Freeman v. Department of Highways

217 So. 2d 166, 253 La. 105, 1968 La. LEXIS 2485

• Court: Supreme Court of Louisiana
• Decided: November 12, 1968
• Docket: 48729
• Status: Published

Opinions

SUMMERS, Justice.

Certiorari was granted to review a judgment of the First Circuit rejecting, in part, the claim for damages for breach of contract asserted by the plaintiff E. M. Freeman against the Department of Highways. See 197 So.2d 188 and 250 La. 928, 199 So.2d 925.

Plaintiff’s 'suit arose out of two contracts entered into with the Department of Highways, wherein he agreed to perform engineering service on two segments of the national system of interstate highways in Louisiana.

The first contract, Number 13, dated June 25, 1957, represented that the Department had completed a topographic sui’vey; and, by the terms of the contract, the Department engaged plaintiff to perform engineering services in connection with the preparation of preliminary and contract plans, specifications and estimates of costs, including supplemental topographic surveys, for the Greenwood-Shreveport section of the interstate system. The service to be performed by the engineers was to be divided into two successive phases covering: (I) All investigations, studies and surveys necessary or required for, and the preparation of, preliminary plans; and (II) the making of right of way survey and map, the preparation of construction contract plans and specifications, and the checking of contractors’ shop drawings.

The Department agreed to furnish to the engineers for use in the preparation of the required plans and designs certain services and data, consisting of: (1) Information showing locations of route, and location and schematics of interchanges, bridges and grade separations, (2) topographic survey, (3) traffic assignments for determining design of the project, (4) information in the Department’s files as to boring data, surveys, plan and studies within the area and assistance in securing similar data from others, and (5) prints of standard plans of bridges, culverts and incidental drainage structures.

Phase I of Contract Number 13, including completion of the subsurface investigation and delivery of the preliminary plans and estimates, was required by the contract to be completed within six months after receipt of notice to proceed. Phase II was to be completed within four months.

The other contract, Number 37 dated May 19, 1958, covers the Texas State Line-Greenwood Section of the interstate system. It differs from Contract No. 13 in effective dates and the segments of the highway affected. The contracts are otherwise essentially the same.

One provision of the contracts which is of special concern to us relates to delays and extensions, for it is this provision which the Department relies upon to defeat the claims of plaintiff in this suit. It is an exculpatory clause which reads as follows:

“Delays and Extensions:

“The Engineers will be given credit and extension of time for delays beyond their control or for those caused by tardy approvals of work in progress by various official agencies, but no additional compensation shall be allowed for such delays.”

While conceding that delays occurred which were not attributable to the plaintiff engineers, the Department maintains that the quoted clause relieved it of responsibility for the delays notwithstanding the fact that the Department may have caused them. The plaintiff, on the other hand, contends that the clause does not exculpate the Department, for it applies only to delays attributable to “various official agencies”, meaning agencies other than the Department; and since the Department is not relieved of responsibility for delays which it caused, it must compensate plaintiff for the damage which plaintiff incurred by reason of the delays.

The trial court gave judgment for the contractor, being of the opinion that the Department had unduly and unnecessarily delayed plaintiff’s compliance with the contracts. The Department’s contention that the quoted exculpatory “Delays and Extensions” clause of the contracts relieved it of liability for damages for delays was disallowed. The trial judge reasoned that the clause did not refer to delays of the Department, but, instead, referred to delays by agencies other than the Department itself. In its decision, the court cited and relied upon Sandel & Lastrapes v. City of Shreveport, 129 So.2d 620 (La.App.1961) decided by the Second Circuit Court of Appeal.

In the Sandel & Lastrapes Case, the City of Shreveport was sued by the contractor under a construction contract for damages caused by the City’s failure to timely furnish concrete pipe to be used in the construction project as provided for in the contract. The City resisted liability for damages caused by delays for which it was admittedly responsible, urging in support of its position an exculpatory clause of the contract, which it contended relieved it from liability for “any delays”. The Second Circuit held that “It is contrary to public policy to allow a contractee to stipulate exemption from negligent acts which cause injury.” Accordingly, the City was held to respond for the damage incurred by the contractor due to the City’s delay in providing the concrete pipe

In the instant matter, the First Circuit Court of Appeal stated that it did not agree with the Sandel & Lastrapes Case, but in the final analysis it distinguished the Sandel Case from the case at bar. The apparent conflict created by the statement of the First Circuit prompted us, at the urging of the plaintiff, to grant certiorari.

Now that the record is before us and we have had an opportunity to study the contracts in detail and have considered them in the light of the facts disclosed by the voluminous record, we are aware that this case involves the application of facts to a contractual provision distinguishable from the facts and the contract in the Sandel and Lastrapes Case. We find it unnecessary, therefore, to reconcile the alleged conflict between these cases and address ourselves, instead, to the merits of the case at hand.

