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SOUTHEASTERN HIGHWAY CONTRACTING COMPANY v. STATE HIGHWAY DEPARTMENT.
48108.
Action on contract. Lamar Superior Court. Before Judge Sosebee.
QUILLIAN, Judge.
Where, after utilizing all applicable rules of construction, the contract remained ambiguous, it was error for the trial judge to grant the defendant's motion for summary judgment predicated on a particular construction of such contract.
Southeastern Highway Contracting Company filed its complaint against the State Highway Department in the Lamar Superior Court.
The complaint alleged that on January 18, 1966, the plaintiff entered into a contract with the defendant to perform highway construction work in Lamar, Pike and Spalding Counties, being designated Project No. F-001-4 (10); that it commenced performance on January 21, 1966; that it performed each and every item of work and supplied each and every item of material required of it, and that defendant accepted the project as complete on April 6, 1970; that the defendant had fixed the value of the material and work furnished and performed by plaintiff at $2,521,786.58, had paid plaintiff $2,504,402.96, and had tendered as final payment the sum of $17,383.62 to plaintiff in exchange for a release of all claims.
Plaintiff further alleged that it disputed the final payment tendered, and provided a detailed written exception renewing the claim which is the subject of this litigation; that, consistent with its previous demands for payment, defendant was still indebted to plaintiff for 275,956 cubic yards of Unclassified Excavation at $0.27 per cubic yard or $74,508.12, plus interest, for the work of stockpiling selected borrow before placing this material on the roadway in accordance with defendant's orders; that defendant was indebted in the amount of $17,383.62 as retainage on the contract, for a total amount owing of $91,891.74. Plaintiff also alleged that all conditions precedent to plaintiff's bringing this action had been performed, waived, or occurred.
Defendant filed defensive pleadings asserting two defenses: (1) a denial of paragraph 7 of the complaint in which plaintiff had alleged that it was ordered to perform the stockpiling of borrow operation, and (2) an assertion that plaintiff had not provided timely notice of its claim.
On January 19, 1971, plaintiff and defendant entered into a stipulation, filed with the trial court, stipulating into the record the various documents making up the contract between the parties, to wit: (1) The Proposal, which includes the Special Provisions and Supplemental Specifications, which act as amendments to or modifications of the Standard Specifications of the State Highway Department of Georgia, dated May 1, 1956, and the formal written contract between the parties; (2) the highway construction engineering plans, which are a set of technical engineering plans defining the work to be performed; (3) the Standard Specifications of the State Highway Department of Georgia for the Construction of Roads and Bridges, Volumes 1 and 2 dated May 1, 1956; and (4) the Notice to Contractors.
It was further stipulated that said documents shall be "a part of the record in this case, to become a part of plaintiff's complaint" and "shall be a part of the record of this case for every purpose, including any order or judgment of the court . . ."
The above-mentioned stipulation also provided for payment to the plaintiff of the $17,383.62 which was the retainage due on the project. In connection with this payment, plaintiff agreed to waive its claim for interest on the retainage and defendant agreed that the payment in no way afflicted plaintiff's claim for $74,508.12 claimed to be owing by reason of defendant's ordering of stockpiling in the borrow pits.
Based on depositions, affidavits and other documents filed, the defendant filed a motion for summary judgment asserting there was no genuine issue as to any material fact and that the defendant was entitled to a judgment as a matter of law. After a hearing and briefs being filed by both parties, the trial judge rendered his decision granting the defendant's motion. The order recited: "In their oral arguments before the Court, the attorneys for each side conceded that this case hinged upon an interpretation of the contract between the parties."
Here follows the pertinent provisions of the contract documents on which plaintiff relies. The Standard Specifications, Section 1, "Definitions of Terms," defined the following:
"The Work: The work will be understood to mean the furnishing of all labor, materials, equipment, superintendence and other incidentals necessary or convenient to the successful completion of the Project and the carrying out of all the duties and obligations imposed by the Contract."
The State Highway Department Standard Specifications, Vol. I., May 1, 1956, provides as follows:
"Section 104, Roadway and Drainage Excavation 104.01. Description: Roadway and drainage excavation consists of excavation, removal and satisfactory disposal of all materials of whatever nature, not otherwise classified, from within the limits of The Work, including excavation for dikes; inlet, outlet and lateral drainage ditches; changing, clearing or widening waterway channels, stripping material pits and all excavation except borrow necessary for the construction, preparation, and completion of all embankments, road bed, subgrades, shoulders, slopes, side ditches, take-off ditches, surface ditches, gutters, intersections, approaches and entrances, to the alignment, grade and cross-sections specified . . .
