| |
Supreme
Judicial Court of Massachusetts
SUTTON
CORPORATION
v.
METROPOLITAN DISTRICT COMMISSION.
Decided
July 16, 1996.
Before
LIACOS, C.J., and WILKINS, ABRAMS, LYNCH and GREANEY,
JJ.
LYNCH, Justice.
Sutton Corporation (Sutton) brought this action against
the Metropolitan District Commission (MDC) in April,
1982, for damages relating to site preparation work
done on the replacement of the General Lawrence Bridge
(bridge) in Medford.FN1 A master was appointed under
Mass.R.Civ.P. 53, as amended, 386 Mass. 1237 (1982),
who issued a report containing extensive findings
of fact and rulings of law. A Superior Court judge
adopted the master's report in its entirety and awarded
Sutton $255,504.61 plus $346,903.72 in interest. The
MDC appealed from the judgment; Sutton cross appealed.
The Appeals Court reversed the decision of the Superior
Court. Sutton Corp. v. Metropolitan Dist. Comm'n,
38 Mass.App.Ct. 764, 652 N.E.2d 627 (1995). We granted
Sutton's application for further appellate review
and now affirm the decision of the Superior Court.FN2
| |
FN1.
Sutton also initially brought a claim against
Vibroflotation Foundation Company. Geotechnical
Engineers, Inc.; Somerville Engineers, Inc.;
and United States Fidelity and Guaranty Company
were also parties. All of these additional parties
were dismissed prior to the determination of
the case on the merits. Sutton Corp. v. Metropolitan
Dist. Comm'n, 38 Mass.App.Ct. 764, 764 n. 1,
652 N.E.2d 627 (1995).
FN2.
We acknowledge the amicus briefs of Utility
Contractors Association of New England, Inc.;
Associated Subcontractors of Massachusetts,
Inc.; and Associated General Contractors of
Massachusetts, Inc., and Construction Industries
of Massachusetts, Inc., on behalf of the plaintiff.
|
A.
Facts. We recite the significant facts as found by
the master.FN3 Sutton bid for and was awarded a contract
with the MDC to conduct site preparation as part of
the replacement of the bridge. As part of its contract,
Sutton was responsible for the installation of sand
drains on the site of the bridge. Sutton contracted
with Vibroflotation Foundation Company for the use
of Vibroflotation's patented system of sand drain
installation utilizing the "Dutch Bailor"
method, which was one of the methods sanctioned in
the contract specifications.FN4
| |
FN3.
We agree with the Appeals Court that the parties'
objections were not sufficient to raise a challenge
to the master's subsidiary findings of fact.
See Sutton Corp. v. Metropolitan Dist. Comm'n,
supra at 765-766, 652 N.E.2d 627. Therefore,
we accept those findings "unless they are
clearly erroneous, mutually inconsistent, unwarranted
by the evidence before the master, or are otherwise
tainted by error of law. Mass.R.Civ.P. 53(h)(1),
as amended, 386 Mass. 1237 (1982)." Bishay
v. Foreign Motors Inc., 416 Mass. 1, 3 n. 4,
616 N.E.2d 96 (1993).
FN4.
The master found: "A sand drain is a vertical
hole in the ground, approximately 12 [inches]
in width and, in this instance, 90 to 100 [feet]
in depth.... The 'Dutch Bailor' or 'jetted'
method of sand drain installation involves the
use of a dropping head or bailor which pulsates
in a vertical manner as it is lowered into the
ground. A high pressure jet of water is sprayed
into the hole liquefying the earth; the earthen
materials float to the surface in suspension
as the water level in the hole rises, ultimately
flowing out onto the work area surface.... Once
the water drains from the hole, the hole is
filled with sand.... The purpose of the sand
drains is to provide a route for the moisture
that is trapped in the soil below to percolate
to the surface, thus permitting quicker compaction
of the soil."
|
Sutton
agreed to charge $3 per linear foot for a total of
141,362 linear feet of sand drains. Sutton estimated
that it would take approximately twenty minutes to
install each of 1,570 sand drains over a period of
thirty-five working days for a total cost of $424,086.
Sutton
began installing trial sand drains on April 13, 1981,
and immediately encountered a multitude of problems.
