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Central Allied Enterprises, Inc v. the Adjutant General's Department

September 27, 2011

CENTRAL ALLIED ENTERPRISES, INC., PLAINTIFF-APPELLANT/ CROSS-APPELLEE,
v.
THE ADJUTANT GENERAL'S DEPARTMENT, DEFENDANT-APPELLEE/CROSS-APPELLANT.



(C.C. No. 2007-07841) APPEAL from t he Court of Claims of Ohio

The opinion of the court was delivered by: Connor, J.

Cite as Cent. Allied Ents., Inc. v. Adjutant Gen.'s Dept.,

(REGULAR CALENDAR)

DECISION

{¶1} Plaintiff-appellant/cross-appellee, Central Allied Enterprises, Inc. ("Central Allied"), appeals the judgment rendered by the Court of Claims of Ohio in favor of defendant-appellee/cross-appellant, The Adjutant General's Department ("AGD"), following a bench trial. For the reasons that follow, we affirm the judgment of the Court of Claims of Ohio.

{¶2} This matter concerns a public works contract entered between Central Allied and AGD for the reconstruction of a helicopter apron and taxiway at the Akron Canton Army Aviation Support Facility ("Akron-Canton airbase"). Central Allied performed the original construction in the 1980s. The apron consisted of 8 inches of asphalt built directly on top of the soil. In 2001, AGD contracted with Superior Paving to remove, or "mill," 4 inches of the existing asphalt and replace it with new asphalt to the same thickness. This reconstruction was necessary because the apron was going to have to accommodate heavier, CH-47 Chinook helicopters. As Superior Paving began its work, its milling equipment began sinking and shifting due to the moist conditions of the soil underneath the apron. As a result, Superior Paving informed AGD that the reconstruction should consist of something more than merely placing new asphalt on top of the soil. Therefore, Superior Paving recommended that AGD contact Whitworth-Borta & Co. ("WB"), an engineering company specializing in the design of airports.

{¶3} AGD contracted with WB to create plans and specifications for a reconstruction design of the apron and taxiway. WB was also to serve as AGD's representative by observing the construction, answering questions of the contractors, conducting weekly progress meetings, and performing quality assurance testing at the site. WB's primary people involved in the project were Augustine Ubaldi and Steve Potoczak.

{¶4} WB's reconstruction design depended upon the characteristics of the soil at the site. Generally, the strength of soil is assigned a numeric value known as its California Bearing Ratio ("CBR"). In relative terms, the higher a CBR value is, the stronger the soil will be. There is generally an inverse relationship between the soil strength and the amount of asphalt needed to bear a load. That is, if the soil strength is strong, less asphalt is needed to properly bear a load. Conversely, weaker soils need more asphalt. Typical CBR values of soil in Northeast Ohio range from 4.5 to 5.0.

{¶5} Given that the design depended upon the characteristics of the soil, WB hired Hall's Testing and Consulting ("Hall's Consulting") to test and analyze the soil at the site. Barbara Hall, of Hall's Consulting, and Potoczak selected four random locations around the site from which soil samples were removed and analyzed. The results were summarized in a report drafted by Hall's Consulting ("Soils Investigation Report"). This report noted: "The general soil stratum consists of soft to hard glacial tills that are restrictive to good drainage." (Defendant's exhibit B.) It indicated that the soil strength at the site was 5.7 CBR. Further, it set forth a description of the characteristics of the soil found at each of the four locations before concluding, "[t]hese soils are suitable * * * for airport construction when brought to proper moisture conditions." (Defendant's exhibit B.)

{¶6} Based upon the information contained in the Soils Investigation Report, WB's awareness of the difficulties Superior Paving previously encountered, and its observations during various site visits, WB created a design for the reconstruction. The design called for the removal of the existing asphalt and for the excavation of soil to a depth of 20 inches. It also established that the apron and taxiway would consist of 12 inches of aggregate base materials to be placed beneath 8 inches of new asphalt. Finally, WB's design also included specifications to provide for better drainage at the Akron-Canton airbase.

{¶7} AGD solicited bids for lump-sum contracts to cover the reconstruction of the apron and taxiway. AGD provided prospective bidders with WB's design and various addenda, including the Soils Investigation Report. These contract documents informed bidders of the estimated excavation to be expected in addition to the materials required for the construction.

{¶8} Central Allied was the low bidder and was awarded the lump sum contract. It submitted a schedule of values, which allowed for estimated progress payments to be made to Central Allied over the course of the project.

{¶9} First, Central Allied removed the asphalt and took it off site. Next, Central Allied hired Deckert Excavating ("Deckert") as a subcontractor to perform the required excavation. Unlike the lump-sum contract between Central Allied and AGD, the contract between Central Allied and Deckert was a unit price contract. Therefore, the cost of the excavation to Central Allied was tied directly to the specific amount of excavation Derkert performed. After the excavation was thought to have been completed, the next step of the project involved the installation of catch basins and drain pipes. After this was completed, the entire site was proof rolled.

{¶10} Proof rolling is the process whereby the subgrade, or soil that would eventually be underneath the asphalt apron, is tested and inspected by driving a loaded truck over it. Potoczak and Joseph Seck, who was Central Allied's field manager, walked alongside the loaded truck as it traversed the approximate 11 acres of the site. As the proof rolling occurred, Potoczak and Seck noticed failure areas where unstable soils created deflections, which left uneven ruts in the subgrade. These areas were staked off in order to identify them as areas in need of further work. It was determined that these areas needed to be undercut, or excavated an additional 12 inches or more, and strengthened by layering in geotextile fabrics with more aggregate base materials. Before the extra excavation occurred, these failure areas were measured in order to see how much extra excavation and aggregate base materials would be required.

{¶11} On January 11, 2006, Central Allied submitted a request for extra payment based upon the extra excavation and extra materials used in the project. When Central Allied submitted this request to WB, the contract between WB and AGD had expired. As a result, WB could not process the request. Therefore, Central Allied submitted its request directly to AGD. When no further payment was forthcoming, Central Allied filed the instant suit.

{¶12} In its complaint, Central Allied presented claims for breach of contract, unjust enrichment, and constructive change order. On November 15, 2007, AGD submitted its own deduct change order, which alleged that Central Allied actually performed less excavation than was originally estimated in the lump-sum contract. AGD then filed a counterclaim for breach of contract based upon this deduct change order.

{¶13} The matter proceeded to bench trial, and the parties submitted post-trial briefs. Judgment was rendered in favor of AGD on Central Allied's claims, while it was rendered in favor of Central Allied on AGD's counterclaim. This timely appeal and cross- appeal followed. By way of Central Allied's appeal, it raises the following assignments of error:

1. The Court of Claims erred by not allowing Central Allied Enterprises additional compensation for additional work and materials that were not part of the contract and that it was directed to do by The Adjutant General's Department's representative.

2. The Court of Claims erred by not shifting to The Adjutant General's Department the cost of extra excavation and material used on the helicopter apron that was not shown on the plans and specifications prepared by its own architect.

3. The Court of Claims erred where it failed to recognize the existence of an unforeseen concealed condition for which extra compensation should have been allowed.

4. The Court of Claims erred where it determined that Central Allied Enterprises failed to follow the contract's change order procedure and was thus barred ...


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