Case Title: New England Partnerships, Inc. v. Rutland City School District

Citation: 173 Vt. 69, 786 A.2d 408

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2001-09-14T00:00:00Z

Document:
New England Partnership, Inc. v. Rutland City School Dist. (2000-108); 
173 Vt. 69; 786 A.2d 408

[Filed 14-Sep-2001]

[Motion for Reargument Denied 29-Oct-2001]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.

                                No. 2000-108

New England Partnership, Inc.	                 Supreme Court

                                                 On Appeal from
     v.	                                         Washington Superior Court

Rutland City School District	                 June Term, 2001

Mary Miles Teachout (findings and conclusions) and Alden T. Bryan (judgment 
  order), JJ.

Michael B. Clapp, Burlington, for Plaintiff-Appellant. 

William H. Meub and Erin Gallivan (On the Brief) of Keyser Crowley, P.C., 
  Rutland, for Defendant-Appellee.

PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.

       SKOGLUND, J.   In this dispute over payment due under a construction
  contract, appellant  New England Partnership, Inc. (NEPI), architects of a
  building and remodeling project for appellee  Rutland City School District
  (district), appeals the Washington Superior Court's determination that  the
  amount still owed on the contract to NEPI was $41,059.  NEPI argues that
  the trial court erred in  (1) its calculation of the contingent fee amount
  due pursuant to paragraph six of the addendum to the  contract; (2) its
  determination of the "basic compensation" amount pursuant to paragraph 3 of
  the  addendum agreement; (3) its calculation of the amount of prejudgment
  interest to be awarded NEPI;  and (4) its holding that the Prompt Pay Act,
  9 V.S.A. §§ 4001-4009, does not apply to 

 

  paragraph 6 of the addendum.  The district presents three cross claims as
  well: that the trial court  erred in (1) its determination that NEPI was
  owed any amount under the contingent fee agreement in  paragraph six of the
  addendum; (2) its calculation of the contingent fee amount pursuant to 
  paragraph six of the addendum; and (3) its award of attorney's fees to
  NEPI.  We agree with NEPI on  its first, second, and third arguments, and
  disagree with its fourth argument as well as the arguments  presented by
  appellee on cross-appeal.  We therefore affirm the trial court's decision
  in part, reverse  in part, and remand. 					

                            I. Factual Background

       We begin with the facts, as found by the trial court, which are
  relevant to this appeal.  On  December 8, 1989, the parties entered into a
  written agreement in which NEPI would provide the  district with
  architectural services for the building of a new high school and the
  renovation of other  buildings.  The agreement was memorialized in a
  standard American Institute of Architects contract,  and incorporated a
  budget dated November 16, 1989 which had previously been developed by NEPI 
  for the district for bond vote purposes.  The agreement specified in
  paragraph 11.2 the "basic  compensation" NEPI was to receive for its
  services. It stated, in pertinent part, that "basic  compensation" shall be
  computed as "[t]he Stipulated Sum of Eight Hundred Twenty Five Thousand 
  Dollars (Gross Fee of $853,000.00 less $28,000.00 credit for payments for
  pre-bond services)[.]"    On May 16, 1990, the parties agreed to change the
  compensation portion of the agreement to reflect a  cost of $8,804 for
  insurance, resulting in a new basic compensation fee of $816,196.   

       In June 1990 the district's Act 250 permit request was denied.  In
  August, when it appeared  that it would be some time before the permit
  would be obtained, NEPI stopped working on the plans 

 

  for the high school.  In January 1991, NEPI informed the district that when
  the project resumed, its  fees would need to be increased as a result of
  the delay.

       The Act 250 permit was granted in the summer of 1992, and NEPI resumed
  work on the  drawings.  On July 23, 1992, NEPI informed the district of
  what would be necessary to complete the  project, and that completion would
  cost the district $466,373 in additional fees above and beyond the 
  original contract amount.  Despite NEPI's letter providing a description of
  the bases for these  increased costs, the district was upset over this
  increased amount, finding it difficult to understand  why, with the
  construction drawings 58% complete, so much in additional fees was
  necessary.

