Court Opinion

ID: 44761
Source: CourtListenerOpinion
Date Created: 2010-04-25 22:27:37+00
Date Added: 2024-06-11T08:37:44.807933
License: Public Domain

United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
               IN THE UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT                   July 19, 2006
                       _____________________
                                                         Charles R. Fulbruge III
                             No. 05-10582                        Clerk
                        _____________________

BARNARD CONSTRUCTION CO.,

                        Plaintiff - Appellant,

                                  v.

CITY OF LUBBOCK,

                        Defendant - Appellee.

_________________________________________________________________

           Appeal from the United States District Court
                for the Southern District of Texas
                        No. 5:03-CV-269
_________________________________________________________________

Before JONES, Chief Judge, WIENER, and PRADO, Circuit Judges.

PER CURIAM:*

                                  I

     Barnard Construction Co. (“Barnard”) sued the     City of

Lubbock, Texas (“City”) for breach of contract in the Northern

District of Texas.   The district court granted the City’s motion

for summary judgment, and Barnard appeals.

     Barnard submitted the lowest bid for a pipeline construction

contract to the City.    The City hired an independent engineering

company to act as “Engineer” for the project.    The Engineer was

     *
       Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

                                  1
responsible for, inter alia, the bid form for the pipeline

construction project.    The bid form included a line item for rock

excavation, but only for one of the fifteen pipelines (Line A1),

because the Engineer’s data suggested that rock excavation was

needed only in the one pipeline.       Prior to the bidding process,

the City expressly stated that the Engineer’s data was for

informational purposes only, and that bidders had the opportunity

to drill their own test holes.    The City also offered a question

and answer session prior to bidding and made changes to the

pipeline construction contract via addenda as a result of the

question and answer session.    Barnard did not drill its own test

holes.

      Barnard and the City entered into a written contract.      The

City estimated that 410 cubic yards of rock would need excavating

from Line A1; but whatever quantity of rock was excavated from

Line A1, the City would pay Barnard at the unit price for which

they bid ($200).    In performance of the contract, Barnard

discovered lines other than Line A1 required rock excavation as

well.    Barnard excavated rock from several lines other than Line

A1.   After Barnard billed the City for all rock excavated, the

City initially paid, but later offset payment for rock excavated

outside of Line A1.    Barnard sued for breach of contract and on

appeal argues for reversal of summary judgment.      First, Barnard

argues that the City’s decision to pay for all rock excavated is

a final, conclusive decision pursuant to the contract.      In

                                   2
response, the City maintains it had communicated to Barnard

before or at the time of payment that it might later offset

payment for rock excavated outside of Line A1.1         In addition,

Barnard argues that the contract is unambiguous in its terms

requiring payment of all rock excavated, or alternatively, that

it is ambiguous thereby warranting reversal of summary judgment.

                                     II

     We review an appeal from summary judgment de novo, applying

the same standard as the district court.         Degan v. Ford Motor

Co., 869 F.2d 889, 892 (5th Cir. 1989).         Summary judgment is

appropriate if there is “no genuine issue as to any material fact

and . . . the moving party is entitled to a judgment as a matter

of law.”    FED. R. CIV. P. 56(c).       Because this suit is based on

diversity jurisdiction, we apply Texas substantive law to

determine whether the City was entitled to summary judgment.

Fireman’s Fund Ins. Co. v. Murchison, 37 F.2d 204, 207 (5th Cir.

1991).

     We review the interpretation of a contract, including the

question of whether the contract is ambiguous, de novo.

Constitution State Ins. Co. v. Iso-Tex Inc., 61 F.3d 405, 407

(5th Cir. 1995) (citation omitted).

                                 III

     1
         Barnard contests the date this communication was made.

                                     3
     Barnard’s first argument, that the City’s decision to pay

for all rock excavated is a final, conclusive decision pursuant

to the contract, fails because the contract grants the City

authority to make a final determination regarding the amount and

quantity of work done by Barnard in excavating rock.     Paragraph

47 of the General Conditions reads, in pertinent part:

     Any decision by the Owner’s Representative, or deemed denial
     by the Owner’s Representative, shall be final and conclusive
     in the absence of fraud.

