Case Title: WESTATES CONSTRUCTION CO., A Wyoming Corporation v. THE CITY OF CHEYENNE, LARAMIE COUNTY, WYOMING, AND THE CHEYENNE BOARD OF PUBLIC UTILITIES

Citation: 

Docket Number: 88-191

State: wyoming

Court: Wyoming Supreme Court

Date: 1989-06-09T00:00:00Z

Document:
WESTATES CONSTRUCTION CO., A Wyoming Corporation v. THE CITY OF CHEYENNE, LARAMIE COUNTY, WYOMING, AND THE CHEYENNE BOARD OF PUBLIC UTILITIES1989 WY 128775 P.2d 502Case Number: 88-191Decided: 06/09/1989Supreme Court of Wyoming
WESTATES CONSTRUCTION 
CO., A WYOMING CORPORATION, APPELLANT (PLAINTIFF),

v.

THE CITY OF 
CHEYENNE, LARAMIE 
COUNTY, WYOMING, AND THE CHEYENNE BOARD OF PUBLIC 
UTILITIES, APPELLEES (DEFENDANTS).

Appeal from the District 
Court, LaramieCounty, Edward L. Grant, 
J.

John T. Pappas 
of Western Law Associates, Lander, for 
appellant.

Carl L. Lathrop 
and Peter K. Michael (argued), of Lathrop, Rutledge & Boley, Cheyenne, for appellees.

Before CARDINE, C.J., and THOMAS, URBIGKIT, MACY 
and GOLDEN, JJ.

CARDINE, Chief 
Justice.

[¶1.]     Appellant Westates 
Construction Company (Westates) initiated a contract action against the City of 
Cheyenne and the 
Cheyenne Board of Public Utilities (City) to recover damages allegedly arising 
from the performance of extra-contractual work and delays in the construction of 
the Stage II Water Diversion Project. The district court granted the City's 
motion for summary judgment on three alternative grounds:

1. Westates' action was 
barred by its failure to file a timely claim under the Wyoming Governmental 
Claims Act;

2. Westates effectively 
relinquished its claims by agreeing to the terms of change orders 3019 and 
3032;

3. Westates forfeited its 
claims by failing to adhere to contractually mandated claims 
procedures.

[¶2.]     We 
affirm.

[¶3.]     Appellant seeks 
reversal, alleging that the Governmental Claims Act is inapplicable to contract 
claims and asserting that ambiguities in the contract and the change orders 
raise issues of material fact which preclude summary judgment. We need not 
decide whether the Governmental Claims Act and change orders 3019 and 3032 were 
a bar to appellant's claim because we find that the unambiguous terms of the 
contract control appellant's right to relief. Appellant's claims are barred 
because they were not asserted as required by the contract of the 
parties.

FACTS

[¶4.]     The Stage II Water 
Diversion Project required the City to obtain an easement from the United States 
Forest Service (USFS) to increase the storage capacity of Hog Park Reservoir, 
located in the MedicineBowNational 
Forest approximately twenty miles southwest of Encampment, 
Wyoming. Under 
the terms of the easement issued, USFS retained broad supervisory authority over 
the project for the control of soil erosion and water pollution. On July 26, 
1982, Westates contracted with the City to enlarge the reservoir. In 
mid-October, subcontractors began washing gravel and draining muddy water from 
the process into three holding ponds built by one of Westates' subcontractors. 
The ponds failed, discharging the muddy pollutant into Hog Park Creek. The USFS, 
apparently concerned that Westates' diversionary structure might be unable to 
handle the 1983 spring runoff thereby resulting in a similar degradation of the 
stream, immediately suspended work until adequate preventative measures could be 
devised. After evaluating the problem, USFS required Westates to leave the 
reservoir's existing outlet works in place until after 
runoff.

[¶5.]     Westates alleges in its 
complaint that compliance with USFS's decision created delays and extensive 
extra work which so enlarged Westates' contractual obligations as to require 
additional compensation. During October and November of 1982 Westates requested 
a change order that would compensate it for the anticipated delays and extra 
work. The requests, however, were not accompanied by data supporting the claim 
for additional payment.

[¶6.]     About the same time, a 
dispute arose concerning excavation in the area of the reservoir's new control 
building and stilling basin. Because the contractors and the project engineers 
were uncertain whether the excavators had reached bedrock, the area was 
over-excavated, requiring that it be refilled with concrete. By the end of July 
1983, Westates' subcontractor had completed the refilling, and on July 30 
representatives for Westates and the City agreed that Westates would be paid for 
495 of the 985 cubic yards of concrete required to fill the over-excavation. 
Thereafter, on November 29, 1983, Westates' subcontractor requested payment for 
an additional 448 cubic yards of concrete. Westates forwarded that claim to the 
project engineer with supporting data on March 8, 1984. The engineer denied the 
claim on May 10, 1984, on the grounds that Westates had already agreed to accept 
payment for only 495 cubic yards of concrete and had in fact been 
paid.

