be due by virtue of a contract which the plaintiffs entered into with the Department of Highways for the construction and improvement of a section of an interstate highway in Fairfax and Prince William counties.

The allegations of the original petition may be summarized thus:

During November, 1958 the Department of Highways advertised for bids for the construction and improvement of 8.480 miles to Interstate Route 66 in Fairfax and Prince William counties. Included among the contract bid items was the placement and stabilization of approximately 196,000 cubic yards of select material 'of a minimum CBR value of 12' upon that portion of the roadway prepared to receive its foundation and surface courses.

In the preparation of their bid the plaintiffs and the authorized representatives of the Department met on the site of the proposed construction, at which time these representatives designated on the ground and delineated upon the project plans a number of sources of material located within the roadway limits, which material the Department assured and represented to the plaintiffs was of sufficient 'CBR value' and of suitable quality to be employed for the select material requirements of the contract.

Relying upon these assurances and representations, the plaintiffs submitted to the Department a bid proposal in the sum of $1,841,787.39. The plaintiffs' proposal was accepted by the Department and a contract was executed in writing on December 29, 1958. The plaintiffs commenced work under the contract on January 5, 1959.

During the latter part of 1959 and early part of 1960, the plaintiffs, in the course of their work, began to excavate and place as select material that which had been designated by the Department. After a portion of this material had been excavated and placed, the Department notified the plaintiffs that the sources originally designated were not of sufficient 'CBR value,' were not of suitable equality, and could no longer be used by the plaintiffs for the procurement of such material.

The Department thereupon directed the plaintiffs to secure from sources outside the limits of the project another type of select material and to finish the graded roadway with the latter material to a depth of six inches. Further, the Department directed the plaintiffs to place beneath the select material other material than that specified in the contract.

The plaintiffs complied with these directions of the Department and performed all conditions of the contract on their part. The extra work thus required of the plaintiffs was performed at a cost of $509,468.97 over and above the original contract price of the project.

In the further course of performance the plaintiffs laid a section of 36-inch corrugated matal pipe, in a manner expressly approved by the Department. From causes beyond the control of the plaintiffs a failure subsequently occurred in this pipe and the Department required them to excavate the pipe and replace the section which had failed, at a cost of $2,360.34.

All of the work required of the plaintiffs was accepted by the Department as of August 3, 1962. Thereafter the Department, in measuring for payment the quantities of select material excavated, placed and stabilized by the plaintiffs, failed to measure the same in the manner provided for in the contract. As a result, the plaintiffs were paid a sum for such material which was $47,253.65 less than that to which they were entitled under the contract.

The Department also deducted and withheld from payment to the plaintiffs the sum of $5,310 as liquidated damages for an alleged delay of 118 days in the completion of the contract. The delay in the completion of the project resulted directly from the modifications, changes and breaches of the contract by the Department and from the opening of the project to traffic by the Department prior to the date set for the completion of the work.

Upon completion of the contract the plaintiffs made timely and proper demands for payment of the sums due them, but these demands were refused.

The defendants demurred to the petition on the grounds that (1) the matters complained of are among those upon which the plaintiffs agreed in their contract that the decision of the State Highway Commissioner would be final and binding; (2) the plaintiffs failed to allege compliance with § 105.12 of the contract with respect to claims for adjustment and disputes, compliance with which is a prerequisite to the right to recover.

It was stipulated and agreed that the construction contract between the Department of Highways and the plaintiffs and the Department's Road and Bridge Specifications should be considered in determining the issues raised by the demurrer.

The specifications, which were integral parts of the contract, contained among others these pertinent provisions. ¹ The lower court sustained the demurrer, with leave to the plaintiffs to file an amended petition. In sustaining the demurrer it held that since the petition had failed to allege that the plaintiffs had complied with certain provisions of the Department's specifications which were embodied in the contract, their suit against the Department could not be maintained.

The plaintiffs filed an amended petition alleging that the Department had waived and was estopped to assert the various contractual provisions which the lower court had relied upon in sustaining the demurrer to the original petition. Further, the plaintiffs asserted that the arbitration clause embodied in § 105.13 of the specifications, relied upon by the defendants in their demurrer, was unenforceable as a matter of law.

The defendants again demurred on substantially the same grounds as those asserted in their demurrer to the original petition, and on the additional ground that the factual allegations in the amended petition were insufficient in law to raise an estoppel or to constitute a waiver by the Department of the provisions in the contract relied upon by the latter.

The lower court sustained the demurrer to the amended petition and the plaintiffs having declined leave to file a further amendment, the petition was dismissed.

In their amended petiton the plaintiffs base their right to recover the cost of the extra work in excavating the placing suitable material on the roadway, $509,468.97; the alleged shortage in the amount paid them for excavating materials, $47,253.65; the cost of relaying the pipe, $2,360.34, and the sum of $5,310 wrongfully withheld from the payment due the plaintiffs, on the breach of the express contract between the parties.

They also base their right to recover the first of these items by virtue of what they allege was a 'modification by mutual consent of the parties' of the terms of the original contract. They base their right to recover all of the items on the implied agreement of the Department to pay the reasonable value of all labor, materials and equipment furnished by the plaintiffs in the performance of the work.

On appeal the plaintiffs contend that the lower court erred in sustaining the demurrer to their amended petition, because, they say, (1) the Highway Department waived and is estopped to assert the various contractual provisions which the court held had barred the plaintiffs' right of recovery; (2) the arbitration provision of § 105.13 of the specifications does not bar the plaintiffs' cause of action, because (a) it is void and unenforceable, as a matter of law, and (b) the Department is estopped to assert it; (3) the petition sufficiently alleges the plaintiffs' right to recover under the terms of the modified agreement of the parties; and (4) the petition sufficiently alleges the plaintiffs' right to recover on the implied agreement between the parties.

In its written memorandum the lower court held that the plaintiffs were not entitled to recover for the alleged extra work performed by them because they failed to allege the execution of a supplemental agreement therefor as required by § 104.03 of the specifications, or that they had obtained an extra work order therefor as required by §§ 104.04 and 105.02, or had notified the engineer in writing of their intention to make claim for such extra compensation before beginning the work as required by § 105.12.

To meet these deficiencies, in their amended motion the plaintiffs alleged that the Department is estopped to rely upon these provisions of the specifications in that when it was ascertained that the material previously designated for the road work was not of suitable quality and could no longer be used, the Department directed the plaintiffs to secure suitable material from another source, and that did so.

Obviously, this necessity for a change in the source of the material did not relieve the plaintiffs of the obligations imposed upon them by...