STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
WESLEY OF FLORIDA, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 75-2071
) STATE OF FLORIDA, DEPARTMENT OF ) GENERAL SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, a hearing was held before Charles C. Adams, Hearing Officer with the Division of Administrative Hearings, at Room 205, Building "B", 6501 Arlington Expressway, Jacksonville, Florida at 9:00 a.m., April 16, 1976.
For Petitioner: S. Gordon Blalock, Esquire
Independent Square Building, Suite 2301 Jacksonville, Florida 32202
For Respondent: William S. Stevens, III, Esquire
Department of Legal Affairs 725 South Calhoun Street Tallahassee, Florida 32304
ISSUE
Whether the Petitioner is entitled to an extension of time of
565 days for the completion of the project which is the subject of this proceeding, as opposed to the 367 days time extension which was granted for completion, and thereby is free from liquidated damages in the amount of $31,680.
FINDINGS OF FACT
On February 21, 1973, a contract was entered into between the Petitioner and Respondent for the construction of Phase II, University of North Florida, at Jacksonville, Florida, State
Project No. BR-6504/7801-D. The Form of Agreement Between Contractor and Owner For Construction of Buildings, through its Article 4.2 identifies the conditions of liquidated damages.
Article 8.5 states the conditions for settlement of claims and disputes. Contained as part of the contract, was standard form AlA Document, A201, American Institute of Architects, General Conditions of the Contract for Construction. Within the document A201, was Article 4.5, warranty of the work by the contractor; Article 8.3.1 discussing the matter of delays and extensions and Article 13.2.1 discussing uncovering and correcting. All these contract conditions are found in Petitioner's Exhibit "A" which was admitted into evidence.
In pursuit of the contract obligations, the Petitioner entered into a contract with W. W. Gay, Mechanical Contractor, Inc., 523 Estelle Lane, Jacksonville, Florida. This contract with
W. W. Gay as subcontractor contemplated the installation of mechanical parts of the contract work, and the agreement between the Petitioner and W. W. Gay is Petitioner's Exhibit "B", admitted into evidence.
Part of the work to be performed by W. W. Gay involved the installation of a hot water piping system. According to Mr.
W. W. Gay, President of W. W. Gay, Mechanical Contractor, Inc., 95 percent of the pipe to be used in the Phase II project was already available, having been left over from Phase I of the University of North Florida Project. This pipe had been stored for as long as
16 months, exposed to the weather. The storage itself was in accordance with the conditions of modification to contract document prepared by Reynolds, Smith and Hills, Architects, Engineers and Planners of Jacksonville, Florida. Petitioner's Exhibit "C" sets out the requirements for storing the aforementioned pipe. In addition, Mr. Gay testified that some of the type resin epoxy utilized in the Phase I project was left over and was stored in a facility whose temperatures reached 90 degrees Fahrenheit, although the recommended storage temperature for the substance was 70 degrees Fahrenheit. The piping spoken of was a type manufactured by Ric-wil Manufacturing known as FRP, Dual Gard
250. The pipe was identified in the course of the hearing by Carl Bowles, General Superintendent for W. W. Gay, as being a fiberglass type pipe. This pipe had been selected in lieu of the job specification pipe which is a form of asbestos pipe manufactured by Johns Manville, due to the fact that the Johns Manville pipe had not been approved for release by Johns Manville's quality control department. The substitution of the Ric-wil pipe was approved by the project architect, John Brickert, who was also the project manager and an employee of Reynolds,
Smith and Hills. The approval for substitution was on the basis that the Ric-wil pipe was acceptable because it was a non-metallic pipe and the Johns Manville pipe was a non-metallic pipe.
Approval for the substitution had been granted in Phase I and carried over into Phase II.
