Court Opinion

ID: 9706583
Source: CourtListenerOpinion
Date Created: 2023-08-26 01:46:54.490264+00
Date Added: 2024-06-11T18:22:23.758014
License: Public Domain

DYKMAN, J.
(dissenting). I agree with the majority's interpretation of article IV, § 26 of the Wisconsin Constitution. Thus, the question for me is whether the State contracted in advance to pay road grading contractors for increased fuel costs or whether the fuel cost adjustment payments were after-the-fact payments *420made to the contractors because of escalating fuel prices caused by the Iraqi invasion of Kuwait.
This is a mine-run contract case, once the constitutional issue is resolved. I view the question for review as whether the materials submitted on summaxy judgment demonstrate that the State directed construction and design engineers to include contractual fuel cost adjustment clauses in contracts for some or all of the projects.
Because this case is here on summary judgment, I agree that we follow the methodology explained by the majority. A party is entitled to summary judgment if there are no disputed issues of material fact. Germanotta v. National Indem. Co., 119 Wis. 2d 293, 296, 349 N.W.2d 733, 735 (Ct. App. 1984). After examining the affidavits submitted by the parties, we may reach one of the following three results: (1) the affidavits unambiguously demonstrate that the State intended to include fiiel cost adjustment clauses on select projects but only after an individualized inquiry into the facts of a particular contract; (2) the affidavits unambiguously demonstrate that the State intended that all grading contracts have fuel cost adjustment clauses; or (3) the affidavits are ambiguous because reasonable persons could interpret them either way. The trial court chose the second interpretation while the majority chooses the first.
The material submitted by the legislators in support of their motion for summary judgment consists of 1993 Senate Bills 516 through 520, the memorandum written by Michael E. Jaskaniec, a draft copy of the proposed fuel cost adjustment clause, and a contract between the Wisconsin Department of Transportation (DOT) and the Vinton Construction Company. The defendants submitted an affidavit signed by David *421Hoffman, the president of Hoffman Construction Company and a member of the Wisconsin Road Builders Association.
Because the Jaskaniec memorandum is critical to deciding this case, I quote it in its entirety:
Date: February 3,1982
To: District Director, District #—
Attn: Chief Construction Engineer
Chief Design Engineer
From: Michael E. Jaskaniec, P.E.
Chief Construction Engineer
Subject: Cost Adjustment Provisions
By memo of July 27, 1979, the Districts were provided background information and guidelines for the implementation of cost adjustment provisions (escalators) for cement, asphalt and fuel on appropriate contracts. The principal justification for price adjustments was the contractor's inability to procure price quotes at the bidding stage for critical materials which were subject to extreme market fluctuations. The very competitive and stable bids received over the past three years supports the effectiveness of these provisions.
In the monitoring of market indicators we have reasonable confidence that adequate supply and moderate price structuring has stabilized critical material availability relating to contract bidding. Accordingly, there no longer exists support for continuing the price adjustment provisions as initiated in 1979. This position has been reviewed with construction industry representatives and concurred in with the exception of the grading industry. The graders, representing the highest unit users of fuel (20% - 40% of cost) continue to express substantial *422concern regarding the potential for extreme impacts of fuel costs to work under contract as a result of Mid-East instabilities. In order for the Department to continue to receive the most competitive and favorable grading prices, we will continue to provide for fuel adjustments on select grading projects. This fuel provision is a new and simplified approach and completely changed from our previously used fuel adjustment specification. For your information, we have attached a draft copy of the proposed specification. It will be inserted by the central office on appropriate major grading projects taking into consideration the time of letting, anticipated progress of the work and expected carry-over into subsequent calendar years. The cost adjustment will be based on changes in the Department's index and applied to final quantities on the final estimate. Hopefully, this new approach will limit administrative problems, limit contractor's risk and continue to provide a favorable bidding environment. We encourage the districts to assess their major grading projects in consideration of the foregoing and make a recommendation in their PS&E letter as to the appropriateness of the fuel provision.
The Department will continue to monitor and publish monthly material indexes for asphalt, cement and fuel. Should future market conditions change, we propose to reinitiate cost adjustments when and where warranted.
