Opinion ID: 1653760
Heading Depth: 1
Heading Rank: 8

Heading: was plaintiff kimmins required to obtain in advance written change orders in order to recover damages, or could plaintiff kimmins be awarded extra compensation if the jury found kimmins had received constructive change orders?

Text: ¶ 16. Sentinel/Centre and Seaboard/St. Paul maintain that under the contracts in this case, Kimmins agreed to dismantle the ammonia plant for a lump sum, and because the ammonia plant never increased in size, Kimmins is not entitled to any additional compensation. However, as Kimmins points out in its brief, this is an oversimplification of the issue, because the project was governed by detailed plans and specifications which must be examined to reach a decision in this case. ¶ 17. Sentinel/Centre and Seaboard/St. Paul also assert that under the clear and unambiguous change order provision found in the contracts between Sentinel/Centre and Kimmins, Kimmins was required to obtain advance written approval of any extra work. Because Kimmins failed to obtain prior written approval for the extra work it claims to have performed in this case, Sentinel/Centre and Seaboard/St. Paul assert that Kimmins is not entitled to the additional compensation. ¶ 18. The language in each subcontract between Sentinel/Centre and Kimmins required Kimmins to provide the labor and equipment to perform the asbestos abatement and plant dismantlement as specified in the prime contracts between Exxon and Sentinel/Centre. Both of the subcontracts contained change order provisions in Article VIII, stating: No alterations except as provided for in Article VI and VII hereof shall be made in the Work covered by this Contract except upon the written order of Sentinel, and when so made, the value of the work to be added or omitted shall be stated in said order and the amount added to or deducted from the Contract price. However, Article 7 of the prime contracts required that Kimmins proceed with work, regardless of the issuance of a change order: Notwithstanding that a CHANGE ORDER has not been issued, CONTRACTOR shall promptly comply with instructions, authorizations and notices given by OWNER in connection with WORK. OWNER shall issue a CHANGE ORDER with respect to such instructions, authorizations and notices if appropriate under the provisions of 7.3. ¶ 19. Kimmins presented evidence that it made 14 written change order requests which Sentinel/Centre refused to approve. George English, Kimmins's project manager, testified that he both sent written notices and spoke to Joseph Tomberlin, Sentinel/Centre's project manager, several times regarding work that he considered to be extra work on the project, with detailed attachments regarding the costs involved in that extra work. Edward Mackowiak, a former general manager for Kimmins, testified that on several occasions he discussed Kimmins's written change order requests with Mr. Milgrim and asked him to submit the change order requests to Exxon. George Robinson, Kimmins's expert, confirmed that Kimmins submitted written change order requests to Sentinel/Centre. ¶ 20. Kimmins argues that it would be unjust to allow Sentinel/Centre to require it to perform extra work but refuse to pay without a written change order, particularly when the change orders were unreasonably denied. Contrary to Sentinel/Centre and Seaboard/St. Paul's assertion that Kimmins proceeded at its own peril, Kimmins maintains that it had no choice under Article 7 of the prime contracts but to continue work without a change order upon receipt of direction to perform extra work. Mr. DeWitt testified that in his experience, such change order clauses require that the work continue, even if the parties cannot agree on whether the change order should be issued and then argue about it later, because the important thing is completing the project. Joseph Tomberlin, Sentinel/Centre's project manager, agreed that he did not want Kimmins to stop work on the project in order to resolve a contract dispute. Kimmins also pointed out, through the testimony of Mr. DeWitt and Mr. Mackowiak, that had Kimmins stopped work, Sentinel/Centre would have default terminated Kimmins, sustained damages by having another contractor come in under Kimmins's bond, and Kimmins would have been sued for reimbursement of those costs by Sentinel/Centre and/or its surety and would have had difficulty getting bonded for future projects. ¶ 21. Kimmins contends that it produced sufficient evidence at trial to show that Sentinel/Centre required Kimmins to perform additional work in that it required Kimmins to complete the job in a different manner and on a different schedule than that set out under the contracts, thereby breaching the contracts. Most significantly, Kimmins presented substantial evidence that Sentinel/Centre imposed shipping dates upon Kimmins that had not been included in the original subcontracts. The subcontracts contained no interim or milestone performance dates, only a beginning and ending date for each phase. The Phase I subcontract stated that the asbestos abatement work was to begin on April 8, 1991, and end on August 9, 1991, and the Phase II subcontract stated that the dismantlement project was to be performed between May 28, 1991, and January 15, 1992. At a May 29, 1991, meeting, Stan Thomas, a representative from Exxon, informed Kimmins's representatives that the supercargo (consisting of nine large pieces: an absorber, the stripper, secondary reformer, a primary reformer consisting of five pieces, and an ammonia converter) was to be shipped between September 15 and 30, 1991, contrary to Kimmins's original plans. Exxon presented testimony showing that Sentinel/Centre was aware of and agreed to this shipping schedule as early as its negotiations for the