Court Opinion

ID: 2783151
Source: CourtListenerOpinion
Date Created: 2015-03-02 15:04:47.919284+00
Date Added: 2024-06-11T11:02:43.736956
License: Public Domain

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13-P-1880                                               Appeals Court

             CELCO CONSTRUCTION CORP.     vs.   TOWN OF AVON.

                              No. 13-P-1880.

            Norfolk.        October 8, 2014. - March 2, 2015.

                 Present:    Green, Rubin, & Agnes, JJ.

Contract, Public works, Bidding for contract, Municipality,
     Modification, Promissory estoppel. Public Works, Bidding
     procedure, Extra work. Municipal Corporations, Contracts,
     Estoppel.

     Civil action commenced in the Superior Court Department on
October 22, 2010.

     The case was heard by Patrick F. Brady, J., on a motion for
summary judgment.

    Raymond S. Ewer for the plaintiff.
    Doris R. MacKenzie Ehrens for the defendant.

    GREEN, J.     In its successful bid to perform work for the

defendant town of Avon (town) on a water main extension project,

the plaintiff, Celco Construction Corp. (Celco), assigned a unit

price of $0.01 as its charge to excavate each cubic yard of rock

from the project site.       That price was substantially lower than
                                                                     2

Celco's actual cost to remove each cubic yard of rock; Celco

constructed its bid based on its belief that the amount of rock

actually on site would be considerably less than the unverified

estimate indicated in the contract bid documents, so that its

low unit price would give it a competitive advantage when

compared to other bidders who assigned a unit price to rock

removal that more closely approximated the actual cost.1    When

the amount of rock turned out to exceed the estimate by more

than 1,500 cubic yards, Celco sought an "equitable adjustment"

in the contract price to recover its increased costs for rock

removal.    See G. L. c. 30, § 39N.   The town refused Celco's

request, Celco filed a complaint in the Superior Court, and a

judge of that court allowed the town's motion for summary

judgment.   Celco appealed, and we now affirm the judgment.

     Background.    We summarize the undisputed facts appearing in

the summary judgment record relevant to Celco's claim of

entitlement to an equitable adjustment in the contract price.2

In 2008, the town solicited bids to perform work on a project

for the installation of water mains and associated

reconstruction of roadways disturbed during such installation.

     1
       To make up the difference between its bid price and its
cost to remove the amount of rock it estimated to be on the
site, Celco increased the unit prices it assigned to various
other components of the work.
     2
       We reserve additional facts relevant to Celco's claim of
promissory estoppel for our discussion of that issue.
                                                                      3

Celco submitted a bid and was awarded the contract.     Celco's bid

included unit prices for various elements of the work including,

as relevant to its claim for equitable adjustment, a specified

unit price of $0.01 per cubic yard for excavation and disposal

of rock from the project site.3    Next to the line item for that

element of the work, under the heading "Estimated Quantity," the

bid documents specified "1000* cu. yd."     A legend at the bottom

of the page explained that the asterisk denoted an

"[i]ndeterminate quantity assumed for comparison of bids."4

Celco and the town entered into a contract for the work on April

6, 2009.

     During its performance of the work, Celco discovered that

the quantity of rock requiring removal substantially exceeded

the 1,000 cubic yards estimated in the bid documents for

purposes of bid comparison.     On August 11, 2009, Celco requested

an increase in its contract unit price for rock removal from

$0.01 to $220 per cubic yard.     On November 16, 2009, describing

the additional rock as a "change in the conditions depicted by

     3
       Celco was not alone in submitting a "penny bid" for rock
removal; thirteen other bidders similarly submitted penny bids
for that line item. Several other bidders, however, submitted
bids that specified unit prices ranging from $40 to $125 per
cubic yard for rock excavation and removal. We note that
Celco's bid submission also assigned a $0.01 unit price to a
variety of other line items, none of which is the subject of
dispute between the parties.
     4
       Several other line items included the same denotation
regarding the specified estimate.
                                                                     4

the plans and specifications," Celco again requested an increase

in the unit price, this time to $190 per cubic yard.    On January

13, 2010, the town denied Celco's request for an adjustment to

the unit price.    Eventually, Celco removed a total of 2,524

cubic yards of rock from the project site.

    In support of its claim for an "equitable adjustment" to

the contract price, Celco asserts that its performance of the

work was made more difficult by the additional rock.

Specifically, Celco claimed that it lost "150 feet per day of

production," because average production in earth without rock

was 300 feet per day, compared to only 150 feet per day with

rock.    However, Celco submitted no evidence suggesting that the

character of the rock discovered on site was different, or that

the actual unit cost to remove it was greater, by reason of the

increased amount or any other concealed condition.