Use of the "Dutch Bailor" method, as designed,
resulted in sand drains that did not meet contract
specifications. In attempts to explain these problems,
on-site observers hypothesized that either the clay
material in one of the layers of the soil was overcompacted
or the clay in another layer contained more gravel
than anticipated. Everyone agreed that the conditions
at the site were unusual and that the resulting sand
drains were unacceptable. On April 24, 1981, after
two weeks of failed attempts to improve the situation,
Sutton stopped installing sand drains.FN5
| |
FN5.
The master found that "[t]he resident engineer
noted in his Project Diary entry for that day
as follows: 'there is a definite problem with
the existing conditions.' "
By a letter dated April 27, 1981, Sutton advised
the MDC that it had encountered a "changed
condition" within the scope of G.L. c.
30, § 39N (1994 ed.), and requested permission
to use a substitute system for compacting the
soil. Sutton conducted some successful tests
of the substitute "wick drain" system
(which was paid for by the MDC), but ultimately
the MDC declined to authorize its use.FN6 Eventually,
Sutton resumed work using a highly-modified
Dutch Bailor system. With the new system, Sutton
was able to install sand drains acceptable to
the MDC, but only at much greater cost and time
than anticipated.FN7
FN6.
The master found: "The wick or Alidrain
system involves inserting an oblong shaped piece
of plastic tubing into the ground by means of
a long mandrel. A jet spray of water is used
to assist in clearing a path through the earth
for the mandrel. The plastic tube remains in
the hole after the mandrel is withdrawn. There
are numerous pores or openings in the plastic
tube or 'wick' through which the moisture in
the soil seeps and rises to the surface, thus
performing the same function as the sand drains
in facilitating the consolidation of the soil.
The wick system was not among the drainage systems
included in the contract specifications."
FN7.
The master found that "[r]epresentatives
of the MDC ... were well aware throughout the
course of the sand drain installation of the
length of time that was involved in the installation
of the sand drains, as a result of the modifications
to the Dutch Bailor System, and that the attendant
delay would result in increased expense to Sutton."
|
As
a result of the sand drain installation, a significant
amount of "spoils material" accumulated
on the site.FN8 Because the spoils material did not
meet contract specifications for ground cover, the
MDC required Sutton either to mix it with other material
to bring it within contract specifications or to move
the material offsite and replace it with soil that
complied with the contract. Sutton asked instead to
move the material to the preload area, another portion
of the construction site. The MDC declined. Sutton
then chose to remove the spoils material and replace
it with "gravel borrow," for a total cost
of $153,094.
| |
FN8.
The spoils material was a byproduct of sand drain
installation: the jetted water used in creating
the sand drains carried soil, residue clay, dirt,
and gravel out of the hole being created to settle
elsewhere on the construction site. |
B.
Changed condition. Sutton first argues that it is
entitled to an equitable adjustment under the changed
conditions provision of the contract. The Superior
Court judge adopted the master's rulings that: (1)
there was a "changed condition" within the
meaning of G.L. c. 30, § 39N; and (2) Sutton
satisfied the procedural requirements for an equitable
adjustment claim under the "changed conditions"
provision of the contract.FN9 The MDC argues, first,
that there was no changed condition. In the alternative
it argues that, even if there was a changed condition,
Sutton's claims are barred because they fall under
the purview of the "extra work" provision
of the contract (Article XVIII) and Sutton failed
to follow the detailed procedural prerequisites for
such a claim.FN10 It was on this latter ground that
the Appeals Court reversed the decision of the Superior
Court and ruled in the MDC's favor. 38 Mass.App.Ct.
at 769, 652 N.E.2d 627.
| |
FN9.
General Laws c. 30, § 39N (1994 ed.), provides,
in relevant part: "Every [public works
construction] contract ... shall contain the
following paragraph in its entirety ...:"If,
during the progress of the work, the contractor
or the awarding authority discovers that the
actual subsurface or latent physical conditions
encountered at the site differ substantially
or materially from those shown on the plans
or indicated in the contract documents either
the contractor or the contracting authority
may request an equitable adjustment in the contract
price of the contract applying to work affected
by the differing site conditions. A request
for such an adjustment shall be in writing and
shall be delivered by the party making such
claim to the other party as soon as possible
after such conditions are discovered. Upon receipt
of such a claim from a contractor, or upon its
own initiative, the contracting authority shall
make an investigation of such physical conditions,
and, if they differ substantially or materially
from those shown on the plans or indicated in
the contract documents or from those ordinarily
encountered and generally recognized as inherent
in work of the character provided for in the
plans and contract documents and are of such
a nature as to cause an increase or decrease
in the cost of performance of the work or a
change in the construction methods required
for the performance of the work which results
in an increase or decrease in the cost of the
work, the contracting authority shall make an
equitable adjustment in the contract price and
the contract shall be modified in writing accordingly"
(emphasis added).