Feel free to forward any comments, questions or concerns you may have regarding this transmittal.
By
Chief Construction Engineer
The Hoffman affidavit states that DOT "agreed and committed to provide fuel cost reimbursements *423when warranted due to major market fluctuations." Hoffman further averred:
Hoffman Construction Company and other grading contractors have consistently relied on this DOT agreement and commitment. We have consistently bid.on projects using then existing fuel prices without any additional component to account for market fluctuations, and have relied in good faith on DOT's representation that it would reimburse extraordinary fuel expenses due to market fluctuations.
Pursuant to summary judgment methodology, I must consider whether the Jaskaniec memorandum, the fuel cost adjustment clause, and the Hoffman affidavit create disputed issues of material fact. Germanotta, 119 Wis. 2d at 296, 349 N.W.2d at 735. I conclude that this material could reasonably be interpreted to support the legislators' position. The use of the term "select grading projects" can reasonably mean that if a fuel cost adjustment clause is appropriate for a particular project, the fuel cost adjustment clause would be inserted in the contract. Since the clause was not included in the defendants' contracts, reimbursing the contractors for increased fuel costs would be after the fact and, therefore, violate art. IV, § 26 of the Wisconsin Constitution.
But the material could also be reasonably interpreted to support the defendants' position. The Jaskaniec memorandum refers to all cost adjustment provisions, not just those for fuel. A part of the memorandum specifically refers to the grading industry and the prior practice of "price adjustment provisions." It uses the word "continuing" in reference to the prior practice. It concludes: "Should future market conditions change, we propose to reinitiate cost adjustments *424when and where warranted." The memorandum was addressed to district directors, not to road grading firms. In his affidavit, Hoffman averred that he relied upon the Jaskaniec memorandum when submitting bids containing no fuel cost adjustment clauses. He averred that DOT represented that it would reimburse extraordinary fuel expenses.
A reasonable interpretation of the same summary judgment material could be that the road graders got their information about the new fuel cost adjustment policy from the district directors, and that this information was sufficient to permit the graders to reasonably conclude that the prior agreed practice would continue. The Jaskaniec memorandum did not inform the district directors that there would be no fuel cost adjustment clause unless one was specifically inserted in the contract. The documents show that DOT's contract began by acceptance of the contractor's bid. Thus, the contractor's understanding of the State's position on fuel cost adjustments would be crucial to determining what the State and the contractors agreed. I conclude that a reasonable interpretation of the summary judgment material would permit a conclusion that a prior agreement existed between the grading contractors and the State and that grading contracts would be subject to increased fuel cost adjustment provisions.
Having determined that the summary judgment documents could reasonably be interpreted as both the legislators and the defendants contend, the only conclusion I may draw is that summary judgment should be denied, and that a trial should be held to determine the intent of the parties to the various contracts. Intent is not an issue that can be decided on a motion for summary judgment. Lecus v. American Mut. Ins. Co., *42581 Wis. 2d 183, 190, 260 N.W.2d 241, 244 (1977). At trial, testimony of the district directors and others could be heard, and the trial court could assess the credibility of the witnesses to determine the intent of the parties to the contracts. Once that intent is determined, the court could consider whether the constitutional prohibition against after-the-fact contract adjustments is applicable and grant judgment accordingly.
If an examination of DOT's and the contractors' intent reveals that both intended that the fuel cost adjustment clause would be a part of all DOT grading contracts, it would be unfair not to interpret those contracts in that way. But if DOT and the contractors had differing beliefs as to the fuel cost adjustment provisions, it would be unfair for the contractors to recover their additional fuel costs because ordinary contract principles require a meeting of the minds for a contract to exist. See Garvey v. Buhler, 146 Wis. 2d 281, 289, 430 N.W.2d 616, 619 (Ct. App. 1988). If no meeting of the minds occurred, awarding the additional fuel costs would be after-the-fact payments prohibited by art. IV, § 26 of the Wisconsin Constitution. We will never know which scenario is correct because the majority has concluded that the contractors cannot win under any view of the facts. I cannot agree and, therefore, I respectfully dissent.