Sherman R. Smoot Co. v. Ohio Dept. of Adm. Serv., 98AP-1497.

• Decision Date: 27 January 2000
• Docket Number: No. 98AP-1497.,98AP-1497.
• Parties: The SHERMAN R. SMOOT COMPANY OF OHIO, Appellant, v. OHIO DEPARTMENT OF ADMINISTRATIVE SERVICES, Appellee.
• Court: Ohio Court of Appeals

136 Ohio App.3d 166

736 NE 2d 69

The SHERMAN R. SMOOT COMPANY OF OHIO, Appellant, v. OHIO DEPARTMENT OF ADMINISTRATIVE SERVICES, Appellee.

No. 98AP-1497.

Court of Appeals of Ohio, Tenth District, Franklin County.

Decided January 27, 2000.

Buckingham, Doolittle & Burroughs, L.L.P., Donald B. Leach, Jr. and Kenneth A. Fisher, Jr.; John Hardin Young, for appellant.

Betty D. Montgomery, Attorney General, William C. Becker, Peter E. DeMarco and Jon C. Walden, Assistant Attorneys General, for appellee.

KENNEDY, Judge.

Plaintiff-appellant, The Sherman R. Smoot Company of Ohio ("Smoot"), appeals from a judgment of the Ohio Court of Claims awarding it $749,017.13 on its breach of contract claims against defendant-appellee, the Ohio Department of Administrative Services.

This action arises out of the state's construction of the Belmont Correctional Institution in Belmont County, Ohio. Construction of the prison was planned in several distinct phases. Although the entire project was overseen by a single project manager, the prime contracts, those for the general trades, the plumbing, the electrical, and the heating and cooling work, were bid separately for each phase of the project.

Smoot, a large construction company with expertise in concrete and masonry work, won the contracts to serve as the prime general trades contractor on phases III and IV of the project, for $8,436,600 and $3,828,000, respectively. Phase III involved the construction of seven prison support buildings, including the prison administration building, the infirmary, a segregated housing unit, and a large-food services building. Phase IV involved the construction of eight identical housing units.

The state issued a notice to proceed with phase III on September 18, 1993. The contract originally required work on phase III to be complete within four hundred twenty days, or by November 2, 1994. However, a thirty-day extension granted by the state moved the completion date to December 2, 1994. The state issued a notice to proceed with phase IV on November 26, 1993. The contract originally required work on phase IV to be complete within three hundred thirty days, or by October 23, 1994. However, the state granted a thirty-day extension on phase IV as well, pushing the completion date to November 20, 1994.

During the course of its work on both phases III and IV, Smoot sought numerous change orders for additional compensation or an extension of time from the state. Several of Smoot's change order requests were granted, but most were not. It is these ungranted change orders that form the basis of Smoot's claims against the state. While Smoot's claims will be discussed in detail under their corresponding assignments of error, at issue herein are Smoot's claims for additional compensation for (1) differing site conditions that necessitated the use of "form footings," rather than "trench footings," for the wall footings on four of the seven phase III buildings; (2) the constructive acceleration of work on phases III and IV necessitated by the state's refusal to grant Smoot a time extension for weather-related delays occurring after January 31, 1994; (3) increased costs on phase III caused by the failure of Power City Plumbing and Heating ("Power City"), the prime heating and cooling contractor on phase III, to complete its work on schedule; and (4) increased costs on phase IV caused by Power City's failure to complete its work on schedule.

Smoot filed its complaint against the state in the Court of Claims on May 15, 1996. Smoot's complaint contained claims for breach of contract, equitable adjustment, breach of warranty, negligence, unjust enrichment, and quantum meruit, and sought damages in the amount $2,200,000, plus interest and costs.

Smoot's claims against the state were tried by the court beginning on April 20, 1998. On October 22, 1998, the Court of Claims issued a decision and a judgment entry awarding Smoot $749,017.13. Specifically, the Court of Claims awarded Smoot $350,866.84 on its claims for increased costs on phase III arising out of Power City's failure to complete its work on schedule, and a total of $202,183.50 on several minor claims that are not the subject of this appeal, plus prejudgment interest of $195,966.79 on these amounts. However, the Court of Claims found for the state on Smoot's claims for differing site conditions, constructive acceleration on phases III and IV necessitated by the state's refusal to grant a time extension for weather-related delays occurring after January 31, 1994, and increased cost on phase IV arising out of Power City's failure to complete its work on schedule.

