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Foreseeable Subsurface Sand Didn't Alter Work Scope

Thursday, March 01, 2012 04:43 am


Contract Breach -- Differing Conditions

Dave's Excavating, Inc. v. City of New Castle, Indiana, 2012 Ind. App. Lexis 6 (Jan. 11, 2012) According to an appellate court, a trial court correctly found that a contractor breached its contract for failure to continue performing after stumbling on differing subsurface conditions.

The City of New Castle, Indiana demanded from surety Liberty Mutual Insurance Company (Liberty Mutual) $428,000 in payment under a performance bond after the city terminated for default its sanitation project contract with the bonded contractor. Liberty and the contractor, Dave's Excavating, Inc. (Dave's), alleged that the city had breached the contract. But a trial court disagreed and awarded damages and attorney's fees totaling $909,000 to the city. Liberty and Dave's appealed, arguing--unsuccessfully--against Dave's contract liability and Liberty's bond liability.

The appellants contended that there was a question as to the work scope for the project because of the differing conditions. They pointed to a difference between the bid documents provided when Dave's bid on the project and those later provided to the bidders who were to complete Dave's unfinished work. Only in the second set of documents did the city identify the subsurface sand and gravel conditions that were the basis for Dave's change order request and its dispute with the city. The appellants reasoned that this disparity raised questions as to whether the sand and gravel conditions were outside the work scope, but the court found it immaterial whether the two documents differed. Dave's agreed when it execute [...]

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