FN10.
Article XVIII of the contract provides:"The
Contractor shall do any work not herein otherwise
provided for, when and as ordered in writing
by the Engineer, or his agents especially thereto
authorized in writing, and shall, when requested
by the Engineer so to do, furnish itemized statements
of the cost of the work ordered and give the
Engineer access to accounts, bills and vouchers
relating thereto. If the Contractor claims compensation
for extra work not ordered as aforesaid, or
for any damage sustained, he shall, within one
week after the beginning of any such work or
of the sustaining of any such damage, make a
written statement of the nature of the work
performed or damage sustained to the Engineer,
and shall on or before the fifteenth day of
the month succeeding that in which any such
extra work shall have been done or any such
damage shall have been sustained, file with
the Engineer an itemized statement of the details
and amount of such work or damage, and unless
such statements shall be made as so required
his claim for compensation shall be forfeited
and invalid, and he shall not be entitled to
payment on account of any such work or damage.
The cost of extra work shall not include any
general or indirect overhead charges and shall
be determined by such method of compensation
as approved by the [MDC] and provided for in
the Proposal. Any equipment employed by the
Contractor for use in extra work shall be of
such amount and at such rental rates as the
Engineer approves. The determination of the
Engineer shall be final upon all questions of
the amount and value of extra work."
|
We
begin with the general rule that "contractor's
invocation of remedies available under either the
contract or applicable statutes such as G.L. c. 30,
§ 39N, must be addressed by the public agency
in good faith. Glynn v. Gloucester, 9 Mass.App.Ct.
[454, 460-461, 401 N.E.2d 886 (1980) ( Glynn I ) ]."
Glynn v. Gloucester, 21 Mass.App.Ct. 390, 397, 487
N.E.2d 230 (1986) ( Glynn II ). Here, Sutton followed
the procedures set out in § 39N (and incorporated
in the contract as part of Article XIX); once Sutton
discovered what it believed to be a changed condition,
it ceased operations and notified the MDC by letter
seeking an equitable adjustment. The MDC does not
dispute that Sutton fulfilled the procedural prerequisites
of § 39N.
The
master found that, in the course of the sand drain
installation, Sutton had experienced a "Type
II" changed condition, because "the site
conditions [were] substantially in conformance with
the contract documents, but the installation system
specified did not perform as anticipated." FN11
The Appeals Court ruled that the master's conclusion
was "incorrect as matter of law" because
it relied on the failure of the installation system
rather than the soil conditions, Sutton Corp. v. Metropolitan
Dist. Comm'n, supra at 767 n. 2, 652 N.E.2d 627, but
went on to conclude that "Sutton experienced
a changed condition under § 39N, since the [master's]
subsidiary findings support the conclusion that the
actual soil conditions differed radically from those
described in the contract plans." Id.
| |
FN11.
The standard changed conditions provision for
Federal contracts "enables the contractor
to obtain an equitable adjustment in price if
it encounters 'during the progress of the work
[1] subsurface and/or latent physical conditions
at the site materially differing from those shown
on the drawings or indicated in the specifications,
or [2] unknown physical conditions of an unusual
nature differing materially from those ordinarily
encountered and generally recognized as inhering
...' in the type of work being done." United
Contractors v. United States, 368 F.2d 585, 594
(Ct.Cl.1966). See Stock & Grove, Inc. v. United
States, 493 F.2d 629, 644-645 (Ct.Cl.1974); Charles
T. Parker Constr. Co. v. United States, 433 F.2d
771, 772 n. 1 (Ct.Cl.1970); Kaiser Indus. Corp.
v. United States, 340 F.2d 322, 324 (Ct.Cl.1965).
A claim for an equitable adjustment under the
second clause of the standard provision is commonly
referred to as a "Type II" changed condition
claim. |
We
agree that Sutton experienced a changed condition
within the meaning of the statute, but for slightly
different reasons than either the master or the Appeals
Court. The Appeals Court correctly criticizes the
master's report for improperly focusing on the performance
of the equipment, not the actual physical conditions,
as required by the statute. G.L. c. 30, § 39N.
