Virginia Lawyers Weekly

The Virginia Court of Appeals has set aside much of the $21.2 million verdict a trial judge awarded the company that built the Clarksville bypass segment of U.S. 58.

AMEC Civil LLC of Lawrenceville, N.J., contended that the Virginia Department of Transportation owed it $24 million on top of the $72.5 million contract price for the project.

The company said it had to spend 19 additional months on what was to have been a 41-month project.

The parent of AMEC, which is based in the United Kingdom, bought Morse Diesel Civil LLC after Morse won the contract for the project in May 2000. The contract called for the project to be completed by November 2003, but it was not finished until June 2005.

By far the largest component of the 5.3-mile, 11-bridge project was the 4,800-foot John W. Tisdale Memorial Bridge over the John H. Kerr Reservoir.

Attorneys for AMEC alleged that most of the delay was based on difficulty in installing the shafts for the 81 piers that support the bridge and on unusually high water levels during much of the construction.

Delays from those and other less substantial problems extended the project over two more winters than had been contemplated, which contributed to the cost overrun, according to the complaint filed in Mecklenburg County in October 2006.

Norfolk Circuit Judge Charles E. Poston was assigned to the case because its scope overwhelmed the circuit judge in the 10th Judicial Circuit. Although the case continued to be designated as a Mecklenburg case, the trial and much of the related litigation occurred in Norfolk.

The key to the case was Virginia Code § 33.1-386, which requires a contractor to submit any claim for damages against VDOT “at the time of the occurrence or beginning of the work upon which the claim and subsequent action is based.”

AMEC’s attorneys acknowledged that it had failed to file formal written notice of most of its claims but argued that VDOT had “actual notice” of the claims and had not been prejudiced by the absence of formal notice.

“Importantly, VDOT has affirmatively acted on AMEC’s actual notice,” Poston wrote in July 2008 after a trial in March of that year. “Specifically, it has communicated with AMEC extensively regarding disputed issues before litigation arose, actively engaged in settlement negotiations and other preliminary proceedings, and has aggressively prepared for trial. VDOT’s assertion that AMEC’s claim fails for want of proper notice is a highly technical argument that undermines the clear and unambiguous purpose of the written notice requirements.”

Poston concluded, “Legal form must yield to the interests of legal function.”

Appeals Court Judge D. Arthur Kelsey was not impressed with that reasoning. “Our statutory analysis begins and ends with a less ambitious premise: ‘We can only administer the law as it is written.’ ”

The AMEC case was typical of much construction litigation, Kelsey wrote for a unanimous panel that included Judges James W. Haley Jr. and Senior Judge Rudolph Bumgardner.

“Once hopeful of an on-time, on-budget, conflict-free contract, the parties find themselves traveling the path toward litigation,” he said. “Knowing when a particular dispute has started down that path can be crucial.”

“A contracting agency may need to make difficult judgments about continued management of the contract. And, depending on the magnitude of the dispute, the agency may also need to calibrate the effect a threatened claim might have on its limited procurement budgets,” he said.

That doesn’t mean that the notice must have the sophistication of a legal pleading. “Any document can suffice if it clearly and timely states the contractor’s intention to later file an administrative claim,” but, he said, “The intent to file the claim had to be express, timely, and in writing,” and it was not in this case.

The appeals court remanded the case to Poston to determine AMEC’s damages once the items improperly considered had been eliminated. Although the bulk of the claims appear to have been disallowed, an award of damages for the extra winters appeared to stand. It was not clear, however, what that amount might be.

A spokesman for the attorney general’s office said, “We appreciate the careful attention to the law and to the details of this case exhibited by the Court of Appeals as evidenced by its opinion. We continue to analyze the opinion, and look forward to continuing to do everything possible to protect the interests of VDOT and the taxpayers in the Commonwealth of Virginia as this matter moves forward.”

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