In addition to the hot water piping system in Phase II,
W. W. Gay installed a chill water system using a PVC type pipe identified as Ric-wil Chil Gard.
Prior to the installation of the Ric-wil Dual Gard pipe in Phase I, W. W. Gay had never installed that type piping system. In the course of the installation of the piping system in Phase I, some problems were experienced with the installation which were not similar to the problems that would be experienced in the construction of the Phase II University of North Florida project. Phase I was completed utilizing the Ric-wil Dual Gard pipe. In the beginning of Phase II, W. W. Gay ran the cold water system and hot water system in a common area underground from valve pit one to valve pit six, in order to put into operation buildings 008 and 009 of the University of North Florida. These locations are shown on the engineering drawing which is Petitioner's Exhibit "K", entered into evidence. Installation of the two piping systems commenced in October of 1973. Sometime in the middle part of November, 1973, a test was conducted on the hot and chilled water systems between valve pits one and six. The hot water system passed the test. The chilled water system failed. Later in November, the chilled water system also passed. This successful test opened up the hot and chilled water systems to buildings 008, 009 and 011. Further tests were conducted in early January, 1974 and again the hot and chilled water lines passed. In January, 1974, W. W. Gay began to run the hot water piping system from valve pit six to valve pit seven and in the area of building 010 found that the line would not hold pressure. A decision was made to retest between valve pit one and six, a leek as found in the area of valve pit one. This leak was discovered in late January, 1974. A subsequent test of the hot water piping system was run in early February, 1974, between valve pit one and valve pit six and into the buildings 008, 009 and 011. This test failed. In the middle of February, 1974, a further test was made from valve pit one to the end of the line, to the northwest corner of building 011, and this test failed. For the balance of February, 1974, time was spent trying to repair the leaks in the hot water piping system. These continued failures in the system brought about two meetings to discuss the solution of the problem. These meetings will be discussed subsequently.
At the time the subcontractor was experiencing problems with the installation of the hot water system, problems were also being experienced with the chill water system. Throughout March, the chill water system was continuing to be installed and in late March a leak was discovered opposite building 010. This leak was repaired. In mid April a leak was found in the chill water system in the area of valve pit six and an attempt to repair it was unsuccessful. Problems continued until June, 1974, at which time replacement of the water pipe and fittings was begun between valve pit one and six. Further testing showed a failure in the chill water piping. Finally in September, 1974, the chill water system passed. One of the problems with the chill water piping system concerned the couplings for that system which were found to be defective. An example of the problems associated with the couplings in the chill water system is demonstrated through Exhibit "N", by the Petitioner, which is a cross section of one of the couplings which was removed after being installed in the Phase II University of North Florida Project. This cross section shows numerous surface irregularities, which promote leaks.
On February 28, 1974, a meeting was held in the offices of Reynolds, Smith and Hills which was attended by the project manager, John Brickert; representatives of the Petitioner; representatives of Ric-wil, Incorporated; representatives of the University of North Florida; representatives of the subcontractor
W. W. Gay, and other representatives of Reynolds, Smith and Hills associated with the project. Varying theories were advanced in trying to explain the problems associated with the hot water piping system. From the subcontractor's point of view, expressed by W. W. Gay, this difficulty was not obvious because it was his contention that the pipe was being installed according to the directions of the manufacturer's representative who was on the job site for some 90 percent of the installation. Jack Green, the mechanical construction specialist for Reynolds, Smith and Hills, testified that from his on site observations, which occurred about the general time frame of the meeting of February 28, 1974, that he had seen water in the trenches around the building 010. Furthermore, according to Green, the subcontractor had undercut the ditches and had attempted to install the hot water piping system while the ditch was too wet, using loose soil which was not compacted. In addition Mr. Green stated that he felt that the joints were dirty and moist and had not been sanded properly. Finally, Mr. Green stated that he had stopped the installation of the pipe because of the conditions mentioned. The deposition upon written questions of C. G. Schoor, Service Manager with Ric-wil, said that he had been at the job site on February 11, 1974, and had noticed water leaks in the fringes and couplings of the hot
water pipes. He felt that in the area of the flanges there was improper sanding because when the pipe was pulled out, the surface was clean and resin remained in the flange. He also commented in his deposition that there was improper surface sanding and a large area of entrapped air on one of the 10" couplings pulled out between points two and three on the second joint north of two and this occurred during an initial 150 lb. hydro test. In one joint the resin epoxy had not hardened and was still in a plastic state, according to Ben Schoor. In speculating about the plasticity, Schoor said that it could have been promoted by long storage of the material, or contamination of the material which constitutes the resin epoxy or improper mixture of the two components of the epoxy resin on the part of the subcontractor. He felt that this plasticity would probably promote leaks but he observed no such leaks where the resin epoxy was plastic. The deposition on written questions of Ben Schoor was entered into evidence as Respondent's Exhibit "B".
