July 5, 2017

A recent case in R.I. limns use of “incidental” in work descriptions

Highway departments use the term “incidental” to describe work that, while required, is not subject to separate payment and therefore must be accounted for in the price of other related work.

There are few court cases involving disputes over “incidental,” because the term is so widely used and to say that some task is required, but shall be accounted for within the cost of a specific bid item, is hardly ambiguous. The contractor and subcontractor in a recent Rhode Island case disagreed.

High Steel Structures, Inc. v. Cardi Corporation, et al., 152 A.3d 439 (R.I. 2017) involved a contract with the State of Rhode Island Department of Administration (RIDA) for construction of a new interchange, which included new steel tub-girder bridges. The bid form included Item No. 312, Grade 50 Steel, which covered the girders. The drawings also required temporary Grade 36 steel bracing, but no separate bid item was provided for that work.

At a pre-bid conference, one bidder asked whether separate payment would be made for the temporary bracing. In response, RIDA issued Addendum 7, which indicated that the temporary bracing “is not measured separately for payment,” and that costs for such bracing “are considered as incidental and shall be included in the structural steel items of work.” RIDA also made changes to notes on several relevant design drawings that reiterated the point.

RIDA awarded the contract to Cardi Corp. for a little over $63 million. Cardi subcontracted with High Steel Structures Inc. (HSS) for steel fabrication, including the temporary bracing. HSS’s proposal, which was incorporated into the subcontract, contained an acknowledgement that HSS had received Addendum 7.

After HSS supplied all temporary bracing, it forwarded a letter to Cardi asserting that it was entitled to an additional payment for 182,873 lb of steel under Item No. 312 for the bracing. Cardi passed the letter on to RIDA, which replied that Addendum 7 clearly instructed bidders to include the cost of bracing in its pricing for the Grade 50 steel. RIDA thus refused to make an additional payment for the bracing. HSS sued Cardi, and Cardi filed a third-party complaint against RIDA seeking indemnification in the event Cardi was held liable to HSS.

Before a trial could be held, both RIDA and HSS filed motions for summary judgment, which sought a ruling on the central issue in the case; i.e., whether the language of Addendum 7 meant that HSS must include the cost of the temporary bracing in its unit price for Grade 50 steel or the 182,873 lb of the temporary bracing should be added to the weight of Grade 50 steel for additional payment.

HSS argued that its bid and invoices were consistent with Addendum 7 and that RIDA “is not being asked to pay more than High Steel’s original bid amount.”

HSS also argued that its interpretation of the addendum was consistent with its significant industry experience and general industry practice. RIDA countered that how HSS bids other projects and general industry practice are not relevant to interpreting the terms of the contract in the case, and that the language of Addendum 7 stating that the bracing was incidental to Item No. 312 was clear and unambiguous. The court ruled that the language was indeed clear and no additional payment should be made for the bracing. HSS and Cardi appealed.

On appeal before the Supreme Court of Rhode Island, both HSS and RIDA argued that the language of Addendum 7 was unambiguous. However, they differed as to what that language provided vis-à-vis payment for the temporary bracing.

In its ruling for RIDA, the court placed particular emphasis on the statement in Addendum 7 that the temporary bracing “is not measured separately for payment” and that all costs associated with the bracing “are considered incidental and shall be included in the structural steel items of work.” Citing the American Heritage Dictionary of the English Language, the court noted that “separate” means “to keep apart; disunite” and that “incidental” is defined as “[o]f a minor, casual, or subordinate nature” or “[a] minor accompanying item or expense.” The court concluded that these words are clear and that it was unreasonable to interpret Addendum 7 as calling for payment for the bracing. It thus appears that “no” means what it has always meant . . . no!

About The Author: Caudle is a principal in Kraftson Caudle LLC, a law firm in McLean, Va., specializing in heavy-highway and transportation construction. Caudle can be contacted via e-mail at [email protected].

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