But the Appeals Court improperly focuses on the description
of the conditions set out in the contract plans. Id.
Where the actual subsurface conditions differ substantially
from those conditions "ordinarily encountered
and generally recognized as inherent in work of the
character provided for in the plans and contract documents,"
G.L. c. 30, § 39N, there is a changed condition
under the meaning of the statute, whether or not the
conditions differ from the contract specifications.
Thus, contrary to the MDC's assertions, the Federal
"Type II" changed condition is explicitly
part of Massachusetts law, as demonstrated by both
the text of the statute and regulations promulgated
pursuant to the statute.FN12
| |
FN12.
Title 350 Code Mass.Regs. § 13.01 (1993)
provides, in relevant part:"(1) The Contractor
shall, upon encountering differing subsurface
or latent physical conditions, promptly cease
operations in the area of such conditions and
notify the Engineer, in writing, describing in
full detail the subsurface or latent physical
conditions at the site which he maintains differs
substantially or materially from those shown on
the plans or indicated in the contract documents,
or from those ordinarily encountered and generally
recognized as inherent in work of the character
provided for in the plans and contract documents.... |
"If
the [MDC] finds that such conditions, as have been
described in detail by the Contractor, do exist, and
are of such a nature as to cause an increase or decrease
in cost of performance of the work or a change in
the construction methods required for the performance
of the work which results in an increase or decrease
in the cost of the work, the [MDC] shall make an equitable
adjustment in the contract price...." (Emphasis
added.)
The master's subsidiary findings support the conclusion
that subsurface conditions at the construction site
differed substantially from those "ordinarily
encountered and generally recognized as inherent"
in the installation of sand drains by the methods
specified in the contract. G.L. c. 30, § 39N.
The difference in the conditions caused "a change
in the construction methods required for the performance
of the work which result[ed] in an increase ... in
the cost of the work," see id., a conclusion
also supported by the master's findings.FN13
| |
FN13.
We agree with the master that Sutton was not required
to conduct independent tests of the subsurface
conditions at the site. Demanding such tests would
frustrate the policy of G.L. c. 30, § 39N. |
The
Appeals Court concluded that Sutton forfeited its
claim for an equitable adjustment by failing to follow
the procedures for an extra work claim under Article
XVIII of the contract. We disagree. Section 39N mandates
that its provisions be included in public works construction
contracts. It provides a specific procedure and remedy
for the contractor encountering differing subsurface
or latent physical conditions. Article XVIII, on the
other hand, applies to "extra work," rather
than work required by the contract. The unexpected
soil condition encountered by Sutton required it to
modify its construction methods and incur significant
additional expense in order to complete the contractually
required work. Such modifications and additional expense
do not constitute "extra work" within the
meaning of Article XVIII. Cf. Lawrence-Lynch Corp.
v. Department of Envtl. Management, 392 Mass. 681,
682-683, 467 N.E.2d 838 (1984).FN14
| |
FN14.
Even if Article XVIII did apply to Sutton's
claim, "to the extent there may be conflict
between the expressed contract and the statutorily
required provision, the required provision controls."
Reynolds Bros. v. Commonwealth, 412 Mass. 1,
5, 586 N.E.2d 977 (1992).
The cases cited by the MDC are not to the contrary.
It is true that contractors seeking to recover
payment in excess of the contract price must
follow the procedures set out in the contract.
See Lawrence-Lynch Corp. v. Department of Envtl.
Management, supra at 684-685, 686, 467 N.E.2d
838; State Line Contractors, Inc. v. Commonwealth,
356 Mass. 306, 317-319, 249 N.E.2d 619 (1969);
Marinucci Bros. & Co. v. Commonwealth, 354
Mass. 141, 144-145, 235 N.E.2d 783 (1968); Chiappisi
v. Granger Contracting Co., 352 Mass. 174, 177-178,
223 N.E.2d 924 (1967); Lewis v. Commonwealth,
332 Mass. 4, 5-7, 122 N.E.2d 888 (1954); Glynn
II, supra at 394-395, 487 N.E.2d 230; Skopek
Bros. v. Webster Hous. Auth., 11 Mass.App.Ct.