Discussion at the February 28, 1974, meeting considered two alternatives: First, to allow for the further installation of the Ric-wil Dual Gard System using the expertise of the Ric-wil employees; second, to substitute the Ric-wil Dual Gard pipe with Ric-wil Hi-Gard Pipe, which is steel.
A further meeting on March 4, 1974, was held with representatives of the Petitioner; the subcontractor, W. W. Gay; Reynolds, Smith and Hills, by John Brickert, and other representatives of that firm. It was decided at that meeting, that due to the effect of oil shortages causing the unavailability of the Ric-wil Dual Gard pipe and fittings, the Ric-wil Company would design a pipe system to utilize steel pipes, and the subcontractor would determine the necessary adjustments to use the steel pipe. At this meeting the subcontractor, W. W. Gay, requested some relief from possible liquidated damages, and the minutes of that meeting indicate that consideration of that request was deferred. According to notes from time sheets of Reynolds, Smith and Hills, which was admitted as Respondent's Exhibit "A", installation of the steel piping system was commenced on July 1, 1974, and completed August 21, 1974. Minutes of the meetings of February 28, 1974, and March 4, 1974, are found as Petitioner's Exhibits "E" and "F" respectively, admitted into evidence.
After the March 4, 1974, meeting, discussion was continued on the question of liquidated damages in view of the substitution of the type of piping, and conjecture was made about the problems with the piping system. In correspondence of March
22, 1974, Neil A. Porter, Vice President of the Petitioner, makes reference to the liquidated damages question in this letter to John Brickert, and suggests holding the matter in abeyance. This letter enclosed a letter from W. W. Gay dated March 21, 1974, directed to the Petitioner, which sets out the approximate time to complete the system will be 105 days. The Gay letter also states opinions by Mr. Gay as to what was determined in the course of the February 28, 1974, meeting on the subject of the cause of the problems with the Ric-wil Dual Gard piping. Mr. Gay made further comments that he felt that the change in temperature, from 70 degrees to 90 degrees as stored, adversely effects the resin epoxy and that the ultra violet rays of the sun also effected the pipe which was stored outside. Mr. Gay's letter of March 21, 1974 and Mr. Brickert's letter of March 22, 1974 are Petitioner's composite Exhibit "G", which was admitted into evidence. Mr. Brickert responded to Mr. Porter by letter of March 29, 1974, in which he suggests the question of liquidated damages cannot be addressed at present because the amount of delay is unknown, and Reynolds, Smith and Hills is not a part of the contract and cannot accept a stipulation for extension. This letter is Petitioner's Exhibit "H", which was admitted into evidence.
On April 19, 1974, a change order was entered by Mr. Brickert which allowed for the substitution of Ric-wil Hi-Gard steel pre-insulated pipe for the Ric-wil Dual Gard 250 plastic
pre-insulated pipe. Page three of that change order indicates the rationale for accepting such a substitute and alludes to the possibility of a time extension which is not subject to identification at the moment of the change order, but which will be requested. This change order is Petitioner's Exhibit "I", which was admitted.
A further statement on the Chil Gard pipe and the problems with the couplings is found in Petitioner's composite Exhibit "J", a letter of May 29, 1974, with attachments from John
T. Brickert to Neil A. Porter.
By Change Order #19 and the accompanying letter of explanation from John T. Brickert, addressed to Jack C. Koons, Administrator, Department of General Services; the project manager has denied, and the Respondent has agreed to such denial, of any time extension conditioned upon problems with the piping systems. This denial by the letter of September 8, 1975, is premised on the conclusion that any failure on the system was due to faulty installation or failure of material which was subject to the control of the Petitioner. As a result of Change Order #19, 198 days of time overrun at $160.00 a day have been assessed as
liquidated damages, totaling $31,680.00. These items of Change Order #19 and the correspondence alluded to are found in composite Exhibit "D" by the Petitioner, which was admitted into evidence.
