Opinion ID: 474514
Heading Depth: 3
Heading Rank: 1

Heading: Entitlement to Breach of Contract Damages

Text: 18 The contract between Middle South and Bagwell contains an explicit provision for changes and extra work. 1 This provision, article 38, essentially allowed Bechtel, as Middle South's agent, to require Bagwell to perform extra work, work outside the scope of the contract, or a change, a substitution, addition, or deletion of work within the scope of the contract. To be recompensed for changes or extra work, Bagwell was required to submit within ten days after receiving a written order from Bechtel a proposal outlining the cost of such work in sufficient detail, which Bechtel could either accept or reject in whole or part. If this proposal was rejected in whole or in part by Bechtel or if Bagwell did not submit a cost proposal, article 38 provided a detailed method of computing compensation. It is the asserted applicability of article 38 to the facts of this case that is the main focus of Middle South's appeal. 19 Middle South claims that article 38 should have governed the district court's disposition in this case. First, Middle South notes that the district court held that under the circumstances before it, Bagwell had the right ... to submit a claim for additional costs, thus arguably finding article 38 applicable. Middle South claims that the district court ignored its own holding by finding that the conditions Bagwell faced during its second mobilization were the proximate cause of substantial additional costs to plaintiff [Bagwell] in continuing work at Grand Gulf, but nevertheless awarding damages not in accordance with article 38. Since the district court awarded damages to Bagwell other than pursuant to article 38, Middle South concludes that the district court implicitly but erroneously awarded damages for breach of contract. Thus Middle South's ultimate position is that Bagwell must recover additional compensation, if any is owing, only through article 38. 20 Middle South asserts that the contract is flexible and is fully capable of resolving the current dispute through its various provisions and amendments, including primarily article 38 for changes and extra work. Middle South claims that the contract also provides compensation for differing site conditions (article 16), 2 and suspensions (article 42), 3 , and thus concludes that the contract is fully capable of adapting to meet this dispute. However, Middle South fails to explain why article 38 or any of the other above-noted articles are applicable to this particular dispute. Middle South claims that under article 38 Bagwell forfeited all rights to additional compensation because Bagwell did not comply with the requisites contained therein for compensation. Middle South asserts that Bagwell submitted claims under article 38 that were no more than stacks of paper, and thus Bechtel's rejection of these claims was correct. We reject these contentions. 21 Bagwell's suit was for breach of contract by Middle South. Bechtel, Middle South's agent, violated a specific contractual condition that it not obstruct the structural steel before the fireproofing. The contract between Middle South and Bagwell provided, through the adoption of Carboline's guidelines for the use of its cementitious fireproofing material Pyrocrete, that the fireproofing work was to proceed before installation of fixtures or equipment obstructing access to the steel members. This was a specific contract provision, unique to the contractual relationship between these parties. 4 22 Breach of this contractual provision to provide Bagwell unobstructed access to the structural steel is fully supported by convincing, undisputed evidence in the record. Don Williams, the production foreman for Bagwell during the Grand Gulf project, testified that piping, unistruts, duct work, [and] cabletrans were attached to the structural steel, and these obstructions slowed it [the fireproofing] down an awful lot. Photographs were admitted into evidence that established the work surface area in and around structural steel was clustered with various components. Williams also testified that conditions were often even more congested than those depicted in the photographs. These photographs show steel covered with various ducts and other obstructions. Working conditions suffered greatly as a result of this congestion, and workers were forced to improvise to the extent possible. 5 Furthermore, Gonzalez, president of Bagwell, testified that not having control of the work, the congestion, and not having a proper schedule severely affected Bagwell's profitability under its contract with Middle South. Thus we find uncontroverted evidence in the record that Middle South, through its agent Bechtel, breached its contract with Bagwell. 6 23 As we have noted, the contract requires that the fireproofing was to be done before the ducts, pipework, equipment, and other similar obstructions were in place. While it is perhaps arguable that Changes or Extra Work within the contemplation of article 38 should not be read so broadly as to authorize total repeal of this provision against obstruction of access, 7 we need not resolve that issue. Here, article 38 was never invoked by Bechtel or Middle South so as to alter this provision of the contract. No written order for Changes or Extra Work was ever issued in this respect, 8 and indeed Bechtel consistently refused to issue such an order. Accordingly, article 38 never came into play, and there was no article 38 Change of the contract to eliminate the provision prohibiting obstruction of access to the steel members. 