In Weigand Constr. Co., Inc. v. Stephens Fabrication, Inc., 929 N.E.2d 220 (Ind. Ct. App. 2010), a subcontractor bound by flow-down provisions, under which the terms of the contract between the owner and general contractor are incorporated into the subcontract, saw its claim for extra work denied because it was not submitted within the contractual deadline.
Weigand was hired by Ball State University as the general contractor for the Music Instruction Building project. Stephens was the successful bidder for structural steel construction. Weigand issued a purchase order to Stephens that included a flow-down provision adopting the terms of the Weigand-BSU contract. The claim provision of that contract required claims for additional payment to be submitted in writing to the project architect within the later of 1) 21 days after the occurrence of the event giving rise to the claim, or 2) within 21 days after the claimant first recognizes the condition giving rise to the claim.
Stephens was hired to 1) fabricate the structural steel for the project, 2) engineer the connections between the structural steel members and the roof truss members, and 3) create detailed shop drawings for use by production personnel. Stephens hired Cecil Wilson and Argo Engineering to perform the engineering and detailing work. In June 2002, BSU’s architect made changes to the design of the steel trusses. The architect sent revised drawings to Weigand, which sent them to Stephens, which in turn sent them to Wilson. When Wilson and Argo met to discuss the revised drawings on July 11, 2002, they realized that substantial changes to their own calculations would be required. (According to Stephens, it was not given notice of the needed revisions at the time the need for them was recognized.) Nine months later, in April 2003, a Stephens employee verbally informed a counterpart at Weigand that the design changes would result in extra work and expense. Another five weeks passed before a written claim for extra work was submitted. To keep the project on schedule, Weigand directed Stephens to comply with its contract and agreed to submit the claim to BSU for resolution while work continued. BSU ultimately rejected the claim because it was untimely.
Stephens sued Weigand, BSU, and Weigand’s payment bond surety. In deciding cross motions for summary judgment, the trial court awarded more than $268,000 to Stephens. This included nearly $40,000 for an unpaid balance due on the base contract and for certain materials, and the claim for extra compensation. Weigand, which opposed the claim for extra work on timeliness grounds, appealed. The Court of Appeals devoted the first part of its Opinion that a Chapter 7 bankruptcy filed by Stephens had on the claim, concluding that the right to pursue the claim survived the bankruptcy. The claim, however, was not timely filed. A clear notice provision in the Weigand-BSU contract was incorporated into the Weigand-Stephens subcontract. Stephens received revised drawings on June 13 and June 20, 2002. These drawings required significant changes to the scope of work, as Weigand’s subcontractors Wilson and Argo recognized on July 11, 2002. Stephens, however, waited until April 22, 2003 to verbally notify Weigand of the changes, and until May 28, 2003 before finally submitting written notice of its claim.
Faced with this timeline showing that it waited far beyond the 21-day period required by its subcontract, Stephens argued that Wilson and Argo did not communicate changes in the scope of the work until April 2003. The Court was unsympathetic, because 1) Stephens was responsible for communicating with its subcontractors and could have included flow down provisions in their contracts, and 2) the best case for Stephens was that it waited 34 days after receiving notice of the changes in scope to provide written notice to Weigand. At the very latest, Stephens knew of the changes on April 22, 2003 (when it gave verbal notice to Weigand), so it unquestionably did not comply with the 21-day notice provision.