Razorback Contractors v. Board Cty. Com'Rs

• Decision Date: 02 April 2010
• Docket Number: No. 101,131.,101,131.
• Citation: 227 P.3d 29
• Parties: RAZORBACK CONTRACTORS OF KANSAS, INC., Appellant, v. THE BOARD OF COUNTY COMMISSIONERS OF JOHNSON COUNTY, Kansas, Appellee.
• Court: Kansas Court of Appeals

227 P.3d 29

RAZORBACK CONTRACTORS OF KANSAS, INC., Appellant, v. THE BOARD OF COUNTY COMMISSIONERS OF JOHNSON COUNTY, Kansas, Appellee.

No. 101,131.

Court of Appeals of Kansas.

April 2, 2010.

Fred Bellemere, III, and Paul G. Schepers, of Seigfried, Bingham, Levy, Selzer & Gee, of Kansas City, Missouri, for appellant.

LeeAnne Hays, of Johnson County Legal Department, of Olathe, for appellee.

Before McANANY, P.J., GREEN and MALONE, JJ.

McANANY, J.

This appeal centers on the contract between Razorback Contractors of Kansas, Inc. (Razorback), and the Johnson County Board of County Commissioners (the Board) for construction of a sanitary sewer line in southern Johnson County. The agreed contract price was $2,393,320.76. Razorback claimed that during construction it encountered site conditions materially different from what previously had been disclosed. It sued the Board for additional compensation of $1,342,932, but the district court entered summary judgment in favor of the Board because Razorback failed to provide notice of its claim in accordance with the parties' contract. Razorback appeals that decision.

The Board provided prospective bidders on the project with two sets of soil boring logs taken in early 2004. The boring logs were provided in order to inform prospective bidders about the soil composition and water table on the job site. The boring logs reported information about rock formations soil strata, and "observed" groundwater conditions at various depths in approximately 80 locations throughout the construction area. The borings were not intended to measure surface water or indicate surface conditions. Bidders were further informed about site conditions in an accompanying April 30, 2004, letter which stated:

"SITE CONDITIONS

"The project site is located in an agricultural area of southern Johnson County, Kansas. According to the site plan provided, the proposed sewer lines are generally in the floodplains of Coffee Creek and [its] tributaries. The soils in these areas are by nature typically saturated due to the natural accumulation of water by surface drainage.

"SITE PREPARATION

"The near surface soils in several areas of this project site were saturated at the time of our field exploration. The soil moisture contents will likely be high at the time of construction for the proposed sewers. Drying of these soils may be required to develop a stable base for construction activities. Discing and aeration may be sufficient to provide a stable base. However, additional stabilization measures may be required depending on the soil moisture content of the near surface soils at the time of construction. The contractor should determine the most appropriate means of soil stabilization required for the proposed work.

"EXCAVATIONS

"Excavations will be required for the proposed sewer lines. It is anticipated that the excavations will be in clay soils and shale, sandstone and limestone bedrock above and below the water table. Typical temporary dewatering techniques should be sufficient to remove any water seepage that may be encountered in the excavations. The contractor should determine the appropriate dewatering technique required to complete the work `in the dry.' ". . . Surface drainage should be carefully controlled to prevent flow of water into the excavations."

The contract work was to be completed in 270 days. The contract provided for liquidated damages of $1,000 for each day thereafter until completion of the work.

Razorback, the successful bidder on the project, is an experienced sewer contractor with over 160 sewer and waterline projects in the Kansas City-Lawrence-Topeka area since the year 2000. Michael Martin was Razorback's project manager. George Butler Associates (GBA) was the Board's consulting engineering firm for the project. Doug Martin was GBA's senior construction observer for the project and was onsite several times each week during construction.

The work commenced on July 19, 2004. Progress meetings were held onsite in September, October, November, and December 2004, and in January and February 2005. Doug Martin, the engineer supervising the project, attended each of these meetings, prepared the agenda and minutes for each meeting, and gave Razorback an opportunity to correct the minutes of prior meetings.

In September 2004, Razorback first reported to Doug Martin that it had encountered unanticipated water conditions. The September 2004 progress meeting minutes (which Razorback reviewed and apparently approved) indicate that Razorback was experiencing "wet surface conditions and equipment problems." Razorback was a week or two behind schedule by this time. Razorback requested no time extension or additional compensation in September 2004.

