Seneca Waste Solutions, Inc. v. Sheaffer Mfg. Co., LLC

• Decision Date: 10 December 2010
• Docket Number: No. 09-0325.,09-0325.
• Citation: 791 N.W.2d 407
• Parties: SENECA WASTE SOLUTIONS, INC., Appellant, v. SHEAFFER MANUFACTURING CO., LLC and Sheaffer Pen Corporation, A Division of BIC USA Inc., Appellees.
• Court: Iowa Supreme Court

791 N.W.2d 407

SENECA WASTE SOLUTIONS, INC., Appellant,

v.SHEAFFER MANUFACTURING CO., LLC and Sheaffer Pen Corporation, A Division of BIC USA Inc., Appellees.

No. 09-0325.

Supreme Court of Iowa.

Dec. 10, 2010.

Brenda L. Myers-Maas, West Des Moines, for appellant.

Benjamin P. Roach of Nyemaster, Goode, West, Hansell & O'Brien, P.C., Des Moines, for appellees.

HECHT, Justice.

After hiring a contractor to clean and decontaminate its pen manufacturing plant, the owner of the plant refused to pay more than the "not to exceed" price designated in the cleaning contract. The contractor filed suit, claiming entitlement to a judgment in an amount exceeding the not-to-exceed contract price because the scope of the work defined in the contract was modified by the owner after the written contract was formed. The district court granted summary judgment in favor of the plant owner. On appeal, the court of appeals reversed and remanded. We granted the plant owner's application for further review.

I. Background Facts and Proceedings.

A reasonable fact finder could find the following facts from the summary judgment record. Sheaffer Manufacturing Company operated a pen manufacturing plant in Fort Madison, Iowa. After deciding to cease operations at that location, Sheaffer took bids from several environmental contractors to clean and decontaminate the plant. Seneca Waste Solutions submitted a letter bid on September 7, 2006. Sheaffer offered the contract to Seneca on a time and materials basis but specifically requested the inclusion of a not-to-exceed price of $170,000. Seneca agreed, and the agreement was finalized in a written "Contractor Agreement." The agreement included the following relevant terms:

2. Scope of work. The Contractor will furnish all of the materials and perform all of the Work as described in the first page of the letter dated September 7, 2006, and sent by Seneca Waste Solutions, LLC to Michele Pancza, BIC Consumer Products Manufacturing Co. Inc., together with the itemized worksheet used to calculate the project cost estimate, which are attached hereto and made a part of this Agreement as Exhibit A.

....

5. Contract Price and Payments. The work shall be charged on a Time and Materials Cost Basis at the rates quoted by the Contractor in Exhibit A, except that the Work shall not exceed One Hundred Seventy Thousand Dollars ($170,000.00), inclusive of all taxes, subcontractor fees, and any and all other surcharges, costs and expenses. Sheaffer will pay Contractor upon satisfactory completion of the Work and within forty-five (45) days of receipt of invoice.

....12. Complete Agreement. This Agreement, together with all exhibits attached hereto, constitutes the full and complete understanding and agreement of the parties relating to the subject matter hereof and supersedes all prior or contemporaneous understandings and agreements relating to such subject matter. Any waiver, modification or amendment of any provision of this Agreement shall be effective only if in writing signed by the parties hereto.

The "Exhibit A" referred to in the agreement included the first page of Seneca's September 7 letter bid and a "Budgetary T & M Estimate Worksheet prepared for: Sheaffer Pen Plant Closure" ("worksheet").

The first page of the September 7 letter bid provided, in relevant part, as follows:

Seneca Waste Solutions LLC, is pleased to submit to BIC/Sheaffer Pen this Budgetary T & M estimate for performing decontamination/cleaning/demolition services as per the scope of work specified in the Vendor-Provided Sheaffer Closure/Clean-up Activities Document. The project timeline is estimated at 20 working days. All vacuumed and rinsate residual and decontamination liquids shall be off loaded on site in approved containers. This project shall be performed on a Time and Materials Cost Basis Port-To-Port with an estimated cost based upon projects of similar nature, specified scope of work and onsite pre-estimate inspections. Attached is the itemized worksheet used to calculate the project cost estimate.

Summary of Fees for service:

Total-does not include Iowa State Sales Tax $143,520.67

Note: All Seneca Waste Solutions LLC Work is to be completed on a T & M basis. Any materials, supplies or services NOT utilized or performed will NOT be billed.

