Commonwealth of Virginia v. Asphalt Roads ( 1998 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Baker, Willis and Overton
Argued at Norfolk, Virginia
COMMONWEALTH OF VIRGINIA,
DEPARTMENT OF TRANSPORTATION AND
WILLIAM E. LANDSIDLE,
COMPTROLLER OF THE COMMONWEALTH
MEMORANDUM OPINION * BY
v. Record No. 1665-97-1 JUDGE JERE M. H. WILLIS, JR.
MARCH 3, 1998
ASPHALT ROADS & MATERIALS CO., INC.
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
Frederick B. Lowe, Judge
Mark S. Paullin, Assistant Attorney General
(Richard Cullen, Attorney General, on
briefs), for appellants.
Jack Rephan (Beth Hirsch Berman; Hofheimer,
Nusbaum, McPhaul & Samuels, P.C., on brief),
for appellee.
The Commonwealth of Virginia, Department of Transportation
(VDOT) appeals a judgment of the trial court granting additional
compensation to Asphalt Roads & Materials Co., Inc. (Asphalt) on
behalf of its subcontractors, Kevcor Corporation (Kevcor) and
M.M. Gunter & Sons, Inc. (Gunter). VDOT contends that the trial
court erred: (1) in awarding additional compensation for
backfill material and for disposal of unsuitable material; (2) in
awarding "undercut" compensation for excavation that was not
"undercut"; (3) in failing to limit damages for "undercut" to the
amount claimed by Asphalt; (4) in awarding damages for
*
Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
construction delays without proof of the actual costs incurred by
those delays; (5) in admitting hearsay evidence from an industry
manual to calculate equipment-related damages; and (6) in
incorrectly calculating days lost at a worksite operated by
Gunter. Asphalt contends that the trial court erred in denying
damages for unabsorbed overhead. For the reasons that follow, we
affirm in part, reverse in part, and remand.
Asphalt contracted with VDOT to widen Landstown Road in
Virginia Beach. The contract incorporated by reference the 1991
VDOT Road and Bridge Specifications (Specifications), the project
plans and drawings, the 1989 VDOT Standards, and VDOT's project
proposal.
Asphalt filed an administrative construction claim
requesting additional compensation for itself and on behalf of
Kevcor and Gunter. See Code § 33.1-386. The Commonwealth
Transportation Commissioner allowed part of the claim. Asphalt
then filed this action seeking recovery for "such portion of the
claims as were denied by the Commissioner." See Code § 33.1-387.
The trial court denied Asphalt any further recovery for itself,
but allowed further recovery on behalf of Kevcor and Gunter.
I.
Asphalt subcontracted with Kevcor to perform drainage and
water and sewer system work. During construction, a VDOT
inspector informed Kevcor that material being excavated for the
installation of the storm drainage system was unsuitable for use
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as backfill. 1 Kevcor requested additional compensation for costs
incurred in acquiring off-site and placing suitable backfill
material and in disposing of the unsuitable excavated material.
VDOT responded that according to the specifications, the bid
price for the pipes and backfill included these associated costs.
However, VDOT paid Kevcor additional compensation for backfill
material, based upon the plan dimensions and the contract unit
price for select borrow. 2 VDOT also allowed additional
compensation for disposal of the unsuitable material.
The trial court awarded Asphalt, on behalf of Kevcor,
additional compensation of $53,500.26 for backfill imported to
the site and $98,286.12 for off-site disposal of the unsuitable
excavated material. 3 VDOT contends that the contract bars
recovery of additional compensation for these items. We agree.
Our resolution of this issue turns upon a reading of the
parties' contract. Because the parties presented for our review
all of the evidence necessary to construe the contract, its
1
Specifications § 101.02 defines "backfill" as "Material
used to replace or the act of replacing material removed during
construction . . . ."
2
Specification § 101.02 defines "select borrow" as "borrow
material that has specified physical characteristics." "Borrow"
refers to suitable material from sources outside the roadway.
Id.
3
The trial court had jurisdiction over this matter "as to
such portion of the claim as was denied by the Commissioner."
Code § 33.1-387. Contrary to the assertion made by Asphalt, the
trial court had the authority to determine not only the amount of
any award, but also whether Asphalt was entitled to an award.
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meaning and effect is a question of law, capable of
interpretation by us on appeal. See Fry v. Schwarting, 4 Va.
