Metropolitan Sewerage Commission of Milwaukee v. R. W. Construction, Inc.

255 N.W.2d 293, 78 Wis. 2d 451, 1977 Wisc. LEXIS 1259
CourtWisconsin Supreme Court
DecidedJune 14, 1977
DocketNo. 76-221
StatusPublished
Cited by10 cases

This text of 255 N.W.2d 293 (Metropolitan Sewerage Commission of Milwaukee v. R. W. Construction, Inc.) is published on Counsel Stack Legal Research, covering Wisconsin Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Metropolitan Sewerage Commission of Milwaukee v. R. W. Construction, Inc., 255 N.W.2d 293, 78 Wis. 2d 451, 1977 Wisc. LEXIS 1259 (Wis. 1977).

Opinion

HEFFERNAN, J.

The question on this appeal is whether the trial judge on remand for determination of damages properly followed the mandate of this court in Metropolitan Sewerage Commission of County of Milwaukee v. R. W. Construction, Inc., 72 Wis.2d 365, 241 N.W.2d 371 (1976), and made a reasonable assessment of damages on the basis of a “jury type” verdict. We conclude that he did and affirm the judgment.

This is the second appeal involving this case. In the original trial, the trial judge found that R. W. Construction, Inc., in constructing a section of the Milwaukee sewerage system under bid contract, did not encounter subsurface conditions differing materially from those indicated in the bid documents. Thus, he concluded, it was not entitled to an equitable adjustment in its original contract price. Instead, the court held that Metropolitan Sewerage Commission of the County of Milwaukee, plaintiff, was entitled to a judgment of approximately $5,500,000 for breach of contract.

On appeal this court, in Metropolitan Sewerage Commission of County of Milwaukee (hereinafter M.S.C. 1), supra, found changed conditions as a matter of law and reversed. We remanded for determination of the amount of equitable adjustment (damages) to which R. W. Construction, Inc. (hereinafter R.W.) was entitled. Metropolitan Sewerage Commission’s motion for rehearing on grounds that this court had applied incorrect engineering principles was denied.

On the remand, the trial judge rendered a “jury type” verdict for R.W. in the amount of $1,500,000. R.W. has now appealed, claiming the amount should have been nearly $3,000,000. Metropolitan Sewerage Commission (hereinafter M.S.C.) cross-appealed, claiming the amount should have been zero.

[454]*454The background to this litigation is set forth extensively in the opinion of this court dated May 4, 1976. To briefly recapitulate the facts however, M.S.C. and R.W. on May 6, 1969, entered into a $3,900,000 contract for the construction of a sewer to be located one hundred feet below the surface of the ground. After commencing work, R.W. encountered artesian water, which resulted in extensive flooding. This required unanticipated and expensive dewatering procedures. R.W. attempted to control the flooding by the use of compressed air. Compressed air from the tunnel escaped from abandoned but unplugged wells and carried carbon dioxide into neighboring homes. Because of the health hazard, the West Allis Health Commissioner on March 3, 1971, ordered the work stopped on the tunnel. R.W.’s efforts to secure an equitable adjustment to compensate for the unforeseen costs were refused by M.S.C. R.W., therefore, ceased all work and depressurized and blocked the tunnel. M.S.C. terminated the contract in June of 1971 and sued for a breach of contract.

M.S.C. was awarded damages in the sum of approximately $5,500,000.

R.W.’s counterclaim for equitable adjustment was dismissed. R.W. appealed from the judgment, and R.W. and Fidelity and Deposit Company, its surety, appealed dismissal of a counterclaim. M.S.C. cross-appealed, claiming judgment should be entered against Fidelity in the same amount as against R.W.

On May 4, 1976, this court decided that R.W., as a matter of law, had encountered changed conditions and was entitled to an equitable adjustment. We said:

“In this case R.W. argues that its damages are readily determinable, and sets forth a summary of damages amounting to nearly 3 million dollars. However, this summary does not take account of the fact that the contractor must absorb those costs, if any, due to its inef-[455]*455fieiency in planning and performance. Under these circumstances our holding here is limited to concluding that the MSC is liable for an equitable adjustment under the changed-conditions clause, and therefore we remand the case to the trial court for a hearing to determine the amount of the equitable adjustment to which R.W. is entitled. In so doing, we follow the same general procedure followed by the 7th Circuit in the Fattore Cases, which were diversity actions applying Wisconsin law in which the MSC was a party.” (M.S.C. 1, at 383-84)

This court remanded the case to the trial court for entry of judgment and assessment of damages against M.S.C.

On July 15, 1976, in the trial court, R.W. filed notice of motion and motion for entry of judgment in its favor and for entry of findings of fact as follows:

Direct job costs $1,473,031.05

Equipment costs 375,827.96

Office overhead costs 104,732.51

Less payment to R.W. by M.S.C. 478,957.23

NET LOSS 1,474,634.29

Bid profit without changed condition 348,555.00

10% profit on equitable adjustment 143,813.15

10% profit on equitable adjustment after contract termination 624,597.44

TOTAL DAMAGES $2,591,599.88 Interest at $355.05 daily from Feb. 8, 1974, to date of judgment at 7%

As a conclusion of law, R.W. asked that judgment for $2,953,613.28 be entered, reflecting the above amount plus interest. These proposed findings are derived from R.W.’s Exhibit A.1

M.S.C. moved for reopening of the trial to take testimony on damages. After hearing and in a decision ren[456]*456dered August 24, 1976, the trial judge found both motions “inappropriate” and denied them.

In his decision, the trial judge interpreted M.S.C. 1 to mandate only a hearing on damages. Judge Decker, the trial judge, wrote:

“The Supreme Court neither intended to deny to the trial court the right to reopen the case for further testimony nor to compel the reopening of the case. As this court views the mandate, the trial court was to review the record with respect to the equitable adjustment (damages) to be awarded to R.W., and if it felt that it could do so on the record, it was to proceed to an adjudication on the merits. In addition, it was to afford a hearing to the parties to the action to present their views with respect to damages, including those already presented at the close of the trial. If the parties were of the opinion that additional testimony was necessary to enable the trial court to proceed to judgment, they were to be afforded this hearing in order to present that testimony, or at least to detail the need therefor, so that it could be produced at a time mutually convenient to counsel and court.”

The judge found the record adequate for damage assessment and denied the admission of further evidence.

M.S.C. had asserted that additional expert testimony was necessary.

The judge then rendered a “jury type” verdict:

“. . . this court fixes the equitable adjustment to which R.W. is entitled at $1.5 million dollars. Included in said sum is direct job costs, overhead, allocable equipment costs, bid profits, profit on the equitable adjustment for work completed by R.W., profit on the extra cost on account of changed conditions, profit on the equitable adjustment for the work uncompleted by R.W. and prejudgment interest to the date of August 31, 1976.”

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METRO. SEWERAGE COMM. v. RW Const., Inc.
255 N.W.2d 293 (Wisconsin Supreme Court, 1977)

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Bluebook (online)
255 N.W.2d 293, 78 Wis. 2d 451, 1977 Wisc. LEXIS 1259, Counsel Stack Legal Research, https://law.counselstack.com/opinion/metropolitan-sewerage-commission-of-milwaukee-v-r-w-construction-inc-wis-1977.