Opinion ID: 1250780
Heading Depth: 1
Heading Rank: 1

Heading: Excavation

Text: On the excavation claim, Rugby argued: (1) the additional excavation was caused by rainfall and Johnson was not entitled to additional compensation because contractors are responsible for weather-related expenses; (2) Johnson failed to provide notice, under § 50-16 [1] of the specifications, of its intention to seek additional compensation for excavation of subcut material; (3) there was no change order or supplemental agreement, as required by §§ 40-02 [2] and 40-04 [3] of the specifications; (4) the contract does not contain a differing site conditions or changed conditions clause, which would shift the risk of unknown subsurface conditions (such as groundwater) from the contractor to the owner; and (5) that Johnson chose to excavate additional material below the planned depth to quickly dry the subcut, and that excavation should be at Johnson's expense. In its memorandum in opposition to Rugby's motion, Johnson summarized its position as follows: 1. The additional excavation for which Johnson seeks compensation was not weather-related but rather, was caused primarily by the fact that substantial quantities of the excavation which was to be used for fill under the runway (`select embankment') was not suitable for that purpose. See Affidavit of Curtis L. Erickson. 2. The notice of claim for additional compensation is not required because the basis of the claim is not `extra work' as defined in Section 10-20 of the specifications. The claim relates only to the final quantity of excavation for which Johnson is entitled to compensation. See Affidavit of Joe Metzger and Section 50-16 (p. 1.032) of the specifications (copy attached.). [4] 3. No change order or supplemental agreement is required, again because the basis of the claim is not `extra work' as defined in the specifications. See Affidavit of Joe Metzger and Section 50-16 (p. 1.032) of the specifications (copy attached). In granting Rugby's motion for a partial summary judgment dismissing Johnson's excavation claim, the trial court concluded that notice of an intention to seek additional compensation was required, and that by failing to provide such notice, Johnson waived its right to make a claim: As a matter of law, the contract language clearly requires notice, a change order or supplemental agreement as a prerequisite to Plaintiff's excavation claim for additional compensation. The consequences for failure to give timely written notice or some type of written alteration of the contract, without a valid exception, constitutes a waiver of the right to make the claim. Therefore, Defendant's Motion for Partial Summary Judgment is meritorious as a matter of law and is granted.  The notice provision in § 50-16 of the specifications is similar to the notice provision in § 24-02-26.1, N.D.C.C., which we construed in Byron's Constr. Co. v. North Dakota State Highway Dep't, 448 N.W.2d 630 (N.D.1989). We observed that the notice statute protects important underlying concerns by permitting early investigation of the validity of a claim when evidence is still available, by allowing the Highway Department to compile records of the contractor's costs, and by allowing the Highway Department to consider alternate methods of construction to prevent unnecessary expenditures. Id. at 633. We held that the notice provision required a contractor to provide written notice if it intended to seek additional compensation: If Byron's was requested to perform work or supply materials for which it did not believe it was being compensated under the contract, it was required to notify the engineer in writing of its intent to make a claim for additional compensation. Id. at 634. See also, Herman v. Magnuson, 277 N.W.2d 445 (N.D.1979), in which we observed that notice requirements for presenting claims against a municipality foster prompt investigation while the evidence is still fresh, the adjustment of claims without the expense of litigation if the circumstances warrant it, and the preparation of fiscal planning to meet possible liability. We do not believe that there is a significant distinction between the notice requirement in § 24-02-26.1, N.D.C.C., and § 50-16 of the specifications. We conclude that if Johnson believed it was being requested by Rugby's engineer to perform more excavation and embankment work than it had anticipated, and for which it did not believe it was being compensated under the contract, it was required by § 50-16 of the specifications to notify the engineer in writing of its intent to make a claim for additional compensation. By failing to provide that written notice, Johnson waived all claims for additional compensation for excavation and embankment work. Johnson argues that excavation and embankment are clearly `provided for in the awarded contract' and cannot be classified as `extra work' as defined in § 10-20 of the specifications. However, Johnson acknowledged in its brief: As a result of the decision of the project engineer [that much of the material directly under the topsoil was not suitable for `select embankment'], it was necessary to remove large quantities of earth, stockpile it and replace it after removing the material which was used for `select embankment.' It is this additional excavation which forms the basis for the greater portion of the excavation claim of Johnson. (Emphasis added.) In our view, additional excavation is extra work as defined by § 10-20 of the specifications, for which notice of an intent to claim additional compensation is required before doing the work or the contractor waives the right to claim additional compensation for that work. In any event, the requirement of notice of a claim for work or materials not provided for in the awarded contract should alert a contractor to provide notice if any doubt exists as to the right to payment. The provision should be construed to encourage, not discourage, notice of a claim for additional compensation in order that the dispute be resolved then, when other options are available to the parties, rather than later when the work is completed and cannot be undone. Johnson argues that, pursuant to § 23 [5] of the Special Provisions, Rugby retained the right to change the total contract price by 25 percent, and, because the claim for additional excavation ($131,331) is less than 25 percent of the contract price, § 40-02 of the specifications does not apply to its claim for additional compensation for excavation. We disagree. Acceptance of Johnson's argument in this regard would render an owner powerless to protect itself from a 25 percent increase in the cost of a project. We are unable to discern such an intention from the language of the contract, the specifications, or the special provisions. Johnson's reliance on the following sentence in § 50-16 is also misplaced: Nothing in this subsection shall be construed as a waiver of the contractor's right to dispute final payment based on differences in measurements or computations. The dispute in this case is not based on differences in measurements or computations, but upon whether or not Johnson was required to give written notice of an intent to claim additional compensation.