A review of the evidence offered on the question of the cause of the problems in the hot water system which was being installed as Ric-wil Dual Gard indicates a possible problem associated with the manufacture of Ric-wil Dual Gard pipe; a possible problem with the storage of the Ric-wil Dual Gard pipe at the job site for a period of up to 16 months prior to its installation; possible problems associated with the storage of the resin epoxy at temperatures which would damage the compound; possible contamination of the resin epoxy; possible improper mixture of the resin epoxy and possible improper application of the resin epoxy on the surface of the piping; possible improper sanding of the surfaces of the pipe where it was joined; possible improper preparation of the ditch in which the pipe was being placed, and possible improper installation of the pipe itself. From an examination of the testimony and the evidence offered in support of that testimony, the cause of the problems with the pipe would appear to be a combination of all the factors mentioned above, but it cannot be discerned with reasonable exactness what the percentage of responsibility is in determining the factors which lead to the rejection of the Ric-wil Dual Gard System in favor of the Ric-wil Hi-Gard System.
From the testimony and the exhibits offered on the question of the problems associated with the Chil Water System, the testimony points to defective couplings as the responsible agent for the problems associated with that installation. These defective couplings are found to be the primary cause of the problems associated with the Chill Water System.
On the question of liquidated damages penalties to be associated with a substitution of the Ric-wil Hi-Gard System for the Ric-wil Dual Gard System testimony was offered, as described before, by W. W. Gay who was under the impression that he was receiving relief from any liquidated damages and thought that relief would be afforded. This testimony is supported by the testimony of Neil Porter, the Vice President of the Petitioner who likewise had such an understanding. It is also supported by the testimony of John Daniel Cheatwood, the President of Petitioner, who was in attendance at the March 4, 1974 meeting at the offices of Reynolds Smith and Hills. In addition, Jack Green, Field Representative Mechanical, for Reynolds, Smith and Hills recalled that W. W. Gay requested relief from any possible liquidated damages for substitution of the pipe and the appearance was given
that some consideration would be made of the necessity for extension of time. Mr. Brickert, as spokesman for the owner, felt that the meeting of March 4, 1974, did not commit the owner to grant an extension, and upon ultimate assessment an extension of time associated with the substitution of the pipe was denied. It is found as a matter of fact that the owner through negotiations with the contractor and/or his subcontractor, W. W. Gay, and through the Petitioner's Exhibit "I" agreed to an extension of time for the installation of the Ric-wil Hi-Gard Pipe in substitution for the Ric-wil Dual Gard pipe.
CONCLUSIONS OF LAW
As stated in the findings of fact section of this recommended order, it is not clear whether the unsuccessful installation of the Ric-wil Dual Gard pipe was caused by faulty pipe, faulty fittings, a deterioration in the resin epoxy, or poor workmanship in the elements of installation, or a combination of all factors. Therefore, the Petitioner has failed to show that the causes of the delay in completing the project, associated with the installation of the hot water pipe system were due to factors beyond the control of the Petitioner. It was suggested in the course of the hearing that the owner agreed to allow for an extension of time to the Petitioner through the subcontractor, W.
W. Gay, Mechanical Contractor, Inc., for purposes of substituting Ric-wil Hi-Gard pipe for the Ric-wil Dual-Gard pipe. It is concluded as a matter of law that the Respondent agreed to grant such an extension of time and therefore should not have assessed liquidated damages for necessary delays in obtaining and installing the substituted pipe system. Furthermore, the delays that were experienced were necessary.
In the installation of the Chil Gard pipe, it is concluded that certain problems existed with the couplings in that pipe system. These problems are found to be the responsibility of the Petitioner under the terms of the contract and delays in completing the contract, which are associated with these problems, are properly the subject of liquidated damages.
It is recommended that the relief requested from the imposition of liquidated damages due to the delays associated with the installation of the hot water system and chill water system, which were assessed as 198 days at a $160.00 per day, for a total of $31,860, be reduced in an amount which would equate to the time necessary to install the substituted hot water system, and be
upheld in the amount which would equate to the time necessary to install the chill water system.
DONE and ENTERED this 23rd day of June, 1976, in Tallahassee, Florida.
CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 23rd day of June, 1976.
COPIES FURNISHED:
William S. Stevens, III, Esquire For the Executive Director Department of General Services State of Florida
725 South Calhoun Street Tallahassee, Florida 32304
S. Gordon Blalock, Esquire Suite 2301
Independent Square Building Jacksonville, Florida 32202
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
WESLEY OF FLORIDA, INC.,
Petitioner,
vs. CASE NO. 75-2071
STATE OF FLORIDA,
DEPARTMENT OF GENERAL SERVICES,
Respondent.