Paragraph 14 of the “General Conditions of the Agreement,”

clearly states, in pertinent part:

     Unless otherwise specified, it is mutually agreed between
     the parties to this Agreement that the Owner’s
     Representative has the authority to review all work included
     herein. The Owner’s Representative has the authority to
     stop the work whenever such stoppage may be necessary to
     ensure the proper execution of the contract. The Owner’s
     Representative shall, in all cases, determine the amounts
     and quantities of the several kinds of work which are to be
     paid under the contract documents, and shall determine all
     questions in relation to said work and the construction
     thereof, and shall, in all cases, decide every question
     which may arise relative to the execution of this contract
     on the part of said Contractor.

The record is clear that the City, via the Owner’s

Representative, told Barnard that it was only considering

Barnard’s request to pay for rock outside of Line A1.2    Barnard

     2
       While Barnard disputes the date on which the City informed
Barnard that it would only consider the payment, the date is not
dispositive; nor is the fact that the communication was made.
The fact that Barnard was initially paid for the rock excavated
outside of Line A1 is also irrelevant. The contract places
authority over final decisions on the Owner’s Representative.
After reviewing the City’s obligations under the contract, the
City and the Owner’s Representative correctly determined that it

                                4
does not allege the City has committed fraud in making this

decision.    The Owner’s Representative made a final decision as to

the amount and quantity of excavated rock for which Barnard was

to be paid when it determined under the contract that it need not

pay for rock excavated outside of Line A1.

                                 IV

       Barnard’s second argument also fails.    First, it argues that

the contract is unambiguous thereby requiring payment for rock

excavated outside of Line A1.    Alternatively, Barnard argues the

contract is ambiguous and therefore creates a genuine issue of

material fact, requiring reversal and remand.      Whether a contract

is ambiguous is a question of law for the court to decide.       Coker

v. Coker, 650 S.W.2d 391, 394 (Tex. 1983).      If the written

contract is worded such that it can be given a certain or

definite legal meaning or interpretation, then it is not

ambiguous and the court will construe the contract as a matter of

law.    J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.

2003); Coker, 650 S.W.2d at 393.       The court must give meaning to

each of its provisions, in light of the circumstances surrounding

the contract’s execution, excluding statements of the parties as

to what they intended.    Davidson, 128 S.W.3d at 229; see also

Universal C.I.T. Credit Corp. v. Daniel, 243 S.W.2d 154, 157

(Tex. 1951).

need not pay for rock excavated outside of Line A1.

                                   5
     First, Barnard argues that the following circumstances,

which they contend were not taken into account by the district

court, existing at the time of execution, support its

interpretation that the contract is unambiguous: (1) the City

provided all the forms for the bidding process and did not allow

any alteration of the form or negotiation of the terms; (2) no

bidder could bid on a unit price for rock anticipated to be

encountered except on the blank provided for rock excavation on

Line A1; and (3) no bidder could increase an amount for work

performed on one line in order to “pad” or “cover” unpaid work

performed on another line.   As the argument goes, because Barnard

could not bid on rock outside of Line A1, it was irrelevant

whether it took the opportunity to investigate the sub-surface

conditions outside of Line A1.   However, Barnard neglects to

consider that the City did allow for an opportunity for the

bidders to ask questions, a process through which the contract

could be changed and through which addenda were added to the

contract.

      In the General Conditions section of the contract, under

Paragraph 17, “Contractor’s Understanding,” it states:

     It is understood and agreed that the Contract has, by
     careful examination, satisfied itself as to the nature and
     location of the work, the confirmation of the ground, the
     character, quality and quantity of materials to be
     encountered, the character of equipment and facilities
     needed preliminary to and during the prosecution of the
     work, and the general and local conditions, and all other
     matters which in any way affect the work under the contract
     documents.

                                 6
     . . .

     Unless otherwise specified herein, all loss, expense, or
     damage to Contractor arising out of the nature of the work
     to be done, or from the action of the elements, or from any
     unforeseen circumstance and the prosecution of the work,
     shall be sustained and borne by the Contractor at its own
     cost and expense.

