Sometimes, a contract’s differing site conditions provisions go well beyond providing relief for Type I (different from contract representations) and Type II (highly unusual for the type and locale of work). An owner may decide to attempt to give clarity to the parties’ rights and responsibilities with respect to some of the more common specific differing site conditions, such as ground water, unstable soils, or bedrock. But, as we shall see, these efforts can sometimes make matters worse by suggesting relief may exist when, upon close analysis, the relief is proven to be illusory.
This was the case with respect to rock excavation in Thomas & Marker Construction Co. v. Wal Mart, 2008 U.S. Dist. LEXIS 79072, briefed generally in the November 2008 issue of BrickerConstructionLaw. com. In Thomas & Marker, the contractor sued the owner on an over one million dollar differing site conditions claim arising out of unanticipated rock excavation. This case involved a myriad of issues, but we shall concentrate on how the contract addressed rock excavation.
The project, which included site improvements and utilities in preparation for a “big box” retail store, was located in Clark County, Ohio, an area known for its very hard and shallow limestone formations. The contract included two requirements for the contractor to be eligible for payment for rock excavation in excess of the unit price bid for unclassified excavation. First, the rock excavation had to meet the contractual definition of rock excavation. Second, the rock had to be a Type I differing site condition.
The contract defined “rock excavation” as “igneous, metamorphic or sedimentary rock that cannot be removed by mechanical rippers or other mechanical methods and, therefore, requires drilling and blasting.”
The contractor’s sitework subcontractor encountered shallow limestone bedrock that it claimed was not shown on the plans. Ordinary excavators could not handle it. Neither could an excavator equipped with a bucket with hardened teeth, or a bulldozer with a ripper attachment. The only equipment that had success was two Vermeer trenchers. The extra equipment and loss of productivity cost the contractor over one million dollars.
Ultimately, the owner denied the contractor’s differing site condition claim, explaining, for among other reasons, that the troublesome rock excavation did not meet the contractual definition of rock excavation. In a summary judgment proceeding in front of the trial court, the contractor argued that the definition of rock excavation in the contract was ambiguous and so the definition should be construed in the contractor’s favor. The contractor argued that the definition was ambiguous because the “drilling” part of “drilling and blasting” was a mechanical method. However, the court disagreed, explaining that “rock excavation includes only rock that is removed by drilling and blasting. It makes no difference whether the drilling and blasting are mechanical means.”
The contractor argued further that the definition was ambiguous, this time because a hoe ram, a mechanical device, can be used to excavate rock. This argument, too, was rejected for the same reason as the first.
Finally, the contractor argued that the definition was ambiguous because it resulted in multiple absurdities, the most important one being that drilling and blasting was either prohibited by law or an unsafe practice for the particular job site. But again, the court was not impressed, and it rejected these arguments too, explaining that the contract definition had no relation to when or where the excavation is to take place. In the eyes of the court, the contractor had not excavated any rock, despite the fact that over 5,500 cubic yards of limestone, not identified in the contract documents, was removed from the site.
This case points up the risk of unintended consequences when closely defining key contract terms. It is probably true that ultimately, any rock excavation is susceptible to some sort of Herculean mechanical excavation method without resorting to blasting. But the critical factor for a contractor preparing a competitive bid is the huge difference in the cost of the ordinary mechanical means anticipated for performing unclassified excavation and the highly expensive and specialized mechanical equipment that ultimately proved necessary.
The case was ultimately tried in front of a jury in the U.S. District Court for the Southern District of Ohio in December 2008, and the contractor prevailed on the issue of whether the owner waived the restrictive rock excavation provisions during the course of the project. The contractor was awarded a large verdict.