       On July 28, NEPI provided a new budget which called for a total
  project cost of $16 million -  substantially higher than the $8.7 million
  project cost at the time of the bond vote.  The district  requested that
  NEPI come up with a fixed fee for the completion of the project, and during
  the next  three months NEPI worked with the district to develop a budget
  and scope for the project that would  be in balance with the district's
  available funding.  On September 14, a budget in line with the  available
  funding was presented to the district, with construction costs for the high
  school at  $9,002,000, not including a four-percent construction
  contingency.  The budget included a fixed fee  for NEPI's services for the
  entire project at $1,095,585, plus $91,475 in start-up costs.  At this
  time,  NEPI indicated that it was willing to address the issue of the near
  $150,000 in project suspension  costs by making payment for them contingent
  on the project being bid below the budget for  construction.  

       On October 13, 1992, the parties met to negotiate a revised contract,
  as the original  agreement was due to expire.  As a result of these
  negotiations, on November 23, 1992 the parties  agreed on the terms of an
  addendum to the contract.  Subsequently, the district contacted a 

 

  construction company to manage the construction project, and on April 13,
  1993 the district and the  construction company agreed on a "guaranteed
  maximum price" (GMP) for the overall project of  $10,183,406, including a
  guaranteed maximum price of $8,759,405 for construction of the high  school
  portion of the project.  The construction project agreed to with the
  construction company  differed from that planned by NEPI, as the district
  specifically eliminated from this later agreement  certain items present in
  the NEPI plans and drawings in order to ensure that the district would have 
  money left over.  The project then went out for bidding, and the project,
  as bid on, resulted in a  savings of $342,760.   

       On July 12, 1993, NEPI submitted a bill to the district for the
  contingency fee called for  under paragraph six of the addendum.  The bill
  referred to $9,001,500 as the amount by which the  contingency was to be
  calculated, and claimed that the GMP, as adjusted for bid savings, was
  below  this amount.  The district did not pay the bill for the contingency. 

                         II. NEPI's Claims on Appeal

       NEPI first argues the trial court erred in calculating the suspension
  contingency amount as  described in paragraph six of the addendum. 
  Paragraph six provides:

    Owner agrees to pay Architect additional contingent compensation 
    over that already set out above.  The contingent compensation will
    be  50% of the amount, if any, by which the high school GMP, as 
    adjusted through completion of bidding, is lower than the October
    13,  1992, estimate, attached hereto, up to a maximum contingent 
    compensation of $50,000.00.  For example, if the adjusted GMP is 
    $50,000.00 lower than the October 13, 1992 estimate, Architect
    will  receive $25,000.00, if the adjusted GMP is $101,000.00 or
    more  lower than the October 13, 1992 estimate, Architect will
    receive only  $50,000.00.  The calculation of the contingent
    compensation will be  made at the completion of bidding and
    payment shall be made out of  initial bond proceeds.      

 

  NEPI claims that the trial court erred in adjusting the "high school GMP"
  upwards, as there was no  provision in the addendum for such an upward
  adjustment.    

       We note initially, as to NEPI's claims that paragraph six does not
  provide for any upward  adjustment of the "high school GMP," that the
  addendum does not specifically state that the  adjustment to be made at the
  completion of bidding is limited to decreasing the "high school GMP" 
  amount.  NEPI's proposed construction of the phrase "as adjusted through
  completion of bidding"  allows only a downward adjustment of the high
  school GMP.  NEPI does not, however, indicate  whether this argument was,
  if ever, presented to the trial court.  The trial court's decision makes no 
  reference to whether there was an issue as to the ambiguity of the language
  NEPI now challenges.  It  found that portions of paragraph six were
  ambiguous, but it did not state whether or not it had  concluded, or even
  considered, if the adjustment language at issue here was ambiguous.  
  Accordingly, we will not search the record to determine if the issue was
  preserved for review.  See   In re Wright, 131 Vt. 473, 490,