[¶7.]     In the meantime, 
because of the USFS's 1982 decision to temporarily leave the reservoir's 
existing outlet structures in place, Westates had to reschedule the demolition 
of those structures and postpone construction of the new outlet. Accordingly, 
Westates fell behind schedule for the 1983 construction season and once again 
found it necessary to perform additional, but temporary, work to prepare for the 
upcoming spring runoff. On November 8, 1983, the City authorized change order 
3019, relieving Westates of liability for its failure to complete that year's 
work according to contract deadlines and requiring the completion of certain 
temporary work in preparation for runoff. By the terms of that change order, 
Westates was to receive no compensation for the extra work performed or for the 
delays caused by performing that work. Westates was never able to overcome the 
delays created in 1982, and the project remained behind schedule. Therefore, on 
June 4, 1985, the City authorized change order 3032, extending the contract 
completion date but providing that Westates would receive no extra compensation 
for work performed during the extension.

[¶8.]     On December 19, 1985, 
Westates submitted a series of claims and supporting data asserting that the 
City owed it additional compensation for extra work and delays caused by the 
diversion and excavation problems that arose in 1982. Except for the claim 
relating to the refilling of the over-excavation, this was the first time that 
Westates had offered any data in support of its claims. When the City failed to 
pay these claims, Westates initiated the present action for breach of 
contract.

ANALYSIS

[¶9.]     Westates' suit was 
premised on the City's alleged breach of contract. The provisions of the 
contract control the rights and obligations of the parties. Under the terms 
contained in §§ 101.10 to 101.12 of the General Conditions of this construction 
contract, Westates was not entitled to additional payment or an extension of 
contract deadlines simply because the City required it to perform extra work. 
Westates was merely entitled to an "equitable adjustment" of the contract - and 
then only if it followed the contractually mandated procedures for seeking a 
change order. If through the use of those procedures Westates successfully 
obtained an increase in payment or an extension of time, it would have no claim 
to assert. Thus, under the provisions of Westates' contract with the City, the 
only type of event which could constitute a breach of the City's obligation to 
provide additional compensation would be the failure of the contract's dispute 
resolution mechanisms.

[¶10.]  To approach the matter otherwise would be 
in derogation of the parties' intent to settle their disputes through a more 
informal and cooperative means than litigation. Such a reading of a public works 
contract finds support in the dissenting opinion in Rissler & McMurry Co. v. 
Wyoming Highway Dept., 582 P.2d 583, 586-88 (Wyo. 1978) (Thomas, J., dissenting, 
with whom Raper, J., joins), and was implicitly adopted by a majority of this 
court in Brasel & Sims Construction Co. v. State Highway Commission, 655 P.2d 265 (Wyo. 1982). We noted, in that case, that parties can create a 
contractual prerequisite to the right to sue such that a claim will not accrue 
under the contract until the condition has been met. Id. at 268; see also Quin 
Blair Enterprises, Inc. v. Julien Construction Co., 597 P.2d 945, 951-52, 956 
(Wyo. 1979).

[¶11.]  Westates' failure to comply with 
contractual procedures for submitting its claims clearly and unambiguously 
deprives it of a right to compensation. As a general principle, parties to a 
contract have a right to employ whatever provisions they desire so long as those 
provisions violate neither law nor public policy. Commercial Union Insurance Co. 
v. Stamper, 732 P.2d 534, 538-39 (Wyo. 1987). Courts should give effect to the 
intent of the parties as expressed in the clear and unambiguous language of 
their contract. Amoco Production Co. v. Stauffer Chemical Co., 612 P.2d 463, 465 
(Wyo. 1980); Flora Construction Co. v. Bridger 
Valley Electric Association, Inc., 355 P.2d 884, 885-86 (Wyo. 1960). Thus, where 
that language is clear, parties can create valid conditions precedent to the 
right to bring an action, and claims will not accrue under the contract until 
those conditions have been performed. Brasel & Sims, 655 P.2d  at 268; Quin 
Blair Enterprises, 597 P.2d  at 951-52, 956. Where questions of interpretation or 
construction arise or where there is a question as to whether a provision is 
ambiguous, the court may resolve those issues as a matter of law. Hensley v. 
Williams, 726 P.2d 90, 93 (Wyo. 1986); Amoco Production, 612 P.2d  at 467. 
Therefore, the court may resolve a problem of contract construction by means of 
a summary judgment unless that contract is facially ambiguous and extrinsic 
evidence introduced to resolve the ambiguity raises a genuine issue of fact. 
Madison v. Marlatt, 619 P.2d 708, 714 (Wyo. 
1980).