App. 173, 180, 355 S.E.2d 342, 346 (1987).
Section 302 of the Specifications controls construction of
drainage structures. Measurement and payment for installation of
drainage structures is governed by § 302.04, which states:
Pipe shall be paid for at the contract unit
price per linear foot. This price shall
include excavating, when not a pay item;
sheeting; shoring; dewatering; disposing of
surplus and unsuitable material; backfill
material; and restoring existing surfaces.
Section 520 of the Specifications addresses installation of
water and sanitary sewer facilities. Section 520.06 states:
Water mains, water service lines, sanitary
sewer pipe, and sanitary sewer force mains
will be measured in linear feet of pipe
through all valves and fittings,
complete-in-place, and will be paid for at
the contract unit price per linear foot.
This price shall include excavating; testing;
disinfecting; backfilling; compacting;
dewatering; disposing of surplus and
unsuitable material; . . .; and restoring
property.
Asphalt argues that the foregoing provisions are ambiguous
when considered in conjunction with the other terms of the
contract and the surrounding circumstances.
Asphalt claims that Specifications §§ 302.04 and 520.06 must
be interpreted with reference to § 303.06, which governs the
measurement and payment of earthwork. Specifications § 303.06(d)
states in part that:
Furnishing and placing backfill material
. . . will be included in the price for
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excavation and will not be measured for
separate payment unless specific material is
a pay item for backfill or unless suitable
material is not available within the
construction limits. When a specific
material is a pay item, the unit of measure
of the material will be in accordance with
the unit specified in the Contract. When
suitable backfill material is not available
within the construction limits, the material
furnished and placed by the Contractor will
be paid for in accordance with Section
109.05. 4
The backfilling and unsuitable material disposal concerned in
this case were not "pay items." Specifications § 101.02 defines
"pay item" as "a specifically described unit of work for which a
price is provided in the Contract."
4
Specifications § 109.05 states in part that:
Extra work performed in accordance with the
requirements and provisions of Section 104.03
will be paid for at the unit prices or lump
sum specified in the work.
Specifications § 104.03 states that:
The Contractor shall perform unforeseen work
for which there is no price specified in the
Contract whenever it is deemed necessary or
desirable. Such work shall be performed in
accordance with these specifications and as
directed by the Engineer and will be paid for
in accordance with Section 109.05.
Asphalt argues on appeal that these sections do not
encompass "minor structure excavation," which is measured and
paid for under § 303.06. However, the record does not indicate
that Asphalt set forth that claim with particularity to the
Commissioner. Because the Commissioner had no opportunity to
deny additional compensation for minor structure excavation, the
trial court would not have jurisdiction to hear the claim. Code
§ 33.1-387.
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While acknowledging that the Commonwealth cannot be
estopped, Asphalt cites VDOT correspondence that, referencing
§ 303.06, allowed additional compensation for furnishing backfill
and disposal of unsuitable excavation material per the dimensions
provided in the plans. However, in that correspondence, VDOT
acknowledged employing a "liberal" interpretation of the terms of
the contract in order to accommodate Asphalt and to resolve the
issues. In the same correspondence, VDOT noted that the contract
price included the cost of supplying suitable material and
disposing of unsuitable material.
We find no ambiguity as to payment for backfill or disposal
of unsuitable material.
"An ambiguity exists when language admits of
being understood in more than one way or
refers to two or more things at the same
time." The fact that the parties attribute
to the same terms variant meanings does not
necessarily imply the existence of ambiguity
where there otherwise is none.
Smith v. Smith, 3 Va. App. 510, 513-14, 351 S.E.2d 593, 595
(1986) (citations omitted). Despite the variant interpretations
placed on the terms of the contract by the parties, §§ 302.04 and
520.06 state clearly and unambiguously that the unit price shall
include the cost of backfill material and disposal of surplus and
unsuitable material.
Asphalt also argues that additional compensation is due,
because the parties did not contemplate the quantity of
unsuitable material encountered at the project site. Special
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Provision Copied Notes § 104.03 provides in part that:
During the progress of the work, if
subsurface or latent physical conditions are
encountered at the site differing materially
from those indicated in the contract . . .
the party discovering such condition shall
promptly notify the other party in
writing . . . .
