Northern Imp. Co., Inc. v. South Dakota State Highway Commission
| Decision Date | 15 June 1978 |
| Docket Number | No. 11789,11789 |
| Citation | 267 N.W.2d 208 |
| Parties | 25 Cont.Cas.Fed. (CCH) P 82,625 NORTHERN IMPROVEMENT COMPANY, INC., a South Dakota Corporation, Plaintiff and Respondent, v. SOUTH DAKOTA STATE HIGHWAY COMMISSION, Consisting of Governor Richard F. Kneip, Manley Feinstein, R. C. Stenson, and W. O. Delzer, members of the said South Dakota Highway Commission, acting for and on behalf of the Department of Highways, State of South Dakota; Department of Highways, State of South Dakota; and, the State of South Dakota, Defendants and Appellants. |
| Court | South Dakota Supreme Court |
Ronald G. Schmidt, of Schmidt & Schroyer, P. C., Pierre, for plaintiff and respondent.
Carl W. Quist, Asst. Atty. Gen., Pierre, for defendants and appellants.
This action arises out of a highway construction contract entered into on August 15, 1968, between plaintiff, Northern Improvement Company, Inc., and defendant South Dakota State Highway Commission for the performance of certain dirt, grading, gravel, and asphalt work on U.S. Highway No. 212 in Codington County, South Dakota. * Plaintiff's original complaint alleged that the contract plans and specifications were unfit and inadequate for the job, that defendant would not permit plaintiff to utilize other, more efficient methods, that defendant refused to correct the deficiencies but rather harassed plaintiff's employees and generally interfered with plaintiff's performance, and that all of these acts and omissions disrupted plaintiff's performance schedule and necessitated the expenditure of work and materials not contemplated by the parties at the time the contract was bid and executed. The original complaint additionally alleged that defendant failed to account fully for materials and work supplied by plaintiff under the provisions of the contract. The damages claimed by plaintiff were all in excess of and in addition to the agreed contract price. In Northern Improvement Co., Inc. v. State Highway Comm., 87 S.D. 71, 202 N.W.2d 861, this court upheld the trial court's dismissal of plaintiff's original complaint as being one for damages for breach of contract and for extra work not within the terms of the contract. Omitted from defendant's motion and hence from that decision was that portion of the complaint which alleged that defendant had failed to account fully for plaintiff's performance under the terms of the contract.
In response to a motion for a more definite statement of its remaining claim, plaintiff filed its amended and second amended complaints, which set forth plaintiff's present claims in five counts. Plaintiff presently seeks damages in the sum of $343,535.92. Count I of the complaint, except paragraph 9 thereof, was subsequently dismissed pursuant to a settlement stipulation. Defendant's answer and amended answer generally deny plaintiff's allegations and raise the affirmative defenses of full payment, waiver, and res judicata.
Prior to trial, plaintiff and defendant filed a joint petition for declaratory judgment. For purposes of the joint petition, the parties mutually stipulated to the truth of the facts and conclusions of fact contained in plaintiff's amended and second amended complaints and in the joint petition. The pertinent facts as thus established are summarized as follows.
The contract proposal including plans, specifications, and special provisions was available to bidders and was obtained by plaintiff prior to its submitting a bid. The contract incorporated the South Dakota Department of Highways "Standard Specifications for Roads and Bridges, (1963 Edition)." It specified a "contract time" of 150 working days. Plaintiff's bid was accepted by the Commission and a contract was duly executed.
Throughout the course of construction, plaintiff was plagued by difficulties. The source of these difficulties, as specifically set forth in Count II of the amended complaint, was the defendant's project engineer, who refused to yield to plaintiff's demands for extra work orders and supplemental agreements to augment plans and specifications which were in certain instances defective and in others inadequate to permit plaintiff to cope profitably with unforeseen contingencies. Besides the mere refusal to issue the requested orders, the engineer aggravated various problems and created others by orally "ordering" plaintiff both to do defective work, which then had to be redone, and to perform various operations in a defective or highly inefficient and unprofitable manner.
