Opinion ID: 2655158
Heading Depth: 3
Heading Rank: 1

Heading: Asphalt Overage Charges

Text: Generally, the interpretation of a contract is reviewed de novo. Meridian Leasing, Inc. v. Associated Aviation Underwriters, Inc., 409 F.3d 342, 346 (6th Cir. 2005); Klapp v. United Ins. Grp. Agency, Inc., 663 N.W.2d 447, 451 (Mich. 2003). If a contract uses clear and unambiguous language, the court should not look to extrinsic facts to establish the parties’ intent. Moore v. Kimball, 289 N.W. 213, 215 (Mich. 1939); Mich. Chandelier Co. v. Morse, 297 N.W. 64, 67 (Mich. 1941) (finding that the “court does not have the right to make a different contract for the parties or to look to extrinsic testimony . . . when the words used by them are clear and unambiguous.”). In making such a determination, the court reads the contract as a whole, giving the contract language its ordinary and natural meaning. City of Wyandotte v. Consol. Rail Corp., 8 No. 12-2380 Gerken Paving, Inc. v. LaSalle Group, Inc. 262 F.3d 581, 585 (6th Cir. 2001). Here, the contract specifies that Michigan law governs; we therefore apply Michigan law. Section 5 of the contract pertains to “Changes/Claims.” Section 5.2 provides that “any increase or decrease in the Subcontract price and time of performance resulting from changes shall be agreed upon in writing by the parties hereto in advance of performance of the work.” Section 5.4 further defines the requirements for submitting a claim for an increase in price, stating that: Any claim for an increase in the Subcontract price or time for performance based upon Contractor’s written or verbal order . . . must be made by Subcontractor to Contractor, in writing, within five (5) working days from the date of such claimed order, act or omission, or at such earlier date required by the Subcontract Documents but in any event prior to starting work involved in the claim; otherwise, the claim shall be barred. All such written claims must furnish full details and supporting documentation. (emphasis added). Under Sections 5.2 and 5.4, the contract terms clearly and unambiguously require Gerken to submit a claim in writing prior to starting work involved in the claim. Gerken alleges that it provided daily reports regarding the volume of asphalt used, and sent LaSalle two letters regarding asphalt overages after completing the paving of the main areas. Gerken did not submit a claim for an increase in the contract price to cover asphalt overages in writing prior to commencing the work, however. Therefore, we find Gerken’s claims for asphalt overages barred. Gerken argues that its claim falls under Section 5.6, not Section 5.4. We disagree. Section 5.6 pertains to “extra work;” it states: To the extent that LaSalle, the Owner, or the Owner’s Representative request that extra work be performed, including, but not limited to, R.F.Q.’s, Bulletins, C.C.D.’s, Field Orders, Field Directives, and the like, [Gerken] agrees to provide an accurate, detailed price quotation with detailed labor and material 9 No. 12-2380 Gerken Paving, Inc. v. LaSalle Group, Inc. breakdowns (broken down by item) and associated back-up including man hours, daily reports, invoices, time sheets, receipts, etc… no later than seven (7) business days from the request for quote. If the work is to be performed on a time and material basis, this detailed pricing must be submitted within five (5) business days from the completion of the work. [Gerken] also agrees to provide any additional supplemental information/back-up requested (based on initial review of quotation) within five (5) business days of the request for any/all additional work items. To the extent [Gerken] fails to provide the requested quote(s) or supplemental information/back-up required, [Gerken] waives its right to any payment for the work and will be forced to accept the amount(s) (if any) determined by LaSalle, the Owner, or the Owner’s representatives to be owed for the work. This paragraph only applies to extra work requested by the Owner, Owner’s Representative, or LaSalle. Nothing in this paragraph effects [sic] or impacts any other paragraph of this Agreement including, but not limited to, the requirement that all claims must be in writing. (emphasis added). In reviewing the four corners of the contract, we interpret the term “extra work” in context to pertain to additional work not previously included in the contract, not changes to work already encompassed by the contract. Here, the terms of the contract required Gerken to pave specific areas; costs incurred in doing so do not constitute “extra work.” As such, Gerken needed to comply with Sections 5.2 and 5.4 before it could seek an increase in the subcontract price. Even assuming the asphalt overages constituted “extra work” under a time and material basis, Gerken failed to submit the necessary detailed pricing within five business days from the completion of the work. While Gerken sent LaSalle a letter on December 20, 2007, that mailing did not contain the necessary information. In particular, the letter failed to provide the labor and material breakdowns by item with associated back-up as required in Section 5.6 including “daily reports, invoices, time sheets, receipts, etc.” Gerken did not provide any additional details to LaSalle until at least March of 2008. 10 No. 12-2380 Gerken Paving, Inc. v. LaSalle Group, Inc. Gerken also argues that it has raised questions of fact regarding its right to payment for its asphalt overages. Specifically, it claims that LaSalle provided verbal assurances of payment for the overages on which it reneged. It also claims LaSalle breached the contract by not providing suitably graded surfaces in a timely manner. While the question of whether the overages were the result of underbidding or weather conditions forced upon Gerken by the grading delays is one of fact, like the district court, we do not need to reach that issue because Gerken failed to comply with the writing requirements of Section 5 of the contract. Thus, while issues of fact are in dispute, they are not material to the parties’ respective obligations under the contract. Absent a written claim, we do not get to those factual disputes. We reach the same conclusion with respect to Gerken’s argument regarding oral promises of payment. The parties’ contract required that all changes relating to the price of current work be in writing. Neither party could circumvent that obligation.