XL Specialty Ins. Co. v. Commonwealth, Massachusetts Highway Dept.

• Decision Date: 03 January 2013
• Docket Number: 08-4093
• Parties: XL SPECIALTY INSURANCE COMPANY v. The COMMONWEALTH of Massachusetts, Massachusetts Highway Department.
• Court: Massachusetts Superior Court

XL SPECIALTY INSURANCE COMPANY v. The COMMONWEALTH of Massachusetts, Massachusetts Highway Department.

No. 08-4093

Superior Court of Massachusetts, Suffolk

January 3, 2013

FINDINGS OF FACT, RULINGS OF LAW, AND ORDER FOR JUDGMENT

THOMAS P. BILLINGS, Associate Justice.

For want of a nail the shoe was lost;

For want of a shoe the horse was lost;

For want of a horse the battle was lost;

For the failure of battle the kingdom was lost —

All for the want of a horse-shoe nail. ^[1]

Disregard of seemingly small details can have costly consequences. At issue in this case is whether, and in what amount, the plaintiff (" XL"), as surety and subrogee of general contractor Roads Corporation (" Roads") may recover damages incurred as a result of a two-year delay in a roadway reconstruction and bridge replacement project at Winter Street, Waltham. The delay resulted from MassHighway's failure to arrange and accomplish certain utility relocation work that it knew needed to happen before Roads could begin construction. After it mobilized and while it was still waiting for the utilities, Roads failed. XL stepped into its shoes, ultimately completing the project successfully with another contractor, but at significant cost.

XL seeks compensation over and above the contract price, in the amount of $5, 215, 513. It is entitled to most of this amount, but not all. For the reasons that follow, judgment is to enter in favor of XL, in the principal amount of $3, 853 453.

FINDINGS OF FACT

The case was tried to me, jury-waived, over nine days between September 5 and September 17, 2012. There were ten witnesses and 727 exhibits. Based on the credible evidence and the reasonable inferences therefrom, I find the following facts.^[2]

A. The Parties.

1. XL is a Delaware corporation licensed to issue construction contract surety bonds in Massachusetts. It issued both performance and payment bonds on behalf of Roads for the project in question.

2. Until 2009, the entity responsible for administering most public road and bridge construction projects in Massachusetts was known as the Massachusetts Highway Department (" MassHighway"). On November 1, 2009, pursuant to G.L. c 6C, MassHighway and several other agencies were integrated into the Massachusetts Department of Transportation (" MassDOT").

3. MassDOT is a department of the Commonwealth, organized and existing pursuant to G.L. c. 16, § 1. It is, as MassHighway was, headquartered in the Transportation Building at Ten Park Plaza, Boston and has various district offices throughout the Commonwealth. The project at issue in this case fell within the jurisdiction of the District 4 office, located at 519 Appleton Street, Arlington.

B. The Winter Street Project and Contract.

4. In late summer 2004, MassHighway solicited bids for the construction of a project called " Roadway Reconstruction and Bridge Replacement (W-04-025) on Winter Street at Interstate 95, Federal Aid project No BR-001S(072)" (the " Winter Street project"). The project was to replace a four-lane bridge carrying Winter Street, Waltham over Interstate 95 with a new, seven-lane bridge, and to construct a new collector/distributor roadway at the interchange for I-95 northbound. Because the bridge was critical to both vehicular traffic over it ^[3] and utility lines that had, over the years, been installed under it, all understood that the work must be completed without interruption to either, as further described below.

5. The project was initially proposed by the City of Waltham. The City retained Rizzo Associates to develop the design in tandem with a structural engineering firm, Edwards and Kelcey. The design work began in August 1999.

6. At some later date, the project was approved for state funding and ultimately, for federal funding, with an 80/20 federal/state funding ratio.

7. MassHighway and the City formalized their relationship for the project's actual construction in a " City/Town Agreement" dated December, 2004. (Ex. 12) Under the agreement, MassHighway agreed to put the project out to bid; to construct, oversee and administer it; and to participate in its cost up to a 10% overrun; the City agreed to pay anything over this. Rizzo would do the design, with the City taking responsibility for any costs caused by errors in the plans or by extras ordered by the City.