During the October and November 2004 progress meetings, Razorback repeated that "wet surface conditions and equipment problems" were causing delays. Again, it made no request for a time extension or for additional compensation.

On December 7, 2004, Michael Martin sent a letter to GBA stating that

"the extremely wet ground conditions that we are experiencing on this project are causing delays in laying pipe . . . [and] the wet ground is stopping us from delivering bedding rock to the pipe laying operation. . . .

"We do not see this condition improving until either the precipitation quits for several weeks allowing the ground to dry or the temperature drops below freezing long enough to allow the ground to freeze. . . . "This letter is to serve notice that if we don't get favorable ground conditions soon we will request a time extension based on the current unforeseen site conditions."

A week later, at the December 14, 2004, progress meeting, Razorback again reported that "wet surface conditions and equipment problems" were causing delays. Razorback did not submit a proposed time extension or price increase change order at the meeting. However, Hal Cosgrove, Razorback's president, attended this meeting and

"asked about the possibility of . . . stopping the contract time on the project until surface conditions were more favorable. . . . At this time[, Razorback's] progress is being slowed by muddy surface conditions and unexpected groundwater. Hal stated that the soil borings for the project did not indicate the presence of ground or surface water along the easements of this project."

On December 22, 2004, GBA denied Razorback's time extension request and instructed Razorback to continue working and to "investigate alternative methods for working in the mud."

At the January 2005 progress meeting, Razorback reported that muddy surface conditions caused by wet weather, unanticipated subsurface moisture, and equipment problems put it about a month behind schedule. GBA told Razorback that there would be no time extension for weather delays.

On February 23, 2005, Razorback wrote to GBA requesting a change order extending the contract performance date by 60 days under Sections 10.05, 12.02, and 12.03 of the contract. Razorback cited "the extremely wet and muddy soil conditions at the project site." Johnson County Wastewater (JCW) approved the change order on April 19, 2005, and the date of completion was moved from April 15, 2005, to June 14, 2005.

On June 10, 2005, Razorback formally requested in writing an increase in the contract price based upon wet and muddy soil conditions on the site that it claimed were (1) materially different from the conditions ordinarily encountered and generally recognized as inherent in this type of work, and (2) substantially different from what was represented in the bid documents. According to Razorback, "[o]nce the project is completed, we will have an opportunity to [tally] costs and to present you with a final number."

On July 5, 2005, JCW denied Razorback's request, citing Sections 10.05 and 12.01 of the contract and the fact that notice of the claim was more than 60 days after February 23, 2005. JCW also cited Section 4.03 and noted that the letter of April 30, 2004, accurately described the conditions Razorback would and did encounter.

Razorback replied on July 19, 2005, stating that it had given notice of the differing conditions as early as the December 2004 progress meeting. Also, Razorback claimed that 80% of the bores in the logs were dry holes. To document its claim for a price adjustment, Razorback enclosed a "Claim Summary" which set forth the difference between its actual costs ($3.2 million) and its bid price ($1.9 million).

Razorback sued the Board for breach of contract. It also asserted a claim for breach of implied warranty based on the Board's failure to disclose the amount of ground and surface water present in the construction area.

The Board moved for summary judgment. The district court granted the Board's motion, finding that Razorback failed to comply with the notice requirements of Sections 4.03, 10.05, and 12.01 of the contract. Further, relying on Owens v. City of Bartlett, 215 Kan. 840, 528 P.2d 1235 (1974), and Saddlewood Downs v. Holland Corp., Inc., 33 Kan. App.2d 185, 99 P.3d 640 (2004), the court found that the Board did not waive its right to notice pursuant to the contract. On appeal, Razorback challenges the district court's enforcement of the contract's notice provisions and the court's conclusion that the Board did not waive its right under the contract to written notice of the changed conditions.

Finally, the district court granted the Board summary judgment on Razorback's implied warranty claim. Razorback does not challenge this ruling.

Appellate review of the Board's summary judgment motion is de novo. Central Natural Resources, Inc. v. Davis Operating Co., 288 Kan. 234, 240, 201 P.3d 680 (2009). The applicable summary judgment standards are well known to the parties and may be found in Miller v. Westport Ins. Corp., 288 Kan. 27, 32, 200 P.3d 419 (2009) (summary judgment standards that apply to district court also apply to appellate court on review).

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