Richmond Shopping Center, Inc. v. Wiley N. Jackson Co., 771276

• Decision Date: 08 June 1979
• Docket Number: No. 771276,771276
• Citation: 255 S.E.2d 518,220 Va. 135
• Parties: RICHMOND SHOPPING CENTER, INCORPORATED, v. WILEY N. JACKSON COMPANY et al. Record
• Court: Virginia Supreme Court

Page 518

255 S.E.2d 518

220 Va. 135

RICHMOND SHOPPING CENTER, INCORPORATED, v. WILEY N. JACKSON COMPANY et al.

Record No. 771276.

Supreme Court of Virginia.

June 8, 1979.

John W. Pearsall, Richmond (McCaul, Grigsby & Pearsall, Richmond, on briefs), for appellant.

Archibald Wallace, III, Richmond (Albert D. Bugg, Jr., Sands, Anderson, Marks & Miller, Richmond, on brief), for appellees.

Before I'ANSON, C. J., and CARRICO, HARRISON, COCHRAN, HARMAN, POFF and COMPTON, JJ.

COMPTON, Justice.

In this contract action, the owner of real estate located near the site of a highway construction project seeks recovery for property damages as a third party beneficiary against several road contractors and the surety on their bond.

Appellant Richmond Shopping Center, Incorporated, the plaintiff below, filed this suit in August of 1974 against appellees Wiley N. Jackson Company, E. G. Bowles Company, E. G. Bowles, Contractor, as joint venturers, and The Continental Insurance Company, for $13,640 plus interest. Plaintiff claimed to be a third party creditor beneficiary of a contract between the Commonwealth of Virginia, Department of Highways (hereinafter, Highway Department) and the joint venture (hereinafter sometimes referred to as the contractor). The insurer was surety on the performance bond executed by the contractor as principal. Plaintiff alleged that it was damaged "by the repeated traverse" of its property by heavy equipment used by the contractor during the highway work. Plaintiff sought (1) recovery for the cost of restoring its property to its pre-damage state and (2) payment for the contractor's use of the land.

In a demurrer filed to the motion for judgment, defendants asserted that plaintiff had no right to maintain the action as a third party beneficiary under the contract or bond. The demurrer was overruled and, subsequently, the trial court heard the evidence, sitting without a jury. Later, the court assessed damages against defendants for the restoration cost in the amount of $3,874.50. Plaintiff's monetary claim for use of the land was denied.

We awarded plaintiff a writ of error to the June 1977 final judgment and defendants have assigned cross-error, primarily attacking the trial court's holding that plaintiff was entitled to sue as a third party beneficiary.

The basic facts are uncontradicted. In May of 1971, the Highway Department and the contractor executed a written contract to perform certain work related to construction of Interstate Route 195, a limited access highway, in the City of Richmond. The documents comprising this agreement included a proposal submitted by the contractor, plans, and the Road and Bridge Specifications of the Highway Department contained in a 583-page manual. The work was to be performed over a 1.5-mile north-south segment of the route which lay between points near Broad Street on the north and Cary Street Road on the south. In this area, the highway was to run below ground level in a cut on either side of previously existing railroad tracks. The plaintiff's property was located near Cary Street Road, adjacent to the work site and east of the proposed highway. Among its duties under the agreement, the contractor was to excavate in the cut, build temporary bridges, install drainage systems, and construct interior walls paralleling the railroad.

The contractor began work in June of 1971 and finished about 18 months later. During the course of work, the contractor used heavy equipment at the site including dump, pickup, and flatbed trucks. In moving to and from the work area during this period, the vehicles constantly travelled across plaintiff's property, which included a paved parking lot in a shopping center and a gravel parking area nearby. Because of this use, which was unauthorized, the asphalt surface of the parking lot was broken up, a wall used by the contractor as a loading dock was damaged, and the gravel surface of the parking area, as well as "bumper logs" used to control parking there, were destroyed. Although the contractor offered to pay for the damage to the asphalt parking lot, the parties were unable to settle the entire dispute and this action resulted.

