State DOT construction manuals are sometimes used by project managers and inspectors to interpret the state DOT standard specifications or special provisions. This creates contract interpretation disputes such as the one decided in Thomas M. Durkin & Sons, Inc. v. Pennsylvania Department of Transportation, 742 A.2d 233 (Pa.Cmwlth. 1999).
On April 6, 1987, Durkin and the Pennsylvania Department of Transportation (Penn-DOT) entered into a contract for $53,897,182.97 for the construction of 3.375 miles of "Section 600" of I-78. The project included reconstruction and rehabilitation of local roads and construction of bridge structures and retaining walls.
PennDOT issued a notice to proceed on April 10, 1987, and set a completion date of Dec. 17, 1988.
After the work began, multiple problems arose which delayed Durkin's performance and prevented project completion within the specified time. To resolve Durkin's potential contract claims against PennDOT, the parties executed an interim settlement agreement dated Nov. 10, 1988. The agreement provided a $2.25 million lump-sum payment to resolve Durkin's claims; smaller lump-sum payments for specified construction tasks; construction of two retaining walls on a force account basis; and revised unit prices for certain contract items.
The project was completed within the extended year, but during that time additional disputes arose. On Dec. 15, 1992, Durkin identified 13 claims requiring additional compensation. After efforts to resolve them failed, Durkin filed a complaint with the Pennsylvania Board of Claims. On March 4, 1999, the board awarded Durkin $416,208.73 of the $1,534,075.48 claimed. Of the 13 claims heard by the board (Claims A-M), Durkin appealed the board's order as to Claims C and J and PennDOT appealed the board's order as to Claim G.
Stand and take it
In this column I will discuss only Claim C, which was PennDOT's refusal to pay Durkin force amount, equipment standby costs of $140,314.61 incurred when Durkin chose not to work on rain days, weekends and holidays. In refusing payment, PennDOT relied on its Project Office Manual, which specified: "[D]ay[s] on which the contractor elects not to work, standby time will not be paid." Durkin argued that the manual was never made part of the contract.
The board found that the manual was "in effect" during the project and awarded Durkin $25,662.40 of the $140,314.61 claimed.
On appeal, Durkin contended the board erred in relying on PennDOT's Project Office Manual because the document represented a Penn-DOT internal operating manual which was not made part of the contract.
Instead, Durkin asserted that compensation for equipment standby time is governed solely by Section 110.03(d)(3) of PennDOT Standard Specifications. Section 110.03(d)(3) provides:
"If machinery or equipment is not operating, compensation will be at the hourly rental rate, exclusive of operating costs."
Durkin asserted that if contract language is clear and unequivocal, its meaning must be determined solely by the contents of the contract. PennDOT argued that the board found that the Project Office Manual encapsulated the industry standard for payment of equipment standby costs and that it was within the board's discretion to define the term "standby time" as it is understood in the trade. The court disagreed.
The court reiterated the well-established principle that the meaning of an unambiguous contract can be ascertained without "any guide other than a knowledge of the simple facts on which, from the nature of language in general, its meaning depends; and a contract is not rendered ambiguous by the mere fact that the parties do not agree upon the proper construction."
Because the equipment standby contract terms were clear and did not need to be interpreted without any other guide, the court concluded that the board erred in considering PennDOT's manual in arriving at the amount of standby costs.
The board was restricted to considering only the terms of the agreement.
The court remanded the claim to the board for it to modify its findings, as necessary, to arrive at an appropriate award for standby costs consistent with credible documentation presented by Durkin to support the claim.
