Opinion ID: 2655158
Heading Depth: 3
Heading Rank: 2

Heading: Contract Performance

Text: While the contract required third-party contractors to complete all preliminary grading work by October 26, 2007, none of that work was completed until mid-November and it was not fully complete until November 28. Neither Gerken nor LaSalle caused that delay. The grading delay prevented Gerken from doing any paving until November 12, 2007, over two weeks after the projected start date for that work. Gerken paved the portions of the lot which were graded on November 12, 13, and 14. It did so in above 40 °F weather, as required by the ODOT guidelines. During these three days, Gerken exceeded the amount of asphalt it had projected by over four hundred tons. 1 Section 2.4 states that “[p]rogress payments and final payment may be withheld in whole or in part by [LaSalle] on account of: . . . (c) any breach by [Gerken] of any provision of this Subcontract . . . [or] (f) a reasonable doubt that [Gerken], for any reason, is able to timely and properly complete the Subcontract work[.] . . . If the said causes are not so remedied . . . [LaSalle] may remedy the same for [Gerken’s] account and charge the entire cost thereof to [Gerken].” 3 No. 12-2380 Gerken Paving, Inc. v. LaSalle Group, Inc. Once the grading was completed, Gerken prepared to resume paving on November 28, 2007. On November 27, the weather report predicted that it would be colder than 40 °F on November 28. In response to the sub-40 °F weather report, Gerken asked LaSalle to sign a letter acknowledging that Gerken would not warranty the paving performed in sub-40 °F on November 28. LaSalle agreed. LaSalle signed similar statements on November 29 and 30, and December 2, 5, 12, 14, and 15. There was no mention of the need to use additional asphalt for the paving work in any of those letters. On November 29, 2007, LaSalle approved two written field directives authorizing an increase in the contract price “to install additional base paving material at the board shead [sic] area whitch [sic] is from the catch basin line to 13 feet from the board shed” due to “Hidden Conditions.” The first field directive increased the subcontract price on a “time and materials” basis not to exceed $2,000. Later that day, LaSalle approved a second written field directive increasing the amount of the first directive to $4,000. Though LaSalle did not execute any written field directives during the Project regarding the use of additional asphalt, Gerken claims that LaSalle employees verbally instructed Gerken to continue paving and promised payment for asphalt overages. On December 15, 2007, Gerken finished paving the main area of the Project. Between November 29 and December 15, Gerken used more asphalt than projected every day. During this period, Gerken accrued $94,848.68 in total asphalt overages ($57,916.76 in leveling overages and $36,931.92 in surface overages). Gerken claims that its employees provided LaSalle with a written calculation of the asphalt overages after each day of paving. Although Gerken completed paving the main site, it did not pave the Curtis Road outlot because the local municipality, the city of Northwood, shut down the worksite due to inclement 4 No. 12-2380 Gerken Paving, Inc. v. LaSalle Group, Inc. weather. On December 20, 2007, Gerken wrote a letter to LaSalle explaining that it had used significantly more asphalt to complete the job than expected. The letter contained prices for the additional asphalt used, but Gerken did not expressly ask LaSalle to pay for the overages. On March 3, 2008, Gerken submitted a payment application to LaSalle for the additional $94,848.68. On March 26, 2008, LaSalle responded to Gerken, refusing to pay for the asphalt overages because the parties had a fixed-price contract. In Spring 2008, LaSalle demanded that Gerken pave the outlot and fix certain punchlist items. On May 23, 2008, Gerken responded that it would not pave the outlot unless LaSalle agreed to a $7,442.00 price increase because the cost of petroleum had increased in the interim months. Then, on June 3, 2008, Gerken sent LaSalle a detailed day-by-day description of the asphalt overages Gerken incurred on the Project, and asked LaSalle to pay for the overages. On June 12, 2008, LaSalle sent an email informing Gerken that, if Gerken did not pave the outlot by the following Monday, LaSalle would pave it at Gerken’s expense. Gerken did not pave the outlot. LaSalle also demanded that Gerken fix the items on a punchlist, such as filling in low spots and cracks in the asphalt in the areas Gerken had paved. Gerken responded that it would not fix the items on the punchlist because LaSalle waived the warranty for that work. Based on Gerken’s refusal to pave the outlot and complete the punchlist items, LaSalle retained the final ten percent of the fixed-price contract value, claiming it was authorized to do so under the contract. By this point, LaSalle had already paid Gerken $491,134.50. LaSalle employed a third party to pave the outlot for $20,000 and complete the punchlist items for $4,880.2 2 The district court states that “LaSalle stated it had a third party pave the outlot at a cost of $24,880.00.” It appears, however, that LaSalle paid $20,000 to pave the outlot and that LaSalle paid between $4,000 and $4,880 to complete the punchlist items. 5 No. 12-2380 Gerken Paving, Inc. v. LaSalle Group, Inc.