947, 416 N.E.2d 1006 (1981); D. Federico Co.
v. Commonwealth, 11 Mass.App.Ct. 248, 252-253,
415 N.E.2d 855 (1981). In those cases, recovery
was denied when the contractor failed to give
timely notice of its claim to the public agency.
Without such notice, the contracting authority
was unable to monitor the additional expenses
incurred by the contractor. Here, on the contrary,
Sutton met the procedural requirements for a
claim under § 39N: it provided timely written
notice of its claim to the MDC. As the master
found, the MDC was aware throughout the project
of Sutton's additional expense.FN15 Furthermore,
there was no evidence or finding that the MDC
was prejudiced in any way by the lack of an
itemized statement of damages. Therefore, we
conclude that the MDC's refusal to pay Sutton's
additional sand drain installation expenses
was improper.FN16
FN15.
The MDC had the right, under its regulations,
to request that Sutton furnish itemized statements
of costs due to changed conditions. There is
no finding that the MDC ever made such a request.
See 350 Code Mass.Regs. § 13.01(6) (1993).
FN16.
Because we conclude that Sutton is entitled
to an equitable adjustment under § 39N,
we need not address the master's conclusion
that Sutton was excused from complying with
the itemized damages provisions of Article XVIII
because such compliance would have been futile.
Cf. D. Federico Co. v. Bedford Redevelopment
Auth., 9 Mass.App.Ct. 141, 143, 399 N.E.2d 1103
(1980).
C.
Substitution. Sutton argues that the MDC should
have approved the use of a substitute method
of soil compaction under G.L. c. 30, §
39M( b ) (1994 ed.).FN17 The master ruled that
"[t]he MDC should have permitted Sutton
to substitute the Alidrain or wick system as
an 'or equal' system pursuant to Mass.G.L. c.
30, § 39M and the failure or refusal by
the MDC to allow the substitution was a breach
of its contract with Sutton."
FN17.
General Laws c. 30, § 39M (1994 ed.), provides,
in relevant part:"( b ) Specifications
for [public works construction] contracts ...
shall be written to provide for full competition
for each item of material to be furnished under
the contract.... Every such contract shall provide
that an item equal to that named or described
in the said specifications may be furnished;
and an item shall be considered equal to the
item so named or described if (1) it is at least
equal in quality, durability, appearance, strength
and design, (2) it will perform at least equally
the function imposed by the general design for
the public work being contracted for or the
material being purchased, and (3) it conforms
substantially, even with deviations, to the
detailed requirements for the item in the said
specifications....
"( e ) The word 'material' as used in this
section shall mean and include any article,
assembly, system, or any component part thereof."
|
The master's ruling was incorrect. The wick drain system
is not equivalent to the Dutch Bailor method for purposes
of substitution under G.L. c. 30, § 39M( b ). Even
if we assume that both systems are "materials"
within the meaning of G.L. c. 30, § 39M( e ), a
proposition not free from doubt, they fail at least
two of the three requirements for a substitute. First,
the wick drain system is not "at least equal"
to the Dutch Bailor method in either appearance or design.
See G.L. c. 30, § 39M( b )(1). Sand drains are
water-jetted holes filled with sand; wick drains are
porous plastic tubes. The two types of drains are installed
by substantially different methods. In particular, the
master found that the installation of sand drains displaces
significantly more material than wick drain installation.
Second, despite the master's contrary conclusion, the
wick drain system does not meet the statutory requirement
that it "conform[ ] substantially, even with deviations,
to the detailed requirements for the item in the ...
specifications." G.L. c. 30, § 39M( b )(3).
The master found that the two systems were equal in
"quality, durability, strength and design"
and that the wick drain system "achieved the intent
of the specifications" because it performed the
same function as the jetted method. Any difference in
appearance was "irrelevant," the master found,
"because the system was installed below ground
level and not visible." The master's ultimate conclusion
on the substitution issue is clearly erroneous as a
matter of law in light of the information in the record
and mutually inconsistent with his subsidiary findings
about the nature of the two drain systems. See Melrose
Hous. Auth. v. New Hampshire Ins. Co., 402 Mass. 27,
34, 520 N.E.2d 493 (1988). The record does not support
the master's finding that the two systems were equal
in design. There are numerous subsidiary findings detailing
the differences in design. In fact, the master's implied
finding that the two systems differ in appearance itself
suggests two different designs. Appearance is a factor
set out in the statute and is not irrelevant, even where
the system will not be visible once installed. See John
F. Miller Co. v. George Fichera Constr. Corp., 7 Mass.App.Ct.
494, 496-497, 388 N.E.2d 1201 (1979) (proposed substitute
waste piping system in housing construction project
was not equal, even though it complied with State plumbing
code).
