vs. ) CASE NO. 82-762
Respondent. )
Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on March 30, 1983, in Jacksonville, Florida. The issue for determination in this proceeding is whether the petitioner is entitled to relief from the respondents with regard to its work on Canoe Lake on the campus of the University of North Florida.
For Petitioner: Daniel D. Richardson
For Respondent William L. Coalson University of 2600 Gulf Life Tower
Upon consideration of the oral and documentary evidence received at the hearing, the following relevant facts are found:
In February of 1980, the University of North Florida (UNF) sent to 26 potential bidders the contract documents and specifications for the enlargement of Canoe Lake on the UNF campus and the removal of materials and soil from the project. While six potential bidders attended the pre-bid conference, only the petitioner, G & T Trucking, Inc., submitted a bid for the project. After the bid opening, the UNF decided not to resolicit for bids and awarded the contract to the petitioner.
Pursuant to the contract, the petitioner agreed to excavate and enlarge Canoe Lake on the UNF campus pursuant to the conditions, specifications and drawings set forth in the invitation to bid documents. (Joint Exhibit 1) The petitioner was to pay the UNF the lump sum of $10.00 and was to receive all fill
removed from the site. The bid documents required the petitioner to commence work within ten calendar days after receipt of a Notice to Proceed and to complete the work within one year. Other pertinent requirements expressed in the bid documents were that "the bidder . . . be familiar with all Federal, State and local laws, ordinances, rules and regulations that in any manner affect the work," (Section II, paragraph 6) and that
"The Contractor shall, without additional expense to the Owner, be responsible for obtaining any necessary licenses and permits, and for complying with any applicable Federal, State and municipal laws, codes
and regulations in connection with the prosecution of the work . . . ." (Section II, paragraph 8)
In the Purchase Order dated March 20, 1980, and in the Notice to Proceed issued by the UNF on March 21, 1980, petitioner was instructed that
". . . any changes in the scope of work set forth in the contract documents must be authorized by a written change order
. . . Changes in the scope of the work without prior written authorization shall not be authorized and shall be subject to subsequent rejection and correction at no expense to the Owner." (Joint Exhibits 3
and 4)
The petitioner did enter upon performance of the contract and did commence the excavation and enlargement of Canoe Lake in early April of 1980. At some point, the petitioner estimated that it would excavate approximately
300,000 cubic yards of fill material from the project as originally designed and would be able to sell that fill material for $663,000. After expenses, it was estimated that petitioner would realize a profit in the amount of $86,722.26.
Original documentation to support either the estimated expenses or the revenue from the sale of fill material was not adduced at the hearing. Also, the petitioner's estimate of 300,000 cubic yards of saleable fill material was based upon prior experience in the business of land clearing and selling fill material, and not upon actual borings made at the site of the project. The time at which the petitioner's profit estimations were made was not sufficiently established, though it was suggested that it could have been as late as September of 1981.
In June of 1980, the Department of Environmental Regulation (DER) became aware of the work being performed on Canoe Lake and visited the site. Prior to this time, neither the UNF nor the petitioner was aware that a permit from DER was required for this project. Officials from DER met with officials from the UNF with regard to the project in June of 1980, and in July of 1980, the UNF submitted an application to the DER for a dredge and fill permit for the Canoe Lake project as originally designed and set forth in the bid documents.
DER would not approve the project as originally designed because of water quality concerns. Had work on the originally designed project continued, DER would have undertaken enforcement procedures in the form of a Notice of Violation, Notice for Corrective Action, or a Cease and Desist Order. A period of six months is the normal time taken by DER to process a standard dredge and
fill permit application. The permit process is often a matter of negotiation and "give-and-take" between the applicant and officials from DER.
Negotiations between DER and the UNF began in July of 1980 and continued through March of 1981. The original project called for a lake depth of at least 12 feet and one continuous body of water around two center islands. At first, DER officials indicated that they would only approve a depth of four feet. After negotiations between DER and the UNF, the project was redesigned to a depth of no more than eight feet. One reason for this compromise was the fact that petitioner had already excavated in some areas to a depth of eight feet. The project as redesigned and ultimately permitted reduced the cubic yardage to be excavated, changed the grade of the slopes and required that a dam or dike be constructed between two water bodies. The permit for the redesigned project was ultimately issued on March 10, 1981.
During the nine-month long period of negotiations between the UNF and DER, petitioner was never asked for input into the redesign of the project. The UNF never requested petitioner to secure the DER permit, and all drawings submitted for approval by DER were prepared by UNF officials.