    Following the town's denial of its request for adjustment

to the contract price, Celco commenced an action in the Superior

Court.    A judge of that court allowed the town's motion for

summary judgment, and this appeal followed.

    Discussion.     Under G. L. c. 30, § 39N, inserted by

St. 1972, c. 774, § 4, all public construction contracts such as

the one at issue in the present case must include a provision

allowing either party to request an equitable adjustment in the

contract price "[i]f, during the progress of the work, the
                                                                    5

contractor or the awarding authority discovers that the actual

subsurface or latent physical conditions encountered at the site

differ substantially or materially from those shown on the plans

or indicated in the contract documents."

    The purpose of the equitable adjustment provision is to

remove unknown risks from the competitive bidding process.    The

contracting authority is thereby able to obtain bid prices

stripped of amounts incorporated by bidders to cover the risk,

and bidders are able to bid with the assurance that they will be

compensated for subsurface or latent site conditions that impose

greater costs than reflected in the bid documents.    See Glynn v.

Gloucester, 9 Mass. App. Ct. 454, 461 n.9 (1980).    According to

Celco, the presence of 2,524 cubic yards of rock on the project

site, when the project bid documents estimated only 1,000 cubic

yards, presents an appropriate occasion for an equitable

adjustment to compensate it for the increased costs it incurred

to remove the additional rock.   We disagree.

    As a threshold matter, we observe that the contract bid

documents did not specify that the site contained only 1,000

cubic yards of rock; instead, the bid documents expressly

disclaimed the accuracy of the stated amount, explaining that

the estimate appeared solely for the purpose of allowing

comparison of the submitted bids.   As the motion judge observed,
                                                                      6

the contract anticipated rock excavation and disclosed that the

amount of rock was "indeterminate."

    More importantly, there is nothing in the summary judgment

record to suggest, and Celco does not contend, that the nature

of the rock itself, and the means and cost to remove it, differ

in any way from what was anticipated in the contract documents.

Particularly in a contract such as the one in the present case,

in which the contract price is comprised of the aggregate of

line items for various elements of the work, which in turn are

based on unit prices for the quantities involved in each line

item, no equitable adjustment is warranted by reason of a

variation in the estimated quantities, standing alone, as

compared to a deviation in the condition or character of the

physical condition.    See Perini Corp. v. United States, 381 F.2d
403, 410-411 (1967).     An equitable adjustment is required only

when the contractor encounters a material difference in the

"actual subsurface or latent physical conditions . . . at the

site . . . of such a nature as to cause an increase or decrease

in the cost . . . of the work."     G. L. c. 30, § 39N, inserted by

St. 1972, c. 774, § 4.     Had Celco in its bid assigned to rock

removal a unit price reasonably approximating its estimated cost

for such removal, instead of assigning the wholly artificial and

unrealistic value of one penny, it would be in no need of

adjustment to the contract price.     Put another way, G. L. c. 30,
                                                                   7

§ 39N, is designed to protect contractors from unknown and

unforeseen subsurface conditions, not from the consequences of

their decisions to bid a unit price for the performance of work

that is wholly unrelated to their anticipated cost to perform

the work.   In such circumstances, it defies logic to invoke

"equity" as a basis for adjustment to the contract price.

    Celco's additional claims of promissory estoppel and

quantum meruit require only brief discussion.   Construed in the

light most favorable to Celco, the statements allegedly made by

the town's water superintendent John Tetreault to the effect

that "Celco should keep working on the project and this

additional [rock] issue would be dealt with once the total

quantity of [rock] excavated was known" were inadequate to give

rise to an obligation on the part of the town to compensate

Celco for rock removal at a rate greater than the unit price

specified in the contract.   As a threshold matter, Celco has

offered no evidence to suggest that Tetreault had legal

authority to agree on behalf of the town to compensate Celco for

rock removal at a rate in excess of that provided in the

contract.   Moreover, even if Tetreault personally held

contracting authority as a general matter, the contract at issue

in the present case was entered into pursuant to a statutorily

prescribed public bidding process, and "a party cannot evade the

statutory limitations on a municipality's contracting power by
                                                                8

rendering services and subsequently seeking recovery based on

alternative theories."   Baltazar Contractors, Inc. v. Lunenburg,

65 Mass. App. Ct. 718, 724 (2006), quoting from Park Drive

Towing, Inc. v. Revere, 442 Mass. 80, 83 n.7 (2004).5

                                   Judgment affirmed.

     5
       We need not consider whether Tetreault's statements were
sufficiently unambiguous to induce reasonable reliance, see
Rhode Island Hosp. Trust Natl. Bank v. Varadian, 419 Mass. 841,
848 (1995), or whether Celco's continued performance of its pre-
existing obligations under the contract might qualify as
detrimental reliance for purposes of promissory estoppel.