Finally,
to the extent that the finding involves the interpretation
of a statute, it is a conclusion of law and subject
to independent judicial review. Pollock v. Marshall,
391 Mass. 543, 555, 462 N.E.2d 312 (1984), and cases
cited. The contract specifications detail two permissible
methods of soil compaction: jetted sand drains and
augered sand drains. Wick drains are not included.
The differences between wick drains and the methods
in the contract are significantly more than deviations;
instead, the wick drain system is a "different
animal" entirely. John F. Miller Co. v. George
Fichera Constr. Corp., supra at 497, 388 N.E.2d 1201.
The
Appeals Court cases addressing this issue support
our conclusion. In John F. Miller Co. v. George Fichera
Constr. Corp., supra at 496-498, 388 N.E.2d 1201,
for example, a subcontractor attempted to substitute
one waste piping system for another. The proposed
system would have changed the size, number, and location
of fittings, pipes, and vents and the materials out
of which they were made. Id. at 496, 388 N.E.2d 1201.
The court agreed that the proposed system did not
meet the requirements of § 39M( b ), and was,
in fact, "a fairly fundamental change of the
design and system prescribed by the specifications."
Id. at 497, 388 N.E.2d 1201.FN18 See also Acmat Corp.
v. Daniel O'Connell's Sons, 17 Mass.App.Ct. 44, 48-49,
455 N.E.2d 652 (1983). Cf. E.A. Berman Co. v. Marlborough,
11 Mass.App.Ct. 1009, 1010, 419 N.E.2d 319 (1981).
Therefore, we conclude that, while the MDC owes Sutton
an equitable adjustment under the "changed conditions"
clause, the MDC did not breach its contract with Sutton
by failing to approve the use of the substitute wick
drain system.
| |
FN18.
Sutton seeks to distinguish the result in John
F. Miller Co. v. George Fichera Constr. Corp.,
7 Mass.App.Ct. 494, 388 N.E.2d 1201 (1979), on
the ground that a finding of the master in that
case supported the court's conclusion. We note,
however, that the court may draw its own conclusions
from the master's subsidiary findings. Mass.R.Civ.P.
53(h)(1), as amended, 386 Mass. 1237 (1982). |
D.
Spoils material. We now address the issues raised
by Sutton in its cross appeal. The first issue involves
Sutton's extra work claim for the costs of removing
and replacing spoils material. The master ruled that,
under the contract, the MDC had a right to refuse
Sutton's request to move the spoils material to the
preload area of the construction site. In addition,
the master ruled, the MDC had the right to require
Sutton to remove the spoils material and replace it
with conforming material without extra cost to the
MDC.FN19
| |
FN19.
The master relied on the following contract provisions
in making his ruling:"Contamination of material
within the drainage blanket at the sand drain
periphery shall be removed and replaced with drainage
backfill at no additional cost.... |
"The
materials jetted or augered from the holes shall be
disposed of in a manner approved by the Engineers.
The Contractor shall propose and receive approval
of such methods prior to the work. The working surface
shall be cleaned of all remaining unsuitable materials
after drain installation. Such unsuitable materials
include clay or silt lumps or organic matter which,
if left in place, would, in the opinion of the Engineer,
create 'silt spots' or zones of compressibility [or]
weakness in connection with placement of overlying
embankment materials.
"
Cleaning-Up. All ... dirt, debris and waste materials
caused in the performance of the work shall be removed
from the work areas from time to time as directed
by the Engineer...."
Sutton argues that it is entitled to the additional
costs incurred in removing the spoils material because
those costs were a direct result of the MDC's failure
to allow Sutton to use the substitute wick drain system,
citing White Spot Constr. Corp. v. Jet Spray Cooler,
Inc., 344 Mass. 632, 635, 183 N.E.2d 719 (1962). Because
we have concluded, infra, that the MDC did not breach
the contract by failing to approve the wick drain
proposal, Sutton is not entitled to damages arising
from such a failure. Furthermore, the contract clearly
provides that Sutton was not entitled to recover for
the cost of removing and replacing the spoils material.
