The Michigan Court of Appeals recently issued two decisions arising from construction contract disputes. In one case, ambiguities in construction drawings precluded summary disposition in favor of either party. In the other, recovery under unjust enrichment principles was rejected because the subject matter of the claim was covered by an express or implied contract.
C.A. Hull Co., Inc. v. Dep’t of Transportation, 2014 WL 7338898 (Mich. Ct. App. December 23, 2014) arose from a contract to paint 23 bridges along an interstate highway. The dispute related to the painting of the largest bridge of the group, the only one which extended over water. After the painting work was complete, the Department of Transportation demanded that additional painting work be completed in conformance with the contract. The contractor argued that it was being asked to perform additional work for which payment was required. Project plan sheet 59 included “painting notes” stating that the estimated area of steel to be coated is 48,250 square feet, and referred to additional notes in structural steel sheet details 1 E. The contractor asserted that the estimated area represented all the painting required, while the department contended that the estimate included only some of the required painting, and that the contractor was required to complete certain work not shown on sheet 59.
Both parties sought summary disposition, arguing that the contract requirements were unambiguous. The Court of Claims granted the department’s motion and denied the contractor’s motion. The Court of Appeals determined that neither party was entitled to summary disposition. The appeals court reviewed contract interpretation principles and applied them to the dispute at issue. The contractor’s interpretation of the plans was not reasonable, in part because sheet 59 referred to “this area of structural steel” as “48,250 square feet,” but another sentence specifically lists what is included, such as end diaphragms and the fascia side and bottom of each fascia beam. The department’s interpretation was likewise unreasonable, in part because a list of what the estimate “includes” did not refer to pin and hanger assemblies that the department contended the contractor was required to paint. Use of the word “includes” does not mean that the list is exhaustive. Since the contract was ambiguous, factual development of the record is needed and neither party was entitled to summary disposition.
Lawrence M. Clarke, Inc. v. Draeger, 2015 WL 205182 (Mich. Ct. App. January 15, 2015) involved a contract for work on a portion of a sanitary sewer system. There were a variety of problems encountered during the project, resulting in litigation. The parties sued each other under theories of recovery including breach of contract and unjust enrichment. The trial court decided the case under the equitable theory of unjust enrichment. The Court of Appeals reversed, after reviewing the contracts between the parties, including a separate arrangement for two parts of the work that referenced the original proposal. Actual performance took place in mutual reliance on a master bid, indicating that the parties were operating under an implied contract. The disputes concerned not what the parties agreed to, but their performance. The Court of Appeals remanded the case with instructions that the trial court analyze what aspects of the parties’ claims came under contract, express or implied, and resort to unjust enrichment or another equitable theory “only to the extent that justice requires operation of that equitable [theory] where no valid contract was in place.”
Both of these cases underscore the importance of clearly defining contract terms, to avoid litigation over the requirements of a construction contract, or whether an express or implied contract even exists.