Smoot appeals from the decision and entry of the Court of Claims assigning the following errors:

Assignment of Error No. 1

"The trial court erred in denying recovery to Smoot of the additional costs it incurred on Phase III of the Project due to subsurface conditions which were materially different from those represented in the contract documents and soilboring logs provided by the owner, the Department of Administrative Services."

Assignment of Error No. 2

"The trial court erred in denying recovery to Smoot of the additional costs it incurred on the Project due to the refusal of the Department of Administrative Services to recognize contractually required, weather-related, time extensions on Phase III of the Project."

Assignment of Error No. 3

"The trial court erred in denying recovery to Smoot of the additional costs it incurred on Phase IV of the Project due to the failure of the Department of Administrative Services to properly manage Power City, one of the Phase III prime contractors, and the refusal of the Department of Administrative Services to recognize contractually required, weather-related, time extensions on Phase III of the Project."

Assignment of Error No. 4

"The trial court erred in denying recovery to Smoot of all of the additional costs it incurred on Phase III of the Project due to decreased labor productivity resulting from the failure of the Department of Administrative Services to properly manage Power City, one of the other Phase III prime contractors."

Preliminarily, the issues raised by Smoot's assignments of error involve the interpretation of contract language, as well as the review of the trial court's factual findings. Issues of contract construction and interpretation are questions of law. Latina v. Woodpath Dev. Co. (1991), 57 Ohio St.3d 212, 214, 567 N.E.2d 262, 264-265 Questions of law are subject to de novo review on appeal. Wiltberger v. Davis (1996), 110 Ohio App.3d 46, 51-52, 673 N.E.2d 628, 631-632. The trial court's findings of fact, however, are entitled to deference on appeal and will not be overturned so long as there is competent, credible evidence to support them. State v. Harris (1994), 98 Ohio App.3d 543, 546, 649 N.E.2d 7, 9.

Smoot's first assignment of error challenges the trial court's denial of its differing site conditions claim. Smoot's differing site condition claim alleges that the phase III contract indicated that the subsurface soil conditions at the phase III site would permit the wall footings for all phase III buildings to be constructed using "trench footings." In fact, the actual subsurface soil conditions encountered at the phase III job site required the wall footings for four of the seven phase III buildings to be constructed using more expensive "form footings."

"Trench footings" are constructed by excavating a trench of the same size and dimensions as the planned footing. The walls of the excavation serve as the form into which concrete is poured to form the footing. Although trench footings are economical, they can only be used where the soil is cohesive enough to permit an excavation in the precise size and shape of the planned footings. In contrast, "form footings" are constructed by excavating a hole larger than the planned footing, then placing a temporary metal or wood form in the shape of the planned footing into the hole. Concrete is then poured into the form to form the footing. Once the concrete hardens, the form is removed and the area around the footing is backfilled. Form footings are more costly than trench footings due to the extra labor required to excavate the larger holes, place and remove the forms, and backfill around the finished footer. Smoot claims to have incurred considerable expenses over and above those it included in its phase III bid as a result of having to use form footings instead of trench footings on four of the seven phase III buildings.

According to the trial testimony, Smoot first encountered soil that would not permit the use of trench footings while preparing the foundation for the segregated housing unit. While attempting to excavate for trench footings, Smoot encountered large rocks, coal and shale that made the excavation of precise trenches impossible. Smoot notified the project manager who sent a representative to view the job site. Thereafter, the "associate architect" approved a change order granting Smoot $10,000 of additional compensation for the construction of footings for the segregated housing building. Smoot subsequently encountered similar soil conditions while attempting to excavate for trench footings for the infirmary, the administration building, and the food services building. However, Smoot's requests for change orders granting additional compensation for the extra work required to construct the footings for these three building were denied.

Differing site conditions claims arise from two separate and distinct circumstances, usually referred to as Types I and II differing site conditions. H.B. Mac, Inc. v. United States (C.A.Fed., 1998), 153 F.3d 1338, 1343; Cushman, Jacobsen & Trimble, Proving and Pricing Construction Claims (2 Ed. 1996), Section 7.2. A Type I differing site condition occurs where actual site conditions differ from the conditions indicated in the contract. A Type II differing site...