8. Subject to the requirements of the public works procurement law (Chapter 30 of the General Laws), MassDOT was in sole control of the procurement process, including the bid solicitation, the award and execution of a contract, and the issuance of a Notice to Proceed.

9. MassHighway advertised the project on or about June 26, 2004. Sealed bids were opened on or about September 21, 2004.

10. There were several bidders, whose bids were relatively close in price. Roads was deemed the lowest responsible bidder and was awarded the contract on or about November 23, 2004.

11. Upon notice of the award, Roads was required to execute a contract within 14 days, on pain of forfeiting 5% of the bid amount (about $950, 000). Roads and MassHighway executed the contract on or about December 1, 2004. The contract price was $19, 055, 914.

12. The contract specified the construction sequence and required that the construction proceed in several phases. In its simplest form, the schedule was as follows:

a. In Phase I, a new two-lane bridge would be constructed abutting, and immediately to the north of, the existing four-lane bridge. Just to the north of and abutting the new bridge, a temporary two-lane bridge (known in the trade as a " Bailey" bridge) would be constructed.

b. In Phase II, the existing four-lane bridge would be demolished and replaced with a new structure wide enough to handle five lanes of traffic. Vehicular traffic would be diverted to the structures erected in Phase I during the Phase II work.

c. The Bailey bridge would then come down, and what was left— all new construction— would carry four lanes eastbound and three lanes westbound.

13. The contract (Ex. 1A, six pages from the end, at Clause 2, last sentence) specifically incorporated MassHighway's Standard Specifications for Highways and Bridges— long known as the " Blue Book" ^[4]— of which the 1995 edition (Ex. 1B) and the 2002 supplement (Ex. 1C) constituted the then-current version. The Standard Specifications included the following provisions (among many others).

14. The project's Engineer was to be " [t]he Chief Engineer of the Department acting directly or through an authorized representative, such representative acting within the scope of the particular duties entrusted to him/her." (Ex. 1C, sec.1.19) Under section 5.01,

The Engineer shall decide all questions which may arise as to the interpretation of the plans and specifications, and the Engineer may alter, adjust and approve same when necessary; all questions which may arise as to the quality, quantity, value and acceptability of materials furnished or to be furnished and work performed or to be performed; all questions which may arise as to the progress of the work and need for and manner of correcting same; and also the need for and terms of delays and suspensions; all questions relating to the need for and terms of extra work; all questions relating to the supervision, control and direction of all work on the site and the use thereof; [and] all questions as to the acceptable fulfillment of the Contract on the part of the Contractor.

The Engineer was also responsible for " approval ... of supplemental plans or detail drawings, " including " shop drawings ... submitted to the Department for review and approval." (§ 5.02)

15. The Contractor was to cooperate with, and take direction from, the Engineer.

The Contractor shall submit, to and for the comments of the Engineer, a schedule of operations within ten days after the mailing of the executed contract to the Contractor. The schedule shall show the proposed methods of construction and sequence of work and the time the Contractor proposes to complete the various items of work within the time specified in the Contract.... (§ 8.02)

The Contractor shall commence work within 15 days after the mailing of the executed Contract to the Contractor unless otherwise ordered in writing by the Engineer, and the Contractor shall thereafter prosecute the work at such places and in such order as the Engineer may from time to time prescribe.... (§ 8.03)

The Contractor shall so carry on his/her work under the direction of the Engineer that Public Service Corporations, or Municipal Departments may enter on the work to make changes in their structures or to place new structures and connections therewith without interference, and the Contractor shall have no claim for, or on account of any delay which may be due to or result from said work of Public Service Corporations or Municipal Departments. No allowance of any kind will be made except as provided in Subsection 8.10. Nothing contained herein shall be construed to hold the Contractor responsible for any acts or omissions by such Public Service Corporations or Municipal Departments. (§ 5.05)

16. Subsection 8.05, titled " Claim for Delay or Suspension of the Work, " read as follows:

The Contractor hereby agrees that he/she shall have no claim for damages of any kind on account of any delay in commencement of the work or any suspension of any portion thereof, except as hereinafter provided.

Provided, however, that if the Commission in their judgment shall determine that the performance of all or any major portion of the work is suspended, delayed, or interrupted for an unreasonable period of time by an act of the Department in the administration of the Contract, or by the Department's failure to act as required by the Contract, within the time specified by the Contract

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