The construction of the detour provides a typical example. Because of a deficiency of material existing at the detour site with which to form the road bed, the specified quantity of gravel placed upon the detour was inadequate to produce a stable roadway in the shoulder areas. To further complicate matters, the gravel derived from the specified sites contained insufficient binder clay to enable plaintiff to lay and compact it properly. Plaintiff immediately requested that the engineer allow it to add clay as a binder at no additional cost to the state. The engineer refused to order any deviation from the specifications, however. Plaintiff then advised the engineer that the instability of the detour would result in substantial additional maintenance costs for which it expected compensation. The engineer responded by ordering plaintiff to dig up the various soft spots and dry them out. Substantial maintenance problems did in fact arise continuously throughout the project because of the defective detour design, and these cost plaintiff valuable time in addition to the cost of the maintenance work itself. Plaintiff was required to assign an entire crew of men whose sole job was to maintain the detour and repair it as it broke up. Plaintiff performed the work as directed but under oral protest. Plaintiff also repeatedly requested written supplemental agreements and written orders, but these requests were consistently denied. On several occasions, plaintiff discussed the problem with the resident engineer, the district engineer, and department engineering personnel in Pierre. The engineers acknowledged that the detour was underdesigned. However, plaintiff never notified the engineer or the department in writing of its intention to claim additional compensation.
This pattern of events was similarly repeated in the numerous other troublesome instances of which plaintiff complains. The two subcontractors doing the earth moving were required to quit the job because the specifications and the engineer required too much water to be added to the soil. The resulting density problems cut the subcontractors' output below the level where their assistance was economically feasible. The gravel base course for the shoulders contained insufficient binder. After plaintiff was finally permitted to mix clay with the gravel, the engineer "ordered" it to lay out the shoulders with a stringline, causing additional delay. The specifications and the engineer set the AC 85-100 content of the asphalt so high that rolling and compaction problems occurred. The engineer forced plaintiff to make automatic turns on corners that were too sharp, delayed rolling for too long, unreasonably shut down the hot mix plant, and orally ordered the media drains to be skewed when the plans called for square end construction. In all of these instances, plaintiff orally requested supplemental agreements or change orders and performed the work under oral protest. However, no supplemental agreements or change orders were executed.
Four issues were presented to the trial court by the joint petition and stipulation. The trial court entered judgment in plaintiff's favor on three of those issues, from which defendant appeals. Plaintiff does not appeal. The three issues thus presented are: (1) whether plaintiff has rights and claims against the state as a matter of law for work not originally contemplated or made necessary by alterations to the project plans and "ordered" or "required" to be done by the state's engineer although no written supplemental agreements or orders were executed nor written notification of intention to make claims for extra work given; (2) whether plaintiff may assert the doctrines of waiver and estoppel in pais to prevent the state from raising the lack of written supplemental agreements, written orders, or written notice of claims as conditions precedent to plaintiff's recovery; and (3) whether plaintiff has a claim against the state for providing defective and deficient project plans.
We note at the outset that plaintiff's third contention was previously raised by paragraph VI of its original complaint. Relying on G. H. Lindekugel & Sons, Inc. v. State Highway Comm., 87 S.D. 32, 202 N.W.2d 125, we upheld the dismissal of plaintiff's claim for damages for defective project plans as being one for breach of contract and hence invalid. Northern Improvement Co., Inc. v. State Highway Comm., supra. We adhere to that decision and hold that the trial court erred in concluding that the stipulated facts may support a claim for damages for defective project plans.
We next consider whether plaintiff may enforce a claim for compensation under the terms of the contract in the absence of a written supplemental agreement, a written order or written notice of intention to make claim for extra work. The resolution of this issue requires us to construe the contract, the pertinent provisions of which are found in the South Dakota Department of Highways "Standard Specifications for Roads and Bridges (1963 Edition)". Because certain provisions of the Standard Specifications are determinative of this appeal, we quote them as follows:
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