[¶12.]  By the terms of the Agreement Form signed 
by Westates and the City, "No charge will be made by the Contractor for 
hindrances or delays from any cause whatsoever in the progress of the work." On 
its face, that provision seems to preclude any claim by Westates for delay 
damages. Westates, however, asserts that the provision is rendered ambiguous by 
a contradictory statement in § 101.12 of the General Conditions of the contract 
which reads: "The provisions of this Section 101.12, CHANGE OF THE CONTRACT 
TIME, shall not exclude recovery for damages (including compensation for 
additional professional services) for delay by either party." We note initially 
that § 101.03 of the General Conditions provides that the terms of the Agreement 
shall be given precedence over conflicting terms in the General Conditions. 
Thus, the Agreement could be said to reasonably limit the General Conditions so 
as to make delay damages available only to the City.

[¶13.]  We need not pursue this argument further, 
however, because we find that §§ 101.11 and 101.12 of the General Conditions 
limit Westates' right to compensation for any type of damages, whether that 
compensation be an increase in price (§ 101.11) or an extension of time (§ 
101.12). The relevant language of those sections, with the alternative language 
of § 101.12 in parentheses, is as follows:

"The Contract Price 
(Time) may only be changed by a Change Order. Any claim for an increase in the 
Contract Price (extension in the Contract Time) shall be based on written notice 
delivered to OWNER and ENGINEER within 15 days of the occurrence of the event 
giving rise to the claim. Notice of the amount (extent) of the claim with 
supporting data shall be delivered within 45 days of such occurrence unless 
ENGINEER allows an additional period of time to ascertain accurate cost data 
(more accurate data). All claims for adjustments in the Contract Price (Time) 
shall be determined by ENGINEER if OWNER and CONTRACTOR cannot otherwise 
agree(.) on the amount involved. Any change in the Contract Price (Time) 
resulting from any such claim shall be incorporated in a Change 
Order."

We observe that 
the parties' intent regarding these provisions may be best understood by 
reference to a portion of § 101.16.01, which states:

"Negotiation shall 
include all parties to the Agreement - OWNER, CONTRACTOR, and ENGINEER. It shall 
be used as a means for attempting settlement of disputes and disagreement 
without the use of outside third party assistance.

* * * * * 
*

"Should negotiation of 
any dispute or disagreement occur, work shall proceed as scheduled and specified 
to the completion of the project. All unsettled claims shall be settled by 
litigation, unless an agreeable settlement can be reached, subsequent to Project 
Completion.

[¶14.]  It is clear from these provisions that 
the parties entered into this contract with the intent to resolve disputes by 
informal, prompt, and cooperative means, conducive to the uninterrupted 
completion of the project. The prospect of litigation over matters which could 
otherwise be resolved is, therefore, contrary to that intent. A reasonable 
method of eliminating that prospect would be to condition the right to relief 
upon the exhaustion of contractual procedures for dispute resolution. Westates 
has no contractual right to compensation for extra work or delays unless it 
seeks a change order. Once it initiates that process, Westates acquires a 
potential right to compensation and a present right to the "equitable 
adjustment" mandated by § 101.10 of the General Conditions. In order for those 
rights to accrue, however, Westates must promptly give the City notice of a 
supportable claim. That condition has not been met.

[¶15.]  Westates' suit for breach of contract 
sought compensation for additional work and delays caused by changes in 1982 
with respect to the diversionary and outlet structures. Westates waived its 
right to compensation for the work and delays associated with the diversionary 
and outlet structures by failing to submit a timely substantiated claim. At the 
very latest, the work associated with that claim must have occurred just prior 
to the issuance of change order 3019 or by November 8, 1983. However, it is 
uncontested that Westates provided no supporting data for that claim until 
December 19, 1985, at least two years after the work was performed. Westates, 
therefore, clearly lost its right to a change order and cannot claim a 
contractual right to compensation for that work.

[¶16.]  Westates also sought compensation for the 
extra concrete used to refill the excavation under the control house and 
stilling basin. It similarly lost its right to payment for extra concrete. The 
record shows that all work associated with that claim had been completed by July 
30, 1983, and that Westates' subcontractor had requested payment for that work 
on November 29, 1983. Though Westates arguably gave timely notice of its claim 
by a letter to the project engineer, dated December 16 and received on December 
19, 1983, no supporting data was delivered to the engineer until March 8, 1984. 
Westates failed to show that the engineer had extended the forty-five day period 
within which to submit that data. Likewise, it failed to assert that such an 
extension would have been required to ascertain accurate cost data. Therefore, 
as with the claims addressed above, Westates failed to raise an issue of fact 
regarding its failure to comply with §§ 101.11 and 101.12 of the General 
Conditions of its contract with the City. Summary judgment was 
appropriate.

[¶17.]  Affirmed.