/
FINAL ORDER
Pursuant to notice, a hearing was held before Charles C. Adams, Hearing Officer with the Division of Administrative Hearings, at Room 205, Building "B", 6501 Arlington Expressway, Jacksonville, Florida at 9:00 a.m., April 16, 1976.
APPEARANCES:
S. Gordon Blalock, Esquire Suite 2301
Independent Square Building Jacksonville, Florida 32202 For the Petitioner
William S. Stevens, III, Esquire Department of Legal Affairs
725 South Calhoun Street Tallahassee, Florida
For the Respondent PROCEDURAL BACKGROUND
Whether the Petitioner is entitled to an extension of time of
565 days for the completion of the project which is the subject of
this proceeding, as opposed to the 367 days time extension which was granted for completion, and thereby is free from liquidated damages in the amount of $31,680.
FINDINGS OF FACT
On February 21, 1973, a contract was entered into between the Petitioner and Respondent for the construction of Phase II, University of North Florida, at Jacksonville, Florida, State Project No. BR-6504/7801-D. The Form of Agreement Between Contractor and Owner For Construction of Buildings, through its Article 4.2 identifies the conditions for settlement of claims and disputes. Contained as part of the contract, was standard form AIA Document, A201, American Institute of Architects, General Conditions of the Contract for Construction. Within the document A201, was Article 4.5, warranty of the work by the contractor; Article 8.31 discussing the matter of delays and extensions and Article 13.2.1 discussing uncovering and correcting. All these contract conditions are found in Petitioner's Exhibit "A" which was admitted into evidence.
In pursuit of the contract obligations, the Petitioner entered into a contract with W. W. Gay, Mechanical Contractor, Inc., 523 Estelle Lane, Jacksonville, Florida. This contract with
W. W. Gay as subcontractor contemplated the installation of mechanical parts of the contract work, and the agreement between the Petitioner and W. W. Gay is Petitioner's Exhibit "B", admitted into evidence.
Part of the work to be performed by W. W. Gay involved the installation of a hot water piping system. According to Mr.
W.W. Gay, President of W. W. Gay, Mechanical Contractor, Inc., 95% of the pipe to be used in the Phase II project was already available, having been left over from Phase I of the University of North Florida Project. This pipe had been stored for as long as
16 months, exposed to the weather. The storage itself was in accordance with the conditions of modification to contract document prepared by Reynolds, Smith and Hills, Architects, Engineers and Planners of Jacksonville, Florida. Petitioner's Exhibit "C" sets out the requirements for storing the aforementioned pipe. In addition, Mr. Gay testified that some of the type resin epoxy utilized in the Phase I project was left over and was stored in a facility whose temperatures reached 90 degrees Fahrenheit, although the recommended storage temperature for the substance was 70 degrees Fahrenheit. The piping spoken of was a type manufactured by Rick-wil Manufacturing known as FRP, Dual Gard 250. The pipe was identified in the course of the hearing by
Carl Bowles, General Superintendent for W. W. Gay, as being a fiberglass type pipe. This pipe had been selected in lieu of the job specification pipe which is a form of asbestos pipe manufactured by Johns Manville, due to the fact that the Johns Manville pipe had not been approved for release by Johns Manville's quality control department. The substitution of the Ric-wil pipe was approved by the project architect, John Brickert, who was also the project manager and an employee of Reynolds, Smith and Hills. The approval for substitution was on the basis that the Ric-wil pipe was acceptable because it was nonmetallic pipe and the Johns Manville pipe was a nonmetallic pipe. Approval for the substitution had been granted in Phase I and carried over into Phase II.
In addition to the hot water piping system in Phase II,
W.W. Gay installed a chill water system using a PVC type pipe identified as Ric-wil Chil Gard.
Prior to the installation of the Ric-wil Dual Gard pipe in Phase, I, W.W. Gay had never installed that type piping system in Phase I, some problems were experienced with the installation which were not similar to the problems that would be experienced in the construction of the Phase II University of North Florida project. Phase I was completed utilizing the Ric-wil Dual Gard pipe. In the beginning of Phase II, W. W. Gay ran the cold water system and hot water system in a common area underground from valve pit one to valve pit six, in order to put into operation buildings 008 and 009 of the University of North Florida. These locations are shown on the engineering drawing which is Petitioner's Exhibit "K", entered into evidence. Installation of the two piping systems commenced in October of 1973. Sometime in the middle part of November, 1973, a test was conducted on the hot and chilled water systems between valve pits one and six. The hot water system passed the test. The chilled water system failed. Later in November, the chilled water system also passed. This successful test opened up the hot and chilled water systems to buildings 008, 009 and 011. Further tests were conducted in early January, 1974 and again the hot and chilled water lines passed.
