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Contract – Bridge Construction – Delay Claims – Written Notice To VDOT

Deborah Elkins//September 21, 2010

Contract – Bridge Construction – Delay Claims – Written Notice To VDOT

Deborah Elkins//September 21, 2010

In this appeal concerning performance of contractor AMEC Civil LLC’s contract with VDOT for the Route 58 Clarksville Bypass in Mecklenburg County, the Supreme Court holds VDOT was entitled to timely written notice of claim under Va. Code § 33.1-386(A), not “actual notice” through the minutes of meetings and memoranda exchanged by the parties; the high court affirms the Court of Appeals’ judgment on all issues, except an issue of contract interpretation on “differing site condition” and an issue of timely written notice of a claim related to construction of concrete shafts for a pier.

Issues on appeal involve timely notice of claims; whether sustained elevated lake water levels constitute a differing site condition under the contract; whether AMEC was entitled to home office overhead damages; whether the “Rental Rate Blue Book” was properly used to calculate AMEC’s damages; and whether AMEC is entitled to pre-judgment interest.

The central element of the project was Bridge 616 over Kerr Lake, which required work performed by equipment floating on the water. The project also included 10 smaller bridges and several miles of roadway. The projected completion date was November 2003; the project was completed in June 2005. Delays arose primarily from difficulties in the construction of concrete-filled drilled shafts that form the foundation of Bridge 616, and sustained elevated water levels in Kerr Lake.

On AMEC’s claims for additional compensation, the circuit court rendered a general verdict and awarded AMEC $21,181,941, without interest or attorney’s fees. The circuit court found VDOT had written notice through minutes of meetings and memoranda addressing the issues, exchanged between the parties, and concluded that every factual assumption made in its first letter opinion was established by the evidence at trial. VDOT and AMEC both appealed. The Court of Appeals reversed in part and affirmed in part. Both parties appealed to this court.

We agree with the Court of Appeals that written notice is required. Virginia Code § 33.1-386(A) is to be strictly construed, and is clear and unambiguous, stating that contractors “shall” provide “written notice” to VDOT. We hold that actual notice cannot satisfy the written notice requirement in the statute; written notice is required, either at the time of occurrence of the claim, or at the beginning of the work upon which the claim is based. Written notice under Code § 33.1-386(A) must be a written document delivered to VDOT clearly stating the contractor’s intention to file a claim. We reject AMEC’s argument that minutes of meetings constitute written notice under Code § 33.1-386(A).

At a minimum, to satisfy the written notice requirement, the written document at issue must clearly give notice of the contractor’s intent to file its claim and must be given to VDOT by letter or equivalent communication directed to VDOT at the appropriate time.

Applying the appropriate standard to the claims at issue here, we agree with the Court of Appeals notice of claim was untimely on claims for drilled shaft, defects in the drilled shaft concrete specification; concrete formwork for foundation caps, piers and columns; the claim for Pier 17 foundation cap repair; and claims for four additional work orders.

On remand, the circuit court should determine the amount of compensation to which AMEC has proved it is entitled on these claims.

Unlike the Court of Appeals, we hold AMEC provided VDOT timely written notice of its intention to file a claim for damages resulting from the plan error regarding the construction of concrete shafts on pier 18 on Bridge 616. On remand, the circuit court should award damages it incurred regarding this claim.

The Court of Appeals held AMEC’s “high-water” differing site condition claim was defeated by the contract as a matter of law. The Court of Appeals erred by deciding the “Type II” condition aspect of AMEC’s claim as a matter of law, as an inquiry into whether a Type II differing site condition existed presents a question of fact. We also disagree with VDOT’s assertion that the sustained elevated water levels were a natural event and therefore an act of God. On remand, the circuit court shall calculate the appropriate adjustment to the contract, excluding any profit based on costs incurred by AMEC through increased time required to perform the contract, as a result of sustained elevated lake water levels. We agree with the lower court that AMEC is not entitled to home office overhead expenses; we hold that court properly affirmed the circuit court’s acceptance of the Blue Book for the purpose of calculating such costs; and the Court of Appeals correctly affirmed the circuit court’s denial of pre-judgment interest sought by AMEC.

Affirmed in part, reversed in part and remanded.

Commonwealth of Va. v. AMEC Civil LLC (Millette, J.) Nos. 091430, 091662; Va.Ct.App.; Richard Tyler McGrath, Sr. AAG; Kenneth T. Cuccinelli II, AG; Wesley G. Russell Jr., Dep. AG; Randall H. Wintory, AAG; William R. Mauck Jr, Stephen G. Test, Matthew S. Sheldon for Comm. Va.; Anne Marie Whittemore, Robert L. Hodges, J. Tracy Walker IV, Gregory S. Martin for AMEC. VLW 010-6-086, 44 pp.

VLW 010-6-086

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