Opinion ID: 1638588
Heading Depth: 3
Heading Rank: 3

Heading: Compliance with Subsection 8.11[23]

Text: The Board argues that it complied with the notice and cure provision of subsection 8.11. Generally, [a] clear and unambiguous notice, timely given, and in the form prescribed by the contract, is essential to the exercise of an option to terminate the contract. 17B C.J.S. Contracts § 446 (1999). [24] Except as previously discussed with respect to the issue of anticipatory repudiation, the Board does not argue that it did not have to strictly comply with subsection 8.11 nor does it argue that the failure to comply with subsection 8.11 would not be a material breach of Contract 15 that would support the rejection of its breach-of-contract claim. Instead, the Board argues that the trial court erred when it found that Asarisi's November 14, 1997, letter did not provide clear and unambiguous notice under subsection 8.11. Further, the Board contends that in addition to Asarisi's November 14, 1997, letter, the Board sent Harbert many [subsection] 8.11 notices demanding Harbert cure its mal-performance and under-performance, including notices of May 7, 1997; August 14, 1997; [and] August 27, 1997. [25] We again note that subsection 8.11 of the standard specifications states: If the Contractor ... fails to perform the work with sufficient workmen, equipment or materials to insure its prompt completion, or performs the Work unsuitably, or neglects or refuses to remove materials or perform anew such work as shall be rejected as defective and unsuitable, or discontinues prosecution of the Work, or from any other cause whatsoever does not carry the Work in an acceptable manner, ... the [Board] or [its] representative may give notice in writing by registered mail to the Contractor and the Surety of such delay, neglect, or default. If within 10 days after such notice the Contractor does not proceed to remedy to the satisfaction of the [Board] the fault specified in said notice, or the Surety does not proceed to take over the Work for completion, the [Board] shall have full power and authority, without impairing the obligation of the Contract or the Contract Bonds, to take over the completion of the Work; ... to enter into agreements with others for the completion of the Contract according to the terms and provisions thereof; or to use such other methods as in its opinion may be required for the completion of the Contract. The Contractor and his Surety shall be liable for all costs and expenses incurred by the [Board] in completing the Work, and also for the liquidated damages in conformity with the terms of the Contract.  As the trial court construed it, subsection 8.11 required that the Board provide Harbert with written notice of any delay, neglect, or default in its performance, and we adhere to that conclusion, given the arguments presented by the Board. [26] As a preliminary matter, we note that subsection 8.11 simply provided Harbert with 10 days  to remedy to the satisfaction of the [Board] the fault specified in said notice; it does not provide that Harbert's mere attempt to remedy any fault at issue would preclude termination of the contract when its performance had already been deficient. Likewise, subsection 8.11 warns Federal that upon its receipt of notice of such delay, neglect, or default from the Board it would have 10 days to proceed to take over the Work for completion; it does not provide that Federal had the right to wait to see whether Harbert cured the delay, neglect, or default in its performance. We further note that the Board's undated resolution reporting its actions taken on December 8, 1997, constitutes substantial, though not conclusive, evidence that the Board terminated Contract 15, not only because of the deficiencies discussed in Asarisi's November 14, 1997, letter to Harbert, but also because the Board ha[d] allowed Harbert in excess of ten days from the date of default notice to remedy the deficiencies documented by various letters and multiple meetings between the parties to the project. With these matters in mind, we turn our attention to the letters the Board argues satisfied the notice and cure provision of subsection 8.11. The Board argues that Asarisi's letters to Harbert dated May 7, 1997, August 14, 1997, August 27, 1997, and November 14, 1997, satisfied the requirements of subsection 8.11, i.e., that each letter provided Harbert with notice of delay, neglect, or default that Harbert failed to cure within 10 days and as to which Federal failed to take over the Work within 10 days. We will address the letters in chronological order. The May 7, 1997, letter from Asarisi to Harbert states: Reactor Number 2 was pressure tested on May 1, 1997. The pressure test failed. The interior seal system is designed to withstand design pressures. The exterior seal is not a pressure system and is intended to keep water and other contaminates away from the interior seal. Therefore, leak repairs must be made on the interior of the reactor and not the exterior. We trust that these repairs will be made immediately to avoid further delays on the project. Please let us know if you have any questions. (Emphasis added.) The Board argues that the May 7, 1997, letter, and particularly the portion emphasized above, constituted substantial evidence of written notice to Harbert that its work was rejected as `defective and unsuitable' and specifically identified one of three reasons for termination allowed by [subsection] 8.11, i.e., `delay.' The Board then argues that there was substantial evidence that Harbert failed to correct its allegedly defective work on reactor basin # 2 within the cure period established by the May 7, 1997, notice. Aside from the fact that the May 7, 1997, letter did not notify Harbert of the need to make the necessary repairs within the 10-day period contemplated by subsection 8.11, that letter was not sent by registered mail, and it was not sent to Federal. Thus, we cannot conclude that the trial court erred by not treating the May 7, 1997, letter as a notice given pursuant to subsection 8.11. The August 14, 1997, letter from Asarisi to Harbert states: As you are aware, [Harbert] informed the [Board] and BCM in November 1996 that the new Reactor and Clarifiers would be on line by December 26, 1996 and the project would be complete by March 1997. To date, none of this has happened. Our daily records indicate that your present work force consists of 1 superintendent and 3 laborers. We are aware of your efforts to seal Reactor 2. However, there are still a number of items that would keep the project from starting up if Reactor 2 was ready today. We have enclosed a partial list of items that have to be completed before Reactor 2 is put on line. This is not a complete list and there may be other incomplete items that delay start up. We are quite concerned about the slow rate of progress on the project and the impact that delays have on the [Board] and the operation of the plant. Therefore, in accordance with [subsection] 8.11 of the [Standard] Specifications you are hereby notified that you have 10 days to start work on each of the items on the enclosed list, with the exception of items that are dependent on the completion of Reactor 2. If work has not begun on all noted items within 10 days the [Board] will notify [Federal] that the project is in default. We trust that you will provide an adequate work force to complete the work within the specified time and to avoid further actions against you. Should you have any questions, please call. The Board argues that Harbert's uncorrected insufficient work force was yet another ground per [subsection] 8.11 for the Board's takeover of the Work. ... Contrary to the [trial court's] findings, this letter clearly referenced and provided Harbert with a [subsection] 8.11 notice and opportunity to cure its deficiencies in the work of Contract 15. [27] We note that the August 14, 1997, letter was sent to Harbert and Federal by certified mail. Also, it clearly notified Harbert of its alleged delay, neglect, or default. The letter then specified the response the Board required of Harbert; that response was not that Harbert perform all the unperformed work within 10 days, but that it start work on each of the items on the enclosed list, with the exception of items that are dependent on the completion of Reactor 2 within 10 days. The letter continued: If work has not begun on all noted items within 10 days the [Board] will notify [Federal] that the project is in default.  Thus, the August 14, 1997, letter required only that Harbert begin work on all the noted items, not that it complete the work, within 10 days. The Board did not produce substantial evidence that Harbert failed to begin work on the specified items within 10 days, though, as hereafter discussed, there is evidence indicating that it did not complete the items. Likewise, we note that the August 14, 1997, letter informed Federal that the Board would notify Federal that Harbert was in default if Harbert had not begun [work] on all noted items within 10 days. The Board produced no evidence indicating that it sent Federal such a notice. Thus, we cannot conclude that the trial court erred by not treating the August 14, 1997, letter as a notice given pursuant to subsection 8.11. The August 27, 1997, letter from Asarisi to Harbert states: As you know, we sent a letter on August 21, 1997, to Mr. Enrico Tissi, the President of [Sika], which included a copy of your consultants report on the Combiflex system inside Reactor 2. We were notified yesterday that Buddy Bonine, from [Sika], will be at the [treatment plant] on Tuesday, September 2, 1997, to inspect the installation and provide their opinion. As Malcolm [Steeves] has previously indicated, we will provide [Harbert] an alternative system to seal the Reactor if [Sika] agrees that the Combiflex system is not suitable for the application. We welcome and encourage you to be present during [Sika's] visit on September 2. If you have any questions, please let us know. The Board argues that this letter directed Harbert to seal Reactor basin 2 and that Harbert again refused to do the work as called for by [BCM] when it responded by sending the September 17, 1997, letter to Asarisi and the Board, vigorously objecting to the Board's proposed reapplication of the Combiflex system to a test cell, rather than approval of Harbert's Liquid-Boot proposal. The August 27, 1997, letter does not request that Harbert seal reactor basin #2. As we discussed in Part IV.C.1. above (Anticipatory Repudiation), the September 17, 1997, letter does not reflect Harbert's refusal to perform repair work as directed by the Board. Instead, the correspondence between the parties at that point in the dispute concerning the sealing of reactor basin # 2 reflects that the Board was attempting to verify whether the Combiflex system was appropriate for sealing reactor basin # 2 in the face of Harbert's and Spiderman's assertions that they had properly applied and/or attempted to repair the Combiflex system in accordance with the standard specifications and that the Combiflex system was not the appropriate product to use to seal the reactor basin. In addition, the August 27, 1997, letter was not sent by registered mail, and it was not sent to Federal. Thus, we cannot conclude that the trial court erred by not treating the August 27, 1997, letter as a notice given pursuant to subsection 8.11. The Board continues its argument by discussing the November 14, 1997, letter from Asarisi to Harbert. Again, that letter states: It appears that a number of items remain incomplete that will keep the new system from going on line when Reactor 2 is satisfactorily sealed and tested. Most if not all of the items are electrical (i.e. load shedding, etc.). In order to avoid further delays on this project we request that you provide an updated schedule which includes all work associated with starting the new system. This schedule should be in our office no later than November 24, 1997. Failure to provide a schedule within ten days will be grounds for finding [Harbert] in default of the Contract in accordance with [subsection] 8.11 of the Specifications. The November 14, 1997, letter was sent by certified mail to Harbert and to Federal. The Board argues that the incomplete items referred to in the November 14, 1997, letter are the deficiencies identified in Asarisi's August 27, 1997, letter, which included addressing the load-shedding work. The November 14, 1997, letter, however, does not purport to declare that the prior delays were grounds for proceeding under subsection 8.11. Rather, the November 14, 1997, letter states unequivocally that [f]ailure to provide a schedule within ten days will be grounds for finding [Harbert] in default of the Contract in accordance with [subsection] 8.11 of the [Standard] Specifications. Before the November 14, 1997, letter, Harbert was under no specific contractual obligation to produce the particular schedule of work required by that letter. Instead, that specific obligation was first imposed on Harbert by BCM, as the supervising engineer for the project, in the November 14, 1997, letter. Appropriately, therefore, the letter informs Harbert of this obligation and then merely states that failure to provide the requested schedule within ten days will be grounds for finding [Harbert] in default of the Contract. It appears that neither Harbert nor Federal provided the requested schedule within 10 days, but the Board did not thereafter notify Harbert and Federal that it was actually declaring their failure to be a default under subsection 8.11, and it did not give them 10 days after such notice in which to cure the default before it terminated Contract 15. Thus, we cannot conclude that the trial court erred by not concluding that the November 14, 1997, letter satisfied the Board's obligation under subsection 8.11. Based on the foregoing, we cannot conclude that the trial court erred by entering a summary judgment for Harbert and Federal on the Board's claims of breach of contract as to Contract 15.