9 Consequently, Middle South's breach of the contract remained unexcused. 10 The cases relied on by Middle South 11 are not in point, for none of them involve situations where the party in Middle South's position was guilty of breach of the contract. Moreover, here, Bagwell's recovery is for damages for breach of contract, as opposed to being for the value of work not covered by the contract. Bagwell performed the work covered by the contract--fireproofing the structural steel--and has not recovered for performing work not covered by the contract. Rather, Bagwell has recovered damages it incurred because Middle South's breach of the contract provision prohibiting obstruction of access increased Bagwell's cost of performance. Nor is this a situation in which a contractually authorized change order is issued. See Jackson v. Sam Finley, Inc., 366 F.2d 148 (5th Cir.1966). Had such an order been properly issued under article 38 (assuming its potential applicability), then Bagwell would have been entitled to the additional compensation called for by article 38 (in contrast to the Sam Finley situation where under the contract the change order did not affect the unit price), and the contract would have been changed so that Middle South would not have been in breach of it. But a change order was not issued, so Middle South remained in breach of its obligations under the contract. Bagwell, which performed its obligations, is entitled to recover its damages for Middle South's breach. 12 24 Nor does Middle South fare any better under its waiver or election of remedies contentions urged at oral argument before us. Middle South's theory seems to be that remedies under article 38 and for breach of contract are mutually exclusive, and that by continuing performance Bagwell chose the former and waived the latter. Under Mississippi law, election of remedies applies only when there is a choice between two or more available but inconsistent remedies. Anaconda Aluminum Co. v. Sharp, 136 So.2d 585, 588 (Miss.1962); O'Briant v. Hull, 208 So.2d 784, 786 (Miss.1968). Mississippi has been slow to accept the doctrine of election of remedies and its application has been carefully limited and guarded. Anaconda, 136 So.2d at 589. Election has not been established here. Since a change order was not issued, and Bagwell had no right to force a change order as such, an article 38 remedy was not available. Bagwell made no choice between article 38 remedies and those for breach of contract. Bagwell, at the beginning of the second mobilization, indicated it was ready to forego completely any further contract performance unless pricing arrangements were made. Bechtel pleaded with Bagwell to continue and assured Bagwell that these problems would be resolved, and that appropriate compensation would be forthcoming, if Bagwell would only return to or continue its fireproofing work. Moreover, the evidence does not indicate that while Bechtel was promising to recompense Bagwell, it promised to do so only under article 38. Indeed, the opposite appears to be true, for Bechtel employees consistently denied the applicability of any specific provision of the contract to its dispute with Bagwell. Moreover, since Bagwell clearly protested and Bechtel induced it to nevertheless continue work by assurances that Bagwell would be appropriately compensated, it cannot be said that Bagwell's continued performance under those circumstances constituted, as a matter of law, a waiver of its right to damages for Middle South's breach of contract. See Montgomery v. Kimbrough Homes, 214 Miss. 519, 59 So.2d 273, 276 (1952); Peter Kiewit Sons' Co. v. Summit Construction Co., 422 F.2d 242, 259 (8th Cir.1969). See also 13 Am.Jur.2d Building and Construction Contracts Sec. 53 at 57 (It is generally held that a building or construction contractor does not, by proceeding with the work, waive the right to recover damages resulting from the delay caused by a default of the contractee, especially where the contractor protests against the delay. (Footnote omitted.)). 13 25 Finally, our holding that Bagwell is entitled to breach of contract damages apart from article 38, and that its continued performance of the work does not require a determination that it waived its right to damages, is fully supported by our recent decision in Affholder, Inc. v. Southern Rock, Inc., 736 F.2d 1007 (5th Cir.1984), which also involved Mississippi law. Indeed, Chief Judge Clark's dissent in Affholder makes it clear that he too would have allowed recovery for the party in Bagwell's position had the work site change which caused that party's additional expenses been a breach of the contract by the other party. Id. at 1017. Here, as we have noted, Middle South breached the contract prohibition of obstructing access to the steel members, and article 38 does not excuse this breach because a change order was never issued. Unlike the subcontractor in Affholder (id. at 1018), Bagwell protested this breach, and Bechtel in response gave assurances that Bagwell would be appropriately compensated if it continued.