A. Scott Enterprises, Inc. v. City of Allentown

102 A.3d 1060, 2014 WL 5335358, 2014 Pa. Commw. LEXIS 511
CourtCommonwealth Court of Pennsylvania
DecidedOctober 21, 2014
StatusPublished
Cited by9 cases

This text of 102 A.3d 1060 (A. Scott Enterprises, Inc. v. City of Allentown) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A. Scott Enterprises, Inc. v. City of Allentown, 102 A.3d 1060, 2014 WL 5335358, 2014 Pa. Commw. LEXIS 511 (Pa. Ct. App. 2014).

Opinion

OPINION BY

Judge LEAVITT.

The City of Allentown (City) appeals an order of the Lehigh County Court of Common Pleas (trial court) entering a judgment in favor of A. Scott Enterprises, Inc. (Contractor) on its breach of contract action and denying the City’s motion for a new trial. The trial court awarded Contractor $929,299 in damages, but Contractor argues that it was also entitled to penalties, attorney’s fees and interest and, therefore, has cross-appealed. We affirm in part and reverse and remand in part.

Background

Contractor was the successful bidder on the City’s planned two lane, one mile roadway called “New England Avenue.” The bid price was $2,949,760 and was to be 100 percent paid by the Pennsylvania Department of Transportation (PennDOT) with funds it received from the Federal Highway Administration. Accordingly, Penn-DOT was responsible for ensuring that the project complied with all applicable state and federal specifications. To that end, PennDOT has issued “Publication 408,” which sets forth the specifications for all its construction projects. The project’s bid documents did not disclose the possibility of hazardous materials at the project site even though the City’s consultant, Michael Baker, Jr., Inc. (Baker) had advised the City of this possibility. The City did not test for hazardous contaminated soil. The project was expected to be completed by October of 2010.

The agreement between the City and PennDOT provided for PennDOT’s reimbursement of invoices submitted by the City. However, that agreement exempted late charges and environmental problems from reimbursement unless attributed to PennDOT’s acts or omissions. Specifical[1063]*1063ly, the agreement stated that PennDOT would not reimburse the City for costs

relating to or resulting from changes made to the approved plans and/or specifications for the project, time delays and extensions of time, interest for late payments, unforeseen costs for environmental litigation and reports, and all other unforeseen costs and expenses directly related to or caused by the planning and/or design of the project and not due to the negligent [act or] omission of [PennDOT],

Trial ct. op. at 7. The agreement further provided that PennDOT would not reimburse the City for work in addition to that in the bid specifications unless first approved in writing by PennDOT. By contrast, the contract between Contractor and the City did not state that Contractor needed the City’s written approval for such additional work.

On October 19, 2009, Contractor began work by setting up field offices, unloading equipment, surveying and clearing the site, and setting up erosion and sediment control barriers. Four weeks later Contractor learned that a pile of dirt on the construction site might be contaminated by arsenic and notified the City of this fact. The City suspended work on the project on November 25, 2009.

In mid-December 2009, PennDOT, the City and Baker met at the work site. Thereafter, PennDOT authorized APEX Companies, LLC, an environmental consultant, to do a site evaluation. Contractor retained its own expert, American Analytical and Environmental, Inc., which determined the levels of arsenic were low enough for residential development. American Analytical also advised Contractor that the contaminated soil could be kept on-site while the job went forward. In March 2010, APEX completed its study and agreed with American Analytical’s report. However, the APEX report did not provide guidance on how to handle the contaminated soil.

On March 24, 2010, the City informed Contractor that the Pennsylvania Department of Environmental Protection (DEP) had determined that because of the contamination, the project’s National Pollutant Discharge Elimination System (NPDES) permit had to be modified before the project could resume. On March 31, 2010, Contractor sent a letter to the City about the additional erosion control and site stabilization requirements and the changed insurance risk. Because the scope of the additional work was unknown, Contractor requested the project to proceed on a force account basis.1 The City declined to proceed on a force account basis, even though this was an option available under the contract.

DEP issued a modified NPDES permit, with the condition that the contaminated soil be surrounded by Filtrexx SilSoxx to prevent contamination offsite. DEP advised Contractor that it was responsible for employee safety issues relating to the handling of the contaminated soil. Contractor advised the City that it would be maintaining force account records because of the additional work, that it was ready to recommence work and that the City was responsible for its idled equipment and the additional costs incurred by the discovery of contaminated soil.

On July 23, 2010, the City directed Contractor to comply with the waste management plan developed by its consultant, APEX. The City agreed that the contami[1064]*1064nated soil was a material change that warranted adjustments to the contract, including the completion date. The City directed Contractor to prepare a Health and Safety Plan, to provide a price proposal for the extra work and to obtain pollution liability insurance. The City authorized the resumption of work in accordance with the Waste Management Plan and upon completion of the Health and Safety Plan.

In August 2010, Contractor returned to the site and demolished a portion of an existing bridge, and left the site three weeks later. On September 28, 2010, a meeting was held between all the parties to address the completion of the project. After the meeting, the parties agreed that Contractor would: (1) get an estimate of the cost of pollution insurance, (2) determine the cost of terminating the contract and (3) explore the possibility of employing subcontractors qualified to work with arsenic-contaminated soils. Contractor contacted a number of subcontractors, and on December 21, 2010, provided the City a written proposal to complete the work for approximately $4.4 million. The proposal stated that upon the City’s acceptance, work would resume on January 3, 2011. Accordingly, Contractor developed a Work Safety Plan, a Health and Safety Plan, and obtained the necessary environmental insurance. Contractor again suggested a force account method of payment.

The City responded that it was uncertain about the repricing and requested more explanation. However, the City did not authorize Contractor to demobilize and continued to expect Contractor to maintain the on-site facilities as well as the erosion and sediment controls.

The parties continued to meet. In June 2011, Contractor submitted the requested explanation of the charges. Contractor’s suspension costs of $1.8 million combined with the subcontractors’ proposal increased the bid overall by $2.8 million. The City responded that it was unwilling to approve these additional expenses without assurances from PennDOT of federal funding. However, the City never submitted these new cost estimates to PennDOT for its review and approval.

On August 4, 2011, Contractor initiated a lawsuit to recover its losses on the project. After a six-day trial, the jury awarded Contractor damages in the amount of $927,299 to cover its losses caused by the City’s suspension of the project. The jury found that the City breached its contract with Contractor and acted in bad faith, which violated the Procurement Code. The trial court entered judgment to this effect on January 31, 2013.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

D.A. Nolt, Inc. v. City of Lancaster
Commonwealth Court of Pennsylvania, 2021
A. Scott Enterprises v. City of Allentown, Aplt.
142 A.3d 779 (Supreme Court of Pennsylvania, 2016)
F. Zacherl, Inc. v. Flaherty Mechanical Contractors, LLC
131 A.3d 1030 (Commonwealth Court of Pennsylvania, 2016)
East Coast Paving & Sealcoating, Inc. v. North Allegheny School District
111 A.3d 220 (Commonwealth Court of Pennsylvania, 2015)

Cite This Page — Counsel Stack

Bluebook (online)
102 A.3d 1060, 2014 WL 5335358, 2014 Pa. Commw. LEXIS 511, Counsel Stack Legal Research, https://law.counselstack.com/opinion/a-scott-enterprises-inc-v-city-of-allentown-pacommwct-2014.