Paul Hardeman, Inc. v. Arkansas Power & Light Company
Decision Date | 14 June 1974 |
Docket Number | No. LR-65-C-66.,LR-65-C-66. |
Citation | 380 F. Supp. 298 |
Parties | PAUL HARDEMAN, INC., Plaintiff, v. ARKANSAS POWER & LIGHT COMPANY, a corporation, Defendant, The Aetna Casualty & Surety Company, Additional Counterclaim Defendant. |
Court | U.S. District Court — Eastern District of Arkansas |
COPYRIGHT MATERIAL OMITTED
E. L. McHaney, Owens, McHaney & McHaney, Little Rock, Ark., for plaintiff.
E. B. Dillon, Jr., House, Holmes & Jewell, Little Rock, Ark., for Ark. Power & Light Co.
Bill S. Clark, Smith, Williams, Friday, Eldredge & Clark, Little Rock, Ark., for Aetna.
Around 1960 the officials of a group of electric utility companies operating in some six states began looking into the possibility of a diversity interchange between the Tennessee Valley Authority (TVA) and those utility companies. It was thought that this could be carried out through the construction of a network of extra-high voltage transmission lines (EHV) connecting the TVA system with the systems of the utility companies. Studies had indicated that the costs of the EHV facilities were sufficiently lower than the costs of creating an equivalent amount of new generating capacity to suggest that the diversity interchange was the better approach.
On August 8, 1962, eleven electric utility companies, identifying themselves as the South Central Electrical Companies (SCEC), entered into an agreement with Commonwealth Associates, Inc. (CAI) of Jackson, Michigan, to assist in the planning of the proposed facilities. In performing such duties CAI conducted a study of an 1,100-mile grid of EHV transmission lines. Subsequently, the SCEC companies decided to build the grid, and the defendant, Arkansas Power & Light Company (AP&L), procured the services of CAI to design the portions thereof in which it was interested, to receive and evaluate bid proposals, to recommend the contractor to be employed, and to assist in the letting of the various contracts which would be required. CAI was also employed to provide the engineering and inspection services which would be needed during the construction.
This lawsuit arises out of the circumstances attending the bidding for, and work on, the first segment of the SCEC grid, which was to run from the Mississippi River to Mabelvale, Arkansas, approximately 139 miles, exclusive of river crossings.
On March 7, 1964, CAI forwarded bid documents to some 16 prospective bidders, including the plaintiff, Paul Hardeman, Inc. (PHI), with instructions that sealed bids should be submitted on or before March 23, 1964. The bids were for the construction of a single circuit, 500 KV electrical transmission line from the Mississippi River near West Memphis, Arkansas, to Mabelvale (near Little Rock), Arkansas. The bid proposal divided the work into 176 items, or units of work. The bid would show a price for each item or each unit of work. The quantity of each unit or item of work was estimated. The bid proposal contained the following provision:
In response to the invitation, the plaintiff and seven other contractors submitted bids for the performance of the construction work.
The original bid proposals were sent to CAI at its Jackson, Michigan office, and copies thereof were sent to AP&L at its offices in Pine Bluff, Arkansas. The bids were opened in private, and the amounts of the bids were not publicized or otherwise made known to the bidders.
Eight bids were received, on or about March 23, 1964, as follows:
Paul Hardeman, Inc Stanton, California $2,704,738.00 R. B. Stovall Construction Company Dallas, Texas $3,809,911.26 Foley-Jelco Salt Lake City, Utah $3,840,276.50 Commonwealth Electric Company Lincoln, Nebraska $4,528,593.00 L. E. Myers Company Chicago, Illinois $5,515,967.15 R. H. Bouligny Charlotte, North Carolina $5,997,710.00 Power Constructors, Inc. & Power Engineering Company Topeka, Kansas and Sioux City, Iowa $7,514,131.00 T. D. Bross Line Construction Company, Hartford, Connecticut $7,773,143.00
These bids vary from a low of $18,826.00 per mile (the bid of PHI) to $53,129.00 per mile.
On March 26, 1964, PHI was informed by telephone that it would be awarded the contract. A confirming letter was mailed on March 26, 1964, and the acceptance of PHI noted thereon on March 30, 1964. A formal contract was executed by the parties on April 1, 1964, showing a total contract price, based upon estimated quantities, of $2,704,738.00. A construction bond in the amount of $2,705,000.00 was issued by the Aetna Casualty and Surety Company (Aetna).
In the early part of April, 1964, PHI commenced activities in connection with the performance of the work required.
The contract contains the following provision:
In late November, 1964, AP&L received a letter from CAI, the first paragraph of which states:
"Commonwealth Associates, Inc., as the Engineer referred to in Article 27 of the General Conditions in your contract with Paul Hardeman, Inc. for construction of a 500 KV Transmission Line, is of the opinion that the schedule of work set forth therein is not being maintained, that many of the conditions and agreements of this Contract are being violated, and that the Contract is not being executed in accordance with the terms thereof."
On November 28, 1964, AP&L wrote PHI the following letter:
PHI responded with the...
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