Court: Massachusetts Appeals Court; July 21, 1987; Massachusetts; State Appellate Court
An appeal was initiated by subcontractor Harland against general contractor Granger and its surety, Fidelity, under the public works payment bond statute (G. L. c. 149, § 29). Harland claimed Granger failed to manage the project effectively, leading to increased expenses beyond the contract price due to delays. The court previously ruled in favor of Harland, but upon review, it was determined that the expenses sought constituted delay damages, which were barred by the terms of Harland's subcontract. As a result, the judgment against Granger and Fidelity was reversed, and the matter was remanded for recalculation of amounts owed to Harland.
Key facts include that in 1978, Granger was awarded a contract for the construction of a campus center, subcontracting electrical work to Harland for $257,760. Fidelity provided a required payment bond. Issues arose when Granger encountered ledge during excavation, leading to a change in construction sequence that disrupted Harland's work efficiency. Problems included inadequate supervision, disputes over construction quality, insufficient materials, and poor working conditions, all contributing to delays and inefficiencies in Harland's operations.
Harland's president and Granger's job superintendent communicated regularly about project progress, with the superintendent indicating intentions to file a claim for delay costs, allowing Harland to submit its damages. However, Granger went out of business before pursuing any claims. Harland asserts it completed its work by October 1980, nine months behind schedule, and claims it is owed $347,798.20 for contract work and additional labor and materials, after receiving $298,148.23, leaving a balance of $49,649.97. The trial judge ruled in favor of Harland for $44,860.97 plus interest, later amending the judgment to include $15,500 in legal fees.
The contract's Article XXIII states that the contractor is not entitled to damages for delays unless caused by the awarding authority, which is enforceable in Massachusetts. Harland contends Article XXIII does not apply since it seeks compensation for increased costs due to Granger's disorganized work schedule and failure to provide necessary winter protections. If deemed a claim for hindrances rather than delays, Harland's position aligns with case law distinguishing between delay damages (related to an idle workforce) and hindrance damages (related to project mismanagement). However, the contract's language regarding hindrances and delays encompasses Harland's claims, making them subject to the limitations of Article XXIII.
Judgments against the claimants in several cases highlight issues such as faulty plans, indecision, unreasonable delays, and failure to coordinate and control work. Harland's claims do not allege arbitrariness or intentional wrongdoing by Granger. Harland relies on the language of Article XXIII, asserting that its right to recover is established by G. L. c. 149, § 44C and § 441(3), which were in effect before the 1980 amendment. These sections required public works contracts to include provisions for weather protection and orderly work prosecution by subcontractors. Although these clauses are not in Article XXIII, they are included elsewhere in the contract.
Article XXIII includes language from G. L. c. 30, § 390, allowing Harland to seek payment for increased performance costs, provided the increase is attributed to specified causes. However, Harland does not claim under that statute, and there is no express remedy for breaches of the statutory obligations by Granger in G. L. c. 149 or the contract. Despite this, Harland could argue that Granger's failures were severe enough to excuse further performance and seek damages.
Harland's claims are based on decreased efficiency due to lack of heat, inaccurate plans, and performing work out of sequence, as found by the trial judge. The contract must be construed as a whole, with every clause given meaning to fulfill the parties' intended objectives, as emphasized in precedent cases.
The contract does not allow Harland to seek damages for hindrances or delays outside the provisions outlined in Article XXIII, which Harland accepted upon signing. The enforceability of this article negates the need to address the defendants' claim regarding the inapplicability of delay damages under the payment bond as per G. L. c. 149, 29. Granger acknowledges that Harland is owed money under the contract, guaranteed by the bond, leading to a judgment being vacated and remanded for Harland to receive $925.97, plus interest and recalculated counsel fees, without any costs of appeal awarded to either party. The total due includes the contract price of $257,760, additional costs of $41,314.20 for extra work ordered by Granger, and a deduction of $925.97, which Granger admitted was still owed. Article XXIII references G. L. c. 30, 390, which outlines conditions under which contractors or subcontractors may recover delay damages, ensuring that no modifications to existing rights between contractors and subcontractors occur. It specifies that the awarding authority can order work suspensions or delays, entitling the general contractor to contract price adjustments under certain conditions, while also imposing a requirement for timely written claims regarding such adjustments.
Article XXII of the contract incorporates the language of G. L. c. 30, § 39N, which allows for equitable adjustments in contract price if subsurface or latent physical conditions at the work site differ significantly from those depicted in contract documents. Harland's position regarding its entitlement to delay damages under § 390 is inconsistent; initially, it claims no entitlement under § 390 but later asserts that, lacking privity with the Bureau of Building Construction, it can only seek damages from the defendants, who can then recoup from Harland. Harland further argues that even if its claim is treated as a delay claim, the defendants would still qualify for relief under § 390. Additionally, Harland contends that § 390 permits claims for delay damages in situations not stemming from an order by the awarding authority to suspend work. Harland also argues that Granger is liable for defective plans and specifications based on precedents indicating a contractor’s liability to a subcontractor for obvious omissions or discrepancies in plans that the contractor relied on for bidding.
