March 2002
By ALEXANDER A. MIUCCIO, CIC Legal Counsel
Contractors normally seek compensation for additional work when they discover that the work they are required to perform differs either quantitatively or qualitatively from what was specified in the contract documents. Public and private owners frequently attempt to protect themselves from claims for such additional work by inserting exculpatory clauses in the contract. These clauses disclaim the accuracy of the contract documents and require the contractor to base its bid on its own inspection of the construction site.
A unit price contract provides for compensation at an agreed rate for the quantity of work actually performed. A contractor seeking additional compensation under a unit price contract must therefore show that there was a qualitative difference in the work. In the recent case, D.A. Elia Construction Corp. v. New York State Thruway Authority, the court denied a contractor's claim for additional compensation under a unit price contract.
Background
D.A. Elia Construction Corp. entered into a unit price contract with the New York State Thruway Authority for the repair of four concrete piers supporting the Castleton-on-Hudson Bridge. The contractor was paid the unit prices specified in the contract for the number of cubic yards of concrete actually placed and the number of gallons of epoxy bonding compound estimated in the bid documents. However, the number of areas actually repaired by the contractor was significantly greater than the number of areas identified in the contract documents. Additionally, the Thruway Authority changed the repair procedure from what was set forth in the bid documents.
The contractor commenced an action for additional cost incurred because of the additional repair work. The contractor argued that the Thruway Authority had misrepresented the extent of repairs in the bid documents. It also argued that the contract's exculpatory clauses should not be enforced because there was insufficient time for the contractor to thoroughly inspect the piers before the submission of its bid. Additionally, the contractor contended that the actual work constituted a qualitative change from the work described in the contract, both because more areas of repair were involved, making the work more difficult to perform than contemplated by the contractor in formulating its bid, and because the repair procedures had been changed.
The lower court dismissed the claim, finding that the contractor had agreed to the changed repair procedures, which had been revised before the contract was executed, and that the increased number of repair areas did not constitute a qualitative change in the work. The contractor appealed.
Decision
The Appellate Division affirmed the lower court's dismissal of the action.
According to the court, in order for the contractor to rely upon fraudulent misrepresentations, it would have to prove that the extra work resulted from concealment or nondisclosure of material facts either known to the Thruway Authority or within its possession. The bid documents did not represent that they were based upon an accurate field inspection. Rather, the contract warned that only major repair areas were indicated and that they were approximations, subject to actual field conditions. The bid documents advised bidders to conduct their own inspections.
The court also pointed out that the contract's exculpatory clauses would not be given effect if an inspection would not have revealed the inaccuracy of the representations. The court held, however, that there was no evidence that a sufficiently thorough inspection could not have been made by the contractor before its bid submission.
Finally, the court found that the contractor had failed to demonstrate a qualitative change in the nature of the work. Although there were significantly more areas requiring repairs, the total area repaired and the amount of concrete used was comparable to the estimates contained in the contract. All that the contractor was able to establish was that the work was more difficult than expected. According to the court, that was "plainly insufficient to free it from the unit price contract." The alteration of the repair procedure was also insufficient to constitute a qualitative change because there was evidence that the procedure was revised before the contract was executed, and was therefore within the contractor's contemplation.
Conclusion
It is difficult to sustain a claim for extra work based upon alleged misrepresentations contained in bid documents when the contract contains exculpatory clauses which disclaim the accuracy of the description of the work and advise bidders to conduct their own inspection of the site. Under a unit price contract, the contractor can only claim qualitative differences in the work since it will be compensated for the actual quantity of work performed under the contract. In this case, the contractor's claim for extra work under a unit price contract failed because of the exculpatory clause and the contractor's inability to prove a qualitative difference between the actual work performed and the work described in the contract.
About the author: Mr. Miuccio is a partner in the New York City-based law firm Altieri, Kushner & Miuccio, P.C., and legal counsel to the Construction Industry Council of Westchester & Hudson Valley, Inc.