"104.02 Classification of Excavation: Roadway and drainage excavation includes all material, of whatever nature encountered except water and other liquids, and will be paid for under the following classifications: . . . a. Unclassified Excavation: This classification consists of all Roadway and Drainage Excavation except Channel Excavation, regardless of the nature of the materials or the manner in which they are removed. It includes removal and disposal of unsuitable or unstable materials under the roadbed section, and backfilling with suitable materials."
The second paragraph of section 104.06 of the Standard Specifications provides as follows:
"Excavated material may be stockpiled and rehandled when the Engineer considers this will be to the advantage of the Department, and orders it to be done. Such material may be hauled and overhauled as the Engineer directs before it is stockpiled, and after it is reloaded from the stockpile. All such material shall be measured and counted for payment as Unclassified Excavation when it is first excavated, and this payment includes hauling up to the free haul limit before stockpiling. Overhaul before stockpiling, if there is any, will be measured and counted for payment. When the material is picked up from the stockpile and finally placed, both the excavation and the overhaul, if there is any beyond the free haul distance, will be measured and counted for payment under the appropriate Pay Items."
The Special Provisions to the contract, included in the Proposal, contained a modification of section 110 of the Standard Specifications in its entirety, and substituted the following:
"Section 110. Borrow Excavation 110.01. Description: This Item consists of excavation obtained from borrow pits located outside the Right of Way, and the placement of satisfactory materials obtained from such borrow pits, including any clearing and grubbing and stripping required unless Clearing and Grubbing and/or Stripping Excavation for borrow pits has been made a Pay Item. Borrow pits will be used only when specified by the Engineer. The material may be used for embankments, and in certain cases for subgrades, or for other purposes when so designated on the plans. This Item may also include selected borrow as further described below. Embankments, subgrades, or other construction made from borrow materials shall conform to the respective construction specifications involved. Excavation obtained from the Right of Way and/or easements adjacent to the Right of Way shall not be classified as Borrow Excavation.
"110.02. Materials: Materials obtained from borrow pits shall meet the requirements of the construction specifications for which the material is being used.
"A. Sources of Materials: Borrow materials shall be obtained from sources designated on the plans, or as otherwise provided for. When sources of materials are shown on the plans the Department does not guarantee the quantity or quality of the material so shown. . . . It will be the Contractor's responsibility to verify the quantity and quality of all pit materials.
"B. Quantity of Borrow Excavation: Borrow is an excavation item.
"110.03. Construction Methods: A. General: No Payment will be made for any work done to provide or improve access to any borrow pit, and the cost of this work shall be included in the prices bid for Borrow Excavation. The excavation equipment and methods used in borrow pits are subject to approval by the Engineer, and shall be such that the various strata, pockets, or accumulations of different types of material will be excavated and used in the correct proportions and sequence to produce Borrow having the best possible gradation, stability, and other characteristics within the range specified, and with the minimum in waste of any of the materials . . .
"C. Selected Borrow: Where borrow pits are con-posed of two or more classes of materials, and the plans require that a certain class of material be used in a designated area, it shall be the Contractor's responsibility to regulate his sequence of operations so that the class of material called for is used in the designated area . . .
"E. Waste Material: All stone, broken rock, boulders and other material not suitable for use in embankments or other work shall be disposed of by the Contractor at his own expense in the manner specified in Section 104.
"110.04 Method of Measurement: The quantity of borrow to be paid for under this Item will be measured in its original position by the method of average end areas. No allowance or payments will be made to the Contractor for any material excavated before the pits have been cross-sectioned and staked by the Engineer.
"110.05. Payment: Borrow excavation will be paid for at the Contract unit price for Borrow Excavation when the Contract includes this Item, otherwise it will be included and counted for payment as Unclassified Excavation. Selected Borrow will be paid for at the Contract unit price established for this Item. In both cases the price paid shall be full compensation for furnishing all labor, equipment, tools, superintendence and incidentals necessary to complete the work including overhaul unless overhaul for borrow excavation is set up in the contract as a separate pay item. If the Contractor is required to pay royalties for the material, the Pay Items will be listed with the words "Including Material" added. Payment will be made under:
"Item No. 110-A. Borrow Excavation (Including Material) per cubic yard.
