Opinion ID: 1195492
Heading Depth: 1
Heading Rank: 7

Heading: The award to the State of reimbursement of the settlement payment to the telescope contractor.

Text: The contract required the Contractor to construct and complete the work in accordance with a schedule which divided the work into three phases. The second phase included completion of certain portions of the observatory building to enable commencement of the telescope installation. The Contractor was required to complete this work by March 31, 1968 and to provide sole occupancy of these portions of the building to the telescope contractor during the ensuing two months. Access to the building by the telescope contractor was not provided by the Contractor until some time in September, 1969. The telescope contractor presented to the State a claim for additional compensation, which was settled by the payment to the telescope contractor of $48,229 pursuant to a settlement agreement. The State counterclaimed for this amount, as an expense incurred by reason of the Contractor's breach of its contract. Payment by the State of the claim of the telescope contractor was found by the trial court to have been reasonable in view of the additional expenses and costs it had incurred because of the Contractor's delay and the desirability of avoiding a long and costly lawsuit by the telescope contractor against the State. The judgment, in paragraph 2(b), awards to the State the sum of $48,229 in reimbursement of the settlement payment. The Contractor contends that its liability, if any, for the delay in completion of the second phase of the contract work was satisfied by the award of liquidated damages, and that the State was not entitled to also be awarded its actual damages. The State does not dispute that where the parties especially provide or stipulate for liquidated damages, such liquidated damages take the place of any actual damages suffered and that any recovery for breach is limited to the amount so agreed upon. Trans World Airlines v. Travelers Indemnity Company, 262 F.2d 321, 325 (8th Cir.1959). However, the State contends that the contract provided for liquidated damages only for delay in finishing the entire work on the completion date specified, and that damages for failure to complete a phase of the work were not liquidated by the contract. This reading of the contract is consistent with the wording of the liquidated damage provision, which liquidates the damages suffered by the State in case of the failure on the part of the Contractor to complete his contract within the time specified and agreed upon. (General Requirements and Covenants Sec. 8.11, emphasis supplied). The failure of the Contractor to complete the second phase of the work on the specified date was not a breach to which this provision is applicable unless his contract is interpreted as meaning any separable portion of the work as to which a completion time is specified. We have not been referred to any authority which would require us to give the contract language other than its natural and apparent meaning. We conclude that the State was not entitled to liquidated damages for the Contractor's failure to complete the second phase of the contract. The trial court computed the liquidated damages awarded in the judgment only for the delay in accomplishing substantial completion of the work, measured from the date specified for completion of the entire work. Accordingly, the award of liquidated damages neither should have nor did in fact compensate the State for the delay in the completion of the second phase of the work and the State is entitled to its actual damages. The Contractor also attacks certain of the findings of fact upon which the award of reimbursement of the settlement payment was based, as not supported by substantial evidence. We have reviewed more than 400 pages of testimony which was heard by the trial court on the merits of the claim of the telescope contractor against the State and on the circumstances of the negotiation which led to the settlement agreement. There was substantial evidence in the record to support the findings which the Contractor challenges, they are not clearly erroneous and they cannot be set aside. J.A. Thompson & Son, Inc. v. State, supra ; Imperial Finance Corp. v. Finance Factors, 53 Haw. 203, 490 P.2d 662 (1971). The Contractor was on notice, from the express reference in its contract to the telescope contractor, that the State might be required by the telescope installation contract to provide timely access to the observatory building for the purposes of the telescope installation. The losses suffered by the State by reason of its inability to fulfill this obligation were the natural consequences of the Contractor's breach of its contract, which the Contractor had reason to foresee at the time of the making of the contract and are recoverable by the State from the Contractor. 5 Corbin On Contracts, § 1013 (1964); City of Bridgeport v. United States Fidelity & Guaranty Co., 105 Conn. 11, 134 A. 252 (1926). The Contractor challenges only the sufficiency of the evidence to support the trial court's findings of fact, and does not question on this appeal the sufficiency of those findings to support the trial court's ultimate conclusion that the loss suffered by the State by reason of the settlement payment was caused by the Contractor's breach. Since we have concluded that the challenge to the findings of fact has not been sustained, the award to the State of damages in reimbursement of this payment must be affirmed.