Paragraph 17 of the General Conditions clearly places the risk of

unforeseen circumstances on Barnard.     See I.O.I. Sys., Inc. v.

City of Cleveland, 615 S.W.2d 786, 789 (Tex. App. 1980).     Barnard

bore the risk in undertaking the project under the terms of the

contract.

     Arguing that the City’s interpretation is unreasonable

because it confers a windfall, Barnard maintains that Paragraph

1.6 of Section 01020 of the contract unambiguously mandates

payment for rock excavation, including “all of the extra cost of

equipment and labor associated with the excavation of rock over

and above the excavation of nonrock materials in a tunnel or

trench.”     Section 01020 is titled, “Measurement and Payment.”

Paragraph 1.6 appears in Part 1, titled, “General.”     The contract

has both specific provisions, such as providing a line item for

rock excavation only for Line A1, as well as general provisions,

for example in Section 01020 in Paragraph 1.6 labeled “Rock

Excavation,” in which it states, “[p]ayment will be made at the

unit price bid for Rock Excavation.”     Where a contract “appears

on the surface to be ambiguous . . . the apparent ambiguity may

be resolved by the application of a well-settled rule of

                                   7
construction, to wit: that if general terms appear in a contract,

they will be overcome and controlled by specific language dealing

with the same subject.”    City of San Antonio v. Heath & Stich,

Inc., 567 S.W.2d 56, 60 (Tex. App. 1978).    The fact that the only

place where a line item appears for rock excavation is for Line

A1, a specific provision, suggests that the agreement between the

parties was to pay for rock excavation only on Line A1.    This

interpretation of the contract is further supported by the

provision in Section 01020 entitled “Scope,” in which it states:

     The unit price bid on each item stated in the Bid Form shall
     include furnishing all labor, superintendence, machinery,
     materials, equipment and incidentals necessary to complete
     the various items of work in accordance with the plans and
     specification. Cost of work or materials shown on the plans
     and called for in the specifications for which no separate
     payment is made shall be included in the bid price on the
     various pay items.

(emphasis added).    The contract clearly evinces a unit price for

rock excavation only for the item Line A1.

     As an alternative argument, Barnard argues that the contract

is ambiguous.    First, Barnard disagrees that the phrase “on each

item stated in the Bid Form” in the “Scope” of Section 01020 is

unambiguous.    It points to the fact that this is a unit price

contract because the City had to make estimations for each line

item, including an approximate amount of rock to be excavated.

Barnard maintains that the phrase “on the project” at the end of

Paragraph 38, “Quantities and Measurements,” found in the General

                                  8
Conditions,3 refers to the project as a whole, not to rock

excavation on Line A1.    As the argument goes, the City is

therefore required to pay Barnard for all rock excavated on the

whole project.    Barnard states, “[t]he term ‘project’ is not

defined by the contract, but ‘Project Number’ is identified

throughout the contract as ‘Project Number 293-6903 . . . .”

Barnard’s invocation of Paragraph 38 is unavailing for the same

reason its attempt to use Paragraph 1.6 of Section 01020 is.     The

unit price bid blank found in Line A1 plainly evidences that the

City expected drilling only on Line A1 and requested bids on rock

excavation on that one line.4   Barnard ignores the fact that the

City’s estimate of 410 cubic yards of rock was only for Line A1,

and not for all of the lines in total.    We find that the contract

between Barnard and the City is not ambiguous in its terms that

     3
         Paragraph 38 reads:

     Where the estimated quantities are shown, and only when same
     are expressly stated to be estimates, for the various
     classes of work to be done and material to be furnished
     under this contract, they are approximate and are to be used
     only as a basis for estimating the probable cost of the work
     and for comparing their bids offered for the work. In the
     event the amount of work to be done and materials to be
     furnished are expressly stated to be estimated, and only
     when same are expressly stated to be estimated, it is
     understood and agreed that the actual amount of work to be
     done and the materials to be furnished under this contract
     is the unit price method, payment shall be for the actual
     amount of work done and materials furnished on the project.
     4
       It bears repeating that Barnard had the opportunity to
drill its own test holes prior to bidding. Instead, Barnard
relied on the Engineer’s data.