Upon written notification, the Engineer will
investigate the conditions, and if he/she
determines that the conditions materially
differ and cause an increase or decrease in
the cost or time required for the performance
of any work under the contract, an
adjustment, excluding anticipated profits,
will be made and the contract modified in
writing accordingly.
Cf. Chantilly Constr. Corp. v. Department of Highways & Transp.,
6 Va. App. 282, 292, 369 S.E.2d 438, 444 (1988) (stating general
rule that contractor will not be entitled to additional
compensation due to an unforeseen difficulty).
The exact quantity of unsuitable material was not known
prior to excavation. VDOT identified the presence of the
unsuitable material and allowed compensation in accordance with
the plan dimensions and terms of the contract. However, the
record does not establish that Kevcor was entitled to further
compensation for backfill or for off-site disposal of unsuitable
backfill material. Moreover, Specifications § 102.04 provides
that:
The submission of a bid will be considered
conclusive evidence that the bidder has
examined the site of the proposed work,
proposal, plans, standard drawings,
specifications, supplemental specifications,
special provisions, special provision copied
notes, and any other documents specified in
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the proposal before submitting a bid and is
satisfied as to the conditions to be
encountered in performing the work and
requirements specified in the proposal.
* * * * * * *
The submission of a bid will be considered
conclusive evidence that the bidder is
satisfied with regard to the subsurface
conditions to be encountered in the work.
Thus, the evidence failed to establish that Kevcor was
entitled to further compensation for backfill or for off-site
disposal of unsuitable backfill material. We reverse the trial
court's award of $151,786.38 to Asphalt for those items.
II.
VDOT contends that the trial court erred in awarding
Asphalt, on behalf of Kevcor, $9,400 in additional compensation
for undercut. VDOT argues that no evidence supports the finding
that undercut occurred. We agree and reverse the trial court's
award for this item.
Specifications § 303.06(a)(3) defines "undercut" as the
excavation of unsuitable material from below the lower of "the
bottom of the lower theoretical slab or culvert thickness or
below the excavation limits shown on the plans." Under familiar
principles, we review the evidence in the light most favorable to
the prevailing party and place upon the aggrieved party the
burden to show that reversal is appropriate. See Lutes v.
Alexander, 14 Va. App. 1075, 1077, 421 S.E.2d 857, 859 (1992).
The plans required the contractor to excavate one foot below
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the pipe. Thus, undercut would occur only to the extent that the
contractor excavated more than one foot below the bottom of the
pipe. Nothing in the record supports a finding that Kevcor
excavated to that level. Therefore, we reverse the award for
excavation of undercut. We need not address whether the trial
court erred in awarding Asphalt a sum greater than was sought in
its motion for judgment.
III.
VDOT next contends that the trial court erred in awarding
Asphalt damages in the amount of $138,544.88 on behalf of Gunter
and in the amount of $115,680.72 on behalf of Kevcor for five
construction delays attributable to VDOT. VDOT argues: (1) that
Asphalt failed to prove the "actual costs incurred" due to the
delays, (2) that the trial court erred in admitting hearsay
evidence, and (3) that the trial court miscalculated the number
of days that Gunter's equipment remained idle at its Holland Road
Pit. Asphalt contends that the trial court erred in denying it
damages for unabsorbed overhead costs.
A. Proof of Actual Costs
Generally, compensation is determined by computation of
actual damages. "'[I]t is sufficient if a reasonable basis of
computation is afforded.'" Washington Golf & Country Club, Inc.
v. Briggs and Brennan Developers, Inc., 198 Va. 586, 592, 95
S.E.2d 233, 237 (1956) (quotation omitted). See 5C Michie's
Jurisprudence Damages § 19 (1983). "'[A]bsolute certainty as to
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the amount of damages is not essential when the existence of a
loss has been established. The quantum may be fixed when the
facts and circumstances are such as to permit . . . an
intelligent and probable estimate thereof.'" Pebble Bldg. Co. v.
G.J. Hopkins, Inc., 223 Va. 188, 191, 288 S.E.2d 437, 438 (1982)
(quoting Wyckoff Pipe & Creosoting Co., Inc. v. Saunders, 175 Va.
512, 518-19, 9 S.E.2d 318, 321 (1940)).
Asphalt, Kevcor, and Gunter presented no evidence of actual
damages resulting from delay. See id. (upholding award for delay
damages based upon difference between estimated and actual
costs). Rather, they introduced testimony of lay witnesses
calculating equipment-related delay damages by using an industry
manual used to calculate rental values of such equipment.
