Better Roads Digital Magazine
Issue link: https://read.dmtmag.com/i/102915
of the amount sought by Southern). The court based correspondence regarding delays to its work and inits award on Note 15, the actual production rate of creased costs. Southern took the position it would not Southern's forces after July 1, 2007 (as opposed to be responsible for any liquidated damages charged to Southern's less-productive and more-costly work prior English for the delays. Southern informed English that to July 1, 2007), and agreed-upon labor and equipit was keeping detailed records of all items, quantities ment rates between Southern, English and NCDOT. and costs incurred since July 1, 2007, and would seek English and the sureties appealed. an equitable adjustment in unit prices. In its second ruling in 2012, the appellate court held On September 23, 2009, Southern filed suit against there was competent evidence to support the award of English and the payment bond sureties, claiming $194,000 to Southern. The court found that Southern's $194,941.39 under the equitable adjustment clause itemized damages, in spreadfor increased costs of materisheet format, was adequate als, labor and equipment to support its claimed damincurred after the schedIn its first ruling in 2011, the court ages. The spreadsheet inuled completion date of of appeals overturned the trial cluded detailed lists of the July 1, 2007. After a bench court, finding that Paragraph 7 and amount of materials used, trial, the trial court denied Note 15 allocated different risks ... the unit cost of the materiSouthern's requested reThe court found the plain language als, when the materials were lief, holding that English expended, the amount and was not required to pay of Note 15 [equitable adjustment rate of man-hours utilized, for an equitable adjustclause] allowed for an equitable and on which dates. As a ment since English lacked adjustment, and the language of result, the appeals court a remedy against APAC Paragraph 7 [no damages for delay determined that Southern (to recover an adjustment clause] did not negate it. properly used July 1, 2007, in unit prices past the its start date, the calculation original completion date). represented its actual costs, Southern appealed. and the calculation properly included only material, In its first ruling in 2011, the court of appeals overlabor and costs. turned the trial court, finding that Paragraph 7 and The Southern Seeding case illustrates the importance Note 15 allocated different risks. Specifically, the court of reading and understanding all contract provisions, held that relief under Paragraph 7 (no damages for including provisions that appear to conflict. Where delay clause) was limited to the extent English was possible, most courts will attempt to harmonize a compensated by APAC or NCDOT for project delays. contract to give meaning to all provisions. In addition, In contrast, Note 15 (equitable adjustment clause) did this case also shows the importance of thoroughly not contain this limitation. The court found the plain documenting increased costs. Here, Southern's detailed language of Note 15 allowed for an equitable adjustdocumentation of its increased costs — in spreadsheet ment, and the language of Paragraph 7 did not negate format — provided the seeds that resulted in an award it. Accordingly, and reading the contract as a whole, of 100 percent of the amount sought by Southern. the appeals court allowed Southern an equitable adjustment for its increased costs. On remand, the trial court found that Southern Brian Morrow is a partner in Newmeyer & Dillion LLP, a was entitled to an equitable adjustment for its inCalifornia law firm. He is also a licensed California civil engicreased actual costs after July 1, 2007, in the amount neer, and specializes in construction law, including road and heavy of $194,941.39 plus interest until paid (100 percent construction. Contact at brian.morrow@ndlf.com Better Roads January 2013 23b