In November of 1980, approximately seven months after the petitioner had commenced work on the project, the UNF notified petitioner that it was to immediately stop all work on the Canoe Lake project due to petitioner's failure to obtain the required DER permit. (Joint Exhibit 15) At this time, petitioner had completed approximately twenty-five to thirty-three percent of the work on the project, and most of that work was non-revenue producing work for the petitioner.
After the permit from DER was secured in March of 1981, petitioner's attorney advised the UNF Purchasing Department Director that it was anticipated that the UNF would issue a Change Order incorporating the reduced scope of work permitted by DER and that petitioner expected to recommence work on the revised project. Petitioner's attorney further advised that, due to the reduced scope of work, petitioner would experience an actual loss when the permitted work was completed. In order to mitigate that loss, it was suggested that the UNF apply to the DER for a modification to the permit which would allow the increase of the depth of the lake to the original project depth of 12 feet. (Joint Exhibit 20)
By letter to petitioner dated April 2, 1981, the UNF confirmed its prior verbal cancellation of the November, 1980, Stop Work Order and advised petitioner that all future work was to conform with the permit and drawings approved by DER. (Joint Exhibit 21) The UNF advised the petitioner by letter dated May 6, 1981, that it would accept the permit, as issued by the DER, and would discuss the revised scope of work at a later meeting. (Joint Exhibit 22) No evidence was adduced as to such a later meeting having been held.
Petitioner's work on the revised project continued until early September, 1981, when petitioner was advised that the UNF considered the work performed by the petitioner to be complete. (Joint Exhibit 23)
By letter dated September 22, 1981, the petitioner's attorney advised the UNF that he was submitting petitioner's claim for losses in the amount of
$95,135.08, said amount representing an actual loss of approximately $8,500 plus lost profits anticipated from the original project in the amount of $86,722.26. The UNF was requested to acknowledge this claim for money damages and to inform petitioner of the procedure for processing the claim and appeal. (Joint Exhibit
25) The UNF never acknowledged the petitioner's claim or the petitioner's attorney's letter.
Although no original documentation was produced by the petitioner at the hearing, it was the testimony of petitioner's witnesses that, as of the time of completion of the project, petitioner sold 155,541 cubic yards of fill material and received revenues of $351,514.95. Petitioner claims that its expenses in completing the project amounted to $359,927.77. This figure includes expenses for clearing and removal of overburden; excavating, loading and pumping; trucking costs; project supervision; grading banks and a ten percent administrative overhead. All these items were included in a greater amount in the petitioner's estimates of expenses for the originally designed project. The additional expenses claimed as a result of the redesigned project include $2,000 to build the newly required dikes, $2,200 for pumping during the stop-work period and $8,775 for increases in fuel costs due to the delay.
Had the original bid documents included the design of Canoe Lake as ultimately permitted by the DER, the petitioner would have submitted a bid requiring the UNF to pay petitioner between $40,000 and $50,000, plus retainage of the fill for resale. The respondent UNF offered no evidence regarding the value of the project.
CONCLUSIONS OF LAW
The petitioner in this proceeding urges that it is entitled to receive compensation for the work it completed on the Canoe Lake project either in the amount of the full contract profit which it bid for, or under the theory of quantum meruit. It is alleged that it was the responsibility of the UNF to secure any necessary environmental permits prior to soliciting bids for the specifically designed project, and that petitioner is entitled to damages as a result of the change in the scope of the work to be performed.
The respondent UNF takes the position that the petitioner, as the contractor, was solely responsible for securing the DER permit and that, by failing to do so, petitioner breached the terms of the contract and any loss suffered should be borne by petitioner. It is urged by the UNF that the actions of DER rendered the contract as originally contemplated by the parties illegal and, therefore, the UNF was excused from performance. Finally, the UNF contends that, even if petitioner were entitled to damages, it totally failed to adduce sufficient proof as to the amount of such damages.
The first issue to be determined is whether the burden to obtain the environmental permit for the project rested upon the UNF or the petitioner. Respondent UNF points to the language contained in paragraphs 6 and 8 of the special conditions of the bid documents in support of its position that the burden fell on the contractor to obtain the DER permit. These provisions require the bidder to be familiar with all State laws and regulations and place the responsibility upon the contractor for obtaining any necessary licenses and permits in connection with the prosecution of the work. However, in interpreting contracts, it is not sufficient to review only an isolated phrase or paragraph in the contract. Due consideration must be afforded to the entire contract as well as to the intention of the parties as of the time of execution of the contract. The intention of the parties is to be ascertained from a consideration of the entire agreement. 11 Fla. Jur. 2d, Contracts, 105, 107 and
121. Also, the actions of the parties may be considered as a means of determining the interpretation that they themselves have placed on the contract. Lalow v. Codomo, 101 So.2d 390 (Fla. 1958).
