West Penn Power Co. v. Bethlehem Steel Corp.

348 A.2d 144, 236 Pa. Super. 413, 20 U.C.C. Rep. Serv. (West) 847, 1975 Pa. Super. LEXIS 1354
CourtSuperior Court of Pennsylvania
DecidedSeptember 22, 1975
DocketAppeal, No. 75
StatusPublished
Cited by27 cases

This text of 348 A.2d 144 (West Penn Power Co. v. Bethlehem Steel Corp.) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
West Penn Power Co. v. Bethlehem Steel Corp., 348 A.2d 144, 236 Pa. Super. 413, 20 U.C.C. Rep. Serv. (West) 847, 1975 Pa. Super. LEXIS 1354 (Pa. Ct. App. 1975).

Opinion

Opinion by

Spaeth, J.,

This is an appeal from the refusal of a court en banc to remove a compulsory nonsuit and to grant a new trial.1 Appellants brought this action to recover about $7,000,000 as consequential damages for appellee’s alleged breach of contract. Because of the scope of the case (appellants’ evidence took eight weeks to present; the transcript is about 7,000 pages; and many issues have been briefed and argued that we do not find it necessary to discuss), we shall first state, in a general way, the background of the contract, adding later such facts as needed.2

[416]*416 General Background

Appellants are three public utilities engaged in producing and distributing electricity in Southwestern Pennsylvania. For certain purposes they form an entity called the Allegheny Power System (APS), although they have brought this action as individual corporations. In 1962, APS started planning an Extra High Voltage Power Generation and Distribution System (EHV system). Power companies on the east coast did the same, the intention being that the several companies’ systems should be combined into a total system known as the “grid”. APS’s system included a generating station, a substation, and a system of power lines; the date set for completion was May 1, 1967. We are concerned with one part of the power lines systems, specifically, that comprising the 500 KV power lines. This is in four segments, totalling about 180 miles and supported by 7583 steel towers.

In 1963, APS retained Sargent & Lundy, a consulting engineering firm, to design the power line system, including the towers, and to provide construction engineering and scheduling. This was an extremely complicated job, for although standard sizes and shapes of structural steel were to be used in all of the towers, differences of terrain, changes in direction, and variations in the distance between the towers, all involving attendant differences in stress, height, etc., required that each tower be virtually custom designed. In August, 1964, Sargent & Lundy invited five large steel manufacturing and fabricating companies to submit bids for the sale of steel to be used in the power line system. Appellee was chosen to supply the steel for the 500 KV part of the system, apparently because APS understood that appellee could [417]*417provide the steel on a faster schedule, albeit at a higher price. A division of United States Steel was chosen to supply the steel for the lower voltage part of the system. APS invited bids from construction contractors in January, 1965, and chose Electrical Contractors, which had bid the job on a unit price basis, i.e., payment to be made on each completed tower. The general relationships thus established were that appellee was to fabricate and ship steel parts of the types and quantities requested to the destinations indicated by Sargent & Lundy, for use by Electrical Contractors, which was to establish receiving yards, preferably with railroad sidings.

Work began in March, 1965. Appellants do not concede that appellee was faithful to whatever commitment existed at any stage of the project. Nevertheless, construction proceeded. The contract between APS and Electrical Contractors contemplated that the line would be built on a 40-hour week, but that APS would reimburse Electrical Contractors for overtime payments if agreed to in advance. Apparently the men who work on this type of project tend to be transient, and in late summer of 1965, Electrical Contractors informed APS that it would have to oifer more overtime in order to induce men to work on the line. This authorization was given on December 7, 1965. At the end of 1965, appellants transferred about 20% of the tower steel order from appellee to Creamer & Dunlop. This was apparently done by mutual consent; appellants claim it was necessitated by appellee’s poor performance with respect to deliveries.

In the summer of 1966, Electrical Contractors informed APS that because of delays in the work, it was no longer willing to continue on the unit price basis. It blamed these delays on the failure of APS to provide timely access to right of way for the lines and also on a lack of steel. In order to keep Electrical Contractors [418]*418on the job, which appellants claim was vital in order to finish the line on time, the construction contract was renegotiated on November 21, 1966, to change the computation of compensation to a cost plus fixed fee basis retroactive to the beginning of the project (i.e., back about eighteen months). No demand was made on Electrical Contractors’ bonding company, APS’s theory being that Electrical Contractors was not to be blamed for the delays. In January, 1967, in another move to expedite the work, appellant West Penn Power Company contracted with the construction firm of Day & Zimmerman for the completion of one part of the line. This contract also provided for payment on a cost plus fixed fee basis.

The line was completed by July, 1967. Although this was about two months later than originally planned, it was possible to place the line in commercial service on schedule by shortening the testing period. This suit was brought on November 18, 1968.4

[419]*419Stating appellants’ three separate claims as one, the damages claimed may be summarized as follows:

(a) Additional costs resulting from the change in the manner of compensation for Electrical Contractors from fixed unit price to cost plus fixed fee, plus cost of adding Day & Zimmerman to the project . $6,672,647.63

(b) Purchase of additional line stringing equipment to make up for lost time . 24,611.84

(c) Difference between the price paid to Creamer & Dunlop for steel it supplied and the price that would have been paid to appellee . 46,032.64

(d) Cost of the audits . 25,809.61

Total . $6,769,101.72

As is evident these figures reflect the theory that appellee should pay so much of the cost of the work on the power line as exceeded the cost that would have accrued if Electrical Contractors had performed in accordance with its original contract and had been paid on a unit price basis. While the size of the figures is of no legal significance, it does give some indication of the factual complexity of this litigation — a consideration that will become important later, in our discussion of the motion to amend the complaint.

The Contract as Pleaded in the Complaint

Paragraph 5 of the complaint reads as follows:

“5. On or before December 21, 1964, plaintiffs and defendant concluded contractual arrangements by the terms of which defendant undertook to detail, fabricate, galvanize and deliver to plaintiffs, in accordance with Specification Y-1756, dated May 19, 1964 [Exhibits 1 and 2], revised for purchase Order October 12, 1964, and Summaries of Proposal Y-1756-A (to West Penn), Y-1756-B (to Mononga[420]*420hela) and Y-1756-C (to Potomac Edison) [Exhibits 5-7], structural steel . . . for steel transmission towers to be used by plaintiffs in the erection of 500 KV transmission lines in Pennsylvania, West Virginia and Maryland. Copies of the following writings which compose, indicate or confirm thé contracts are annexed hereto and made a part hereof. . . .”

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Bluebook (online)
348 A.2d 144, 236 Pa. Super. 413, 20 U.C.C. Rep. Serv. (West) 847, 1975 Pa. Super. LEXIS 1354, Counsel Stack Legal Research, https://law.counselstack.com/opinion/west-penn-power-co-v-bethlehem-steel-corp-pasuperct-1975.