Because rental calculations were not shown to constitute a
reasonable approximation of actual damages, we reverse the
judgment for damages resulting from delay and remand the case to
the trial court for determination of actual damages.
B. Hearsay
The trial court committed reversible error in admitting
passages of the "Rental Rate Blue Book for Construction
Equipment" into evidence as exhibits. This book, and its
component sections, was hearsay.
An expert witness may give testimony and render an opinion
based upon data made known to him prior to trial. If the data is
of a type normally relied upon by others in the particular field
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of expertise, that data need not be itself admissible in
evidence. Code § 8.01-401.1. To the extent called to the
attention of an expert witness by cross-examination or relied
upon by him in direct examination, statements contained in
published treatises, etc., established as reliable authority by
testimony or by stipulation, shall not be deemed hearsay and may
be read into evidence, but may not be received as exhibits. Id.
Asphalt presented only lay testimony as to the equipment
costs resulting from delay. Its witnesses were not qualified as
experts. The witnesses did not tender expert opinions based on
reference to the Blue Book. Rather, the Blue Book itself was
tendered as authoritative evidence of its contents. No testimony
or stipulation established the Blue Book as a document relied
upon by experts in the construction equipment appraisal field.
See Kern v. Commonwealth, 2 Va. App. 84, 87, 341 S.E.2d 397, 399
(1986) (expert jewelry appraiser relied upon unidentified market
data brochure which was not in evidence and testified that its
use was standard in appraisal profession). As an out-of-court
statement offered to prove the truth of the matter asserted, the
Blue Book was hearsay. See Papuchis v. Commonwealth, 15 Va. App.
281, 422 S.E.2d 419 (1992) (reversing gambling conviction upon
error in admitting into evidence sports publications relied upon
by expert). The Blue Book fell into no recognized exception to
the hearsay rule and was, therefore, inadmissible. Cf. Code
§ 8.01-401.1 (permitting admission of learned treatises upon
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direct examination of an expert witness); Code § 8.01-419.1
(National Automobile Dealers' Association books admissible to
prove the fair market value of an automobile).
Asphalt relied upon the Blue Book to prove damages.
"[A]dmission of hearsay expert opinion
without the testing safeguard of
cross-examination is fraught with
overwhelming unfairness to the opposing
party. No litigant in our judicial system is
required to contend with the opinions of
absent 'experts' whose qualifications have
not been established to the satisfaction of
the court, whose demeanor cannot be observed
by the trier of fact, and whose
pronouncements are immune from
cross-examination."
CSX Transportation, Inc. v. Casale, 247 Va. 180, 183, 441 S.E.2d
212, 214 (1994) (quoting McMunn v. Tatum, 237 Va. 558, 566, 379
S.E.2d 908, 912 (1989)). Because it was used to prove the amount
of actual damages, admittance of the Blue Book into evidence was
both material and prejudicial to VDOT's interests. See id. We
reverse this ruling.
C. Calculation of Days of Delay
VDOT contends that the trial court erred in calculating the
number of days Gunter's equipment sat idle at the Holland Road
Pit because of delay. 5 We agree.
The days for which delay compensation may be allowed must be
5
While the Commonwealth failed to argue specifically that
the length of the delay was incorrectly calculated, the record
shows that the Commonwealth introduced evidence concerning the
length of the delay and laid that aspect of the damages award
before the trial court.
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days on which the equipment would otherwise have been used. The
evidence established that Gunter normally would not have worked
on Sundays, holidays and, possibly, Saturdays. Therefore, in
calculating the number of days for which an award of compensation
could be made, the trial court should have taken into account the
non-working days embraced within the applicable time period. The
trial court failed to do so. Accordingly, we reverse its
calculation of days for which compensation might be allowed and
remand that issue for recalculation.
D. Unabsorbed Overhead Costs
Asphalt contends that the trial court should have used the
Eichleay formula to calculate its unabsorbed overhead damages.
We need not address the merits or application of the
Eichleay formula to determine the amount of unabsorbed overhead
during a delay. The trial court considered the Eichleay formula
and concluded that the evidence did not support its reliability
to determine a damage award in this case. The record supports
this conclusion. Finding no error, we affirm this ruling of the
trial court.
Affirmed in part,
reversed in part,
and remanded.
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