prime contracts in 1990. Kimmins's request for a change in the shipping schedule was denied. The shipset lists, directing which equipment was to be shipped on which ships and on which dates, was prepared by Mr. Tomberlin of Sentinel/Centre. Essentially, Kimmins understood when it entered into the subcontract with Sentinel/Centre that the projected completion date for the dismantling project was January 15, 1992, but the new shipping directives required that the bulk of the plant would be shipped no later than October 1, 1991. Mr. English, Mr. Robinson, and Mr. Mackowiak testified extensively regarding the acceleration of work caused by the newly imposed shipping dates. The imposition of the interim dates required Kimmins and its subcontractors to perform the dismantling project in a different manner and at a greater cost than it had planned when making its bid for the subcontracts in order to meet the new schedule. ¶ 22. Kimmins also presented evidence that Sentinel/Centre required it to perform work that was excluded under its subcontracts. For example, Kimmins ended up having to relocate furnace radiant tubes from the plant that were excluded under the terms of the contract. Removal of the tubes from the warehouse where they were stored required Kimmins to take out a wall and then eventually replace that wall. Sentinel/Centre required Kimmins to remove leak valves and motors from the dismantled equipment after Kimmins thought that it had completed the required dismantling under the terms of the subcontract. Sentinel directed Kimmins to remove the control room electrical panels in one piece, rather than in multiple pieces as the subcontract allowed. Contrary to the contract terms, Kimmins had to cut the lube oil pipe apart with porter band saws and pack it for shipment rather than scrapping it. The terms of the subcontract required Kimmins to pack 15 containers, but Sentinel required it to pack 46 containers. Sentinel required Kimmins to crate pipe, while the contract specifications only required that it be bundled and strapped. Kimmins was also required to make several pipe cuts outside of the contract specifications after the piping had been dismantled. Because Kimmins understood under the subcontract terms that it would not be responsible for these items, it did not include the cost of them in its bid to Sentinel/Centre. As a result, Kimmins argued that it was due extra compensation for these costs. ¶ 23. Sentinel/Centre's contention is that because Kimmins failed to obtain change orders in advance of performing any additional work, Kimmins is not entitled to extra compensation. It relies on our decision in Citizens Nat'l Bank v. L.L. Glascock, Inc., 243 So.2d 67 (Miss.1971), for the premise that under Mississippi law, change order provisions are upheld and will not be judicially altered or deleted. In Glascock, we held that a contractor was not entitled to additional payment on a quantum meruit basis for expenses incurred in removing the old foundations below the owner's old bank building before building the new bank, because the contract terms required prior authorization for paid extra work. Id. at 69-70. In so holding, the Court made the familiar statement, Courts do not have the power to make contracts where none exist, nor to modify, add to, or subtract from the terms of one in existence. Id. at 70. ¶ 24. We cited Glascock in City of Mound Bayou v. Roy Collins Constr. Co., 499 So.2d 1354, 1358 (Miss.1986), stating, Generally, a contractor who proceeds with work without procuring a written change order proceeds at his peril. However, we went on to point out that under Mississippi law, where the owner orders the contractor to perform extra work outside the contract, the contractor is entitled to compensation for that work, despite the fact that no change orders were issued: We have recognized that there are circumstances in which the contractor should recover for additional work, even where the contract requires a change to be executed in writing. Baum & Co. v. Covert, 62 Miss. 113 (Miss.1884), concerned a contract to erect a large building which contained a special provision which required change orders signed by the architect and owner before the contractor began the additional work. The owners gave verbal commands to do extra work outside the contract. The owners stressed that they made no change orders in writing. The Court affirmed the jury's award to the contractor for his additional work: This suit was not for recovery of the price of any work whatever authorized by the contract. It was expressly brought for those things which lay outside of and beyond it. The written contract, therefore, in no manner controls the rights of the parties except for showing what things were covered by the contract price.... Notwithstanding their stipulations to the contrary the owners must pay a reasonable value for everything furnished by their order if it be clearly established to the satisfaction of the jury that such things were ordered by them. The burden of so proving is, of course, upon the plaintiff and must be clearly established by him. Id. at 120. In the case of Leggett v. Vinson, 155 Miss. 411, 422, 124 So. 472, 475 (1929), the Court said: It is undoubtedly true that the parties to a contract may modify it, or waive their right under it, and engraft new terms upon it, and in such case the promise of one party will be sufficient consideration for the promise of another. Id. This proposition is supported in a number of jurisdictions, where: It has been held that the contractor was entitled to recover for alterations or extras notwithstanding compliance with a stipulation requiring a written order, where it appeared that work was orally ordered, requested, directed, authorized or consented by the owner or his duly authorized agent. 