In January, 1974, W. W. Gay began to run the hot water piping system from valve pit six to valve pit seven and in the area of building 010 found that the line would not hold pressure. A decision was made retest between valve pit one and six, a leak was found in the area of valve pit one. This leak was discovered in late January, 1974. A subsequent test of the hot water piping system was in early February, 1974, between valve pit one and valve pit six and into the buildings 008, 009 and 011. This test failed. In the middle of February, 1974, a further test was made
from valve pit one to the end of the line, to the northwest corner of building 011, and this test failed. For the balance of February, 1974, time was spent trying to repair the leaks in the hot water piping system. These continued failures in the system brought about two meetings to discuss the solution of the problem. These meetings will be discussed subsequently.
At the time the subcontractor was experiencing problems with the installation of the hot water system, problems were also being experienced with the chill water system. Throughout March, the chill water system was continuing to be installed and in late March a leak was discovered opposite building 010. This leak was repaired. In mid April a leak was found in the chill water system in the area of valve pit six and an attempt to repair it was unsuccessful. Problems continued until June, 1974, at which time replacement of the water pipe and fittings was begun between valve pit one and six. Further testing showed a failure in the chill water piping. Finally in September, 1974, the chill water system passed. One of the problems with the chill water piping system concerned the couplings for that system which were found to be defective. An example of the problems associated with the couplings in the chill water system is demonstrated through Exhibit "N", by the Petitioner, which is a cross section of one of the couplings which was removed after being installed in the Phase II University of North Florida Project. This cross section shows numerous surface irregularities, which promote leaks.
On February 3, 1974, a meeting was held in the offices of Reynolds, Smith and Hills which was attended by the project manager, John Brickert; representatives of the Petitioner; representatives Ric-wil, Incorporated; representatives of the University of North Florida; representatives of the subcontractor
W.W. Gay, and other representatives of Reynolds, Smith and Hills associated with the project. Varying theories were advanced in trying to explain the problems associated with the hot water piping system. From the subcontractor's point of view, expressed by W. W. Gay, this difficulty was not obvious because it was his contention that the pipe was being installed according to the directions of the manufacturer's representative who was on the job site for some 90% of the installation. Jack Green, the mechanical construction specialist for Reynolds, Smith and Hills, testified that from his on site observations, which occurred about the general time frame of the meeting of February 28, 1974, that he had seen water in the trenches around the building 010. Furthermore, according to Green, the subcontractor had undercut the ditches and had attempted to install the hot water piping system while the ditch was too wet, using loose soil which was not
compacted. In addition Mr. Green stated that he felt that the joints were dirty and moist and had not been sanded properly.
Finally, Mr. Green stated that he had stopped the installation of the pipe because of the conditions mentioned. The deposition upon written questions of C. G. Schoor, Service Manager with Ric-wil, said that he had been at the job site on February 11, 1974, and had noticed water leaks in the fringes and couplings of the hot water pipes. He felt that in the area of the flanges there was improper sanding because when the pipe was pulled out, the surface was clean and resin remained in the flange. He also commented in his deposition that there was improper surface sanding and a large area of entrapped air one one of the 10" couplings pulled out between points two and three on the second joint north of two and this occurred during an initial 150 lb. hydro test. In one joint the resin epoxy had not hardened and was still in a plastic state, according to Ben Schoor. In speculating about the plasticity, Schoor said that it could have been prompted by long storage of the material, or contamination of the material which constitutes the resin epoxy or improper mixture of the two components of the epoxy resin on the part of the subcontractor. He felt that this plasticity would probably promote leaks but he observed no such leaks where the resin epoxy was plastic. The deposition on written questions of Ben Schoor was entered into evidence as Respondent's Exhibit "B".