Please note subcontractor terms, conditions and/or work scope modifications if applicable which will affect the project time and cost.

The "Vendor-Provided Sheaffer Closure/Clean-up Activities" document ("vendor-provided document") referenced in the bid was six pages in length. It included a detailed description of the work to be done and multiple references to the parties' expectation that most of the "rinsate"-washwater collected in the cleaning process-would be transferred to Sheaffer's on-site wastewater treatment facility for treatment and disposal. The contracting parties contemplated that a limited amount of the wastewater (4000 gallons) would be transported off-site and decontaminated by a third party, Heritage Environmental Services. The worksheet prepared by Seneca and referenced in both the letter bid and the written contract is a spreadsheet containing an estimate of the materials and labor needed to complete the cleaning of the facility. The estimate included the sum of $5,186, the cost of the off-site disposal of 4000 gallons by Heritage.

After the contract was executed and about the time Seneca began its work in November 2006, Sheaffer shut down its on-site wastewater treatment facility. Sheaffer directed Seneca to dispose of all wastewater through Heritage. Seneca complied with this directive, but neither Seneca nor Sheaffer requested a written modification to the contract.

On January 5, 2007, as it neared completion of the project, Seneca contacted Michele Pancza, Sheaffer's Environmental Manager, and indicated that it "may be approaching the 'not-to-exceed' price." Pancza communicated this information toother Sheaffer managers in an email message:

I received a call late this afternoon from Seneca indicating they may be approaching the "not-to-exceed" price agreed upon by the contract. They claim the difference is in the volume of wastewater which they have had to dispose. Obviously, I did not agree to exceeding the contract price and I asked them to keep me informed as work concludes next week.

But, they may have a point. Looking at my original worksheet, I had assumed (as we all discussed) that Sheaffer would be treating much of the wastewaters from power washing, etc, on site in the wastewater treatment unit which would be the last equipment cleaned and dismantled. But, as I understand it, this was the first unit cleaned and then all wastewaters were subsequently sent off site for treatment via pumper truck.

Even though this was not our original plan, dismantling the treatment unit first may not have been a bad idea. If we had treated these additional wastewaters on sight [sic], we very well may have had more and worse exceedances of the NPDES permit limit than the two we already experienced before the shutdown of outfall 001. (And we might be looking at fines or other enforcement actions.) So, though I am not thrilled at the possibility of a higher closure/clean up cost, these potential extra cost [sic] are not so bad when put into perspective.

On January 15, 2007, Seneca's project manager sent an email message to Pancza summarizing the work left to be done and indicating that the work would be completed later that week. He noted that Seneca was "keeping an eye on the total costs of the project as we near our price cap."

Sheaffer paid Seneca $145,980.87 before receiving the final invoice. By the time Seneca completed its work under the contract, Heritage had treated and disposed of more than 18,000 gallons of wastewater, far in excess of the 4000 gallons contemplated in the estimate attached to Seneca's bid. Seneca submitted invoices to Sheaffer totaling $211,599.47. Sheaffer tendered to Seneca payment in the amount of $24,019.13 as the final payment on the contract, an amount that would have brought Sheaffer's total payments under the contract to $170,000. Seneca rejected the tender and filed suit seeking judgment for the full amount of its invoices.

Both parties moved for summary judgment. The district court granted Sheaffer's motion and dismissed Seneca's claim in its entirety, concluding Seneca was bound by the not-to-exceed price included in the contract. The court further concluded there were no written modifications to the contract which would have allowed Seneca to exceed the price cap. The court also rejected Seneca's contract claim for additional payment under the contract because Seneca's answers to interrogatories revealed the contractor's total billings for subcontracted services, including those provided by Heritage, were less than estimated by the contracting parties.

Seneca appealed, and we transferred the case to the court of appeals. The court of appeals reversed the district court, concluding that while the not-to-exceed clause was unambiguous, the summary judgment record-including documents fully integrated into the contract-engendered a genuine issue of material fact as to the amount owed by Sheaffer to Seneca under the contract. We granted Sheaffer's application for further review.

II. Scope of Review.

We review a district court's grant of a motion for summary judgmentfor errors of law. Iowa R.App. P. 6.907. Summary judgment is appropriate

if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Iowa R. Civ. P. 1.981(3). If reasonable minds can differ on how an issue should be resolved, then a genuine issue of fact exists. Walderbach v. Archdiocese of Dubuque, Inc., 730 N.W.2d 198, 199 (Iowa 2007). A fact is material "only when...