Vermillion Const. Co. v. Fidelity & Deposit Co. of Maryland

• Decision Date: 29 August 1975
• Docket Number: No. 976,976
• Citation: 526 S.W.2d 744
• Court: Texas Court of Appeals
• Parties: VERMILLION CONSTRUCTION COMPANY, Appellant, v. FIDELITY & DEPOSIT COMPANY OF MARYLAND, Appellee.

Page 744

526 S.W.2d 744

VERMILLION CONSTRUCTION COMPANY, Appellant, v. FIDELITY & DEPOSIT COMPANY OF MARYLAND, Appellee.

No. 976.

Court of Civil Appeals of Texas, Corpus Christi.

Aug. 29, 1975.

Thomas M. Andrews, Ellis, Andrews & Lawrence, Inc., Aransas Pass, Lee Mahoney, Corpus Christi, Burt Ballanfant, New Orleans, La., for appellant.

Richard A. Hall, Branscomb, Gary, Thomasson & Hall, Corpus Christi, for appellee.

OPINION

NYE, Chief Justice.

This case involves a claim by a subcontractor against the general contractor for payment of extra work performed. The subcontractor's bonding company, Fidelity & Deposit Company of Maryland brought suit originally for a declaratory judgment against various defendants, including the general contractor and its bonding company, Aetna Casualty & Surety Company, for a declaration as to the amount and validity of the claims of various defendants, including the subcontractor CRM Contractors, Inc. for which Fidelity might be liable. Fidelity sought a determination of whether there existed in fact an oral agreement between CRM and the general contractor that would require the general contractor to pay additional compensation for the extra work done by CRM.

Trial was before a jury which answered certain special issues in favor of the subcontractor CRM. The jury found that there was a subsequent oral agreement entered into between CRM and the general contractor Vermillion Construction Company (hereinafter called Vermillion) whereby Vermillion would pay CRM a reasonable price for doing the extra work. The jury found that $18,093.00 was a reasonable sum for the extra work. Vermillion and its bonding company Aetna have duly perfected their appeal to this Court.

The construction site upon which the subject of the controversy arose is known as the 'Harbor Oaks Subdivision' and is located near Rockport, Aransas County, Texas. The owner of the land was Canoe Lake Corporation. The engineer on the job was Urban Engineering. The project site was ultimately to consist of a venetian type water oriented subdivision with three (3) peninsulas or fingers of land extending from the shoreline into a salt water lake. Upon each of the peninsulas, lots were to be located around the edge with a street down the middle. Around the edge of the three peninsulas were to be placed concrete bulkheads. Between the peninsulas the water was dredged and the spoil was placed on the peninsulas. This accomplished two purposes: to deepen the water and to provide for some fill material on the subdivision site. Vermillion, who specialized in concrete bulkheads, was awarded the contract for a total bid of $292,191.06 for the water front and lot improvements.

Thereafter, Vermillion entered into a subcontract with CRM to do a portion of the work relating to the building of streets, curbs, gutters and to grade and level the lots within the subdivision. CRM's bid was $61,589.62. Prior to the subcontract being entered into between Vermillion and CRM, Mr. Charles Vermillion and Mr. Charles McGuire, (the principal owner of CRM) visited the project site in order to examine the area and to describe CRM's subcontract work. While at the project site, their discussion centered around problems which might be encountered by CRM in leveling and grading the lots. One problem discussed in particular was the necessity of obtaining sufficient dirt to raise the lots to the proper height in case some of the lots settled to an elevation below that required by the plans and specifications. The three peninsulas which were formed were made up of hydraulic fill material which in essence was dredged material. This material has a tendency to settle after being compacted. Once the fill material has become compacted, it would require additional dirt placed on top of it to bring it to the required elevation. CRM's main concern in determining its bid amount was whether the dirt removed from the excavation of streets would be sufficient to compensate any settling of the land. After reviewing the job site, McGuire and Vermillion both agreed that the dirt removed from the street would be in sufficient quantity to take care of any settling of the lots. At the pre-bid conference which was attended by Vermillion, the owner, and the engineer, the subject of the fill material was again discussed. It was anticipated that the fill material would settle to such an extent that approximately 14,000 to 16,000 cubic feet of dirt would be required to raise the lots to the required elevation. It was the consensus of those in attendance that the surplus dirt from the excavation of the streets would be sufficient to take care of the settling.