2 A.L.R.3rd 620, 661 (1965). Such a waiver is valid in the absence of such statutory authority. Mound Bayou, 499 So.2d at 1358-59. The Court allowed the recovery, finding that, The contractors should recover in the instant case because Barrett and Mound Bayou by a persistent pattern of conduct waived the contractual provision requiring changes to be executed in writing, and moreover Barrett and Mound Bayou failed to act in good faith in performing their contractual obligations. Id. at 1360. ¶ 25. In Eastline Corp. v. Marion Apartments, Ltd., 524 So.2d 582 (Miss.1988), we upheld our decision in Mound Bayou, finding that the parties to a construction contract may waive the stipulation that all changes in work be approved through written change orders. Eastline, 524 So.2d at 584. We stated, Among the acts or conduct amounting to waiver are the owner's knowledge of, agreement to, or acquiescence in such extra work, a course of dealing which repeatedly disregards such stipulation, and a promise to pay for extra work, orally requested by the owner and performed in reliance on that promise. Id. ( quoting 13 Am.Jur.2d Building and Construction Contracts § 24 (1964)). Sentinel/Centre relies heavily on the fact that in this case, it did not promise to pay Kimmins for the extra work in question. However, the language in Eastline fails to include the complete language from the American Jurisprudence 2d section it quotes. The first paragraph of that section states: Although stipulations in building or construction contracts requiring written orders or agreements for extra work or alterations are valid and binding so long as they remain in effect, it is equally well settled that they may be avoided by the parties to the contract. The courts have adopted various theories of avoidance, which may be classified as those of independent contract, modification or rescission, waiver, and estoppel. 13 Am.Jur.2d Building and Construction Contracts § 24 (1964). In Eastline, we found that the actions of the owner, Marion, amounted to waiver of the change order provision. Here, the actions of Sentinel/Centre amount to estoppel. ¶ 26. Waiver is voluntary surrender or relinquishment of some known right, benefit or advantage; estoppel is the inhibition to assert it. Black's Law Dictionary 538 (6th ed.1990). Equitable estoppel arises when one party may be precluded by his act or conduct, or silence when it is his duty to speak, from asserting a right which he otherwise would have had. Morrow v. Vinson, 666 So.2d 802, 803 (Miss.1995) ( citing Black's Law Dictionary 538 (6th ed.1990)). Equitable estoppel requires a representation by a party, reliance by the other party, and a change in position by the relying party. Westbrook v. City of Jackson, 665 So.2d 833, 839 (Miss.1995). Through Article 7 of the prime contracts, Sentinel/Centre represented to Kimmins that Kimmins should continue work regardless of the non-issuance of a change order. Representatives of Sentinel/Centre agreed in their testimony at trial that they did not want Kimmins to cease work on the project during disputes over change order requests. Kimmins relied on this contract provision and the threat of default termination by Sentinel/Centre in proceeding with the extra work ordered by Sentinel/Centre to Kimmins's detriment. We therefore find that Sentinel/Centre is now estopped from asserting that Kimmins may not receive compensation for the extra work due to the lack of change orders. Allowing Sentinel/Centre to maintain these inconsistent positions-requiring Kimmins to proceed with the extra work without issuance of a change order while refusing payment based on the lack of an advance written change order-would cause an injustice. We find that Kimmins was entitled to the jury award in its favor based upon Sentinel/Centre's persistent pattern of conduct in requiring Kimmins to perform work outside the scope of their contract and their failure to act in good faith when they refused to issue change orders. See Griffin v. Geneva Indus., Inc., 193 Neb. 694, 698, 228 N.W.2d 880, 882 (1975) (Evidence that defendant knew about additional work performed by plaintiff and authorized continuation of work precluded defendant's assertion that plaintiff was not entitled to compensation due to the lack of prior written approval). ¶ 27. The trial judge instructed the jury that they could award Kimmins damages if they found that Sentinel/Centre's conduct amounted to a constructive change order. Mississippi law does not recognize constructive change orders. However, the court's instruction to the jury on the definition of constructive change order sufficiently complies with Mississippi law. Instruction P-20 states in pertinent part: A constructive change consists of two elements: 1) A change elementwhich calls for examination of the actual performance to see whether it went beyond the minimum standards demanded by the subcontracts; and 2) An order elementin which a Sentinel/Centre representative, by word or deed, required Kimmins to perform work that was not a necessary part of its subcontracts. The trial court erred in instructing the jury on constructive change orders, a concept not recognized under Mississippi law. However, the instruction is in line with our previous decisions allowing recovery for extra compensation without regard for written change orders where the owner imposes extra-contractual work while denying change order requests. The court's instruction sufficiently informed the jury of Mississippi law in this case. Taking the evidence in the light most favorable to Kimmins, a reasonable jury could at least differ on the issue of recovery in this case. We therefore affirm the jury's award of damages against Sentinel/Centre and Seaboard/St. Paul in this case.