Discussion at the February 28, 1974, meeting considered two alternatives: First, to allow for the further installation of the Ric-wil Dual Gard System using the expertise of the Ric-wil employees; second, to substitute the Ric-wil Dual Gard pipe with Ric-wil Hi-Gard Pipe, which is steel.
A further meeting on March 4, 1974, was held with representatives of the Petitioner; the subcontractor, W.W. Gay; Reynolds, Smith and Hills, by John Brickert, and other representatives of that firm. It was decided at that meeting, that due to the effect of oil shortages causing the unavailability of the Ric-wil Dual Gard pipe and fittings, the Ric-wil Company would design a pipe system to utilize steel pipes, and the subcontractor would determine the necessary adjustments to use the steel pipe. At this meeting the subcontractor, W.W. Gay, requested some relief from possible liquidated damages, and the minutes of that meeting indicate that consideration of that request was deferred. According to notes from time sheets of Reynolds, Smith and Hills, which was admitted as Respondent's Exhibit "A", installation of the steel piping system was commenced on July 1, 1974, and completed August 21, 1974. Minutes of the meetings of February 28, 1974, and March 4, 1974, are found as
Petitioner's Exhibits "E" and "F" respectively, admitted into evidence.
After the March 4, 1974, meeting, discussion was continued on the question of liquidated damages in view of the substitution of the type of piping, and conjecture was made about the problems with the piping system. In correspondence of March 22, 1974, Neil A. Porter, Vice President of the Petitioner, makes reference to the liquidated damages question in this letter to John Brickert, and suggests holding the matter in abeyance. This letter enclosed a letter from W. W. Gay dated March 21, 1974, directed to the Petitioner, which sets out the approximate time to complete the system will be 105 days. The Gay letter also states opinions by Mr. Gay as to what was determined in the course of the February 28, 1974, meeting on the subject of the cause of the problems with the Ric-wil Dual Gard piping. Mr. Gay made further comments that he felt that the change in temperature, from 70 degrees to 90 degrees as stored, adversely effects the resin epoxy and that the ultra violet rays of the sun also effected the pipe which was stored outside. Mr. Gay's letter of March 21, 1974 and Mr. Brickert's letter of March 22, 1974 are Petitioner's composite Exhibit "G", which was admitted into evidence. Mr. Brickert responded to Mr. Porter by letter of March 29, 1974, in which he suggests the question of liquidated damages cannot be addressed at present because the amount of delay is unknown, and Reynolds, Smith and Hills is not a part of the contract and cannot accept a stipulation for extension. This letter is Petitioner's Exhibit "H", which was admitted into evidence.
On April 19, 1974, a change order was entered by Mr. Brickert which allowed for the substitution of Ric-wil Hi-Gard steel pre-insulated pipe for the Ric-wil Dual Gard 250 plastic
pre-insulated pipe. Page three of that change order indicates the rationale for accepting such a substitute and alludes to the possibility of a time extension which is not subject to identification at the moment of the change order, but which will be requested. This change order is Petitioner's Exhibit "I", which was admitted.
A further statement on the Chil Gard pipe and the problems with the couplings is found in Petitioner's composite Exhibit "J", a letter of May 29, 1974, with attachments from John
T. Brickert to Neil A. Porter.
By Changer Order #19 and the accompanying letter of explanation from John T. Brickert, addressed to Jack C. Koons, Administrator, Department of General Services; the project manager
has denied, and the Respondent has agreed to such denial, of any time extension conditioned upon problems with the piping systems. This denial by the letter of September 8, 1975, is premised on the conclusion that any failure on the system was due to faulty installation or failure of material which was subject to the control of the Petitioner. As a result of Change Order # 19, 198 days of time overrun at $160.00 a day have been assessed as liquidated damages, totaling $31,680.00. These items of Change Order #19 and the correspondence alluded to are found in composite Exhibit "D" by the Petitioner, which was admitted into evidence.