Applying the above principles of construction to the facts of this case, it is clear that it was never contemplated that the burden of securing the dredge and fill permit for the entire project would rest with the petitioner. First, the contract required that performance of work be commenced within ten calendar days of the Notice to Proceed. Since a standard dredge and fill permit application normally takes about six months to process, it is clear, and both parties so admitted, that neither party contemplated that such a permit was necessary. Secondly, the contract documents required strict adherence to the dimensions and notes of the design plans, and any variance therefrom or change in the scope of the work could be accomplished only by a written Change Order issued by the UNF. Inasmuch as the permit application process with DER is often a process of negotiation resulting in changes or modifications in design of the project, as illustrated by the facts of the instant proceeding, it could not have been contemplated that the petitioner would have the authority to secure the DER permit required for this project. This conclusion is amply supported by what transpired in this case. When the UNF became aware of the environmental concerns of DER, the UNF officials, without solicitation of advice or input from the petitioner, immediately accepted and undertook the responsibility of proceeding with the application and negotiation process with DER. Petitioner was never requested by the UNF to secure the permit from DER. Instead, petitioner was ordered to stop work on the project and was later requested to resume work under a revised project design. The design of the project was always totally within the control of the UNF. Had the project not been redesigned, construction would not have been permitted.
This then leads to the second issue: is the petitioner entitled to damages for the completed work it performed on the project? This case does not involve the issue of whether either the UNF or the petitioner was entitled to terminate the contract on the basis of impossibility of performance. That is not what occurred here. Instead, the UNF, after unilaterally negotiating with the DER for an acceptable design for the project, notified petitioner of the cancellation of the prior Stop Work Order and instructed petitioner to proceed in conformance with the redesigned project as permitted. This occurred after the UNF was informed by petitioner that performance of the reduced scope of work under the redesigned project would result in an actual loss to the petitioner. The instructions to proceed with work in conformance with the redesigned permitted project, while not designated as such, was tantamount to a Change Order issued by the UNF. Being aware from the beginning that the petitioner was reliant upon revenues from the removed fill as its compensation, and that the revised project greatly reduced the amount of fill to be extracted, it could not have been realistically anticipated by the UNF that the value of petitioner's services would remain the same after the Change Order. There is no dispute that petitioner completed the work as specified in the permitted redesign of the project. To allow the UNF to secure the benefit of their bargain without paying a reasonable value for the services received would be unjust.
A determination of a reasonable value for the services performed by the petitioner presents a more troublesome issue. The petitioner attempted to establish its anticipated profits under the contract for the originally designed project, and compare that anticipated profit with the claimed actual loss it sustained upon completion of the revised project. Without ruling on the sufficiency of the evidence offered by the petitioner in support of its claimed anticipated profit and actual loss, it is concluded that that method of determining the value of services performed by the petitioner is not appropriate. The petitioner's acceptance of proceeding under the "Change Order" was equivalent to an acceptance of the revised scope of work. Thus, its
anticipation of profits from the originally designed project becomes immaterial. What is material is the value of petitioner's services pursuant to the redesigned project.
The only valid evidence on the value of such services was the testimony of petitioner's president and that of an estimator. That testimony was that had petitioner bid on the project as redesigned, it would have requested between $40,000 and $50,000, plus the fill material from the UNF. The UNF presented no evidence that such a bid would have been unreasonable, unacceptable or would not adequately measure the value of the services performed by the petitioner. Accordingly, it is concluded that petitioner is entitled to receive the sum of $45,000 for the work it performed on the enlargement and excavation of Canoe Lake and the removal of materials and soil.
Based upon the Findings of Fact and Conclusions of Law recited herein, it is RECOMMENDED that a Final Order be entered awarding petitioner $45,000 for its services in connection with the enlargement of Canoe Lake on the campus of the University of North Florida.
Respectfully submitted and entered this 15th day of July, 1983, in Tallahassee, Florida.
Daniel D. Richardson, Esquire 1636 Atlantic Bank Building Jacksonville, Florida 32202
William L. Coalson, Esquire 2600 Gulf Life Tower Jacksonville, Florida 32207
DIANE D. TREMOR
Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 1983.
Dr. Barbara Newell Chancellor
Dr. Curtis L. McCray President
University of North Florida 4567 Saint Johns Bluff Road Jacksonville, Florida 32216