CRM then moved onto the job site and began job operations. Within a week after CRM had moved onto the job site, it was discovered by Vermillion that the required length and width of each of the peninsulas in question were too short and did not conform to the plans and specifications. Vermillion determined that additional dirt was necessary to extend the peninsulas so that they could get their machinery out far enough to install the concrete bulkheads in the water. After some of the bulkheads were placed in the water at their correct locations, they were a considerable distance from the peninsula land area. It was then discovered that it was necessary to bring in additional dirt to extend the peninsula shoreline to the bulkheads.

In order to alleviate this problem, Vermillion instructed CRM to haul the dirt which was removed from the street excavation to the end of the peninsula for the purpose of filling in and extending the length of such lots. CRM objected to this for the reason that if they wre required to use the dirt that was removed from the street excavation, they would not have sufficient dirt for leveling and grading the lots to the required elevation as required in CRM's subcontract. CRM stated that supplying this additional dirt to extend the peninsula area to the bulkheads was not a part of their job under their contract.

After some discussions, Vermillion agreed with CRM that the hauling of dirt to be placed at the end and the sides of the peninsulas was not a part of CRM's contract. Therefore, Vermillion wrote a letter to Urban Engineering concerning the dirt shortage. The letter reads in part as follows:

'As you know at the pre-bid conference, the subject, 'Settling of Fill Material', was an item of discussion. Therefore, after the conference we anticipated a settlement of fill area to the extent of approximately 14--16000 cu. yds., to be obtained from excavation of street and other areas above specified grades. We have moved this dirt and placed it, not on the lots, as stated at pre-bid conference, because of settling of material, but on the ends of the fingers where the water ranged from -8 to -9 1/2 deep at the bulkhead line, 18 -30 out from waters edge. None of the shortage of length or over cutting was mentioned at the conference. None of the other bidders anticipated it would be necessary to measure the length at the fingers or verify any other widths or lengths on the plans. We certainly didn't.'

CRM contended that an oral agreement was then reached between CRM and Vermillion whereby Vermillion agreed to pay or see to it that CRM was paid for the additional work on the cost plus profit basis. Vermillion denies that any such oral agreement was ever entered into between it and CRM. In the meantime, CRM began removing the dirt from the street excavation for the purpose of extending the peninsulas to the bulkheads. Finally, CRM sent a detailed invoice to Vermillion which included the charges for the additional extra work in the amount of $18,093.00. Vermillion refused to pay any part of the charges claiming that there never was any agreement between it and CRM to do the additional extra work.

After CRM had performed its subcontract, there were various materialmen and suppliers of CRM who were making claims for unpaid bills. It was then that Fidelity instituted this suit in the nature of a declaratory judgment against the general contractor, the various suppliers and materialmen and CRM seeking a declaration as to who was entitled to recover payments from CRM. Fidelity also sought a determination of whether there was an oral agreement to the effect that Vermillion would pay CRM for the extra dirt work in extending the peninsula areas.

After numerous stipulations by the parties, the case was tried upon the question of whether or not CRM reached an oral agreement with Vermillion for the extra work and if so, the amount of money CRM was due for such additional work.

Trial was before a jury. It found that: 1) Vermillion Construction Company required dirt from the fingers of the project to be used to extend such fingers to the bulkhead line for distances up to thirty feet and in water up to nine and a half feet in depth; 2) use of such dirt for purpose of extending the finger caused a shortage of dirt on the project which required additional dirt to be hauled in order to bring the lots to grade; 3) that at the time of the execution of the contract between CRM and Vermillion the parties thereto did not intend that the contract requirement of bringing the lots to grade might include the use of such dirt for the purpose of extending the fingers; 4) that Charles Vermillion told Charles McGuire that Vermillion Construction Company would pay for the hauling of additional dirt required to bring the lots to grade; 5) that CRM hauled the additional dirt required to bring the lots to grade; and 6) that the reasonable value of the work performed by CRM in hauling the additional dirt was $18,093.00.

Vermillion brings forward five (5) points of...