The Delays and Extensions Clause

The first issue presented is whether the Department is contractually responsible for actions or nonactions which may have hindered plaintiff in his work and caused damages. This involves an interpretation of the “Delays and Extensions” clause ; for if the Department is not contractually responsible for delays caused by it, we need not inquire into whether the delays were or were not caused by the Department.

We find, however, that the "Delays and Extensions” clause does not exonerate the Department. The clause refers to official, agencies other than the Department — third parties whose approval or actions might be involved in the contract. For example, because this project was in large measure-financed by Federal funds, the Bureau of Public Roads may, conceivably, have delayed approval of plans and designs submitted, by plaintiff. A delay by the Bureau would have been caused by one of the “official. agencies” referred to in the contract and would have been beyond the control of the Department. Plaintiff would, under the language of the clause, be entitled to credit and extensions of time, but no additional compensation would be due by the Department for actions of third parties. Thus the clause seeks to exculpate the engineers and the Department for delays “beyond their control” or for delays “caused by tardy approvals of work in progress by various official agencies”. For, while the clause provides that the engineer is not responsible for such delays, he receives no extra compensation from the Department for the delays caused by others, but, instead, is granted extensions of time to compensate for these delays, thus avoiding a default under the contract if the work is not completed on time. In like manner the Department is exculpated from the payment of compensation for the delays of third parties, but, at the same time, it must grant additional delays. Nothing is said otherwise about relieving the contracting parties from violations of their contractual obligations. Certainly nothing is said about relieving the Department of the obligation to pay the engineers for damages caused by delays of the Department.

When the contract is considered as a whole, the Department’s argument is readily disclosed to be untenable. La.Civil Code art. 1948. There are numerous references to the “Department” throughout the contract. In each instance we have noted where the Department is intended to be referred to, “Department” is used. We think the reference to “various official agencies” is, therefore, a reference to agencies other than the Department — agencies whose influence upon the contract could not have been foreseen when the contract was confected and over which the Department had no control. If the Department intended to include itself within the “Delays and Extensions” clause provisions, it would have said so. The contract was its own, prepared by it and in general use. La.Civil Code art. 1958.

To include the Department within the meaning of “various official agencies” as used in the “Delays and Extensions” clause would, moreover, be to say that the Department could provide, contractually, that work must be performed within a stipulated time subject to approvals by it, and, at the same time, that it would bear no responsibility for damages incurred by the contractor resulting from its failure to timely approve performance. The provision would, in effect, make the performance of the agreement depend entirely upon the will of the Department, one of the contracting parties, who, by deliberate delays in approvals of plans or designs, could hinder the contractor in the performance of his contractual obligations without any responsibility on the part of the Department for the hindrance. The contract would then be subject to a potestative condition and null. La. Civil Code art. 2024, 2034. We do not construe a contract to nullify it when its language does not unequivocally require such a construction. La. Civil Code art. 1951; Sporl v. New York Indemnity Co., 176 La. 363, 145 So. 771 (1932); Note, 8 Tul.L.Rev. 124 (1933). We are bound to give effect to all contracts according to the true intent of the parties determined by the words of the contract. La. Civil Code art. 1945. Accordingly, we reject the Department’s contention and give the language of the contract effect by saying the clause “various official agencies” does not include the Department.

Who Caused the Delays?

Notice to proceed with the work on Phase I of Contract Number 13 was issued July 9, 1957, and on November 27, 1957 the proceed order was issued for Phase II. It was agreed that Phase I of this contract would be completed within six months, and Phase II was to be completed within four months, meaning that both phases of Contract Number 13 should have been completed prior to March 27, 1958. The contract, however, was not accepted as completed until July 19, 1960. Thus, plaintiff was required to be engaged in the performance of this contract almost 27 months beyond the date when completion was contracted for. Nowhere in the record is it established that the delay involved was due to plaintiff’s action or nonaction; rather, it is convincingly established that plaintiff held a fully complimented staff ready at all times to expedite the completion of work required by the contract and plaintiff did in fact perform its obligations, under the contract with dispatch.

The work order for Phase I of the second contract, Number 37, was issued May 20, 1958, shortly after the anticipated completion date of the first contract, and on January 7, 1959 the work order was-issued for Phase II. The job was, therefore, expected to be finished on May 7, 1959, four months after issuance of the work order on Phase II; it was not accepted, however, until August 19, 1960-Plaintiff was, in consequence, engaged in the performance of the work under this contract 15 months longer than the time agreed upon. Again, as in the first contract, no action or nonaction on plaintiff’s, part is assigned as a reason for the inordinate delays which admittedly occurred-

The delays attributed by plaintiff to the Department about which plaintiff complains, are that (1) the Department’s, employees-tardily supplied or failed to supply standard plans for bridges, culverts and other structures as required by the contract; (2) the Department failed to furnish necessary preliminary right of way information, made revisions during the course of the work requiring the acquisition of additional rights of way and failed to provide access. to certain properties in order that plaintiff ■could complete right of way maps; (3) ■defendant delayed, ignored or deferred repeated requests for certain soil reports required by plaintiff for design work; :and (4) the Department was guilty of immoderate delays in approving plans.