See note 19, supra.FN20
| |
FN20.
Sutton also argues that the master erred in failing
to admit in evidence a 1983 inspector general's
report on the MDC, which includes a discussion
of the General Lawrence Bridge construction project.
According to Sutton, the document fit within the
public records exception to the hearsay rule,
see Julian v. Randazzo, 380 Mass. 391, 393, 403
N.E.2d 931 (1980), and would have provided evidence
that a bridge plan existed at the time when Sutton
was attempting to dispose of the spoils material.
Had the MDC furnished Sutton with such a plan,
the master found, the spoils material could have
been relocated to the preload area of the construction
site. Such a relocation presumably would have
permitted Sutton to incur less expense. We conclude
that the master did not abuse his discretion in
excluding the inspector general's report, which
alludes to, but does not contain a plan of the
bridge replacement design. See Enrich v. Windmere
Corp., 416 Mass. 83, 84 n. 2, 616 N.E.2d 1081
(1993). In addition, there was no finding that,
had a plan been available, the MDC would have
authorized Sutton to relocate the spoils material
to the preload area. |
E.
Damages calculation. The master found that the contract
limited Sutton's damages to those directly related
to the installation of the sand drains under the modified
Dutch Bailor method. Consequently, he rejected claims
for extended job overhead, delay, and consequential
damages. In so doing, the master relied on provisions
of the contract relating to payment for extra work,
including Article XVIII.FN21 Although we have concluded
that Article XVIII does not apply to a claim for an
equitable adjustment under § 39N, we do not thereby
automatically reject the master's approach. Where,
as here, there is no contractual or statutory provision
for an appropriate measure of damages after the wrongful
denial of an equitable adjustment, it is reasonable
to refer to the contractual damages formula concerning
payment for extra work. Indeed, the MDC's regulations
for settling equitable adjustment claims contain a
damages formula nearly identical to the one contained
in the contract and used by the master. 350 Code Mass.Regs.
§ 13.01(7)(b) (1993). We therefore uphold the
master's calculation of damages as reasonable and
in accordance with the appropriate statutory and contractual
provisions.
| |
FN21.
The contract sets out the following as one of
the acceptable formulae for calculating "payment
for extra work":"(1) Actual cost of
direct labor"(2) Actual cost of materials
(less salvage value, if any)"(3) Actual cost
of reasonable rental rates for equipment"(4)
15% of (1), (2) and (3)"(5) Actual cost of
Public Liability Property Damage and Workmen's
Compensation Insurance and payments under Federal
Social Security and Massachusetts Unemployment
Compensation acts for subject extra work"(6)
There shall be no allowance made for superintendence,
general or direct overhead charges, nor for the
use of small tools and manual equipment." |
Sutton
argues that it is entitled to a greater measure of
damages than the contract provides because, by denying
the claim for an equitable adjustment, the MDC allegedly
committed a "true breach" of the contract.FN22
We disagree. A claim for an equitable adjustment under
the changed conditions provision is a claim for relief
under the contract, and is not a "true"
breach of contract claim. United States v. Utah Constr.
& Mining Co., 384 U.S. 394, 404-405 n. 6, 86 S.Ct.
1545, 1551-1552, 16 L.Ed.2d 642 (1966). Cf. Glynn
II, supra at 397-398 (suggesting that, where agency
acts in bad faith, unjustified rejection of proper
equitable adjustment claim might constitute true breach
of contract [dictum] ). Sutton's damages, therefore,
are limited to those provided by the terms of the
contract and the statutes governing public construction
projects.
| |
FN22.
"When the contract makes provision for equitable
adjustment of particular claims, such claims may
be regarded as converted from breach of contract
claims to claims for relief under the contract."
United States v. Utah Constr. & Mining Co.,
384 U.S. 394, 404-405 n. 6, 86 S.Ct. 1545, 1552
n. 6, 16 L.Ed.2d 642 (1966). Recovery for such
claims is limited to the remedies provided in
the contract. When a particular claim falls outside
the contract, such that it is not redressable
under specific contract adjustment provisions,
it is a "true" breach of contract claim
that may justify an award of damages. Id. Glynn
v. Gloucester, 21 Mass.App.Ct. 390, 397-398, 487
N.E.2d 230 (1986). Glynn v. Gloucester, 9 Mass.App.Ct.