"Item No. 110-B. Selected Borrow Excavation (including Material)----per cubic yard."
Under the terms contained in the itemized proposal the unit prices were: Unclassified excavation----$.27 per cubic yard; borrow excavation----$.32 per cubic yard; selected borrow----$.73 per cubic yard.
By virtue of the stipulation between the parties, $17,383.62 retainage with interest on that amount has been liquidated between the parties and is not now an issue in this case. The only issue is the plaintiff's right to recover $74,508.12 together with interest on that amount and court costs for the plaintiff's "work of stock piling selected borrow before placing this material on the roadway in accordance with defendant's orders."
From the proof adduced there was a conflict as to whether the plaintiff was ordered or directed by the defendant's engineer to stock pile material before placing it on the roadway. Since this is on motion for summary judgment, the evidence must be construed in favor of the party opposing the motion. Hospital Authority of Fulton County v. AGN Mfg., Inc., 124 Ga. App. 159, 160 (183 SE2d 58). Moreover, the trial judge's order indicated that the factual question was assumed and that the contractual terms only were considered. Hence, for the purposes of this appeal we considered that the plaintiff was so directed by the defendant. This leaves the question as to whether the contract provides for payment for stock piling in a situation such as here presented.
The contract specifies $.73 per cubic yard for the work of "selected borrow." It further provides that selected borrow will be paid for at the contract unit price established for this item and that "the price paid shall be full compensation for furnishing all labor, equipment, tools, superintendence, and incidentals necessary to complete the work." (From 110.05 section of the contract.) On the other hand, Section 104.06 of the contract specifies with regard to material that is stock piled: "all such material shall be measured and counted for payment as Unclassified Excavation when it is first excavated, . . . When the material is picked up from a stock pile and finally placed, both the excavation and the overhauls . . . will be measured and counted for payment under the appropriate Pay Items."
In the construction of a contract it is to be construed most strongly against the party who formulated it. State Hwy. Dept. v. Wright Contracting Co., 107 Ga. App. 758, 762 (131 SE2d 808). Here the defendant State Highway Department of Georgia as a scrivener of the contract must receive an unfavorable construction with regard to all ambiguities. "Construction of ambiguous written contracts is a matter for the court, and no jury question is raised unless after application of all applicable rules of construction the ambiguity remains." Farm Supply Co. v. Cook, 116 Ga. App. 814 (1) (159 SE2d 128); Davis v. United &c. Life Ins. Co., 215 Ga. 521 (2) (111 SE2d 488).
The key is to ascertain the contractual intention of the parties. Here, as in Western Contracting Corp. v. State Hwy. Dept., 125 Ga. App. 376, 382 (187 SE2d 690), after utilizing all reasonable applicable rules of construction the contract remains ambiguous. It is unclear whether under the terms of the contract, as we read them, the stock piling of borrow should be treated as an exclusive item under Section 110 or should first be paid for as unclassified excavation and then counted for payment under the appropriate pay item as provided in Section 104.06.
In the case sub judice where from the facts it cannot be definitely established whether the actions taken by the contractor fall within one section or the other section and the contract is ambiguous as to which section should control, it was error for the trial judge to grant the defendant's motion for summary judgment.
There is no necessity here to establish that the defendant's actions were fraudulent or such gross mistake as would necessarily imply bad faith or failure to exercise honest judgment. See State Hwy. Dept. v. W. L. Cobb Construction Co., 111 Ga. App. 822, 825 (143 SE2d 500). As we pointed out in State Hwy. Dept. v. Charles R. Shepherd, Inc., 119 Ga. App. 872, 879 (168 SE2d 922): "Questions as to compensation for work actually performed but not allowed are not finally determined by the engineer but instead are subject to arbitration and subsequent legal action." Under Section 7.18 the plaintiff requested arbitration, which the defendant declined, and was then entitled to raise the issue before the courts.
The trial judge erred in granting the defendant's motion for summary judgment.
Judgment reversed. Deen, J., concurs. Bell, C. J., concurs in the judgment only.
Arthur K. Bolton, Attorney General, Marion O. Gordon, Assistant Attorney General, Larry Evans, Marshall R. Sims, Deputy Assistant Attorneys General, for appellee.
Smith, Currie & Hancock, Robert B. Ansley, Jr., Aubrey L. Coleman, Jr., for appellant.
ARGUED APRIL 30, 1973 -- DECIDED NOVEMBER 1, 1973.
Friday May 22 13:52 EDT


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