Steenberg Construction Co. v. Prepakt Concrete Co.

• Decision Date: 06 September 1967
• Docket Number: No. 9009.,9009.
• Citation: 381 F.2d 768
• Parties: STEENBERG CONSTRUCTION COMPANY, a corporation, and the Travelers Indemnity Company of Hartford, Connecticut, a corporation, Appellants, v. The PREPAKT CONCRETE COMPANY, a corporation, Insurance Company of North America, a corporation, and the U. S. A. for the Use and Benefit of the Prepakt Concrete Company, Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

381 F.2d 768 (1967)

STEENBERG CONSTRUCTION COMPANY, a corporation, and the Travelers Indemnity Company of Hartford, Connecticut, a corporation, Appellants, v. The PREPAKT CONCRETE COMPANY, a corporation, Insurance Company of North America, a corporation, and the U. S. A. for the Use and Benefit of the Prepakt Concrete Company, Appellees.

No. 9009.

United States Court of Appeals Tenth Circuit.

August 3, 1967.

Rehearing Denied September 6, 1967.

Ray G. Martineau and C. Keith Rooker, Salt Lake City, Utah (Clifford L. Ashton, of Van Cott, Bagley, Cornwall & McCarthy, Salt Lake City, Utah, with them on brief), for appellant.

Bryce E. Roe, Salt Lake City, Utah (Stuart G. Oles, of Jones, Roe, Jerman & Dart, Salt Lake City, Utah, Allen, DeGarmo & Leedy, Seattle, Wash., with him on brief), for appellees.

Before MURRAH, Chief Judge, and PICKETT and BREITENSTEIN, Circuit Judges.

MURRAH, Chief Judge.

This suit is between a government prime contractor on a Utah dam project and a subcontractor for the drilling and grouting work on the dam foundation. The claim is for breach of the subcontract. The defense is that the standard subcontract which the parties signed, never became operative, but if so, the subcontractor excusably abandoned it for failure of the contractor to do work prerequisite to the orderly performance of the subcontract. The cross-claim was cast under the Miller Act, Title 40 U.S.C. § 270a et seq., for the value of labor and materials furnished by the subcontractor in the prosecution of the prime contract. The statutory sureties are parties according to their respective interests.

This appeal is from a judgment holding that neither party was liable to the other for breach of contract, but that the subcontractor justifiably abandoned the contract and was, therefore, entitled to a judgment on its cross-claim against the contractor and its surety. We affirm the judgment (with slight modifications) but for reasons different than those inhering in the trial court's findings and conclusions.

The trial court's judgment rests upon the following basic facts: In June 1963, Steenberg contracted with the Bureau of Reclamation for the construction of an earthen dam on Lost Creek in Utah. The contract specified the excavation to bedrock of what is called a "core trench" 30 feet wide running the entire length of the dam, and a "grout trench" 3 feet deep and 3 feet wide in the center of the bedrock bottom of the core trench. The grout trench was then to be filled with concrete, and pipes placed upright according to a prescribed pattern. Prepakt, the subcontractor, agreed to drill through these upright pipes, through the concrete grout cap into the bedrock and render it impervious by pressure-pumping grouting material through the drill holes into the cracks and crevices of the bedrock. The core trench was then to be backfilled and covered with impervious material. The progress schedule prepared by the contractor and submitted to the Bureau contemplated that the stream would be diverted to the east side of the canyon for the excavation, drilling, grouting and filling of that portion of the core trench on the west side of the canyon, and that this part of the work would be completed between September 1 and November 15, 1963, and that further drilling, grouting and filling would then be suspended for the winter and resumed in the spring, when the stream would be rediverted to the west side so that the same operations could be accomplished on the east side of the canyon. The subcontract mailed to Prepakt provided that the subcontract work was to be performed in "approximate accord with approved progress schedule presently scheduled for approximately September 1963." Upon receipt of the subcontract, Prepakt added the following typewritten words: "Progress schedule date to be mutually agreed upon in writing * * *." As thus modified the executed contract was returned to the contractor with a covering letter calling attention to the typewritten changes. The standard form subcontract obligated the subcontractor "To perform and coordinate his work with that of the Contractor and other subcontractors to the best interest of the project as a whole as directed by the Contractor * * To be bound to the Contractor by the terms of the General Contract, to conform to and comply with all of the terms of the General Contract and to assume toward the Contractor all of the duties and obligations that the Contractor assumes in the General Contract toward the Owner insofar as they are applicable to this Sub-contract unless changed in this Sub-contract."