                                  9
rock excavation would be paid only for that performed on Line A1.

                                V

     For the aforementioned reasons, we AFFIRM the district

court’s grant of the City’s summary judgment motion.

ENDRECORD

                               10
WIENER, Circuit Judge, dissenting:

     I respectfully dissent from the panel majority’s affirmance of

the summary judgment for the City.     I do so because I am convinced

that summary judgment was granted despite the existence of a

genuine issue of material fact which cannot be resolved under the

summary judgment record that was before the district court and is

now before us.1

     None disputes that (1) a decision was made by the City on May

22 to pay Barnard for all rock excavation, whether inside or

outside Line A1 —— and indeed, the City did pay for it —— but (2)

on June 17, the City reversed that decision and deducted from the

next periodic payment the portion of the prior payment attributable

to excavation outside Line A1.    The parties do vigorously contest,

however, the correct way to classify the legal nature of the City’s

May 22 decision and payment.    Barnard insists that under the terms

of the construction contract, the May 22 decision was “final and

conclusive,” making it binding on the City and not subject to

subsequent unilateral reversal or change by the City. In contrast,

the City pays little heed to this issue; and the panel majority

opinion   demonstrates   an   unwillingness   even   to   recognize   the

possibility that whether a particular decision by the City is

“final and conclusive” is not simply whatever the City unilaterally

     1
       Summary judgment may be granted, of course, only if “there
is no genuine issue as to any material fact ....” FED. R. CIV. P.
56(c).

                                  11
may say.2

       The contract states that “[a]ny decision by the [City’s]

Representative ... shall be final and conclusive in the absence of

fraud.”3      Although neither a definition nor an explanation of

“final and conclusive” appears in the contract, the phrase is used

in it.      For example, the contract gives the City’s representative

authority to resolve “all questions of dispute or adjustment [that

are    timely]     presented   by    the    Contractor”      to   the    City’s

representative.          Elsewhere    in        the   contract,   the    City’s

representative is given the authority and duty to, “in all cases,

decide every question which may arise relative to the execution of

this contract.”      Further, the contract deems each such decision to

be    “conclusive   in   the   absence     of    written   objection    to   same

delivered to Owner’s Representative within fifteen (15) calendar

days of any decision or direction by [City’s] Representative.”

       Here, there were (1) an initial decision by the City on May 15

to deny Barnard’s request to be paid for all rock excavation; (2)

a timely objection by Barnard to that decision; (3) a decision

favorable to Barnard made by the City on May 22, reversing its May

15 decision and agreeing to pay Barnard for all excavation; and,

finally (4) a third decision by the City, this one on June 17,

purporting to reverse its own May 22 change of position from its

       2
           See footnote 2 in panel majority opinion, supra.
       3
           Emphasis added.

                                      12
initial decision of May 15 —— a double flip-flop.

     I do not question that the City, acting through its designated

representative, had the right vel non to make the May 22 decision;

but given that decision, I do question how the City could then, on

June 17, make a contrary decision on the same discrete issue.              I

have found no principled way to interpret final and conclusive ——

at least not without making this construction agreement a contract

of adhesion —— to mean anything other than that an officially made,

unqualified and unconditional decision by the City on any given

issue, at any stage of the construction, is not merely final and

conclusive, but is also just as unilaterally irreversible by, and

binding on, the City as it is on Barnard.          As the contract is the

law between the parties, contractual interpretation must provide

the answer to the key question, “which of the City’s diametrically

opposed, sequential decisions regarding rock excavation was the

final   and   conclusive   one,   and    was   therefore   irrevocably   and

irreversibly binding on both parties?”

     The summary judgment record makes clear, and none disputes,

the relevant sequence of events.

•    On May 15, the City made a “decision” to deny Barnard’s
     request to be paid for all rock excavation, not just that in
     Line A1.

•    Barnard timely objected to that denial.

•    On May 22, the City made a “decision” to reverse its May 15
     decision and to pay for all rock excavation (which it did).