The delays which did occur, as we have noted, were not caused by plaintiff. To the contrary, plaintiff maintained his fully ■complimented staff throughout the period •during which he was attempting to accomplish the work called for by the contract. We understand this was necessary to avoid delaying the work and in order to have adequate and properly trained personnel on hand when work could be performed. The Department makes no convincing effort to assign the cause of delay to plaintiff and, unexplainably, makes no effort to assign the cause for delay to ■others.

Without reviewing the evidence in ■detail here, we are satisfied from our study ■of the record that the Department was responsible for inordinate delays which plaintiff could not be expected to anticipate. The delays were a violation of the Department’s contracts with plaintiff and brought about damage to plaintiff for which recovery should be allowed.

The principal delay, which we shall cite, was brought about by the Department in making a contract with Engineering Testing Laboratory, Inc., for subsurface soil testing required by plaintiff before designs of certain bridges and other structures could be finalized. Changes in procedure of the Department’s right of way section entailed innumerable other delays, and the Department’s failure to timely furnish standard plans and specifications for plaintiff’s use, changes in standards relating to vertical clearances, sidewalk dimensions, the position of a bridge, the type of foundations required for overpasses, a change in the location or routing of the highway, a change in location of a segment of the highway because of a subsurface pipeline, delays in approval of plans and designs submitted, relocation of the bridge or overpass at Broadacres Road to the White Pines Road, requiring a new schematic plan for the Greenwood and T & P location, revision of Greenwood Interchange and Buncomb Road Crossing, the Fournoy-Lucas Road Crossing and U.S. 79 connection, together with others, all caused delays because of the Department’s action or nonaction making performance within the time stipulated impossible.

When plaintiff entered into these con- " tracts he properly assumed that his services would be required during the time stipulated for performance by the contract — approximately 14 months. Instead he was required to hold his staff in readiness from June 25, 1957 to August 19, 1960 — more than three years — with the resulting additional expense which he asserts.

Quantum

In support of his claim for damages, plaintiff submits his added payroll costs which he allocated to the work performed. Careful records were kept of these payroll costs which the Department audited. There is no claim that these figures are not correct. Plaintiff has not exaggerated his claim in the least. To the contrary, he has not sought profit or reimbursement for general overhead, or compensation for his own services, but only the added money it cost him to keep his organization intact to finish these contracts. The claim should be allowed.

We adopt, as our own, the formula used by the trial court in making the awards for damages on account of the violation of the contract by the Department.

“Allowing twelve months, which the court considers reasonable tmder the evidence in this case, for the completion of the first contract, plaintiff has calculated his payroll attributable to this job subsequent to July, 1958. It amounts to $56,028.33, and the sum of $21,238.67 for overhead payroll, making a total of $77,-267.00. Also allowing twelve months for the completion of the second contract, which this court deems to be reasonable and fair under the evidence in this case, plaintiff has calculated his payroll directly attributable to that job from May 20, 1959, which amounts to the sum of $33,-198.51, and the sum of $16,249.18 for overhead payroll, making a total of $49,-447.69.”

Plaintiff also claimed the Department had not reimbursed him properly under provisions of the contract for work he performed. The district court awarded $15,208.46 under Contract Number 13 and $9,711.30 under Contract Number 37. The $9,711.30 award was approved by the Court of Appeal and no appellate review was sought of the $15,208.46 award. We do not consider these latter awards to be disputed. The application for writs made no reference to a review of these awards and there is no mention of them in brief by the Department.

Putting in Default

The Department asserts plaintiff cannot recover, for even if a breach of contract occurred it was a passive breach, and plaintiff is not entitled to damages prior to filing suit because he did not put the defendant in default prior thereto. Articles 1933 and 1911 of the Civil Code are relied upon to support the contention.

In answer, we find several letters written by the plaintiff to the Department calling upon it to meet its obligations under the contract, and pleading with it to expedite the work. In addition, plaintiff made several trips to Baton Rouge in an effort to persuade defendant to meet its obligations and to expedite the work.

“Demands for the performance of a contract are not to be considered ineffective because couched in polite terms; all that is necessary is that the terms be sufficient to let the obligor know that performance of the contract is expected.” Hafner Mfg. Co. v. Lieber Lumber and Shingle Co., 127 La. 348, 53 So. 646 (1909).

For the reasons assigned, the judgment of the Court of Appeal, First Circuit is reversed in part and affirmed in part and judgment is rendered herein reinstating and affirming the judgment of the trial court.

McCALEB, J., dissents, being of the opinion that the judgment of the Court of Appeal is correct. See La., 197 So.2d 188. HAMLIN, J., dissents, being of the opinion that the decision of the Court of Appeal is correct.