Coast Paving & Sealcoating, Inc. v. N. Allegheny Sch. Dist.111 A.3d 220 (Pa. Commw. Mar. 6, 2015).

North Allegheny School District (“Owner”) hired East Coast Paving & Sealcoating, Inc. (“Contractor”) to pave several large areas.  Shortly after Contractor began its paving work, Owner’s architect found “soft spots” in the areas to be paved.  Contractor’s scope of work under the contract did not include soft spot repair work, in which soft ground is replaced with compacted stone before paving, but Contractor and Owner’s Director of Facilities, who had the authority to authorize additional work, agreed that Contractor would do the repair work.  Owner’s architect’s finding of soft spots and Owner’s Director of Facilities’ agreement with Contractor were documented in a report to Owner.  A second report to Owner documented Contractor’s commencement of the repair work.

Contractor submitted its first two invoices to Owner for the soft spot repair work, which Owner’s architect incorporated into a change order, and which Owner paid.  When Contractor submitted a third invoice, Owner’s architect did not incorporate it in to a change order, and Owner refused to pay it.  Contractor filed suit to recover the invoice amount. After a non-jury trial, the trial court found in Contractor’s favor.

On appeal, Owner argued that the terms of the parties’ contract required an executed, written change order before it would have a duty to pay Contractor for the soft spot repair work.  The parties’ contract integrated the conventional American Institute of Architects (“AIA”) A201 General Conditions of the Contract for Construction, Section 7.1.1 of which states that “[c]hanges in the Work may be accomplished after execution of the Contract, and without invalidating the Contract, by Change Order.”

The appeals court found that the Owner’s agent authorized the soft spot repair work, the repair work was documented in written reports to Owner, and Owner’s architect had previously incorporated invoices for portions of the same work into change orders.  As a result, Owner could not rely on the written change order requirement to refuse to pay Contractor for its repair work.  Owner agreed to Contractor’s performance of the soft spot repair work, knew the repair work was being done, and knew what the repair work involved, and Section 7.1.1’s written change order requirement thus could not relieve it of its obligation to pay Contractor for that repair work.

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