Opinion ID: 1177128
Heading Depth: 1
Heading Rank: 2

Heading: equitable adjustment

Text: On appeal, Eagle's Nest first argues that the district court erred in ruling that Brunzell was entitled to an equitable adjustment under the contract. This contention is without merit. We initially note that neither party to this appeal appears to contest the district court's finding that delays occurred in the course of construction, and that these delays were caused in large part by the failure of Eagle's Nest to deliver the appropriate number of molds to the construction site. Instead, appellant Eagle's Nest argues that the district court erred because it failed to recognize that Brunzell failed to comply strictly with a contractual provision which established specific methods and procedures to be followed if the contractor wished to make a claim for an increase in the contract price. Eagle's Nest maintains that because Brunzell failed to comply with this provision, the contractor may not later claim an increase in the agreed contract price. The provision in question, Section 9.2.1 of the construction contract, established a procedure by which Brunzell could seek an adjustment in the guaranteed maximum contract price. That section provided: If the contractor wishes to make a claim for an increase in the Guaranteed Maximum Price, or increase his Fee or an extension of the Contract Time Schedule, he shall give the Owner written notice thereof within a reasonable time after the occurrence of the event giving rise to such claim. This notice shall be given by the Contractor before proceeding to execute the Work, except in an emergency endangering life or property in which case the Contractor shall act, at his discretion, to prevent threatened damage, injury or loss. Claims arising from the delay shall be made within a reasonable time after delay... . No such claim shall be valid unless so made... . Any change in the Guaranteed Maximum Price, the Contractor's Fee or Contract Time Schedule resulting from such claim shall be authorized by Change Order. (Emphasis added.) It is clear from the contractual language used that this notice and claim provision was material to the parties. The issue presented is whether the district court erred in finding that Brunzell complied with this material notice and claim provision. The district court ruling that the notice and claim provision had been complied with was based on a letter sent by Brunzell to appellant some time after the contractor began experiencing mechanical problems with the small Wham-T mold. That letter provided, in pertinent part: We are currently being delayed as a result of misalignment and unworkability of certain parts within the small Wham-T mold (affectionately called Rusty Dusty by its Maker). This equipment was damaged in transit and has undergone considerable repair and modification since being shipped to the jobsite. Major repairs have been made as directed by Wham-T however, this work has not completely resolved this problem since the rear door closing jacks are still inoperative. Due to this and other problems we have not benefited from having this mold. We have not been able to doordinate [sic] its use with the large mold, consequently have had to bear the additional cost for lifting and erection of poured units after our equipment has moved to a different location. For example, the large Wham-T molds for building No. 3 are almost finished yet due to breakdown we have only poured one small mold at this time. This will necessitate moving the crane and labor back to Building 3 site when the molds poured in Rusty Dusty are available. We do not believe we should be responsible for the resultant extra costs. Accordingly, it is our intent to submit our billing to you at a later date. We trust you will consider this matter favorably in the light of the circumstances known to you. The district court ruled this letter gave sufficient notice of additional costs and expenses which Brunzell later detailed in a Change Order 19. These additional charges and expenses totaled $380,537.09. The letter clearly indicated that Brunzell was being delayed as a result of difficulties caused by mechanical problems with one of the Wham-T molds. Further, the letter indicated that the contractor disclaimed any liability for the resulting extra costs, and intended to bill Eagle's Nest at a later date. The letter thus provided some notice that Brunzell was incurring additional costs, for which the contractor expected to recover from Eagle's Nest. The question presented is whether the district court correctly found that the letter provided sufficient notice to comply with the requirements of Section 9.2.1. We believe that the letter did provide sufficient notice, and that the district court did not err in finding that Brunzell had complied with Section 9.2.1. Section 9.2.1. provides that [c]laims arising from the delay shall be made within a reasonable time after delay. Appellant apparently would interpret this provision to require Brunzell to prognosticate in some fashion all delay costs before they had been incurred. However, we believe that under the circumstances presented in this case appropriate notice might consist of an initial notice that difficulties had arisen, to be followed by a detailed statement of the extra costs incurred when those costs could be determined with sufficient accuracy. Brunzell's letter that he was having trouble with the molds clearly provided appellant with warning that the contractor was experiencing overruns and additional costs, and gave Eagle's Nest the opportunity to take appropriate remedial measures. Further, the question of notice raised by appellant must be considered in light of the specific circumstances of this case. Appellant's representative shared an office on the construction site with the contractor, and was well aware of the difficulties which arose during construction. The Brunzell letter impliedly makes reference to the representative's knowledge of the problems the contractor was encountering; the letter closes: We trust you will consider this matter favorably in light of the circumstances known to you. Given that appellant was aware that Brunzell was experiencing difficulties and additional costs for which he expected to be compensated, we do not believe the district court erred in ruling that the letter provided sufficient notice to meet the requirements of Section 9.2.1 of the contract. See, e.g., Farnsworth & Chambers Co. v. United States, 346 F.2d 577, 171 Ct.Cl. 30 (1965) (notice need not be set forth specifically and in detail; notice sufficient if owner knows contractor claiming condition in certain area).