454, 461, 401 N.E.2d 886 (1980). |
F.
Interest. In its original appeal, the MDC protested
the Superior Court's application of prejudgment interest
at the rate of twelve per cent per annum to Sutton's
award. We now examine whether the interest award was
proper.
In
1993, the way that interest is calculated in judgments
against the Commonwealth in contract actions was changed.
G.L. c. 231, §§ 6C, as amended through St.1993,
c. 110, § 224, and 6I, inserted by St.1993, c.
110 § 225. Passed as outside sections of an appropriations
bill such interest is now calculated by reference
to the coupon issue yield equivalent of the price
for United States treasury bills, capped at ten per
cent. The sections were approved July 19, 1993, but,
by St.1993, c. 110, § 390, were made effective
July 1, 1993. The statute did not contain an emergency
preamble and did not explicitly state whether it had
retroactive effect. The Superior Court clerk entered
final judgment in the case on August 16, 1993. Interest
was calculated at twelve per cent per annum from the
date the complaint was filed (April 20, 1982) until
the date of the final judgment.
The
MDC argues that the clerk should have applied the
new, lower interest rate to the judgment. Sutton responds
that, because it was subject to referendum, the amended
interest statute did not take effect until ninety
days after its enactment, citing art. 48, The Referendum,
I, of the Amendments to the Constitution of the Commonwealth.
Because final judgment entered before the effective
date, Sutton argues, the amendment does not apply
to this action.
We
agree with Sutton that the 1993 amendment does not
apply because it became effective after final judgment
was entered. Laws which are subject to referendum
do not take effect until ninety days after passage,
unless they are designated as emergency laws. Art.
48, The Referendum, I. See Mirageas v. Massachusetts
Bay Transp. Auth., 391 Mass. 815, 819-820, 465 N.E.2d
232 (1984). The MDC argues that this law is not subject
to referendum because it "appropriates money
for the current or ordinary expenses of the commonwealth,"
which is an excluded subject under the Constitution.
Art. 48, The Referendum, III, § 2. See Mitchell
v. Secretary of Admin., 413 Mass. 330, 337, 597 N.E.2d
400 (1992); Powell v. Cole-Hersee Co., 26 Mass.App.Ct.
532, 535, 529 N.E.2d 1359 (1988). In Mirageas v. Massachusetts
Bay Transp. Auth., supra at 820, 465 N.E.2d 232, we
assumed that, barring an effective emergency preamble,
a statute changing the interest rate applied to judgments
would be subject to referendum. The only difference
between that case and the one before us is that the
1993 amendment was attached to an appropriations bill
as an outside section. We have declined to determine
the constitutionality of attaching provisions that
do not appropriate funds (outside sections) to appropriation
bills. Mitchell v. Secretary of Admin., supra, quoting
Brookline v. The Governor, 407 Mass. 377, 382, 384,
553 N.E.2d 1277 (1990). The practice, even if it is
constitutional, would not be effective to insulate
a legislative enactment from the operation of art.
48, when that enactment did not pertain to matters
excluded from the referendum process by art. 48. Here,
the provisions of the bill relating to interest in
actions against the Commonwealth are not sufficiently
related to appropriations to bring them within the
excluded matters provision of art. 48.FN23 The clerk's
calculation of interest was correct.FN24
| |
FN23.
The parties did not address, and so we do not
consider whether prejudgment interest is a proper
subject for an outside section of an appropriations
bill. See Brookline v. The Governor, 407 Mass.
377, 382 nn. 6 & 7, 553 N.E.2d 1277 (1990).
FN24. Because we conclude that the amendment took
effect after final judgment in the action, we
need not address the question of its retroactivity.
Cf. Mirageas v. Massachusetts Bay Transp. Auth.,
391 Mass. 815, 821 & n. 9, 465 N.E.2d 232
(1984); Porter v. Clerk of the Superior Court,
368 Mass. 116, 330 N.E.2d 206 (1975). |
G.
Conclusion. Accordingly, we reject both the MDC's
appeals and Sutton's cross appeals. We conclude that
Sutton is entitled to recover the full amount of the
Superior Court judgment.FN25
| |
FN25.
Sutton has not appealed from the master's ruling
in MDC's favor regarding test pile mobilization
costs and therefore we do not address that issue. |
Judgment
affirmed.
back to top
|