Thus, when we interpret the contract as a whole, with all relevant

                                    13
provisions considered in pari materiae, this second “decision” by

the City, the one on May 22 to reverse its May 15 decision and pay

Barnard for all rock excavation, had to be “final and conclusive”

—— unless, that is, the May 22 decision was expressly made subject

to the putative condition subsequent, reserving to the City the

power to reconsider and again reverse itself.          Unlike the May 15

decision which was timely contested by Barnard pursuant to the

contract, the May 22 decision was not contested or appealed by

either party. Rather, the City just changed its mind weeks later.

Crucially, then, for the May 22 decision not to be final and

conclusive, and thus remain reversible by the City, this condition

subsequent    would   have   to   have   been   made   by   the   City   and

communicated to Barnard (1) in the May 22 decision, (2) before that

decision was made, or (3) contemporaneously with that decision.

Conversely, any subsequent attempt by the City to make its May 22

commitment reversible would have been too late and thus ineffectual

to render the May 22 decision anything other than final and

conclusive.

     It follows that if, on the one hand, the question when that

condition subsequent was made and communicated to Barnard is

ultimately found to have been in the May 22 decision, or on or

before May 22, then that decision would not have been “final and

conclusive,” and the City would be entitled to change its mind, as

it purported to do on June 17.     But if, on the other hand, the fact

ultimately found is that communication of the reserved right to

                                    14
change    its   mind   was    not    made    by   the   City   in,   before,   or

contemporaneously with its May 22 decision, but only thereafter,

the May 22 decision would be a “final and conclusive” decision on

that one point, viz., to pay Barnard for all rock excavation.              This

is why the answer to the question whether the May 22nd decision was

final and conclusive and therefore not subject to a unilateral,

post-hoc change of position by the City (as the City purported to

do on June 17), is the crucial “genuine issue of material fact” on

which this contract dispute turns.

     The panel majority appears to accept as a given the City’s

representation to this court that “it had communicated to Barnard

before or at the time of payment that it might later offset payment

for rock excavated outside of Line A1.”             Yet the majority opinion

also concedes that “Barnard contests the date this communication

was made.”4     In the face of these irreconcilably opposed factual

contentions of the parties, I cannot conclude, as did the district

court and the panel majority, at least implicitly, that no genuine

issue of material fact exists regarding the timing or sequence of

the City’s reservation of that condition subsequent.                 Instead, I

remain    convinced    that   this    material     fact   question    cannot   be

resolved on the basis of the summary judgment record, either by the

district court or by this court on de novo review.               Here’s why.

     In granting summary judgment, the district court stated as a

     4
         See footnote 1 in panel majority opinion, supra.

                                        15
given that Barnard was “forewarned”5 —— shorthand for Barnard was

informed of the condition subsequent by the City, before, in, or

contemporaneously with its May 22 decision to pay Barnard for all

rock excavation.    If that turns out to be how it happened, I would

agree that the May 22 decision was conditional, preventing it from

being deemed final and conclusive, and thus making it subject to

reconsideration and change by the City.       I repeat for emphasis,

however, that the district court’s conclusional statement that

Barnard was “forewarned” simply is not supported by the summary

judgment record, without which support that material fact issue

remains genuinely contested and unresolved.

     By the district court’s own declaration, its determination

that Barnard was “forewarned” by the City is based solely on one

individual’s affidavit.     The problem is that the affidavit nowhere

states, mentions, adverts to, or implies either (1) the precise

calendar date of the City’s making and communicating the condition

subsequent, or (2) the relative timing of that communication vis-à-

vis the notification to Barnard of the City’s May 22 decision to

pay for all rock excavation (itself a turn around from its May 15

decision not to pay).     Whether Barnard was or was not “forewarned”

remains an open genuinely contested issue of material fact.

     If this panel had reversed and remanded, the City as movant

might well have been able to supply evidence of such date or timing

     5
         Emphasis mine.

                                   16
to show that Barnard was indeed “forewarned”; and it might well be

that Barnard would not have been able to controvert it.       But,

without a summary judgment record sufficient to support the absence

of a genuine issue of material fact, we should not affirm the

summary judgment here being appealed.   This is why, with genuine

respect for my colleagues of the panel majority and for the

district court, I am compelled to dissent.

                                17