A review of the evidence offered on the question of the cause of the problems in the hot water system which was being installed as Ric-wil Dual Gard indicates a possible problem associated with the manufacture of Ric-wil Dual Gard pipe; a possible problem with the storage of the Ric-wil Dual Gard pipe at the job site for a period of up to 6 months prior to its installation; possible problems associated with the storage of the resin epoxy at temperatures which would damage the compound; possible contamination of the resin epoxy; possible improper mixture of the resin epoxy and possible improper application of the resin epoxy on the surface of the piping; possible improper sanding of the surfaces of the pipe where it was joined; possible improper preparation of the ditch in which the pipe was being placed, and possible improper installation of the pipe itself. From an examination of the testimony and the evidence offered in support of that testimony, the cause of the problems with the pipe would appear to be a combination of all the factors mentioned above, but it cannot be disconcerned with reasonable exactness what the percentage of responsibility is in determining the factors which lead to the rejection of the Ric-wil Dual Gard System in favor of the Ric-wil Hi-Gard System.
From the testimony and the exhibits offered on the question of the problems associated with the chillwater system, the testimony points to defective couplings as the responsible agent for the problems associated with that installation. These defective couplings are found to be the primary cause of the problems associated with the chill water system.
On the question of liquidated damages penalties to be associated with a substitution of the Ric-wil Hi-Gard System for the Ric-wil Dual Gard System testimony was offered, as described before, by W. W. Gay who was under the impression that he was requesting relief from any liquidated damages and thought that relief would be afforded. This testimony is supported by the testimony of Neil Porter, the Vice President of the Petitioner who
likewise had such an understanding. It is also supported by the testimony of John Daniel Cheatwood, the President of Petitioner, who was in attendance at the March 4, 1974 meeting at the offices of Reynolds, Smith and Hills. In addition, Jack Green, Field Representative Mechanical, for Reynolds, Smith and Hills recalled that W. W. Gay requested relief from any possible liquidated damages for substitution of the pipe and the appearance was given that some consideration would be made of the necessity for extension of time. Mr. Brickert, as spokesman for the owner, felt that the meeting of March 4, 1974, did not commit the owner to grant an extension, and upon ultimate assessment an extension of time associated with the substitution of the pipe was denied. It is found as a matter of fact that the owner through negotiations with the contractor and/or his subcontractor, W. W. Gay, and through the Petitioner's Exhibit "I" agreed to an extension of time for the installation of the Ric-wil Hi-Gard Pipe in substitution for the Ric-wil Dual Gard Pipe.
CONCLUSIONS OF LAW
As stated in the findings of fact section of this Final Order, it is not clear whether the unsuccessful installation of the Ric-wil Dual Gard Pipe was caused by faulty pipe, faulty fittings, a deterioration of the resin epoxy, or poor workmanship in the elements of installation, or a combination of all factors. Therefore, the Petitioner has failed to show that the causes of the delay in completing the project, associated with the installation of the hot water pipe system were due to factors beyond the control of the Petitioner. It was suggested in the course of the hearing that the owner agreed to allow for an extension of time to the Petitioner through the subcontractor, W.
W. Gay, Mechanical Contractor, Inc., for purposes of substituting Ric-wil Hi-Gard Pipe for the Ric-wil Dual Gard Pipe. It is concluded as a matter of law that the Respondent agreed to grant such an extension of time and therefore should not have assessed liquidated damages for necessary delays in obtaining and installing the substituted pipe system. Furthermore, the delays that were experienced were necessary.
In the installation of the Chil Gard Pipe, it is concluded that certain problems existed with the couplings in that pipe system. These problems are found to be the responsibility of the Petitioner under the terms of the contract and delays in completing the contract, which are associated with these
problems, are properly the subject of liquidated damages.
FINAL ORDER
Accordingly, it is hereby Considered, Ordered and Adjudged that the relief requested from the imposition of liquidated damages due to the delays associated with the installation of the hot water system and chill water system, which were assessed as
198 days at a $160.00 per day, for a total of $31,860, be reduced in an amount which would equate to the time necessary to install the substituted hot water system, and be upheld in the amount which would equate to the time necessary to install the chill water system.
DONE AND ORDERED in Tallahassee, Leon County, Florida, this 24th day of January, 1977, pursuant to official action taken by the Governor and Cabinet sitting as the Board heading the State of Florida Department of General Services as September 7, 1976.
JACK D. KANE, Executive Director Department of General Services
| Issue Date | Proceedings |
|---|---|
| Oct. 05, 1977 | Final Order filed. |
| Jun. 23, 1976 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Sep. 07, 1976 | Agency Final Order | |
| Jun. 23, 1976 | Recommended Order | Liquidated damages should not be granted, but money due on completion should be reduced in part, paid in part. |