In proceeding as a third party beneficiary, plaintiff alleged that among the obligations which the contractor assumed under the contract were the responsibilities imposed by § 107.12 of the Road and Bridge Specifications, which provided:

Sec. 107.12 Protection and Restoration of Property and Landscape The Contractor shall be responsible for the preservation of all property along the line of and adjacent to the work, the removal or destruction of which is not called for by the plans. He shall use suitable precaution to prevent damage to all such property.

When the Contractor finds it necessary for any reason to enter upon private property for the prosecution of his work, the storage of materials or any other purpose, he shall secure from the owner or lessee of such property, written permission for such entry prior to moving thereon. An executed copy of this permission shall be furnished the Engineer.

The Contractor shall be responsible for all damage or injury to property of any character during the prosecution of the work resulting from any act, omission, neglect or misconduct in his method of executing the work or at any time due to defective work or materials, and this responsibility shall not be released until the project has been completed and accepted.

When any direct or indirect damage or injury is done to any public or private property by or on account of any act, omission, neglect or misconduct in the method of executing the work or in consequence of the nonexecution thereof on the part of the Contractor, he shall restore such property to a condition similar or equal to that existing before such damage or injury was done by repairing, rebuilding or restoring, as may be directed, or make settlement with the owner of the property so injured or damaged and secure from him a release from any claim against the Department, without additional compensation therefor. A copy of this release shall be furnished the Engineer.

Thus, plaintiff asserted, it was "a third party creditor beneficiary of the . . . contract with the Virginia Department of Highways, and in particular Section 107.12 of the Road and Bridge Specifications, and of the surety's obligation to indemnify for non-performance of the joint venturers' obligations."

As the trial began, the defendants, during the opening statement, asserted that one of the issues to be decided during the hearing was whether the plaintiff was, in fact, a third party beneficiary under the contract. Defendants' principal reliance was on § 107.14 of the Road and Bridge Specifications, which provided:

Sec. 107.14 Responsibility for Damage Claims The Contractor shall indemnify and save harmless the State, the Commission and all of its officers, agents and employees as well as the city, town or other municipality in which the work is performed and all of their officers, agents and employees from all suits, actions or claims of any character, name and description brought for or on account of any injuries received or sustained by any person, persons or property by or from the said Contractor or by or in consequence of any neglect in safeguarding the work, through the use of unacceptable materials in the construction of the improvement by or on account of any act or omission, neglect or misconduct of the said Contractor; or by or on account of any claims or amounts recovered by infringement of any patent, trademark or copyright under any law, bylaw, ordinance, order or decree. The Commissioner may retain so much of the monies due the said Contractor under and by virtue of his contract as shall be considered necessary for the use of the State. In case no monies are due, the Contractor's surety shall be held until all such claims and actions thereon have been settled and suitable evidence to that effect furnished to the Commission.

Any extension of time granted the Contractor in which to complete the contract shall not relieve him or his surety from this responsibility.

It is not intended by any of the provisions of any part of the contract to create the public or any member thereof as a third party beneficiary hereunder, or to authorize anyone not a party to this contract to maintain a suit for personal injuries or property damage pursuant to the terms or provisions of the contract.

Deciding that the prior ruling on demurrer, made by another judge of the same court, had become "the law of the case", the trial judge would not allow defendants further to contest plaintiff's right to sue on the third party beneficiary theory.

Because we believe the main issue raised on cross-error to be dispositive of this appeal, we move directly to the question whether the plaintiff was entitled to sue as a third party beneficiary.

In attempting to sustain the theory that it is entitled to sue in contract as a third party beneficiary, rather than in tort for trespass, plaintiff primarily relies on § 107.12 in support of its contention that the promise of the contractor made to the Highway Department was made for its benefit, within the meaning of Code § 55-22. ¹ Plaintiff says that it is entitled to recover for the value of a so-called "temporary construction easement" under the provisions of the second paragraph of § 107.12 and for restoration damages under the fourth paragraph of the section. In contending that the contracting parties intended to create obligations on the defendants for the benefit of others, including plaintiff, who were not parties to the contract, plaintiff also points to numerous other sections of the contract documents contained in both the Road and Bridge Specifications and in certain "Special...