The prime contract pertinently provided "The Contractor shall promptly, and before such conditions are disturbed, notify the Contracting Officer in writing of: (a) subsurface or latent physical conditions at the site differing materially from those indicated in this contract, or (b) unknown physical conditions at the site, of an unusual nature, differing materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in this contract. * * * Any claim of the Contractor for adjustment hereunder shall not be allowed unless he has given notice as above required; or unless the Contracting Officer grants a further period of time before the date of final payment under the contract. * * *"

The subcontract was thus integrated with the general contract, each of the parties agreeing to coordinate his work toward the performance of the obligations of the general contract.

Soon after the execution of the subcontract and about the middle of August 1963, representatives of Steenberg and Prepakt met at the dam site to get acquainted and to discuss the performance of the subcontract as an integral part of the prime contract. Prepakt's attention was called to a bar graph or progress schedule showing the work to be accomplished before the contemplated winter shutdown. It seemed to be understood in the conversations that there would be some delay in starting the drilling and grouting operations, but the parties discussed and understood the necessity of completing these operations before the scheduled winter shutdown about November 15. And, it seemed also understood that Prepakt would have sufficient time to perform the grouting and drilling operations between the middle of September and the 15th of November. The parties did not agree in writing on a progress schedule but Prepakt undertook to do the work under the subcontract in accordance with the progress schedule indicated on the bar graph. Prepakt mobilized its equipment at the dam site about the 1st of September and made ready to commence operations about September 15. Pursuant to a call from Steenberg, a Prepakt crew was sent to the site about September 21, but the grout cap was not ready for drilling and grouting operations and having nothing to do, the crew moved out about October 5.

The progress schedule prepared by the contractor and shown to the subcontractor at the August meeting was based upon the Bureau engineers' estimate that the maximum depth of the excavation of the core trench to bedrock would be approximately 28 feet. When, however, the excavation got under way sometime in September, it was soon discovered that the estimates of the depth to bedrock were erroneous; that instead it would be necessary to excavate approximately 68 feet to bedrock in some areas of the core trench.

Because of the specified sloping sides of the core trench, the additional depth of the excavation increased the width of the core trench at surface from approximately 120 feet to approximately 240 feet. This, of course, required restaking of the core trench by the Bureau engineers and it became apparent that the completion of the core trench would be delayed and that a revision of the progress schedule would be necessary. The contractor so notified the contracting officer who was undobtedly aware of the changed condition. The excavation of the core trench at the lower levels also created unanticipated water problems. A revised progress schedule reflecting the delay caused by the additional excavation was submitted to the Bureau about November 15.

In these circumstances representatives of Steenberg and Prepakt met again at the dam site on November 6 to discuss the problems wrought by the delay. Revision of the work schedule was discussed; the condition of the core trench and grout cap was surveyed; spring flooding and other water problems were also discussed. The bottom of the core trench had not been reached and the necessity for a revised schedule was recognized, though Steenberg did not inform Prepakt that a winter shutdown had been abandoned and a revised schedule had been or was about to be submitted to the Bureau.

After viewing conditions at the dam site, Prepakt reminded Steenberg that "We didn't have anything in our estimate or in our contract for winter work * * We had anticipated going by that schedule and being far enough ahead that we could close that job down as the progress chart shows * * *" but that "* * cold weather was coming on us and we had already spent the amount of money we had waiting and moving in and out and I felt we should have more money if they expected us to continue on through the winter weather." The contractor did not agree to a revision of the contract price, but promised "to help in every way we can", including shelter, heat, lights and hot water; "Anything you want * * * because it is going...