A case decided in Florida last week saw a court side with a site development contractor over a $33.000 dispute based on whether the original contract included certain demolition and replacement of portions of a parking lot due to an imprecise description of work. The court’s ruling does a great job of walking through many of the consideration general contractors and subcontractors need to take into account when starting a project.
In F.H. Paschen, S.N. Niels & Associates v. B&B Site Development, a general contractor and site development subcontractor entered into an agreement regarding demolition and paving work for a parking lot at a post office located in Okeechobee, Florida. The bid documents provided by the general contractor “interchangeably used the terms ‘pavement,’ ‘cement concrete pavement,’ ‘existing Portland cement concrete pavement,’ and ‘existing PCC pavement’ to describe what was to be demolished and removed.” While most of the parking lot was laid with portland cement, an eastern driveway was asphalt, which the subcontractor determined to be only a few years old and in good condition.
Based on this review of the site, the subcontractor excluded the eastern driveway from its bid, and submitted a proposal for 9,000 square yards of concrete work on the balance of the property. The general contractor failed to walk the site to verify the area of concrete to be demolished and incorrectly assumed that the entire parking lot area was concrete. This incorrect assumption made its way into the general contractor’s contract with the post office, which included removal of the total area of the pavement in the parking lot.
Ultimately the subcontractor and general contractor entered into a contract for the replacement of the parking lot at the post office. Near the end of the project a dispute arose as the general contractor stated that the eastern driveway needed to be replaced as part of the project, while the subcontractor indicated that it did not include the eastern driveway in its scope of work. The subcontractor provided a quote of approximately $33,000.00 to remove and replace the eastern driveway to match the balance of the work that had been completed.
This dispute was submitted to the project architect, who concluded that the eastern driveway was included in the bidding documents and that this area was included in the subcontractor’s scope of work. The subcontractor proceeded with the work to avoid delaying the project, but did so under protest. At the conclusion of the project, the subcontractor submitted a request for the additional $33,000, which the general contractor denied. The subcontractor then sued the general contractor for breach of contract, unjust enrichment, and quantum meruit. Following cross motions for summary judgment, the trial court entered judgment in favor of the subcontractor on all three counts. The general contractor appealed.
On appeal, the Fourth District Court of appeal agreed with the trial court that the subcontractor was owed the additional money, but not on all the bases decided by the trial court. In reaching this conclusion, the appellate court did a great job of walking through 4 issues.
First, the appellate court determined that the subcontract agreement was limited only to concrete removal, and therefore did not include the asphalt eastern driveway. In reaching this conclusion, the court analyzed the scope of work as follows:
To be sure, the subcontract contained general titles and headings such as “Replace Pavement” and “Replace Parking Area,” and set forth a general Summary of Work stating that “[t]he existing pavement should be demolished.” However, the specific provisions governing the subcontract's scope of work control over the headings and other general language in the subcontract. In multiple places of the subcontract, the specific description of the scope of work called for the Sub to replace “the existing concrete pavement” or “the existing Portland cement concrete pavement.” The subcontract even specified the thickness of the concrete to be removed, but provided no similar specification for the existing asphalt.
While Schedule A stated that the work was “not limited to” the enumerated tasks, including disposal of the existing concrete pavement, the phrase “not limited to” modified the phrase “Sitework . . . necessary to complete the project in accordance with the contract plans and specifications.” Thus, although the phrase “not limited to” implies that there may be some unenumerated tasks that are necessary to complete the project, the phrase cannot be used to expand the required tasks beyond the “contract plans and specifications.”
The subcontract also required the subcontractor to rely on its own site examination in preparing the bid, which bolstered the appellate court’s conclusion.
Second, the appellate court concluded that the architect’s determination that the scope of work included the eastern driveway was not determinative of that issue, despite contract provisions claiming this to be the case. The court started by citing several court decisions holding that arbitrary or unsupported decisions of architects are not final and binding resolutions of disputes and cannot be used to rewrite contracts. Further the court concluded that the architect’s determination was that the general contractor had included the eastern driveway in its bid, not that the subcontractor had included it in its bid. Thus, the architect’s decision could not be used to rewrite the subcontract.
Third, the appellate court determined that despite all of this, the general contractor did not actually breach the contract with the subcontractor. While the subcontractor performed the extra work, it did so without a written change order and did so without an award of additional compensation from the post office. Since these were the only circumstances where the general contractor would have been required to pay the subcontractor for the eastern driveway work under the subcontract, the court found there was no breach of contract.
Finally, despite that, the appellate court did determine that the subcontractor was entitled to compensation under its claims of unjust enrichment and quantum meruit. While in many cases courts will decline to award damages under these claims where an express contract exists, the court also acknowledged that “Florida has long recognized that an implied contract may arise out of an express contract where a contractor or subcontractor performs “extras” not covered by the original contract.” Here the court concluded that the subcontractor was entitled to payment because the general contractor had benefited from the additional work while not paying for it.
The appellate court remanded the case for the trial court to determine the reasonable value of the extra services provided by the subcontractor.
The key takeaway from this case should be how to avoid ending up like this. General contractors and subcontractors alike should walk jobsites and openly communicate about discrepancies they find between the scope of work, bid documents, and site conditions. Had that happened here, the eastern driveway issues could have been resolved before the contracts were even awarded.